Edgar Filing: NORTHROP GRUMMAN CORP /DE/

As filed with the Securities and Exchange Commission on December 13, 2001
Registration No. 333-61506
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Post-Effective Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

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NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)

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Delaware 3812 95-4840775
(State or other jursidication of) (Primary Standard Undustrial (I.R.S. Employer Identification No.)
inforporation or organization) ClassificationCode Number)

1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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John H. Mullan
Corporate Vice President and Secretary
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies to:
Stephen Fraidin
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
(212) 859-8000

Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective and upon completion of the transactions described in the enclosed
information statement/prospectus.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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The information in this information statement/prospectus may change. We may not
complete the exchange offer and issue these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
information statement/prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer is not permitted.

[LOGO] Newport Shipbuilding logo

December 13, 2001

Dear Stockholder:

The Newport News Shipbuilding Inc. board of directors has unanimously
approved a merger agreement dated November 7, 2001 that provides for the merger
of Newport News with and into Purchaser Corp. I, a wholly owned subsidiary of
Northrop Grumman Corporation. As a result of the merger, Newport News will
become a wholly owned subsidiary of Northrop Grumman. Each holder of each
Newport News share will have the right to receive either $67.50 net in cash or
0.7193 shares of Northrop Grumman common stock (subject to the proration
procedures and limitations described in this information statement/prospectus).

Newport News has scheduled a special meeting of its stockholders on January
18, 2001 to consider and vote upon a proposal to adopt the merger agreement.
Holders of record of Newport News common stock at the close of business on
December 5, 2001 will be entitled to vote at the special meeting or any
adjournment or postponement. However, because Purchaser Corp. I acquired
26,241,019 shares of Newport News (representing approximately 80.7% of the
shares outstanding as of December 5, 2001), Northrop Grumman can cause the
merger to occur without the affirmative vote of any other holder of shares.

Enclosed with this information statement/prospectus is a letter of election
and transmittal for use in surrendering your share certificates. You will have
until January 18, 2002 to elect to receive either cash or stock pursuant to the
merger. After January 18, 2002, you will be able to surrender your share
certificates but will not be able to elect the form of consideration that you
will receive.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY

Please read this information statement/prospectus carefully. In particular,
you should read the "Risk Factors" section for a description of various risks
you should consider in evaluating the merger.

/S/ W. BURKS TERRY

W. Burks Terry
Vice President and General Counsel
Newport News Shipbuilding Inc.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this information statement/prospectus. Any
representation to the contrary is a criminal offense.

This information statement/prospectus is dated December 13, 2001, and is
intended to be first mailed to stockholders on December 17, 2001.

ADDITIONAL INFORMATION

This information statement/prospectus incorporates important business and
financial information about Northrop Grumman and Newport News from documents
each has filed with the SEC that are not included in or delivered with this
information statement/prospectus. If you call or write, Northrop Grumman will
send you copies of these documents, excluding exhibits, without charge. You may
contact Northrop Grumman at:

Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Attention: Investor Relations
Telephone number: (310) 553-6262

If you call or write, Newport News will send you copies of the documents
that it has filed with the SEC, excluding exhibits, without charge. You may
contact Newport News at:

Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607
Attention: Investor Relations
Telephone number: (757) 380-2000

In order to receive timely delivery of the documents in advance of the
special meeting, you should make your request no later than January 8, 2002 (10
calendar days before the special meeting).

For more information on the matters incorporated by reference in this
information statement/prospectus, see "Where You Can Find More Information."

NEWPORT NEWS SHIPBUILDING INC.
4101 Washington Avenue
Newport News, Virginia 23607

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 18, 2002

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December 13, 2001

To the Stockholders of Newport News Shipbuilding Inc.:

We will hold a special meeting of our stockholders on Friday, January 18,
2002 at 9:00 a.m. (local time) at the offices of Fried, Frank, Harris, Shriver
& Jacobson at 350 South Grand Avenue, Los Angeles, CA 90071.

As described in this information statement/prospectus, at the special
meeting you will:

(1) Consider and vote upon a proposal to adopt the agreement and plan of
merger by and among Newport News Shipbuilding Inc., Northrop Grumman
Corporation, and Purchaser Corp. I, a wholly owned subsidiary of
Northrop Grumman, providing for, among other things, the merger of
Newport News with and into Purchaser Corp. I. Following the merger,
Purchaser Corp. I will continue as the surviving corporation and the
separate existence of Newport News will cease.

(2) Transact such other business as may properly come before the meeting or
any adjournment or postponement of the meeting.

On November 7, 2001, the Newport News board of directors approved the merger
agreement and the merger.

The merger will constitute the second and final step of the acquisition of
Newport News by Northrop Grumman in a two-step transaction pursuant to which
Northrop Grumman, as the owner of all of the capital stock of Purchaser Corp.
I, will acquire the entire equity interest in Newport News. The first step was
an exchange offer commenced by Northrop Grumman through Purchaser Corp. I on
May 23, 2001 for the right to receive either 0.7193 shares of Northrop Grumman
common stock, par value $1.00 per share, or $67.50 net in cash, for each
outstanding share of Newport News common stock, par value $0.01 per share
(subject to the proration procedures and limitations described in this
information statement/prospectus). The offer was completed on November 29,
2001. Purchaser Corp. I acquired 26,241,019 shares of Newport News
(representing approximately 80.7% of the shares outstanding as of November 29,
2001).

Upon completion of the merger, each share of Newport News common stock
(other than common stock owned by Newport News, Northrop Grumman or Purchaser
Corp. I and Newport News common stock for which appraisal rights have been
exercised in accordance with Delaware law) will be converted into the right to
receive either 0.7193 shares of Northrop Grumman common stock or $67.50 net in
cash (subject to the proration procedures and limitations described in this
information statement/prospectus), the same consideration as in the exchange
offer. Northrop Grumman currently anticipates that the merger will be completed
on January 18, 2002, or as promptly as practicable thereafter.

Only holders of record of Newport News common stock at the close of business
on December 5, 2001 will be entitled to vote at the special meeting or any
adjournment or postponement. As of the record date, Northrop Grumman and its
affiliates own an aggregate of 26,241,019 shares, representing approximately
80.7% of all shares outstanding on that date. The affirmative vote of the
holders of a majority of all outstanding shares is sufficient to adopt the
merger agreement. Therefore, Northrop Grumman can cause the merger to occur
without the affirmative vote of any other stockholder.

Please read the attached information statement/prospectus carefully.

WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND A PROXY.

By Order of the Board of Directors,

/s/ JOHN H. MULLAN

John H. Mullan
Secretary and Director

Newport News, Virginia
December 13, 2001

TABLE OF CONTENTS

Page
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QUESTIONS AND ANSWERS ABOUT THE MERGER............................................................ 1
RISK FACTORS...................................................................................... 5
The Anticipated Benefits of the Acquisition May Not Be Realized and as a Result the Price of
Northrop Grumman Shares May Decline.......................................................... 5
The Northrop Grumman Common Stock to be Received by Newport News Stockholders Pursuant to
the Merger will Fluctuate in Value........................................................... 5
Exchange Ratio of the Offer and Merger Could Work to Your Disadvantage......................... 5
You May Not Receive All Consideration in the Form You Have Elected............................. 5
The Receipt of Northrop Grumman Shares in Connection with the Merger May Be Taxable to You..... 6
The Trading Price of Northrop Grumman Common Stock May Be Affected by Factors Different from
Those Affecting the Price of Newport News Common Stock....................................... 6
Failure to Complete the Merger Could Negatively Impact Newport News' Stock Price and Future
Business and Operations...................................................................... 6
Northrop Grumman's Indebtedness Following the Offer and the Merger Will Be Higher Than Its
Existing Indebtedness........................................................................ 6
Successful Integration of the Northrop Grumman and Newport News Business Is Not Assured........ 7
Northrop Grumman's Ability to Retain Personnel Who Are Key to Northrop Grumman's and
Newport News' Business....................................................................... 7
Risks Related to the Business of Northrop Grumman and Newport News............................. 7
Officers and Directors of Newport News Have Potential Conflicts of Interest in the Transaction. 7
Forward-Looking Statements May Prove Inaccurate................................................ 7
SUMMARY........................................................................................... 9
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS....................................... 19
INFORMATION ABOUT THE COMPANIES................................................................... 25
Northrop Grumman Corporation................................................................... 25
Newport News................................................................................... 26
THE SPECIAL MEETING............................................................................... 27
Time, Place, Date.............................................................................. 27
Purpose of the Special Meeting................................................................. 27
Record Date; Quorum; Outstanding Shares Entitled to Vote....................................... 27
Vote Required.................................................................................. 27
Surrender of Certificates and Payment Procedures............................................... 27
The Merger Consideration....................................................................... 28
Cash Instead of Fractional Shares of Northrop Grumman Common Stock............................. 29
APPRAISAL RIGHTS.................................................................................. 30
FINANCIAL FORECASTS............................................................................... 33
THE MERGER........................................................................................ 34
Background of the Offer and the Merger......................................................... 34
Northrop Grumman Reasons for the Offer and Merger.............................................. 37
Recommendation and Reasons of Newport News Board of Directors.................................. 37
Opinion of Newport News' Financial Advisor..................................................... 40
Purpose and Structure of the Merger; Reasons of Northrop Grumman for the Merger................ 46
The Merger Agreement........................................................................... 47
Delisting of Newport News Shares Following the Merger.......................................... 50
Regulatory Approvals........................................................................... 50
Plans for Newport News After the Merger........................................................ 50

Page
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Accounting Treatment................................................... 51
Fees and Expenses...................................................... 51
Source and Amount of Funds............................................. 51
Certain Relationships with Newport News................................ 52
INTERESTS OF CERTAIN PERSONS IN THE MERGER................................ 53
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES............................. 56
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION............... 61
DESCRIPTION OF NORTHROP GRUMMAN COMMON STOCK.............................. 62
COMPARISON OF RIGHTS OF HOLDERS OF NORTHROP GRUMMAN SHARES AND NEWPORT
NEWS SHARES............................................................. 63
BENEFICIAL SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT....... 70
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 70
LEGAL MATTERS............................................................. 71
EXPERTS................................................................... 71
OTHER MATTERS............................................................. 72
WHERE YOU CAN FIND MORE INFORMATION....................................... 73
ANNEX A--SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW-- APPRAISAL
RIGHTS.................................................................. A-1
ANNEX B--DIRECTORS AND EXECUTIVE OFFICERS OF NORTHROP GRUMMAN............. B-1
ANNEX C--AGREEMENT AND PLAN OF MERGER AMONG NORTHROP GRUMMAN
CORPORATION, PURCHASER CORP. I AND NEWPORT NEWS SHIPBUILDING INC., DATED
NOVEMBER 7, 2001........................................................ C-1

QUESTIONS AND ANSWERS ABOUT THE MERGER

The merger of Newport News with and into Purchaser Corp. I, a wholly owned
subsidiary of Northrop Grumman Corporation, will constitute the second and
final step of the acquisition of Newport News by Northrop Grumman. The first
step was an exchange offer, commenced by Northrop Grumman through its
subsidiary on May 23, 2001, for the right to receive either 0.7193 shares of
Northrop Grumman common stock or $67.50 net in cash for each outstanding share
of Newport News common stock (subject to the proration procedures and
limitations described the offer). The offer was completed on November 29, 2001.
Purchaser Corp. I acquired 26,241,019 shares representing approximately 80.7%
of the shares outstanding as of November 29, 2001. The following are some
questions you, as a stockholder of Newport News, may have and the answers to
those questions. We urge you to carefully read the remainder of this
information statement/prospectus because the information provided in these
questions and answers is not complete and additional important information is
contained in the remainder of this information statement/prospectus.
Stockholders are urged to read this information statement/prospectus in its
entirety.

Q: When and where is the special meeting?

A: Newport News will hold a special meeting of stockholders on January 18,
2002, at 9:00 a.m., local time, at the offices of Fried, Frank, Harris,
Shriver & Jacobson at 350 South Grand Avenue, Los Angeles, CA 90071. See
"The Special Meeting."

Q: Is my vote required to adopt the merger agreement?

A: No. The affirmative vote of a majority of the votes entitled to be cast by
the holders of all outstanding shares as of the record date will be required
to adopt the merger agreement. Northrop Grumman and Purchaser Corp. I have
agreed to vote all of the shares they own in favor of the adoption of the
merger agreement. Because Northrop Grumman and its affiliates own
approximately 80.7% of the outstanding shares on the record date, adoption
of the merger agreement is assured without the vote of any other
stockholder. You are not being asked for a proxy and you are requested not
to send one. See "The Special Meeting--Vote Required."

Q: Who are the parties to the transaction?

A: Northrop Grumman
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262

Northrop Grumman is a leading global aerospace and defense company
providing products and services in defense and commercial electronics,
systems integration, information technology and non-nuclear-powered
shipbuilding and systems. As a prime contractor, principal subcontractor,
partner or preferred supplier, Northrop Grumman participates in many
high-priority defense and commercial technology programs in the United
States and abroad. Northrop Grumman is a holding company formed in
connection with the acquisition of Litton Industries, Inc. in April 2001.
Northrop Grumman is aligned into five business sectors: Integrated Systems,
Electronic Systems, Information Technology, Ship Systems and Component
Technologies.

Purchaser Corp. I
c/o Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262

Purchaser Corp. I is a wholly owned subsidiary of Northrop Grumman.
Purchaser Corp. I was organized on October 11, 2001 for the purpose of
acquiring the Newport News shares tendered in response to the offer and
merging with Newport News pursuant to the merger. It has not carried on any
activities other than in connection with the transactions contemplated by
the merger agreement.

Newport News
4101 Washington Avenue
Newport News, Virginia 23607
(757) 380-2000

Newport News' primary business is the design, construction, repair,
maintenance, overhaul and refueling of nuclear-powered aircraft carriers and
submarines for the U.S. Navy.

As a result of the first step, Newport News is approximately 80.7% owned
by Purchaser Corp. I, a wholly owned subsidiary of Northrop Grumman.

Q: What will I be entitled to receive in exchange for my shares of Newport News?

A: Upon completion of the merger, each share of Newport News common stock
(other than shares owned by Northrop Grumman, Purchaser Corp. I, or Newport
News and shares for which appraisal rights have been exercised in accordance
with Delaware law) will be converted into the right to receive either 0.7193
shares of Northrop Grumman common stock or $67.50 net in cash (subject to
the proration procedures and limitations described in this information
statement/prospectus), the same consideration paid in the offer. See "The
Special Meeting--The Merger Consideration."

Q: Is there an agreement governing the merger?

A: Yes. Northrop Grumman, Purchaser Corp. I and Newport News entered into an
agreement and plan of merger dated as of November 7, 2001. The merger
agreement provides, among other things, for the terms and conditions of the
offer and the merger of Newport News into Purchaser Corp. I following the
offer. See "The Merger--The Merger Agreement."

Q: Does Newport News support the merger?

A: Yes. Newport News' board of directors has determined that the merger
agreement and the transactions contemplated thereby, including the offer and
the merger, taken together, are advisable and fair to, and in the best
interests of, Newport News stockholders and unanimously recommends that
Newport News stockholders adopt the merger agreement. Newport News' board of
directors has approved the merger agreement and the transactions
contemplated thereby. See "The Merger--Recommendations and Reasons of
Newport News Board of Directors."

Q: When do the companies expect to complete the merger?

A: Northrop Grumman expects to complete the merger on January 18, 2002, or as
soon as practicable thereafter. The merger will become effective upon filing
the certificate of merger with the Secretary of the State of Delaware or at
such later time as is agreed by Newport News and Northrop Grumman and
specified in the certificate of merger. See "The Merger."

Q: Can the merger agreement be terminated?

A: The merger agreement may be terminated by either Northrop Grumman, Purchaser
Corp. I or Newport News under certain circumstances. See "The Merger--Merger
Agreement."

Q: Is Northrop Grumman's financial condition relevant?

A: Yes. Since shares of Newport News common stock issued and outstanding
immediately prior to the effective time (other than shares owned by Northrop
Grumman, Purchaser Corp. I or Newport News or shares for which appraisal
rights have been exercised in accordance with Delaware law) will be
converted into a right to receive 0.7193 shares of Northrop Grumman common
stock or $67.50 net in cash (subject to the proration procedures and
limitations described in this information statement/prospectus), Newport
News stockholders should consider Northrop Grumman's financial condition and
particularly, the section entitled "Risk Factors" before deciding whether to
elect to become one of Northrop Grumman's stockholders pursuant to the
merger. In considering Northrop Grumman's financial condition, you should
review carefully the information in this information statement/prospectus
and the documents incorporated by reference in this information
statement/prospectus because they contain detailed business, financial and
other information about Northrop Grumman.

Q: What will happen to Newport News after the merger is completed?

A: After completion of the merger, Purchaser Corp. I will continue as the
surviving corporation and Newport News' separate corporate existence will
cease. The former holders of Newport News shares will no longer possess any
direct interest in Newport News. Promptly upon completion of the merger,
Newport News will terminate the registration of its shares under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
addition, upon termination of the registration of the shares under the
Exchange Act, the shares will no longer be eligible for inclusion on the New
York Stock Exchange and on the Chicago Stock Exchange. See "The
Merger--Delisting of Newport News Shares Following the Merger." In the
merger, Purchaser Corp. I will change its name to Newport News Shipbuilding
Inc.

Q: What is the accounting treatment for the merger?

A: The acquisition of Newport News by Northrop Grumman's wholly owned
subsidiary, Purchaser Corp. I, would be accounted for under the purchase
method of accounting under U.S. generally accepted accounting principles,
which means that Newport News' results of operations will be included with
Northrop Grumman's from the closing date and Newport News' consolidated
assets and liabilities will be recorded at their fair values at the same
date.

Q: Do any existing or former members of Newport News' management or board of
directors have interests in the merger other than as stockholders of Newport
News?

A: Yes. Certain existing and former members of Newport News' management and
board of directors (as well as employees of Newport News) have interests in
the merger other than as stockholders relating to, among other things, (x)
the terms of employment and non-competition agreements and change of control
severance agreements between Newport News and certain members of management,
providing for cash payments and other benefits; and (y) the acceleration of
unvested stock options for certain members of management. See "Interests of
Certain Persons in the Merger."

Q: Should I send in my stock certificates now?

A: Yes. A letter of election and transmittal for use in surrendering share
certificates is enclosed with this information statement/prospectus. See
"The Merger." Certificates representing Newport News shares should be
surrendered only in accordance with the instructions in the letter of
election and transmittal. Stockholders will have until January 18, 2002, to
elect the right to receive either cash or stock pursuant to the merger. You
may make an election by completing the enclosed letter of election and
transmittal without surrendering your Newport News stock certificates. If
appraisal rights are available and you intend to demand appraisal of your
shares, do not surrender your stock certificates. If appraisal rights are
available and you do surrender your stock certificates, you may be
disqualified from being entitled to have your shares appraised under Section
262. After January 18, 2002, stockholders will be able to exchange their
shares but will not be able to elect the form of consideration that they
will receive. Rather, you will be entitled to receive the underelected form
of consideration (or a proportionate share of each form of consideration if
neither is oversubscribed). See "The Special Meeting--The Merger
Consideration."

Q: Will I be taxed on the Northrop Grumman shares and cash that I receive?

A: In general, if you receive only Northrop Grumman shares in the offer and
merger you will not be taxed on the receipt of those shares. If you receive
a combination of Northrop Grumman shares and cash or solely cash you will be
taxed on the cash received up to the amount of gain, if any, you realize on
the exchange (that is the excess, if any, of value of the consideration you
receive over the tax basis of the Newport News shares you exchange for that
consideration). If you receive a combination of Northrop Grumman shares and
cash or solely Northrop Grumman shares and you realize a loss on the Newport
News shares you exchange, you will not be able to recognize that loss.
Special rules apply with respect to cash received in lieu of fractional
shares. This treatment assumes that the offer and the merger will be treated
as a single integrated transaction that constitutes a "reorganization" for
federal income tax purposes. Northrop Grumman's counsel, Fried, Frank,
Harris, Shriver & Jacobson, has provided an opinion to that effect, based on
certain assumptions and representations. At the time of the merger Northrop
Grumman will seek to have Fried, Frank, Harris Shriver & Jacobson confirm
its opinion based on the facts existing at that time. If that opinion cannot
be obtained, the merger will be restructured as a merger of Purchaser Corp.
I into Newport News. If the merger is restructured, your exchange of Newport
News shares for Northrop Grumman shares and/or cash pursuant to the merger
will be a fully taxable transaction. For more information, see "Material
U.S. Federal Income Tax Consequences of the Merger."

Q: What regulatory approvals are required?

A: On October 23, 2001 Northrop Grumman received clearance from the Department
of Defense and the Department of Justice with respect to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Other than the SEC's
declaring the effectiveness of the registration statement of which this
information statement/prospectus is a part and the filing of a certificate
of merger under the Delaware General Corporation Law with respect to the
merger, Newport News and Northrop Grumman believe that there are no other
material regulatory or governmental approvals required in order for the
merger to be completed. See "The Merger--Regulatory Approvals."

Q: Can I exercise appraisal rights?

A: Under Delaware law, stockholders who do not vote to approve the merger, who
are stockholders of record as of the time they demand appraisal rights, who
continuously own the shares through the effective time of the merger and who
otherwise strictly comply with applicable requirements of the Delaware
General Corporation Law may be able to demand payment in cash from Newport
News for the fair value of their shares. See "Appraisal Rights."

RISK FACTORS

In deciding whether to vote upon a proposal to adopt the merger agreement
and to transact such other business as may properly come before the meeting or
any adjournment or postponement, you should read carefully this information
statement/prospectus and the documents to which we refer you. You should also
carefully consider the following factors:

The Anticipated Benefits of the Acquisition May Not Be Realized and as a Result
the Price of Northrop Grumman Shares May Decline

Upon completion of the merger, Northrop Grumman expects that Newport News
initially will continue to operate as a separate business from that of Northrop
Grumman. However, there will be inherent challenges in transferring ownership
of Newport News to Northrop Grumman. These challenges may result in significant
diversions of management time and attention. Northrop Grumman's current efforts
to integrate the Litton acquisition may also contribute to the diversion of
management time and attention. In addition, the acquisition of Newport News
could result in business or operational difficulties not currently anticipated
by Northrop Grumman. As a result, Northrop Grumman may not realize the benefits
it anticipates from the ownership of Newport News and so Northrop Grumman's
business could be adversely affected.

The Northrop Grumman Common Stock to be Received by Newport News Stockholders
Pursuant to the Merger will Fluctuate in Value

The market price of the shares of Northrop Grumman common stock to be issued
pursuant to the merger in exchange for Newport News common stock may change as
a result of change in Northrop Grumman's business, operations or prospects,
market assessments of the impact of the merger or general market conditions.
Northrop Grumman's results of operations, as well as the market price of
Northrop Grumman's common stock, may be affected by factors different from
those affecting Newport News' results of operations and the market price of
Newport News' common stock. Because the market price of Northrop Grumman's
common stock fluctuates, the value of the Northrop Grumman shares to be
received by Newport News stockholders pursuant to the merger will depend upon
the market price of such shares at the time they are received pursuant to the
merger. There can be no assurance as to this value. In addition, because the
fraction of a Northrop Grumman share to be exchanged for each Newport News
share is fixed, the value of the consideration actually received by you
pursuant to the merger could decline.

Exchange Ratio of the Offer and Merger Could Work to Your Disadvantage

Northrop Grumman is offering to exchange each share of Newport News common
stock for the right to receive 0.7193 shares of Northrop Grumman common stock
or $67.50 net in cash (subject to the election and proration procedures and
limitations described in this information statement/prospectus). Although you
may benefit from possible increases in value in Northrop Grumman common stock,
you may incur losses from possible decreases in value in Northrop Grumman
common stock.

You May Not Receive All Consideration in the Form You Have Elected

At the time you make your election, you will not know exactly what
combination of stock and/or cash you will receive because it will also depend
upon the elections made by other stockholders. You can tell Northrop Grumman
your preference to receive either 0.7193 shares of Northrop Grumman common
stock or $67.50 in cash for each of your Newport News common shares, and you
will receive either cash, Northrop Grumman common stock, or a combination of
cash and Northrop Grumman common stock, based upon your stated preference and
the preferences of other stockholders. To the extent the demand for either the
cash or the stock component of the merger exceeds the aggregate amount of cash
or stock in the merger, Northrop Grumman will prorate the total cash or stock,
as the case may be, proportionally among the stockholders who elect that
component. Stockholders who do not make an election will be allocated whatever
component is remaining (or a

proportionate share of each component if neither is oversubscribed), after
taking into account the preferences of the tendering stockholders who make
elections. See "The Special Meeting--The Merger Consideration."

The Receipt of Northrop Grumman Shares in Connection with the Merger May Be
Taxable to You

Fried, Frank, Harris, Shriver & Jacobson has provided an opinion, based on
certain assumptions and representations, that the offer and the merger will be
treated as a single integrated transaction that constitutes a reorganization
for federal income tax purposes. At the time of the merger Northrop Grumman
will seek to have Fried, Frank, Harris, Shriver & Jacobson confirm its opinion
based on the facts existing at that time. If that opinion cannot be obtained,
the merger will be restructured as a merger of Purchaser Corp. I into Newport
News. If the merger is restructured or if the merger otherwise is not treated
as a reorganization for federal income tax purposes, your exchange of Newport
News shares for Northrop Grumman shares and/or cash pursuant to the merger will
be a fully taxable transaction for U.S. federal income tax purposes.

For more information, see "Material U.S. Federal Income Tax Consequences."

You are urged to consult your tax advisor to determine the specific tax
consequences to you of the offer and the merger, including any federal, state,
local, foreign or other tax consequences, and any tax return filing or other
reporting requirements.

The Trading Price of Northrop Grumman Common Stock May Be Affected by Factors
Different from Those Affecting the Price of Newport News Common Stock

Upon completion of the merger, some holders of Newport News common stock
will be entitled to become holders of Northrop Grumman common stock. Northrop
Grumman's business differs from that of Newport News, and Northrop Grumman's
results of operations, as well as the trading price of Northrop Grumman common
stock, may be affected by factors different from those affecting Newport News'
results of operations and the price of Newport News common stock.

Failure to Complete the Merger Could Negatively Impact Newport News' Stock
Price and Future Business and Operations

If the merger is not completed for any reason, Newport News may be subject
to a number of material risks, including the following:

. the price of Newport News common stock may decline to the extent that the
current market price of Newport News common stock reflects a market
assumption that a merger will be completed; and

. costs incurred by Newport News related to the merger, including legal and
accounting fees as well as a portion of the financial advisor fees that
would be payable upon completion of the merger, must be paid by Newport
News even if the merger is not completed.

Northrop Grumman's Indebtedness Following the Offer and the Merger Will Be
Higher Than Its Existing Indebtedness

The indebtedness of Northrop Grumman as of September 30, 2001 was
approximately $5.319 billion. Northrop Grumman's pro forma indebtedness as of
September 30, 2001 giving effect to the offer and the merger (as described in
"Northrop Grumman Selected Historical and Unaudited Pro Forma Condensed
Combined Financial Data") is approximately $6.455 billion. As a result of the
increase in debt, demands on the cash resources of Northrop Grumman will
increase after the merger, which could have important effects on an investment
in the common stock. For example, the increased levels of indebtedness could:

. reduce funds available for investment in research and development and
capital expenditures; or

. create competitive disadvantages compared to other companies with lower
debt levels.

Successful Integration of the Northrop Grumman and Newport News Business Is Not
Assured

Integrating and coordinating the operations and personnel of Northrop
Grumman and Newport News will involve complex technological, operational and
personnel-related challenges. This process will be
time-consuming and expensive, and may disrupt the business of the companies. In
addition, integration of the Litton acquisition is expected to require
significant management time and attention. The integration of the companies may
not result in the benefits expected by Northrop Grumman. The difficulties,
costs and delays that could be encountered may include:

. anticipated issues in integrating the information, communications and
other systems;

. performance degradation if expectations are not met;

. changes in customer needs and plans;

. unanticipated incompatibility of systems, procedures and operating methods;

. unanticipated costs relating to facilities and operations; and

. the effect of complying with any government imposed organizational
conflict-of-interest rules.

Northrop Grumman's Ability to Retain Personnel Who Are Key to Northrop
Grumman's and Newport News' Business

The success of Northrop Grumman's operations is dependent, among other
things, on its ability to attract and retain highly qualified professional
personnel. Competition for key personnel in the various localities and business
segments in which Northrop Grumman operates is intense. Northrop Grumman's
ability to attract and retain key personnel, including senior officers and
experienced engineers, is dependent on a number of factors, including
prevailing market conditions and compensation packages offered by companies
competing for the same talent, who may offer different employment packages.
These same pressures and concerns also apply to Newport News' business.

Risks Related to the Business of Northrop Grumman and Newport News

Results of operations of Northrop Grumman will be subject to numerous risks
affecting the businesses of Northrop Grumman and Newport News, many of which
are beyond the companies' control. Many of the risks affecting Northrop Grumman
are identified below under "Forward-Looking Statements may prove inaccurate."

Officers and Directors of Newport News Have Potential Conflicts of Interest in
the Transaction

Newport News stockholders should be aware of potential conflicts of interest
and the benefits available to Newport News directors when considering Newport
News' board of directors' recommendation to approve the transaction. Newport
News officers and directors have or had stock options, employment agreements
and/or benefit plans that provide them with interests in the transaction that
are different from, or in addition to, interests of Newport News stockholders.
See "Interests of Certain Persons in the Merger."

Forward-Looking Statements May Prove Inaccurate

Some of the information included in this information statement/prospectus
and in the documents incorporated by reference are forward-looking statements
within the meaning of the securities laws. These include statements and
assumptions with respect to expected future revenues, margins, program
performance, earnings and cash flows, acquisitions of new contracts, the
outcome of competitions for new programs, the outcome of contingencies
including litigation and environmental remediation, the effect of completed and
planned acquisitions and divestitures of businesses or business assets, the
anticipated costs of capital investments, and anticipated industry trends.
Actual results and trends may differ materially from the information,
statements and assumptions as described, and actual results could be materially
less than planned. Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements include:

. dependence on sales to the United States Government;

. successful performance of internal plans;

. government customers' budgetary restraints;

. customer changes in short-range and long-range plans;

. domestic and international competition in both the defense and commercial
areas;

. product performance;

. continued development and acceptance of new products;

. performance issues with key suppliers and subcontractors;

. government import and export policies;

. termination of government contracts, which may include termination for the
convenience of the government;

. the outcome of political and legal processes;

. Northrop Grumman maintaining satisfactory relations with labor unions that
represent certain of Northrop Grumman employees;

. legal, financial and governmental risks related to international
transactions and global needs for military and commercial aircraft,
electronic systems and support, information technologies and ships; and

. other economic, political and technological risks and uncertainties.

See also "Risk Factors," and the risk factors disclosed in Northrop
Grumman's Annual Report on Form 10-K/A, for the fiscal year ended December 31,
2000 and Northrop Grumman Quarterly Reports on Form 10-Q, for the periods ended
March 31, 2001, June 30, 2001 and September 30, 2001, which are incorporated
herein by reference. For additional factors that might affect the
forward-looking statements with respect to Newport News, see Newport News'
Annual Report on Form 10-K, for the fiscal year ended December 31, 2000 and
Newport News' Quarterly Reports on Form 10-Q, for the periods ended March 18,
2001, June 17, 2001 and September 16, 2001, which are incorporated in this
information statement/prospectus by reference. See "Where You Can Find More
Information." Readers are cautioned not to put undue reliance on
forward-looking statements. Northrop Grumman disclaims any intent or obligation
to update these forward-looking statements, whether as a result of new
information, future events or otherwise.

SUMMARY

This summary does not contain all of the information that is important to
you. To understand the transaction fully, you should read this entire
information statement/prospectus carefully and the other documents to which
this information statement/prospectus refers. See "Where You Can Find More
Information." References to "Northrop Systems" refer to Northrop Grumman
Systems Corporation, formerly Northrop Grumman Corporation; references to
"Northrop Grumman" refer to Northrop Grumman Corporation, formerly NNG, Inc.;
references to "Litton" refer to Litton Industries, Inc.; references to "Newport
News" refer to Newport News Shipbuilding Inc.

For Each Outstanding Newport News Share Northrop Grumman Will Issue 0.7193
Shares of Northrop Grumman Common Stock or Pay $67.50 in Cash

Upon completion of the merger, each share of Newport News common stock will
be converted into the right to receive either $67.50 in cash, without interest,
or 0.7193 shares of Northrop Grumman common stock (subject to the proration
procedures and limitations described in this information statement/prospectus).
You will have until January 18, 2002, to elect to receive either cash or stock
pursuant to the merger. After January 18, 2002, you will be able to surrender
your share certificates, but will not be able to elect the form of
consideration that you will receive. See "The Special Meeting--The Merger
Consideration."

The $67.50 Cash Component May Be Subject to Federal Income Tax, but the Common
Stock Component Generally Is Not Expected to Be Subject to Federal Income Tax

In general, if you receive only Northrop Grumman shares in the merger you
will not be taxed on the receipt of those shares. If you receive a combination
of Northrop Grumman shares and cash or solely cash you will be taxed on the
cash received up to the amount of gain, if any, you realize on the exchange
(that is the excess, if any, of value of the consideration you receive over the
tax basis of the Newport News shares you exchange for that consideration). If
you receive a combination of Northrop Grumman shares and cash or solely
Northrop Grumman shares and you realize a loss on the Newport News shares you
exchange, you will not be able to recognize that loss. Special rules apply with
respect to cash received in lieu of fractional shares. This treatment assumes
that the merger will be treated as a "reorganization" for federal income tax
purposes. Northrop Grumman's counsel, Fried, Frank, Harris, Shriver & Jacobson,
has provided an opinion to that effect, based on certain assumptions and
representations. At the time of the merger Northrop Grumman will seek to have
Fried, Frank, Harris, Shriver & Jacobson confirm its opinion based on the facts
existing at that time. If that opinion cannot be obtained, the merger will be
restructured as a merger of Purchaser Corp. I into Newport News. If the merger
is restructured, your exchange of Newport News shares for Northrop Grumman
shares and/or cash pursuant to the merger will be a fully taxable transaction.
For more information, see "Material U.S. Federal Income Tax Consequences of the
Merger."

You are urged to consult your tax advisor to determine the specific tax
consequences to you of our offer and the merger, including any federal, state,
local, foreign or other tax consequences and any tax return filing or other
reporting requirements.

Reasons for the Merger

Northrop Grumman and Newport News believe that the merger represents a
compelling opportunity to enhance value for both Newport News and Northrop
Grumman stockholders. Northrop Grumman and Newport News believe that a
combination of Northrop Grumman (which recently completed its purchase of
Litton) and Newport News would offer a variety of strategic benefits, including
making Northrop Grumman a complete full-line shipbuilding competitor and
providing an opportunity for significant cost savings to the U.S. Navy and the

opportunity for Newport News to realize efficiencies available as part of a
larger, more diversified company.

Achieving these objectives depends on successfully integrating companies
that have previously operated independently and on the other uncertainties
described in this information statement/prospectus in the "Risk Factors"
section.

Newport News' Recommendation

Newport News' board of directors determined by unanimous vote that the
merger agreement and transactions contemplated by the merger agreement,
including the offer and merger, taken together are advisable and fair to and in
the best interests of Newport News stockholders, and recommended that Newport
News stockholders accept the offer and tender their shares into the offer.
Newport News' board of directors determined by unanimous vote to approve the
merger agreement.

Comparative Market Price Information

Northrop Grumman common stock trades on the New York Stock Exchange and on
the Pacific Exchange under the symbol "NOC" and Newport News common stock
trades on the New York Stock Exchange and the Chicago Stock Exchange under the
symbol "NNS."

The following table lists the closing prices of Northrop Grumman common
stock and Newport News common stock on May 8, 2001, the last trading day before
the announcement of Northrop Grumman's intention to make an offer for Newport
News shares and December 12, 2001, the last practicable trading day prior to
the filing date of this information statement/prospectus.

Northrop Newport
Grumman News
Common Common
Stock Stock
-------- -------

May 8, 2001...... $91.50 $65.00
December 12, 2001 $94.64 $68.20

You should obtain current stock price quotations for Northrop Grumman common
stock and Newport News common stock. You can get these quotations from a
newspaper, on the Internet or by calling your broker.

Dividend Policy of Northrop Grumman

The holders of Northrop Grumman common stock receive dividends if and when
declared by the Northrop Grumman board of directors out of legally available
funds. For the past 12 fiscal quarters, Northrop Grumman has paid a cash
dividend of $0.40 per common share, and Northrop Grumman paid a cash dividend
of $0.40 per common share for its most recent fiscal quarter ended September
30, 2001.

Following completion of the merger, Northrop Grumman expects to continue
paying quarterly cash dividends on a basis consistent with its past practice.
However, the declaration and payment of dividends will depend upon business
conditions, operating results, capital and reserve requirements and the
Northrop Grumman board of directors' consideration of other relevant factors.
Northrop Grumman can give you no assurance that it will continue to pay
dividends on its common stock in the future.

Appraisal Rights in Connection with the Merger

A Newport News stockholder will not be entitled to demand appraisal of their
shares in connection with the merger unless (x) that Newport News stockholder
elects to receive shares of Northrop Grumman common stock pursuant to the
merger and receives, in whole or in part, cash (other than cash in lieu of
fractional shares) or (y) that Newport News stockholder does not make an
election as to the form of consideration to be received and receive, in whole
or in part, cash (other than cash in lieu of fractional shares). For more
information, see "Appraisal Rights."

Northrop Grumman Will Account for the Merger Using the "Purchase" Method

Northrop Grumman will account for the merger as a purchase for financial
reporting purposes.

Forward-Looking Statements May Prove Inaccurate

Various information included in this information statement/prospectus and in
the documents incorporated by reference are forward-looking statements within
the meaning of the securities laws. These include statements and assumptions
with respect to expected future revenues, margins, program performance,
earnings and cash flows, acquisitions of new contracts, the outcome of
competitions for new programs, the outcome of contingencies including
litigation and environmental remediation, the effect of completed and planned
acquisitions and divestitures of businesses or business assets, the anticipated
costs of capital investments, and anticipated industry trends. Actual results
and trends may differ materially from the information, statements and
assumptions as described, and actual results could be materially more or less
than planned.

Opinion of Newport News' Financial Advisor

In connection with the offer and the merger, Newport News' financial
advisor, Credit Suisse First Boston Corporation, delivered a written opinion to
the Newport News board of directors as to the fairness, from a financial point
of view, of the aggregate consideration to be received by holders of Newport
News common stock other than Northrop Grumman and its affiliates in the offer
and the merger. A copy of the opinion is included in the Newport News'
Solicitation/Recommendation Statement on Schedule 14D-9, which was mailed to
the stockholders of Newport News. We encourage you to read this opinion
carefully in its entirety for a description of the procedures followed,
assumptions made, matters considered and limitations on the review undertaken.
Credit Suisse First Boston's opinion is addressed to the board of directors of
Newport News and does not address any other aspect of the merger or any related
transaction and does not constitute a recommendation to Newport News
stockholders as to the form of consideration to be elected by any stockholder
in the merger or how such stockholder should vote or act with respect to any
matter relating to the merger.

NORTHROP GRUMMAN SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL DATA

The following table sets forth selected consolidated financial data for
Northrop Systems (formerly Northrop Grumman Corporation) for each of the years
in the five-year period ended December 31, 2000 and for the nine months ended
September 30, 2000 and for Northrop Grumman for the nine months ended September
30, 2001, and selected unaudited pro forma condensed combined financial data of
Northrop Grumman, Litton Industries, Inc. and Newport News for the year ended
December 31, 2000 and the nine months ended September 30, 2001. Consolidated
financial data for the years ended December 31, 2000, 1999, 1998 and 1997 have
been derived from, and are qualified by reference to, the audited consolidated
financial statements and notes thereto filed by Northrop Grumman with the SEC.
Consolidated financial data for the year ended December 31, 1996 and for the
nine months ended September 30, 2001 and 2000 have been derived from unaudited
consolidated financial statements and notes thereto of Northrop Systems and
Northrop Grumman. The selected historical financial data for each of the years
in the five-year period ending December 31, 2000 do not give effect to the
Litton acquisition or the resulting debt. The historical operating data for the
nine months ended September 30, 2001 include six months of Litton's operating
results subsequent to the acquisition by Northrop Grumman on April 3, 2001.

The operating results for the nine months ended September 30, 2001 are not
necessarily indicative of results for the full fiscal year ending December 31,
2001. Newport News stockholders should read this summary together with the
financial statements referred to below and incorporated by reference and their
accompanying notes and in conjunction with management's discussion and analysis
of operations and financial conditions of Northrop Grumman, Litton and Newport
News contained in such reports. Earnings per share is calculated by dividing
income from continuing operations available for the holders of common stock by
the weighted average number of shares outstanding.

The Unaudited Pro Forma Condensed Combined Financial Data were obtained from
the Unaudited Pro Forma Condensed Combined Financial Statements. The pro forma
financial statements are based upon the historical financial statements of
Northrop Systems, Northrop Grumman, Litton and Newport News adjusted to give
effect to the Litton and Newport News acquisitions. The pro forma adjustments
are described in the accompanying notes. The pro forma financial statements
have been developed from (a) the audited consolidated financial statements of
Northrop Systems contained in its Annual Report on Form 10-K/A for the year
ended December 31, 2000 and the unaudited consolidated financial statements of
Northrop Grumman contained in its Quarterly Report on Form 10-Q for the nine
months ended September 30, 2001, which are incorporated by reference in this
information statement/prospectus, (b) the audited consolidated financial
statements of Litton contained in its Annual Report on Form 10-K for the fiscal
year ended July 31, 2000 and the unaudited consolidated financial statements of
Litton contained in its Quarterly Report on Form 10-Q for the period ended
January 31, 2001, which are incorporated by reference in this information
statement/prospectus, and (c) the audited consolidated financial statements of
Newport News contained in its Annual Report on Form 10-K for the year ended
December 31, 2000 and the unaudited consolidated financial statements of
Newport News contained in its Quarterly Report on Form 10-Q for the quarter
ended September 16, 2001, which are incorporated by reference in this
information statement/prospectus. In addition, the audited consolidated
financial statements contained in Litton's Annual Report on Form 10-K for the
fiscal year ended July 31, 2000 and the unaudited consolidated financial
statements of Litton contained in Litton's Quarterly Report on Form 10-Q for
the period ended January 31, 2001 have been used to bring the financial
reporting periods of Litton to within 90 days of those of Northrop Systems and
Northrop Grumman.

The final determination and allocation of the purchase price paid for the
Litton and Newport News acquisitions may differ from the amounts assumed in
this Unaudited Pro Forma Condensed Combined Financial Data.

The acquisition of Litton, which is valued at approximately $5.2 billion,
including the assumption of Litton's net debt of $1.3 billion, is accounted for
using the purchase method of accounting. Under the purchase method of
accounting, the purchase price is allocated to the underlying tangible and
intangible assets acquired and liabilities assumed based on their respective
fair market values, with the excess recorded as goodwill. The Unaudited Pro
Forma Condensed Combined Financial Data reflects preliminary estimates of the
fair market value of the Litton assets acquired and liabilities assumed and the
related allocations of purchase price, and preliminary estimates of adjustments
necessary to conform Litton data to Northrop Grumman's accounting policies. The
Unaudited Pro Forma Condensed Combined Financial Data do not include the
recognition of liabilities associated with certain potential restructuring
activities. Northrop Grumman is currently reviewing the preliminary estimates
of the fair market value of the Litton assets acquired and liabilities assumed,
including valuations associated with certain contracts and preliminary
valuation study results for intangible assets, property, plant and equipment,
and retiree benefits assets and liabilities. Northrop Grumman also is
evaluating several possible restructuring activities of Litton operations. The
final determination of the fair market value of assets acquired and liabilities
assumed and final allocation of the purchase price may differ from the amounts
assumed in the Unaudited Pro Forma Condensed Combined Financial Data.
Adjustments to the purchase price allocations are expected to be finalized by
December 31, 2001, and will be reflected in future Northrop Grumman filings.
There can be no assurance that such adjustments will not be material.

As of the date of this information statement/prospectus, Northrop Grumman
has not completed the valuation studies necessary to arrive at the required
estimates of the fair market value of the Newport News assets to be acquired
pursuant to the merger and the Newport News liabilities to be assumed and the
related allocations of purchase price, nor has it identified the adjustments
necessary, if any, to conform Newport News data to Northrop Grumman's
accounting policies. Accordingly, Northrop Grumman has used the historical book
values of the assets and liabilities of Newport News and has used the
historical revenue recognition policies of Newport News to prepare the
Unaudited Pro Forma Condensed Combined Financial Statements, with the excess of
the purchase price over the historical net assets of Newport News recorded as
goodwill and other purchased intangibles. Once Northrop Grumman has completed
the valuation studies necessary to finalize the required purchase price
allocations and identified any necessary conforming changes, such pro forma
financial statements will be subject to adjustment. Such adjustments will
likely result in changes to the pro forma statement of financial position to
reflect the final allocations of purchase price and the pro forma statements of
income, and there can be no assurance that such adjustments will not be
material.

The Unaudited Pro Forma Condensed Combined Financial Data is provided for
illustrative purposes only and does not purport to represent what the actual
consolidated results of operations or the consolidated financial position of
Northrop Grumman would have been had the offer and the Litton and Newport News
acquisitions occurred on the dates assumed, nor is it necessarily indicative of
future consolidated results of operations or financial position.

The Unaudited Pro Forma Condensed Combined Financial Data does not include
the realization of cost savings from operating efficiencies, synergies or other
restructurings resulting from the Litton and Newport News acquisitions, except
for preliminary estimates of costs to consolidate the Litton and Northrop
Grumman corporate offices.

The Unaudited Pro Forma Condensed Combined Financial Data should be read in
conjunction with the separate historical consolidated financial statements and
accompanying notes of Northrop Systems, Northrop Grumman, Litton and Newport
News that are incorporated by reference in this information
statement/prospectus and the Unaudited Pro Forma Condensed Combined Financial
Statements.

Northrop Northrop
Grumman/ Grumman/
Litton/ Litton/
Newport Newport
News Northrop Grumman News - Northrop Grumman
Pro Forma Historical Data Pro Forma Historical Data
--------- ------------------- ------------ - ----------------------------------

Nine Months Ended September 30, Year Ended Year Ended December 31,
------------------------------- December 31, - ----------------------------------
2000 2001 2000 2000 2000 1999 1998 1997 1996
--------- ------- ------ ------------ - ------ ------ ------ ------ ------
(in millions, except per share data)

Operating Data:
Net sales....................... $12,220 $ 9,254 $5,389 $15,255 $7,618 $7,616 $7,367 $7,798 $7,667
Income from continuing
operations, net of tax......... 338 296 481 702 625 474 193 318 330
Basic earnings per share, from
continuing operations.......... 3.14 3.53 6.86 6.76 8.86 6.84 2.82 4.76 5.27
Diluted earnings per share, from
continuing operations.......... 3.11 3.50 6.84 6.73 8.82 6.80 2.78 4.67 5.18
Cash dividends per common
share.......................... 1.20 1.20 1.20 1.60 1.60 1.60 1.60 1.60 1.60
Balance Sheet Data:
Total assets.................... $20,790 $17,214 $9,354 N/A $9,622 $9,285 $9,536 $9,677 $9,645
Total long-term obligations..... 9,011 7,636 3,111 N/A 3,015 3,564 4,319 4,339 4,694
Redeemable preferred stock...... 350 350 -- N/A -- -- -- -- --

SELECTED HISTORIAL FINANCIAL DATA OF NEWPORT NEWS

The following is a summary of selected consolidated financial data of
Newport News for each of the years in the five-year period ended December 31,
2000 and the nine months ended September 16, 2001 and September 17, 2000. The
operating results for the nine months ended September 16, 2001 are not
necessarily indicative of results for the full fiscal year ended December 31,
2001. This information is derived from the audited consolidated financial
statements of Newport News contained in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, the unaudited consolidated financial
statements of Newport News contained in its Quarterly reports on Form 10-Q for
the periods ended September 16, 2001 and September 17, 2000, and is qualified
in its entirety by such documents. See "Where You Can Find More Information."
You should read this summary together with the financial statements which are
incorporated by reference in this information statement/prospectus and their
accompanying notes and in conjunction with managements' discussion and analysis
of operations and financial conditions of Newport News contained in such
reports.

Nine Months Ended Year Ended December 31,
--------------------------- -----------------------------------
September 16, September 17,
2001 2000 2000 1999 1998 1997 1996
------------- ------------- ------ ------ ------ ------ ------
(in millions, except per share data)

Operating Data:
Revenues............................... $1,639 $1,494 $2,072 $1,863 $1,862 $1,707 $1,870
Net earnings (loss).................... 72 66 90 97 66 (48) 55
Net earnings (loss) per common share,
basic................................. 2.43 2.12 2.91 2.83 1.91 (1.39) 1.60
Net earnings (loss) per common share,
diluted............................... 2.29 2.03 2.77 2.72 1.85 (1.39) 1.60
Cash dividends declared per share (a).. .12 .12 .16 .16 .16 .16 N/A

Balance Sheet Data:
Total assets........................... $1,638 $1,506 $1,476 $1,512 $1,600 $1,515 $1,535
Long-term obligations.................. 432 508 498 525 591 548 596

--------
(a) Cash dividends declared per common share were four cents per share for each
quarter in 2000, 1999, 1998, and 1997. Since Newport News was a wholly
owned subsidiary prior to December 12, 1996, there are no comparable
results for prior periods.

COMPARATIVE PER SHARE INFORMATION

The following table summarizes unaudited per share information for Northrop
Systems, Northrop Grumman, Litton and Newport News on a historical, pro forma
combined and equivalent pro forma combined basis. The following information
should be read in conjunction with the audited consolidated financial
statements of Northrop Systems, Litton and Newport News, the unaudited interim
consolidated financial statements of Northrop Grumman, Litton and Newport News,
and the unaudited pro forma condensed combined financial information included
elsewhere or incorporated by reference in this information
statement/prospectus. The pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have occurred if the offer, the Newport News
merger and the Litton acquisition had been completed as of the beginning of the
respective periods presented, nor is it necessarily indicative of the future
operating results or financial position of the combined companies. The
historical book value per share is computed by dividing total stockholders'
equity by the number of common shares outstanding at the end of the period. The
pro forma per share earnings from continuing operations is computed by dividing
the pro forma income from continuing operations available to holders of common
stock by the pro forma weighted average number of shares outstanding. The pro
forma combined book value per share is computed by dividing total pro forma
stockholders' equity by the pro forma number of common shares outstanding at
the end of the period. Newport News equivalent pro forma combined per share
amounts are calculated by multiplying Northrop Grumman pro forma combined per
share amounts by 0.7193, the percentage of a share of Northrop Grumman common
stock that will be exchanged for each share of Newport News common stock. The
historical per share information of Litton and Newport News was derived from
their respective historical annual and quarterly financial statements and was
adjusted as necessary to bring the information to within 90 days of the dates
listed below.

Nine Months
Ended Year Ended
September 30, 2001 December 31, 2000
------------------ -----------------

Northrop Grumman and Northrop Systems--Historical
Historical per common share:
Income per basic share.................... $ 3.53 $ 8.86
Income per diluted share.................. 3.50 8.82
Dividends declared--Common................ 1.20 1.60
Dividends declared---Preferred............ 3.44 --
Book value per share...................... 61.57 54.38

Litton--Historical
Historical per common share:
Income per basic share.................... N/A $ 4.95
Income per diluted share.................. N/A 4.90
Dividends declared--Common................ N/A --
Dividends declared--Preferred............. N/A 2.00
Book value per share...................... N/A 35.24

Newport News--Historical*
Historical per common share:
Income per basic share.................... $ 2.43 $ 2.91
Income per diluted share.................. 2.29 2.77
Dividends declared--Common................ 0.12 0.16
Dividends declared--Preferred............. -- --
Book value per share...................... 10.29 8.69

Nine Months
Ended Year Ended
September 30, 2001 December 31, 2000
------------------ -----------------

Unaudited Pro Forma Combined
Unaudited pro forma per share of Northrop Grumman common stock:
Income per basic share...................................... $ 3.14 $6.76
Income per diluted share.................................... 3.11 6.73
Dividends declared--Common.................................. 1.20 1.60
Dividends declared--Preferred............................... 5.25 7.00
Book value per share........................................ 67.04 N/A

Unaudited Pro Forma Newport News Equivalents*
Unaudited pro forma per share of Newport News common stock:
Income per basic share...................................... $ 2.26 $4.86
Income per diluted share.................................... 2.24 4.84
Dividends declared--Common.................................. 0.86 1.15
Dividends declared--Preferred............................... 3.78 5.04
Book value per share........................................ 48.22 N/A

--------
* Nine month data for Newport News is for the nine-month period ended September
16, 2001.

COMPARATIVE MARKET DATA

Northrop Grumman's common stock trades on the New York Stock Exchange and on
the Pacific Stock Exchange under the symbol "NOC" and Newport News' common
stock trades on the New York Stock Exchange and on the Chicago Stock Exchange
under the symbol "NNS." The following table presents trading information for
Northrop Grumman and Newport News common stock on May 8, 2001 and December 14,
2001. May 8, 2001 was the last trading day before the announcement of Northrop
Grumman's intention to make an offer for Newport News shares and December 12,
2001 was the last practicable trading day prior to the filing date of this
information statement/prospectus. Newport News equivalent per share amounts are
calculated by multiplying Northrop Grumman per share amounts by 0.7193, the
exchange ratio of Northrop Grumman shares for each Newport News share. The
actual value of the shares of Northrop Grumman common stock a stockholder will
be entitled to receive following the merger may be higher or lower than the
prices set forth below. You should read the information presented below in
conjunction with "Comparative Per Share Market Price and Dividend Information."

Northrop Grumman Newport News Newport News
Common Stock Common Stock Equivalent Per Share
--------------------- --------------------- ---------------------
High Low Closing High Low Closing High Low Closing
------ ------ ------- ------ ------ ------- ------ ------ -------

May 8, 2001...... $92.46 $90.74 $91.50 $65.20 $64.93 $65.00 $66.51 $65.27 $65.82
December 12, 2001 $94.79 $93.61 $94.64 $68.31 $67.76 $68.20 $68.18 $67.33 $68.07

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The Unaudited Pro Forma Condensed Combined Financial Statements presented
below are derived from the historical consolidated financial statements of each
of Northrop Systems, Northrop Grumman, Litton and Newport News. The Unaudited
Pro Forma Condensed Combined Financial Statements are prepared using the
purchase method of accounting, with Northrop Grumman treated as the acquiror
and as if the Newport News and Litton acquisitions had been completed as of the
beginning of the periods presented for statements of operations purposes and as
if the Newport News acquisition had been completed on September 30, 2001 for
balance sheet purposes.

The Unaudited Pro Forma Condensed Combined Financial Statements are based
upon the historical financial statements of Northrop Systems, North Grumman,
Litton and Newport News adjusted to give effect to the Litton acquisition and
the Newport News acquisition. The pro forma adjustments are described in the
accompanying notes presented on the following pages. The pro forma financial
statements have been developed from (a) the audited consolidated financial
statements of Northrop Systems contained in its Annual Report on Form 10-K/A
for the year ended December 31, 2000 and the unaudited consolidated financial
statements of Northrop Grumman contained in its Quarterly Report on Form 10-Q
for the nine months ended September 30, 2001, which are incorporated by
reference in this information statement/prospectus, (b) the audited
consolidated financial statements of Litton contained in its Annual Report on
Form 10-K for the fiscal year ended July 31, 2000 and the unaudited
consolidated financial statements of Litton contained in its Quarterly Report
on Form 10-Q for the period ended January 31, 2001, which are incorporated by
reference in this information statement/prospectus, and (c) the audited
consolidated financial statements of Newport News contained in its Annual
Report on Form 10-K for the year ended December 31, 2000 and the unaudited
consolidated financial statements of Newport News contained in its Quarterly
Report on Form 10-Q for the quarter ended September 16, 2001, which are
incorporated by reference in this information statement/prospectus. In
addition, the audited consolidated financial statements of Litton contained in
its Annual Report on Form 10-K for the fiscal year ended July 31, 2000 and the
unaudited consolidated financial statements of Litton contained in its
Quarterly Report on Form 10-Q for the period ended January 31, 2001 have been
used to bring the financial reporting periods of Litton to within 90 days of
those of Northrop Systems and Northrop Grumman.

The final determination and allocation of the purchase price paid for the
Litton and Newport News acquisitions may differ from the amounts assumed in
these Unaudited Pro Forma Condensed Combined Financial Statements.

The acquisition of Litton, which is valued at approximately $5.2 billion,
including the assumption of Litton's net debt of $1.3 billion, is accounted for
using the purchase method of accounting. Under the purchase method of
accounting, the purchase price is allocated to the underlying tangible and
intangible assets acquired and liabilities assumed based on their respective
fair market values, with the excess recorded as goodwill. The Unaudited Pro
Forma Condensed Combined Financial Statements reflect preliminary estimates of
the fair market value of the Litton assets acquired and liabilities assumed and
the related allocations of purchase price, and preliminary estimates of
adjustments necessary to conform Litton data to Northrop Grumman's accounting
policies. The Unaudited Pro Forma Condensed Combined Financial Statements do
not include the recognition of liabilities associated with certain potential
restructuring activities. Northrop Grumman is currently reviewing the
preliminary estimates of the fair market value of the Litton assets acquired
and liabilities assumed, including valuations associated with certain contracts
and preliminary valuation study results for intangible assets, property, plant
and equipment, and retiree benefits assets and liabilities. Northrop Grumman
also is evaluating several possible restructuring activities of Litton
operations. The final determination of the fair market value of assets acquired
and liabilities assumed and final allocation of the purchase price may differ
from the amounts assumed in these Unaudited Pro Forma Condensed Combined
Financial Statements. Adjustments to the purchase price allocations are
expected to be finalized by December 31, 2001, and will be reflected in future
Northrop Grumman filings. There can be no assurance that such adjustments will
not be material.

assumed in the merger and the Newport News liabilities to be assumed in the
merger and the related allocations of purchase price, nor has it identified the
adjustments necessary, if any, to conform Newport News data to Northrop
Grumman's accounting policies. Accordingly, Northrop Grumman has used the
historical book values of the assets and liabilities of Newport News and has
used the historical revenue recognition policies of Newport News to prepare the
Unaudited Pro Forma Condensed Combined Financial Statements set forth herein,
with the excess of the purchase price over the historical net assets of Newport
News recorded as goodwill and other purchased intangibles. Once Northrop
Grumman has completed the valuation studies necessary to finalize the required
purchase price allocations and identified any necessary conforming changes,
such pro forma financial statements will be subject to adjustment. Such
adjustments will likely result in changes to the pro forma statement of
financial position to reflect the final allocations of purchase price and the
pro forma statements of income, and there can be no assurance that such
adjustments will not be material.

The Unaudited Pro Forma Condensed Combined Financial Statements are provided
for illustrative purposes only and do not purport to represent what the actual
consolidated results of operations or the consolidated financial position of
Northrop Grumman would have been had the offer and the Litton and Newport News
acquisitions occurred on the dates assumed, nor is it necessarily indicative of
future consolidated results of operations or financial position.

The Unaudited Pro Forma Condensed Combined Financial Statements do not
include the realization of cost savings from operating efficiencies, synergies
or other restructurings resulting from the Litton and Newport News
acquisitions, except for preliminary estimates of costs to consolidate the
Litton and Northrop Grumman corporate offices.

The Unaudited Pro Forma Condensed Combined Financial Statements should be
read in conjunction with the separate historical consolidated financial
statements and accompanying notes of Northrop Systems, Northrop Grumman, Litton
and Newport News that are incorporated by reference in this information
statement/prospectus.

Unaudited Pro Forma Condensed Combined Statement of Financial Position

September 30, 2001 ($ in millions)

Pro Forma
Northrop Newport --------------------
Grumman News Adjustments Combined
-------- ------- ----------- --------

Assets:
Current assets
Cash and cash equivalents............................. $ 310 $ 66 $ -- $ 376
Accounts receivable................................... 2,297 131 -- 2,428
Inventoried costs..................................... 1,222 409 -- 1,631
Deferred income taxes................................. 35 110 -- 145
Prepaid expenses and other current assets............. 140 19 -- 159
------- ------ ------ -------
Total current assets.................................. 4,004 735 -- 4,739
------- ------ ------ -------
Property, plant and equipment............................ 3,297 1,616 -- 4,913
Accumulated depreciation................................. (1,211) (950) -- (2,161)
------- ------ ------ -------
Property, plant and equipment, net....................... 2,086 666 -- 2,752
------- ------ ------ -------
Other assets
Goodwill and other purchased intangibles, net......... 7,956 -- 1,938(a) 9,894
Prepaid retiree benefits costs and intangible pension
asset............................................... 2,773 -- -- 2,773
Other assets.......................................... 395 237 -- 632
------- ------ ------ -------
11,124 237 1,938 13,299
------- ------ ------ -------
$17,214 $1,638 $1,938 $20,790
======= ====== ====== =======
Liabilities and Shareholders' Equity:
Current liabilities
Notes payable and current portion of long-term debt... $ 134 $ 46 $ -- $ 180
Accounts payable...................................... 757 87 -- 844
Accrued employees' compensation....................... 629 -- -- 629
Advances on contracts................................. 837 -- -- 837
Income taxes.......................................... 373 -- -- 373
Other current liabilities............................. 1,223 484 -- 1,707
------- ------ ------ -------
Total current liabilities............................. 3,953 617 -- 4,570
------- ------ ------ -------
Long-term debt........................................... 5,185 432 658(a) 6,275
Accrued retiree benefits................................. 1,478 -- -- 1,478
Deferred tax and other long-term liabilities............. 973 285 -- 1,258
Redeemable preferred stock............................... 350 -- -- 350
Shareholders' equity
Paid in capital and unearned compensation............. 2,366 452 1,132(a) 3,950
Retained earnings..................................... 2,928 236 (236)(a) 2,928
Accumulated other comprehensive loss.................. (19) -- -- (19)
Stock Employee Compensation Trust..................... -- (384) 384(a) --
------- ------ ------ -------
5,275 304 1,280 6,859
------- ------ ------ -------
$17,214 $1,638 $1,938 $20,790
======= ====== ====== =======

Unaudited Pro Forma Condensed Combined
Statement of Income

Year Ended December 31, 2000
($ in millions, except per share)

Pro Forma Pro Forma
Northrop ------------------------- Newport -----------------------
Grumman Litton Adjustments Combined News Adjustments Combined
-------- ------ ----------- -------- ------- ----------- --------

Sales and service revenues.............. $7,618 $5,626 $ (61)(b) $13,183 $2,072 $ -- $15,255
Cost of sales
Operating costs...................... 5,446 4,669 88(b)(c)(d) 10,203 1,870 (252)(h)(j) 11,821
Administrative and general
expenses............................ 1,074 491 -- 1,565 -- 271(j) 1,836
------ ------ ----- ------- ------ ----- -------
Operating margin........................ 1,098 466 (149) 1,415 202 (19) 1,598
Interest expense........................ (175) (105) (191)(e) (471) (53) (22)(i) (546)
Other, net.............................. 52 16 -- 68 4 -- 72
------ ------ ----- ------- ------ ----- -------
Income from continuing operations before
income taxes........................... 975 377 (340) 1,012 153 (41) 1,124
Federal and foreign income taxes........ 350 151 (119)(f) 382 63 (23)(f)(j) 422
------ ------ ----- ------- ------ ----- -------
Income from continuing operations....... $ 625 $ 226 $(221) $ 630 $ 90 $ (18) $ 702
====== ====== ===== ======= ====== ===== =======
Less, dividends paid to preferred
shareholders........................... -- -- (25)(g) (25) -- -- (25)
------ ------ ----- ------- ------ ----- -------
Income available to common
shareholders.......................... $ 625 $ 226 $(246) $ 605 $ 90 $ (18) $ 677
====== ====== ===== ======= ====== ===== =======
Average shares basic.................... 70.58 83.58 100.22
Average shares diluted.................. 70.88 84.00 100.64
Basic earnings per share:
Continuing operations................ $ 8.86 $ 7.24 $ 6.76
Diluted earnings per share:
Continuing operations................ $ 8.82 $ 7.20** $ 6.73**

--------
** Calculated by dividing income available to common stockholders by average
shares diluted, which is calculated assuming preferred shares are not
converted to common shares, resulting in the most dilutive effect.

Unaudited Pro Forma Condensed Combined Statement of Income Nine Months Ended
September 30, 2001 ($ in millions, except per share)

Pro Forma Pro Forma
------------------------- -----------------------
Northrop Newport
Grumman Litton Adjustments Combined News Adjustments Combined
- -------- ------ ----------- -------- ------- ----------- --------

Sales and service revenues............ $9,254 $1,345 $ (18)(b) $10,581 $1,639 $ -- $12,220
Cost of sales
Operating costs...................... 7,656 1,120 19(b)(c)(d) 8,795 1,481 (140)(h)(j) 10,136
Administrative and general expenses. 908 121 -- 1,029 -- 153(j) 1,182
------ ------ ----- ------- ------ ----- -------
Operating margin...................... 690 104 (37) 757 158 (13) 902
Interest expense...................... (269) (27) (64)(e) (360) (37) (17)(i) (414)
Other, net............................ 64 3 -- 67 (1) -- 66
------ ------ ----- ------- ------ ----- -------
Income from continuing operations
before income taxes.................. 485 80 (101) 464 120 (30) 554
Federal and foreign income taxes...... 189 30 (35)(f) 184 48 (16)(f)(j) 216
------ ------ ----- ------- ------ ----- -------
Income from continuing operations..... $ 296 $ 50 $ (66) $ 280 $ 72 $ (14) $ 338
====== ====== ===== ======= ====== ===== =======
Less, dividends paid to preferred
shareholders......................... (12) -- (6)(g) (18) -- -- (18)
------ ------ ----- ------- ------ ----- -------
Income available to common
shareholders......................... $ 284 $ 50 $ (72) $ 262 $ 72 $ (14) $ 320
====== ====== ===== ======= ====== ===== =======
Average shares basic.................. 80.34 85.32 101.96
Average shares diluted................ 81.03 86.11 102.75
Basic earnings per share:
Continuing operations.............. $ 3.53 $ 3.07 $ 3.14
Diluted earnings per share:
Continuing operations.............. $ 3.50** $ 3.04** $ 3.11**

Notes To Pro Forma Condensed Combined Financial Statements (Unaudited)

(a) Adjustments to (i) eliminate the equity of Newport News, (ii) record
issuance of common stock, (iii) record debt financing for the Newport News
acquisition along with additional acquisition related costs, (iv) record
the repayment of the Stock Employee Compensation Trust's indebtedness to
Newport News, and (v) record goodwill and other purchased intangibles.

The amount of the purchase price allocated to goodwill and other purchased
intangibles is subject to change and is calculated using a stock value of
$95.22 for the 16,636,885 Northrop Grumman shares to be exchanged in the
offer and merger, which is the average of the Northrop Grumman closing
stock prices from December 3, 2001 through December 7, 2001.

(b) Adjustment to eliminate intercompany sales and cost of sales transactions
between Northrop Grumman and Litton.

(c) Adjustment to amortize the preliminary estimate of goodwill and other
purchased intangible assets arising out of the acquisition of Litton over
an estimated weighted average life of 26 years on a straight line basis.

(d) Adjustment to record preliminary depreciation of property, plant and
equipment and amortization of capitalized software arising out of the
acquisition of Litton.

(e) Adjustment to record interest expense and the amortization of debt issuance
costs on new financing for the acquisition of Litton at a weighted average
rate of 6.8 and 7.5 percent for the nine months ended September 30, 2001
and the year ended December 31, 2000, respectively.

(f) Adjustment to record income tax effects on pre-tax pro forma adjustments,
using a statutory tax rate of thirty-five percent.

(g) Adjusted, pro rata, for dividends to preferred stockholders using a $7 per
share dividend rate for redeemable preferred stock issued in the
acquisition of Litton.

(h) Adjustment to amortize purchased intangible assets arising out of the
Newport News acquisition over an estimated life of 30 years on a straight
line basis.

(i) Adjustment to record interest on debt financing for the Newport News
acquisition at the current rate of 3.4 percent as of October 26, 2001.

(j) Adjustment to conform Newport News data to classifications utilized by
Northrop Grumman.

INFORMATION ABOUT THE COMPANIES

Northrop Grumman Corporation

Northrop Grumman is a leading global aerospace and defense company providing
products and services in defense and commercial electronics, systems
integration, information technology and non-nuclear shipbuilding and systems.
As a prime contractor, principal subcontractor, partner or preferred supplier,
Northrop Grumman participates in many high-priority defense and commercial
technology programs in the United States and abroad. Northrop Grumman is a
holding company formed in connection with the acquisition of Litton Industries,
Inc. in April 2001.

Northrop Grumman Corporation is aligned into five business sectors as
follows:

Integrated Systems. This sector includes the design, development and
production of airborne early warning, electronic warfare and surveillance and
battlefield management systems. Integrated Systems is the prime contractor for
the Joint STARS advanced airborne targeting and battle management system, the
U.S. Air Force's B-2 Spirit stealth bomber, unmanned vehicles including The
Global Hawk, and the EA-6B Prowler electronic countermeasures aircraft, and is
upgrading the E-2C Hawkeye early warning aircraft. Integrated Systems also has
a principal role in producing the U.S. Navy's F/A18 Hornet strike fighter.

Electronic Systems. This sector includes the design, development,
manufacture and integration of a wide variety of defense electronics and
systems, airspace management systems, precision weapons, marine systems,
logistics systems, space systems, and automation and information systems.
Significant programs include fire control radars for the F-16 and F-22 fighter
aircraft and the Longbow Apache helicopter, the AWACS airborne early warning
radar, the Joint STARS air-to-ground surveillance radar sensor, the Longbow
Hellfire missile and the BAT "brilliant" anti-armor submunition. This sector
also provides tactical military radars and country-wide air defense systems,
plus airborne electronic countermeasures systems intended to jam enemy aircraft
and weapons systems. The sector includes the advanced electronics businesses,
which design, develop and manufacture inertial navigation, guidance and
control, IFF (identification friend or foe), and marine electronic systems, and
provide electronic warfare systems and integrated avionics systems and
shipboard information and communication systems. The U.S. Government is a
significant customer.

Information Technology. This sector includes the design, development,
operation and support of computer systems for scientific and management
information. Information Technology has extensive expertise in command,
control, communications, computers, intelligence, surveillance and
reconnaissance (C4ISR). It is a key management support element for major
weapons systems, such as the U.S. Navy's AEGIS class destroyer and also
provides mission planning for the U.S. Navy, Air Force and Special Operations
Command. Information Technology provides base operations support for NASA's
Kennedy Space Center, Cape Canaveral Air Station and Patrick Air Force Base,
among others. In addition, Information Technology provides information
technology services to commercial customers and to the other Northrop Grumman
sectors. Information Technology includes the information systems businesses,
which design, develop, integrate and support computer-based information systems
and provide information technology and services primarily for government
customers.

Ship Systems. This sector is engaged in the building of large multimission
non-nuclear surface ships for the U.S. Navy as well as for other government and
commercial customers worldwide and is a provider of overhaul, repair,
modernization, ship design and engineering services. The U.S. Government is a
significant customer.

Component Technologies. This sector includes international suppliers of
complex backplanes, connectors, laser crystals, solder materials, specialty
products and other electronic components used primarily in the
telecommunications, industrial and computer markets.

The principal executive offices of Northrop Grumman, Northrop Systems and
Litton are located at 1840 Century Park East, Los Angeles, California 90067 and
their telephone number is (310) 553-6262.

Additional information concerning Northrop Grumman is included in the
Northrop Grumman reports incorporated by reference in this information
statement/prospectus. See "Where You Can Find More Information."

Newport News

Newport News is the largest non-government-owned shipyard in the U.S., as
measured by each of revenues, size of facilities, and number of employees. Its
primary business is the design, construction, repair, maintenance, overhaul,
life-cycle support and refueling of nuclear-powered aircraft carriers and the
design, life-cycle support and construction of nuclear powered submarines for
the U.S. Navy. Newport News disclosed in its Annual Report on Form 10-K for the
year ended December 31, 2000 that it believes it was, at that time:

. the only shipyard capable of building the U.S. Navy's nuclear-powered
aircraft carriers;

. the only non-government-owned shipyard capable of refueling and
overhauling the U.S. Navy's nuclear-powered aircraft carriers; and

. one of only two shipyards capable of building the U.S. Navy's
nuclear-powered submarines.

U.S. Navy contracts for aircraft carrier and submarine construction and
aircraft carrier refuelings and overhauls have generated the majority of
Newport News' revenues in recent years. Overall, Newport News' U.S. Navy
business accounted for approximately 98% of its revenues for 2000 and 1999, and
92% for 1998. Newport News has built 10 of the 12 active aircraft carriers in
the U.S. fleet, including all nine nuclear-powered aircraft carriers. For the
last 40 years, Newport News has been the sole designer and builder of the U.S.
Navy's aircraft carriers.

The principal office of Newport News is located at 4101 Washington Avenue,
Newport News, Virginia, 23607, telephone number (757) 380-2000.

Additional information concerning Newport News is included in the Newport
News reports incorporated by reference in this information statement
prospectus. See "Where You Can Find More Information."

THE SPECIAL MEETING
Time, Place, Date

This information statement/prospectus is being furnished to the holders of
outstanding shares of Newport News common stock in connection with the special
meeting to be held on January 18, 2002, at 9:00 a.m., local time, at the
offices of Fried, Frank, Harris, Shriver & Jacobson at 350 South Grand Avenue,
Los Angeles, CA 90071, including any adjournments or postponements.

Purpose of the Special Meeting

At the special meeting, stockholders of Newport News will consider and vote
upon a proposal to adopt the merger agreement, dated as of November 7, 2001,
among Newport News, Northrop Grumman and Purchaser Corp. I pursuant to which
Newport News will be merged with and into Purchaser Corp. I with Purchaser
Corp. I as the surviving corporation at and after the effective time of the
merger. The merger agreement is incorporated by reference to this information
statement/prospectus as Annex C. Stockholders will also consider such other
business as may properly come before the meeting.

Record Date; Quorum; Outstanding Shares Entitled to Vote

The record date for the special meeting has been fixed as the close of
business on December 5, 2001. Only holders of record of shares on the record
date are entitled to vote at the special meeting. Holders of shares on the
record date are entitled to one vote on matters properly presented at the
special meeting for each share held.

On the record date, there were 32,522,528 shares outstanding. The
outstanding shares were held of record by approximately 29,164 registered
holders. The presence in person of holders of a majority of the shares entitled
to vote will constitute a quorum for the transaction of business at the special
meeting. Because the shares owned by Northrop Grumman and its affiliates will
be represented at the special meeting, a quorum will be present, even if no
other stockholders are present.

Vote Required

Pursuant to Delaware law, the merger agreement must be adopted by the
affirmative vote of the holders of a majority of the total number of
outstanding shares. Abstentions of shares that are present at the special
meeting and broker non-votes will each have the same effect as a vote against
adoption of the merger agreement. Pursuant to the merger agreement, Northrop
Grumman and its affiliates are required to vote their shares for adoption of
the merger agreement. As of the record date, Northrop Grumman and its
affiliates beneficially owned 26,241,019 shares (approximately 80.7% of all
outstanding shares). Because the approval of the holders of a majority of all
outstanding shares is sufficient to adopt the merger agreement, Northrop
Grumman can cause the merger to occur without the affirmative vote of any other
stockholder. You are not being asked for a proxy and you are requested not to
send one. If you wish to vote your shares, you may do so only by attending the
special meeting in person.

Newport News stockholders may be able to exercise appraisal rights in
connection with the merger. See "Appraisal Rights."

Surrender of Certificates and Payment Procedures

A letter of election and transmittal and instructions for effecting the
surrender of your Newport News stock certificates is enclosed with this
information statement/prospectus. Upon surrender to Mellon Investor Services,
the exchange agent, of a certificate representing a share of Newport News
common stock, together with a duly completed and validly executed letter of
election and transmittal and such other documents as may reasonably be required
by the exchange agent, the holder of such certificate shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Northrop Grumman common stock or $67.50 per share

net in cash into which their shares of Newport News common stock were converted
into the right to receive, pursuant to the merger agreement, and the
certificates so surrendered will be canceled.

No dividends or other distributions declared after the effective time of the
merger on Northrop Grumman common stock will be paid in respect of any Newport
News common stock formerly represented by a certificate until such certificate
is surrendered for exchange. Following surrender of any such certificate, the
holder of the certificates representing whole Northrop Grumman common stock
issued in exchange will be paid, without interest, (1) at the time of the
surrender, the amount of dividends or other distributions with a record date
after the effective time of the merger, payable with respect to the whole
Northrop Grumman common stock and not paid, less the amount of any withholding
taxes which may be required, and (2) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
effective time of the merger but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole Northrop Grumman
common stock, less the amount of any withholding taxes which may be required.

You should send your share certificates and the enclosed letter of election
and transmittal to the exchange agent now. Share certificates should be sent to
the exchange agent only pursuant to instructions set forth in the enclosed
letter of election and transmittal which is included with this information
statement/prospectus. In all cases, the merger consideration will be provided
only in accordance with the procedures set forth in this information
statement/prospectus and the letter of election and transmittal. Stockholders
will have until January 18, 2002 to elect the right to receive either cash or
stock pursuant to the merger. After January 18, 2002, stockholders will be able
to exchange their shares but will not be able to elect the form of
consideration that they will receive. Rather, you will receive the underelected
form of consideration (or a proportionate share of each form of consideration
if neither is oversubscribed). See "The Merger Consideration" below. If
appraisal rights are available and you intend to demand appraisal of your
shares, do not surrender your stock certificates. If appraisal rights are
available and you do surrender your stock certificates, you may be disqualified
from being entitled to have your shares appraised under Section 262.

Each share of Newport News common stock which has not been exchanged or
accepted for exchange in the offer will be converted pursuant to the merger
into the right to receive the same consideration as was paid in the offer.

Any questions concerning the exchange procedures and requests for letters of
election and transmittal may be addressed to the information agent, D.F. King &
Co., Inc., at 1-800-758-5378 (toll free).

The Merger Consideration

Under the terms of the merger agreement, Northrop Grumman will exchange a
combination of cash and newly issued Northrop Grumman common stock for all
Newport News shares outstanding at the time the merger is complete.

Election Right. Each Newport News stockholder may elect for Newport News
shares exchanged by him or her, either $67.50 in cash, without interest, or
0.7193 shares of Northrop Grumman common stock (subject to the election and
proration procedures and limitations described below). The exchange ratio for
the merger is the same as it was for the offer, regardless of the Northrop
Grumman stock price at the time of completion of the merger.

The offer was completed on November 29, 2001. Prior to the completion of the
offer, Northrop Grumman stated that, pursuant to the merger agreement, it would
issue 16,636,885 shares of its common stock in the offer and merger. Northrop
Grumman issued 13,424,062 shares in the offer, which leaves 3,212,823 shares
remaining to be issued pursuant to the merger. Prior to the expiration of the
offer, Northrop Grumman stated that it would pay $633,452,178 in cash for
Newport News shares in the offer and the merger. Northrop Grumman paid out
$511,581,719 in the offer, and now has $121,870,459 remaining to pay out
pursuant to the merger. Northrop Grumman will issue the remaining available
shares and will distribute the remaining available cash, subject to increase
for fractional shares.

Consequences of Over- and Under-Election. If Newport News stockholders elect
to receive cash in excess of the amount of cash available to be paid pursuant
to the merger, the amount of cash that Newport News stockholders will receive
for each Newport News share for which they made a cash election will be reduced
pro rata so the total amount of cash that Northrop Grumman will pay to all
Newport News stockholders pursuant to the merger will equal the amount of
remaining cash available. If this reduction occurs, in addition to the reduced
amount of cash, Northrop Grumman will issue, in respect of each Newport News
share for which a cash election was made, shares of Northrop Grumman common
stock in lieu of the cash the Newport News stockholder would have otherwise
received. The number of shares of Northrop Grumman common stock Northrop
Grumman will issue for each Newport News share subject to a cash election in
this situation will be calculated by multiplying 0.7193 by the percentage
reduction in the cash consideration paid to Newport News stockholders making
cash elections. If Newport News stockholders elect to receive pursuant to the
merger shares of Northrop Grumman common stock in excess of the amount of
remaining shares available, the number of shares of Northrop Grumman common
stock Newport News stockholders will receive for each Newport News share for
which they made a share election will be reduced pro rata so that the total
number of shares that Northrop Grumman will issue to all Newport News
stockholders pursuant to the merger will equal the amount of remaining shares
available. If this reduction occurs, in addition to the reduced number of
Northrop Grumman shares, Northrop Grumman will pay, in respect of each Newport
News share for which a share election was made, cash in lieu of the Northrop
Grumman shares that the Newport News stockholder would have otherwise received.
The amount of cash to be paid for each Newport News share subject to a share
election in this situation will be calculated by multiplying $67.50 by the
percentage reduction in Northrop Grumman shares issued to Newport News
stockholders making share elections. In the case of an over-election for either
cash or Northrop Grumman shares, those Newport News stockholders who fail to
make a valid election with respect to their shares will receive the
under-elected form of consideration for those shares. Therefore, you are
encouraged to make a valid election with respect to all of your shares. If all
Newport News stockholders together make valid cash elections for less than the
amount of remaining cash available and valid share elections for fewer than all
the amount of remaining shares available, all of the remaining cash and
Northrop Grumman shares that will be paid and issued pursuant to the merger
will be allocated pro rata among the holders of non-electing shares. This means
that, under these circumstances, non-electing stockholders would receive both
cash and Northrop Grumman shares for their Newport News shares.

Cash Instead of Fractional Shares of Northrop Grumman Common Stock

Northrop Grumman will not issue certificates representing fractional shares
of Northrop Grumman common stock pursuant to the merger. Instead, each
stockholder who would otherwise be entitled to a fractional share of Northrop
Grumman common stock will receive an amount of cash equal to the amount of such
fractional share multipled by $93.84 (which is the Parent Stock Value, as
defined in the merger agreement).

APPRAISAL RIGHTS

Stockholders of Newport News may be entitled to appraisal rights under
Section 262 of the General Corporation Law of the State of Delaware as to
shares owned by them. A Newport News stockholder will not be entitled to demand
appraisal of their shares in connection with the merger unless (x) that Newport
News stockholder elects to receive shares of Northrop Grumman common stock
pursuant to the merger and receive, in whole or in part, cash (other than cash
in lieu of fractional shares) or (y) that Newport News stockholder does not
make an election as to the form of consideration to be received and receives,
in whole or in part, cash (other than cash in lieu of fractional shares). Set
forth below is a summary description of Section 262. Section 262 is reprinted
in its entirety as Annex A to this information statement/prospectus. All
references in Section 262 and in this summary to a "stockholder" are to the
record holder of the Newport shares as to which appraisal rights, if any, are
asserted. A person having a beneficial interest in Newport News shares that are
held of record in the name of another person, such as a broker or nominee, must
act promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect whatever appraisal rights, if any,
the beneficial owner may have. If appraisal rights are available and you intend
to demand appraisal of your shares, do not surrender your stock certificates.
If appraisal rights are available and you do surrender your stock certificates,
you may be disqualified from being entitled to have your shares appraised under
Section 262.

For more detail regarding appraisal rights, see Annex A. This summary and
Annex A should be reviewed carefully by any holder who wishes to exercise
statutory appraisal rights, if any, or who wishes to preserve the right to do
so because failure to comply strictly with the procedures set forth in this
summary and Annex A will result in the loss of appraisal rights, if any.

In accordance with Section 262, any stockholder may, before the vote at the
special meeting upon the proposal to adopt the merger agreement, demand in
writing from Newport News the appraisal of the fair value of the stockholder's
shares. The demand must reasonably inform Newport News of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
the stockholder's shares. A stockholder will lose appraisal rights, if any, if,
among other things,

. the written demand for appraisal of shares is not executed by the record
owner on the date of the demand of the shares for which appraisal is
sought (or a duly authorized agent of such record owner);

. the record owner fails to hold the shares continuously through the
effective time of the merger;

. the record owner does not properly demand an appraisal as summarized in
this paragraph and the following paragraphs (and more fully in Section
262);

. the shares for which appraisal is sought are voted in favor of the
proposal to adopt the merger agreement; or

. no petition for appraisal is filed with the Delaware Court of Chancery
within 120 days after the effective time of the merger.

A stockholder who elects to exercise appraisal rights, if any, must mail or
deliver such stockholder's written demand to Newport News at 4101 Washington
Avenue, Newport News, Virginia 23607, Attention: Charles Ream, Chief Financial
Officer. A demand for appraisal will not be effective if it is not actually
received by Newport News before the vote at the special meeting upon the
proposal to adopt the merger agreement. A vote against the merger agreement or
a failure to vote for the merger would not by itself constitute sufficient
notice of a stockholder's election to exercise appraisal rights, if any.

Only a stockholder of record on the date a demand for appraisal is made is
entitled to assert appraisal rights, if any, for shares registered in the name
of the stockholder. A demand for appraisal must be executed by or for the
stockholder of record, fully and correctly, as the stockholder's name appears
on the certificate or certificates representing his or her shares. If the
shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian, or custodian, the demand must be executed by the fiduciary. If the
shares are owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand must be executed by all joint owners.

An authorized agent, including an agent for two or more joint owners, may
execute the demand for appraisal for a stockholder of record; however, the
agent must identify the record owner and expressly disclose the fact that, in
exercising the demand, that person is acting as agent for the record owner.

If a person holds shares through a broker who in turn holds the shares
through a central depositary nominee, such as Cede & Co., a demand for
appraisal of the shares must be made by or on behalf of the depositary nominee
and must identify the depositary nominee as the holder of record.

A stockholder, such as a broker, a central depositary nominee, or other
stockholder who holds shares as a nominee for the benefit of others, may
exercise appraisal rights, if any, with respect to the shares held for all or
less than all beneficial owners of shares as to which the person is the record
owner. In this case, the written demand must set forth the number of shares
covered by the demand. Where the number of shares is not expressly stated, the
demand will be presumed to cover all shares outstanding in the name of the
record owner. Beneficial owners who are not record owners and who intend to
exercise appraisal rights, if any, should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights.

Within 120 days after the effective time of the merger, if appraisal rights
are available in connection with the merger, either the Surviving Corporation
or any stockholder of record who has complied with the required conditions of
Section 262 may file a petition in the Delaware Chancery Court demanding a
determination of the fair value of the Newport News shares of the dissenting
stockholders. If appraisal rights are available in connection with the merger,
a petition for an appraisal is timely filed and a copy thereof is served upon
the surviving corporation, the surviving corporation will then be obligated
within 20 days to file with the Delaware Register in Chancery a duly verified
list containing the names and addresses of all stockholders who have demanded
an appraisal of their shares and with whom agreements as to the value of their
shares have not been reached. After notice to such stockholders as required by
the court, the Delaware Chancery Court is empowered to conduct a hearing on
such petition to determine those stockholders who have complied with Section
262 and who have become entitled to appraisal rights thereunder. The Delaware
Chancery Court may require the stockholders who demanded payment for their
shares to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceeding; and if any
stockholder fails to comply with such direction, the Delaware Court of Chancery
may dismiss the proceedings as to such stockholder.

After determining the stockholders entitled to appraisal, the Delaware
Chancery Court will appraise the Newport News shares formerly owned by those
stockholders, determining the fair value of the shares, exclusive of any
element of value arising from the accomplishment or expectation of the merger,
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. In determining the fair value, the Delaware
Chancery Court is to take into account all relevant factors.

Stockholders considering seeking appraisal should note that the "fair value"
of their shares determined under Section 262 could be more than, the same as or
less than the merger consideration, and that opinions of investment banking
firms as to fairness, from a financial point of view, are not opinions as to
fair value under Section 262. The cost of the appraisal proceeding may be
determined by the Delaware Chancery Court and taxed against the parties as the
Delaware Chancery Court deems equitable in the circumstances. Upon application
of a dissenting stockholder, the Delaware Chancery Court may order that all or
a portion of the expenses incurred by any dissenting stockholder in connection
with the appraisal proceeding, including without limitation, reasonable
attorneys' fees and the fees and expenses of experts, be charged pro rata
against the value of all Newport News shares entitled to appraisal.

From and after the effective time of the merger, if appraisal rights are
available in connection with the merger, no stockholder who has duly demanded
appraisal in compliance with Section 262 will be entitled to vote for any
purpose the Newport News shares subject to that demand or to receive payment of
dividends or other distributions on the shares, except for dividends or
distributions payable to stockholders of record at a date prior to the
effective time of the merger.

At any time within 60 days after the effective time of the merger, any
stockholder shall have the right to withdraw their demand for appraisal and to
accept the terms offered in the merger agreement; after this period, a
stockholder may withdraw their demand for appraisal only with the consent of
the surviving corporation. If no petition for appraisal is filed with the
Delaware Court, within 120 days after the effective time of the merger,
stockholders' rights to appraisal, if any, shall cease, and all stockholders
who had previously demanded appraisal shall thereafter be entitled to receive
the merger consideration, without interest thereon, upon valid surrender of the
certificates that formerly represented their shares. Inasmuch as Newport News
has no obligation to file a petition, and has no present intention to do so,
any stockholder who desires a petition to be filed is advised to file it on a
timely basis. No petition timely filed in the Delaware Chancery Court demanding
appraisal shall be dismissed as to any stockholder without the approval of the
Delaware Chancery Court, and that approval may be conditioned upon terms as the
Delaware Chancery Court deems just.

FINANCIAL FORECASTS

During the course of discussions between representatives of Newport News and
Northrop Grumman representatives prior to entering into the merger agreement,
Newport News provided Northrop Grumman with certain projected financial data.
Newport News has advised Northrop Grumman that these projections reflect
numerous assumptions made by management of Newport News, including assumptions
with respect to the profitability of ship construction, refueling and
maintenance contracts with the U.S. Navy, the award of new contracts by the
Navy and the terms thereof, the markets for Newport News' other products and
services, the level of repurchases by Newport News of its outstanding shares,
the favorable resolution of pending contract disputes with Newport News'
customers, expected dividends from a venture in which Newport News has an
equity interest and favorable changes in working capital. The projections also
embodied assumptions regarding general business, economic, market and financial
conditions and other matters, including effective tax rates consistent with
historical levels for Newport News and interest rates and the anticipated
amount of borrowings by Newport News. Some of the projections also included
certain non-recurring earnings, principally from the assumed sale in the future
of certain assets which would result in one-time non-recurring gains.

The projections provided by Newport News, excluding non-recurring items,
forecast revenues increasing from $2.23 billion in 2001 to $2.76 billion in
2005, operating income increasing from $232 million in 2001 to $295 million in
2005, earnings before interest, taxes, depreciation and amortization increasing
from $286 million in 2001 to $345 million in 2005, and net income increasing
from $110 million in 2001 to $171 million in 2005.

The projections are forward-looking statements that are subject to
significant uncertainties and contingencies and based on assumptions, many of
which are beyond Newport News' control and none of which were subject to
approval by Northrop Grumman. See "Forward-Looking Statements May Prove
Inaccurate" in the section entitled "Risk Factors." In addition, they do not
necessarily represent the assumed performance by Newport News when it is
acquired by Northrop Grumman. Accordingly, there can be no assurance that the
assumptions made in preparing the projections will prove accurate. It is
expected that there will be differences between actual and projected results,
and actual results may be materially greater or less than those contained in
the projections.

In addition, these projections were not prepared in accordance with
generally accepted accounting principles, and neither Northrop Grumman's nor
Newport News' independent accountants have examined, compiled, or performed any
procedures with respect to, any of these projections or expressed any
conclusion or provided any other form of assurance with respect to these
projections and accordingly assume no responsibility for these projections, and
disclaim any association with these projections. These projections were
prepared with a limited degree of precision, and were not prepared with a view
to public disclosure or compliance with the published guidelines of the SEC or
the guidelines established by the American Institute of Certified Public
Accountants regarding projections, which would require a more complete
presentation of data than as shown above.

The inclusion of projections in this information statement/prospectus should
not be regarded as an indication that Northrop Grumman or any of their
respective affiliates or representatives considered or considers the
projections to be an accurate prediction of future events, and the projections
should not be relied upon as such. None of these persons assumes any
responsibility for the reasonableness, completeness, accuracy or reliability of
such projections. None of Northrop Grumman, Newport News or any of their
respective affiliates or representatives has made or makes any representation
to any person regarding the ultimate performance of Newport News compared to
the information contained in the projections, and none of these persons intends
to update or otherwise revise the projections to reflect circumstances existing
after the date when made or to reflect the occurrence of future events even in
the event that any or all of the assumptions underlying the projections are
shown to be in error. However, updated information will be provided to the
extent required by the federal securities laws.

THE MERGER

Background of the Offer and the Merger

On May 6, 1999, Litton proposed to acquire Newport News in a stock-for-stock
merger valued at $35.61 per Newport News share of common stock based on the May
6, 1999 closing price of $64.75 for Litton Industries common stock. Newport
News was unwilling to accept the Litton proposal and in July, 1999, Litton
withdrew its proposal.

On March 9, 2001, Kent Kresa, Chairman, President and Chief Executive
Officer of Northrop Grumman, called William Fricks, Chairman and Chief
Executive Officer of Newport News. Mr. Kresa advised Mr. Fricks that Northrop
Grumman was in the process of completing the Litton acquisition, and was
looking forward to working with Newport News in the shipbuilding industry. Mr.
Kresa referred to the fact that, in the past, Litton had been interested in,
and had in fact proposed, a possible acquisition of Newport News. Mr. Kresa
noted that while this was not the time to discuss a possible transaction with
Newport News, he looked forward to the possibility of having such discussions
on this topic in the future. Mr. Fricks acknowledged Mr. Kresa's comments and
stated that nothing in this regard was currently being considered.

On April 24, 2001, General Dynamics and Newport News announced that they had
entered into a merger agreement providing for an offer by General Dynamics to
acquire all of the issued and outstanding shares of Newport News common stock
for $67.50 in cash per share. The General Dynamics offer was subject to various
conditions including approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.

On May 4, 2001, General Dynamics commenced a cash tender offer pursuant to
the merger agreement for all of the shares of Newport News common stock and
mailed its offer to purchase and other tender offer materials to Newport News
stockholders.

On May 8, 2001, Mr. Kresa called Mr. Fricks and told him that Northrop
Grumman was disappointed to read about the proposed General Dynamics
transaction before having had a chance to discuss a possible Northrop
Grumman-Newport News transaction, and that Northrop Grumman would now be
sending Mr. Fricks a letter offering to acquire Newport News. Mr. Fricks
indicated that he would review the letter when it arrived.

On May 8, 2001, Northrop Grumman sent a letter to Newport News, setting
forth an offer by Northrop Grumman to acquire all outstanding shares of Newport
News common stock for common stock of Northrop Grumman and cash, valued at
$67.50 per Newport News share, requesting that the board of directors enter
into discussions with Northrop Grumman about its offer and stating that
Northrop Grumman expected to commence an exchange offer. On May 9, 2001,
Northrop Grumman issued a press release which attached a copy of the letter.

On May 9, 2001, Newport News issued a press release stating that it had
received the Northrop Grumman letter and that the "Newport News Board of
Directors will meet in due course to consider Northrop Grumman's proposed
exchange offer once the definitive terms of the offer have been made available."

On May 18, 2001, Northrop Grumman filed notification with the U.S.
Department of Justice and the Federal Trade Commission of its intention to
acquire Newport News, in compliance with the Premerger Notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

On May 23, 2001, Northrop Grumman commenced its offer.

On May 25, 2001, Northrop Grumman and General Dynamics received a request
from the Department of Justice for additional information under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to each
company's proposed acquisition of Newport News.

On June 5, 2001, Newport News' board of directors met and determined that it
was unable to take a position with respect to the Northrop Grumman offer until
Newport News further investigated the position of the U.S.

government. Newport News' board of directors also unanimously reaffirmed its
recommendation of the General Dynamics offer and advised Newport News
stockholders to tender their shares as part of the General Dynamics offer.

On June 15, 2001, Mr. Kresa sent a letter to Mr. Fricks, stating that
Northrop Grumman was disappointed to learn that the Newport News board of
directors decided not to take a position with regard to Northrop Grumman's
offer. Mr. Kresa requested access to the same information that Newport News
provided General Dynamics during the governmental review process. Mr. Kresa
reiterated his belief that there were substantial antitrust issues facing the
General Dynamics merger. This letter was filed as Exhibit (a)(5)(E) to Northrop
Grumman's amended Schedule TO, filed with the SEC on June 15, 2001. See "Where
You Can Find More Information."

On June 18, 2001, Northrop Grumman received a request from the Department of
Justice for additional information under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 regarding its proposed acquisition of Newport News.

General Dynamics and Northrop Grumman announced, on August 9, 2001 and on
August 10, 2001, respectively, that they had entered into an agreement with the
Department of Defense and the Department of Justice providing that both General
Dynamics and Northrop Grumman comply with a Department of Justice request not
to issue their intent to complete its proposed acquisition of Newport News
before August 20, 2001. The agreement provided that the Department of Justice
and the Department of Defense would inform General Dynamics and Northrop
Grumman of their enforcement intentions regarding the proposed transactions
after receiving notification of General Dynamics' or Northrop Grumman's intent
to close their proposed acquisition of Newport News.

On October 4, 2001, Mr. Kresa sent a letter to Mr. Fricks, reaffirming
Northrop Grumman's view that its proposal was a superior proposal to that of
General Dynamics. In addition, Mr. Kresa expressed a willingness to have
Northrop Grumman enter into a confidentiality agreement in order to facilitate
discussions with Newport News. The letter was filed as Exhibit (a)(5)(T) to
Northrop Grumman's amended Schedule TO filed with the SEC on October 9, 2001.

On October 4, 2001, Newport News issued a press release announcing that its
board of directors would meet on Friday, October 5, 2001 to review the General
Dynamics and the Northrop Grumman offers in light of the increase of the
Northrop Grumman stock price.

On October 5, 2001, Mr. Fricks called Mr. Kresa to invite Northrop Grumman
to visit the Newport News offices and begin due diligence as soon as possible.

On October 5, 2001, Newport News announced that its board of directors had
determined that discussions with Northrop Grumman could result in Northrop
Grumman making an offer to acquire Newport News that was superior to General
Dynamics' existing offer and determined to initiate discussions with Northrop
Grumman concerning a possible acquisition of Newport News. Newport News' board
of directors also reaffirmed its recommendation of the General Dynamics offer.

On October 5, 2001, Cravath, Swaine & Moore, outside legal counsel to
Newport News, sent a draft merger agreement to Fried, Frank, Harris, Shriver &
Jacobson, outside legal counsel to Northrop Grumman.

On October 6, 2001, Northrop Grumman and Newport News entered into a
confidentiality agreement concerning the exchange of information between the
two companies during discussions concerning Northrop Grumman's proposed
acquisition of Newport News.

On October 23, 2001, the Department of Defense announced that it had
completed its review of the proposals by General Dynamics and Northrop Grumman
to acquire Newport News. The announcement stated that the Department of Defense
had concluded that the proposal by General Dynamics would eliminate competition
for nuclear submarines, resulting in a monopoly and would harm competition for
surface combatants and for the development of emerging technologies for both
nuclear submarines and surface ships. The

announcement also stated that the Department of Defense had also determined
that while the benefits and savings offered by each transaction were
comparable, the Northrop Grumman transaction had the additional benefit of
preserving competition. Also on October 23, 2001, the Department of Justice
announced that it had filed an antitrust lawsuit to block General Dynamics'
proposed acquisition of Newport News.

On October 24, Mr. Kresa called Mr. Fricks to assure him that Northrop
Grumman remained committed to moving forward with a Newport News transaction,
subject to completion of due diligence and negotiation of a mutually
satisfactory merger agreement.

On October 25, 2001, Northrop Grumman issued a press release extending the
offer and stating that it had not completed its due diligence regarding Newport
News nor the negotiation of a possible merger agreement and that it may modify
its offer and reserved the right to do so.

On October 26, 2001, General Dynamics and Newport News announced that they
had terminated their merger agreement.

Between October 26, 2001 and November 7, 2001, Northrop Grumman completed
its due diligence review and Northrop Grumman and Newport News negotiated the
terms of a proposed merger agreement.

On November 5, 2001, the Northrop Grumman board of directors unanimously
approved the transaction and authorized proceeding with the completion of the
transaction.

On November 6, 2001, Newport News announced that it had received a revised
proposal from Northrop Grumman in which the "collar" used in determining the
amount of Northrop Grumman common stock and cash to be received by Newport News
stockholders would be adjusted so that Newport News stockholders would receive
a value of $67.50 per share if the market value of Northrop Grumman common
stock does not exceed $100.00 per share and is not less than $80.00 per share.

On November 7, 2001, the Newport News board of directors unanimously
approved the proposed transaction, determined it to be fair to and in the best
interests of the stockholders of Newport News, and agreed to recommend it to
its stockholders.

On November 7, 2001, the merger agreement was executed by Northrop Grumman,
Purchaser Corp. I and Newport News.

On November 8, 2001, Northrop Grumman and Newport News issued a joint press
release announcing the transaction.

On November 21, 2001, Northrop Grumman announced that the Registration
Statement on Form S-4 had been declared effective by the SEC.

On November 27, 2001, Northrop Grumman announced the exchange ratio for the
offer to be fixed at 0.7193. Northrop Grumman also announced that pursuant to
the merger agreement the Parent Stock Value (as defined in the merger
agreement) was approximately $93.84 and the Adjusted Cash Basis (as defined in
the merger agreement) was $633,452,178. It was also announced that the New York
Stock Exchange approved for listing the 16,636,885 shares of Northrop Grumman
common stock to be issued in the offer and merger.

On November 30, 2001, Northrop Grumman announced it had completed the tender
offer for Newport News on November 29, 2001. A total of 26,241,019 shares were
tendered in the offer and accepted, representing approximately 80.7% of the
outstanding Newport News common stock. In addition, the resignations of all
members of the Newport News board of directors except for Hon. Gerald L.
Baliles and Hon. Charles A. Bowsher were accepted, and Messrs. W. Burks Terry,
John H. Mullan and Albert F. Myers were appointed to

serve on the Newport News board of directors. Thomas C. Schievelbein,
previously executive vice president of Newport News, was named a Northrop
Grumman corporate vice president and president of the new Newport News sector.

During the pendency of the offer and the merger, Northrop Grumman and
Purchaser Corp. I intend to have ongoing contacts with Newport News and its
directors, officers and stockholders.

Northrop Grumman Reasons for the Offer and Merger

Northrop Grumman believes that the proposed acquisition of Newport News
represents a compelling opportunity to enhance value for both Newport News
stockholders and Northrop Grumman stockholders for reasons that include the
following:

. a combination of Northrop Grumman (which recently completed its purchase
of Litton) and Newport News would offer a variety of strategic benefits,
including making Northrop Grumman a complete full-line shipbuilding
competitor;

. the acquisition would provide an opportunity for significant cost savings
to the U.S. Navy and the opportunity for Newport News to realize
efficiencies available as part of a larger, more diversified company;

. the combination of Northrop Grumman and Newport News will strengthen
Northrop Grumman's position in the defense industry marketplace.
Acquisition of Newport News' nuclear-powered aircraft carrier and
submarine capabilities would broaden Northrop Grumman's base, enabling it
to respond to the U.S. Government's demand by providing products
complementary to Northrop Grumman's existing businesses; and

. Newport News' strength in the design, construction, repair, maintenance,
overhaul and refueling of nuclear-powered aircraft carriers and submarines
should provide an opportunity for Northrop Grumman to expand its presence
into those markets.

Achieving these objectives depends on successfully integrating companies
that have previously operated independently and on other uncertainties
described under "Risk Factors."

Recommendation and Reasons of Newport News Board of Directors

On November 7, 2001, Newport News' board of directors determined by
unanimous vote that the merger agreement and transactions contemplated by the
merger agreement, including the offer and the merger, taken together, are
advisable and fair to and in the best interests of Newport News stockholders,
and recommended that Newport News stockholders accept the offer and tender
their shares into the offer. Newport News' board of directors determined by
unanimous vote to approve the merger agreement.

In reaching its decision to approve the merger agreement and recommend that
the holders of Newport News shares adopt the merger agreement, the Newport News
board of directors considered a number of factors. The material favorable
factors were the following:

. The recommendation of the Newport News' management that the merger
agreement, including the offer and the merger, be approved by the Newport
News board of directors.

. The price to be paid pursuant to the offer and the merger (assuming a
value of $67.50 per share), represented a 20% premium over the closing
price of the shares on April 20, 2001 (a date shortly prior to the
announcement of the General Dynamics transaction), a 31% premium over the
average closing price of the shares for the four-week period preceding
April 20, 2001 and a 32% premium over the average closing price of the
shares for the six-month period preceding April 20, 2001. The Newport News
board of directors was aware, however, that the market prices of stocks of
many other defense contractors have risen since the terrorist attacks on
September 11, 2001.

. Under the terms of the offer, the holders of Newport News shares will be
able to elect to receive either $67.50 per Newport News share in cash or a
number of Northrop Grumman shares, subject, in each case, to the election
and proration procedures and limitations on the number of Northrop Grumman
shares and amount of cash to be exchanged for Newport News shares pursuant
to the offer. The exact exchange ratio of Northrop Grumman shares to be
exchanged for Newport News shares will be determined by dividing $67.50 by
the average of the closing sale prices for a Northrop Grumman share on the
NYSE as reported in The Wall Street Journal over the five-day trading
period ending on the trading day immediately preceding the second full
trading day before the expiration of the offer, provided that the exchange
ratio per Newport News shares will not be more than .84375 ($67.50/$80) or
less than .675 ($67.50/$100) per share. The holders of Newport News shares
who receive Northrop Grumman shares in exchange for their shares will
receive less than $67.50 per share of value if the price of the Northrop
Grumman shares, as determined pursuant to the offer, is less than $80 and
will receive more than $67.50 per share of value if such price of Northrop
Grumman shares is more than $100. On May 24, 2001, the first trading day
after Northrop Grumman publicly disclosed the definitive terms of the
offer (which terms at such time provided for a "collar" in which holders
of Newport News shares would receive less than $67.50 per share of value
if the price of Northrop Grumman shares was less than $85 and would
receive more than $67.50 per Newport News share of value if the price of
Northrop Grumman shares was more than $95), the closing price of the
Northrop Grumman shares, as reported on the NYSE Consolidated Tape, was
$86.60 per Northrop Grumman share. Since that date, the closing price of
the Northrop Grumman shares, as reported on the NYSE Consolidated Tape,
has ranged from a high of $110.56 to a low of $76.41. On November 9, 2001,
the closing price of the Northrop Grumman shares, as reported on the NYSE
Consolidated Tape, was $97.60. Accordingly, at recent market prices of the
Northrop Grumman shares, the collar for determining the exchange ratio of
Northrop Grumman shares per Newport News share provides greater protection
against a decline in the market price of the Northrop Grumman shares than
the limitation on the value above $67.50 per Newport News share that will
be received by holders of Newport News shares who elect to receive
Northrop Grumman shares in the offer.

. The opinion of Credit Suisse First Boston Corporation as to the fairness,
from a financial point of view, of the aggregate consideration to be
received in the offer and the merger by the holders of Newport News common
stock (other than Northrop Grumman and its affiliates), as described more
fully below in "The Merger-Opinion of Newport News' Financial Advisor."

. The fact that the offer and the merger had already been approved by the
Department of Defense and cleared the Department of Justice.

. The continuing trend towards consolidation among defense contractors, the
implications of that consolidation for Newport News as a stand-alone
company and management's and the Newport News board of directors' belief
that a combination with Northrop Grumman would make Newport News a
stronger participant in the defense industry.

. Constraints on defense spending by the U.S. government, the implications
for those constraints for the demand for Newport News' aircraft carriers
and submarines, the potential for significant cost savings through a
combination of Newport News and Northrop Grumman.

. The offer is intended to be structured so that Newport News stockholders'
shares will not incur tax on the exchange of shares for Northrop Grumman
shares for U.S. federal income tax purposes. However, any resale of
Northrop Grumman shares will be a taxable event for U.S. federal income
tax purposes.

. Since the announcement of the General Dynamics transaction, over six
months ago, Northrop Grumman has been the only other potential merger
partner to make a proposal to acquire Newport News, and a transaction with
General Dynamics cannot be completed for regulatory reasons.

The Newport News board of directors weighed the foregoing factors against
the following negative considerations.

. The Newport News board of directors noted that approximately 56% to 70% of
Newport News shares in the offer, if completed, would be exchanged for
Northrop Grumman shares if the market price of Northrop Grumman shares
used in determining the exchange ratio of Northrop Grumman shares for each
share is between $80 and $100 per share. The Newport News board of
directors was aware that the value of the Northrop Grumman shares would be
subject to fluctuation, both before and after completion of the offer,
based on a number of factors, including changes in market conditions, the
future financial performance of Northrop Grumman and the market's
assessment of whether the offer will be completed. If the market price of
Northrop Grumman shares used in determining the exchange ratio of Northrop
Grumman shares for each share is less than $80 per Northrop Grumman share,
the holders of shares may receive consideration of less than $67.50 per
share in the offer. In addition, even if the price of Northrop Grumman
shares, as determined during the valuation period provided in the offer,
equals or exceeds $80 per Northrop Grumman share, there is no assurance
that the actual market value of the Northrop Grumman shares to be issued
per share pursuant the offer, when issued, would equal or exceed $67.50
per share.

. The Newport News board of directors also was aware that Northrop Grumman
had recently completed the acquisition of Litton and that the value of
Northrop Grumman shares is subject to risk in successfully integrating the
business of Litton with that of Northrop Grumman.

. The Northrop Grumman board of directors also believes that the value of
Northrop Grumman shares will be dependent upon the successful integration
of the business of Newport News if Newport News is acquired by Northrop
Grumman.

. Credit Suisse First Boston discussed with the Newport News board of
directors the potential adverse impact of a redistribution of the Northrop
Grumman shares (to be received by Newport News' stockholders under the
offer and merger) on the market price of the Northrop Grumman shares.

. The provisions of the merger agreement that restrict Newport News' ability
to entertain other acquisition proposals or to terminate the merger
agreement to pursue another acquisition proposal.

. The provision in the merger agreement requiring Newport News to pay a $50
million termination fee if the merger agreement is terminated under
certain circumstances.

. The covenants in the merger agreement restricting the conduct of Newport
News' business prior to the completion of the merger only to conduct which
is in the ordinary course consistent with past practice, as well as
various other operational restrictions on Newport News prior to the
completion of the merger.

. The Newport News board of directors also noted the other risks to the
holders of shares as disclosed under "Risk Factors."

The Newport News board of directors also considered the following:

. The right of Newport News to terminate the merger agreement if the offer
is not completed by January 31, 2002, which date may be extended at
Newport News' election until April 30, 2002.

. The other terms and conditions of the offer, the merger and the merger
agreement.

. Possible strategic alternatives to the offer and the merger, including
continuing to operate as an independent company or a business combination
with another company.

. The commitment of Northrop Grumman to provide compensation and employee
benefits to employees of Newport News for two years following the
effective time of the merger that are, in the aggregate, no less favorable
than current compensation and employee benefits and to accord certain
rights to Newport News' employees under employee benefit plans of Northrop
Grumman that may be made available to them. See "Merger
Agreement--Employee Benefits."

. The directors' knowledge of Newport News' business, financial condition,
results of operations and current business strategy.

In addition, the Newport News board of directors considered the interest of
Newport News' directors and executive officers that are different from, or in
addition to, the interests of Newport News' stockholders. The Newport News
board of directors did not believe that these interests should affect its
decision to approve the merger agreement in light of the fact that such
interests are primarily based on contractual arrangements which were in place
prior to the negotiation of the merger agreement and the Newport News board of
directors' assessment that the judgment and performance of the directors and
executive officers would not be impaired by such interests. See "Interests of
Certain Persons in the Merger."

The foregoing discussion of the material facts considered by the Newport
News board of directors is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the merger
agreement, the offer and the merger, the Newport News board of directors did
not find it practicable to, and did not, quantify or otherwise assign relative
weights to the factors summarized above in reaching its recommendation. In
addition, individual members of the Newport News board of directors may have
assigned different weights to different factors.

Opinion of Newport News' Financial Advisor

Credit Suisse First Boston Corporation has acted as financial advisor to
Newport News in connection with the offer and the merger. Newport News selected
Credit Suisse First Boston based on Credit Suisse First Boston's experience,
expertise and reputation, and its familiarity with Newport News and its
business. Credit Suisse First Boston is an internationally recognized
investment banking firm and is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes.

In connection with Credit Suisse First Boston's engagement, Newport News
requested that Credit Suisse First Boston evaluate the fairness, from a
financial point of view, to the holders of Newport News common stock, other
than Northrop Grumman and its affiliates, of the aggregate consideration to be
received by holders of Newport News common stock in the offer and the merger.
On November 7, 2001, at a meeting of the board of directors of Newport News
held to evaluate the proposed offer and the merger, Credit Suisse First Boston
rendered to the Newport News board an oral opinion, which opinion was confirmed
by delivery of a written opinion dated November 7, 2001, the date of the merger
agreement, to the effect that, as of the date of the opinion and based on and
subject to the matters described in its opinion, the aggregate consideration to
be received by holders of Newport News common stock in the offer and the merger
was fair, from a financial point of view, to holders of Newport News common
stock other than Northrop Grumman and its affiliates.

The full text of Credit Suisse First Boston's written opinion, dated
November 7, 2001, to the Newport News board of directors, which sets forth the
procedures followed, assumptions made, matters considered and limitations on
the review undertaken, is attached to Newport News' Solicitation/Recommendation
Statement on Schedule 14D-9/A as Annex B, which was previously mailed to
holders of Newport News common stock and is incorporated herein by reference.
Holders of Newport News common stock are encouraged to read the opinion
carefully in its entirety. Credit Suisse First Boston's opinion is addressed to
the board of directors of Newport News, relates only to the fairness, from a
financial point of view, of the aggregate consideration to be received by the
holders of Newport News common stock, other than Northrop Grumman and its
affiliates, in the offer and the merger, and does not address any other aspect
of the merger or any related transaction and does not constitute a
recommendation to Newport News Stockholders as to the form of consideration to
be elected by any stockholder in the merger or how such stockholder should vote
or act with respect to any matter relating to the merger. The summary of Credit
Suisse First Boston's opinion in this document is qualified in its entirety by
reference to the full text of the opinion.

In arriving at its opinion, Credit Suisse First Boston reviewed the merger
agreement and publicly available business and financial information relating to
Newport News and Northrop Grumman. Credit Suisse First Boston also reviewed
other information relating to Newport News and Northrop Grumman, including
financial forecasts, provided to or discussed with Credit Suisse First Boston
by Newport News and Northrop Grumman, and met with the managements of Newport
News and Northrop Grumman to discuss the businesses and prospects of Newport
News and Northrop Grumman. Credit Suisse First Boston also considered financial
and stock market data of Newport News and Northrop Grumman, and compared those
data with similar data for publicly held companies in businesses that Credit
Suisse First Boston deemed similar to Newport News and Northrop Grumman, and
considered, to the extent publicly available, the financial terms of other
business combinations and other transactions which have been effected or
announced. Credit Suisse First Boston also considered other information,
financial studies, analyses and investigations and financial, economic and
market criteria that Credit Suisse First Boston deemed relevant.

In connection with its review, Credit Suisse First Boston did not assume any
responsibility for independent verification of any of the information provided
to or otherwise reviewed by it and relied on that information being complete
and accurate in all material respects. Credit Suisse First Boston was advised,
and assumed, that the financial forecasts for Newport News and Northrop Grumman
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the managements of Newport News and Northrop Grumman
as to the future financial performance of Newport News and Northrop Grumman.
Credit Suisse First Boston also assumed, with Newport News' consent, that the
merger would be treated as a tax free reorganization for federal income tax
purposes. Credit Suisse First Boston was not requested to, and did not, make an
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Newport News and Northrop Grumman, and was not furnished with any
independent evaluations or appraisals.

Credit Suisse First Boston's opinion was necessarily based on information
available to it, and financial, economic, market and other conditions as they
existed and could be evaluated, on the date of Credit Suisse First Boston's
opinion. Although Credit Suisse First Boston evaluated the aggregate
consideration provided for in the offer and the merger from a financial point
of view, Credit Suisse First Boston was not requested to, and did not,
recommend the specific consideration to be received in the offer and the
merger, which consideration was determined between Newport News and Northrop
Grumman. Credit Suisse First Boston's opinion was limited to the fairness, from
a financial point of view, to the holders of Newport News common stock, other
than Northrop Grumman and its affiliates, of the aggregate consideration to be
received by holders of Newport News common stock in the offer and the merger
and did not address the consideration to be received by any particular
stockholder, which may vary as a consequence of, among other things, the forms
of consideration to be elected by the stockholder and other stockholders of
Newport News common stock. Credit Suisse First Boston's opinion did not express
any opinion as to what the value of Northrop Grumman common stock actually will
be when issued pursuant to the offer and the merger or the prices at which
Northrop Grumman common stock will trade at any time. Credit Suisse First
Boston's opinion also did not address the relative merits of the offer and the
merger as compared to other business strategies that might be available to
Newport News, nor did it address the underlying business decision of Newport
News to proceed with the offer and the merger. No other limitations were
imposed on Credit Suisse First Boston with respect to the investigations made
or procedures followed by Credit Suisse First Boston in rendering its opinion.

In preparing its opinion to the board of directors of Newport News, Credit
Suisse First Boston performed a variety of financial and comparative analyses,
including those described below. The summary of Credit Suisse First Boston's
analyses described below is not a complete description of the analyses
underlying its opinion. The preparation of a fairness opinion is a complex
process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances and, therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, Credit Suisse First Boston made qualitative judgments as to the
significance and relevance of each analysis and factor that it considered.
Accordingly, Credit Suisse First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors or

focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.

In its analyses, Credit Suisse First Boston considered industry performance,
regulatory, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Newport News and
Northrop Grumman. No company, transaction or business used in Credit Suisse
First Boston's analyses as a comparison is identical to Newport News, Northrop
Grumman or the proposed offer and the merger, and an evaluation of the results
of those analyses is not entirely mathematical. Rather, the analyses involve
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
analyzed. The estimates contained in Credit Suisse First Boston's analyses and
the ranges of valuations resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by the analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Credit Suisse First
Boston's analyses and estimates are inherently subject to substantial
uncertainty.

Credit Suisse First Boston's opinion and financial analyses were only one of
many factors considered by the board of directors of Newport News in its
evaluation of the proposed offer and the merger and should not be viewed as
determinative of the views of Newport News' board of directors or management
with respect to the offer and the merger or the aggregate consideration to be
received by holder of Newport News common stock in the offer and the merger.

The following is a summary of the material analyses underlying Credit Suisse
First Boston's opinion dated November 7, 2001 delivered to the board of
directors of Newport News in connection with the offer and the merger. The
financial analyses summarized below include information presented in tabular
format. In order to fully understand Credit Suisse First Boston's financial
analyses, the tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the financial
analyses. Considering the data in the tables below without considering the full
narrative description of the financial analyses, including the methodologies
and assumptions underlying the analyses, could create a misleading or
incomplete view of Credit Suisse First Boston's financial analyses.

Newport News.

Credit Suisse First Boston performed a "Discounted Cash Flow Analysis,"
"Selected Companies Analysis" and "Selected Transactions Analysis" for Newport
News as described below. Based on these valuation methodologies, Credit Suisse
First Boston derived the following implied per share equity reference range for
Newport News common stock after adjustment for net debt, option proceeds and
certain obligations related to the Amended and Restated Stock Employee
Compensation Trust Agreement, dated as of August 1, 2000, between Newport News
and Wachovia Bank, N.A., as amended, referred to below as the SECT, and the
change in control in the offer and the merger, as compared to the consideration
in the offer and the merger:

Implied Per
Share Equity Consideration In The
Reference Range Offer And The Merger
--------------- --------------------

Newport News Common Stock $63.38-$72.40 $67.50

Discounted Cash Flow Analysis. Credit Suisse First Boston estimated the
present value of the stand-alone, unlevered, after-tax free cash flows that
Newport News could generate for the fiscal years 2002 to 2010, based on
internal estimates of Newport News' management. Credit Suisse First Boston then
calculated two ranges of estimated terminal values by applying selected
multiples ranging from 8.0x to 9.0x to Newport News' projected fiscal year 2010
earnings before interest, taxes, depreciation and amortization, commonly
referred to as EBITDA,

and by applying a selected perpetuity growth rate ranging from 2.0% to 3.0% to
the estimated stand-alone, unlevered, after-tax free cash flows that Newport
News could generate for the fiscal year 2011. The present value of the
resulting range of cash flows and the resulting ranges of terminal values were
then calculated using selected discount rates ranging from 9.5% to 10.0%.

This analysis indicated an aggregate implied equity reference range for
Newport News of approximately $2,514 million to $2,741 million after adjustment
for net debt, option proceeds and certain obligations related to the SECT and
the change in control in the offer and the merger. Using this aggregate equity
reference range, Credit Suisse First Boston then derived an implied per share
equity reference range for Newport News common stock. This analysis indicated
the following implied per share equity reference range:

Implied Per Share Equity
Reference Range
------------------------

Newport News Common Stock $66.39-$72.40

Selected Transactions Analysis. Credit Suisse First Boston reviewed the
implied transaction multiples in the following eight selected merger and
acquisition transactions in the shipbuilding industry in particular and
fourteen selected merger and acquisition transactions in the defense industry
generally:

Shipbuilding Industry.

Acquiror Target
-------- ------

. General Dynamics Corporation Newport News Shipbuilding Inc.
. Northrop Grumman Corporation Litton Industries, Inc.
. Litton Industries, Inc. Avondale Industries, Inc.
. Litton Industries, Inc. Newport News Shipbuilding Inc.
. General Dynamics Corporation Newport News Shipbuilding Inc.
. Newport News Shipbuilding Inc. Avondale Industries, Inc.
. General Dynamics Corporation National Steel And Shipbuilding Company
. General Dynamics Corporation Bath Iron Works

Defense Industry.

Acquiror Target
-------- ------

. BAE Systems, Inc. Lockheed Martin-Sanders, Inc.
. Alcoa Inc. Cordant Technologies Inc.
. General Dynamics Corporation GTE Government Systems
. United Technologies Corporation Sundstrand Corporation
. Carlyle Group United Defense Industries, Inc.
. The General Electric Company p.l.c. Tracor, Inc.
. Raytheon Company Texas Instruments Defense Operations
. Raytheon Company Hughes Electronics Corporation
. The Boeing Company McDonnell Douglas Corporation
. The Boeing Company Rockwell A&D
. Northrop Corporation Westinghouse Electric--Defense
. Raytheon Company E-Systems, Inc.
. Martin Marietta Corporation Lockheed Corporation
. Northrop Corporation Grumman Corporation

Credit Suisse First Boston compared enterprise values, calculated as equity
value, plus debt and preferred stock, less cash, in the selected transactions
as multiples of latest 12 months revenue, EBITDA and earnings

before interest and taxes, commonly referred to as EBIT. Credit Suisse First
Boston also compared equity values in the selected transactions as multiples of
latest 12 months earnings. All multiples for the selected transactions were
based on publicly available information at the time of announcement of the
relevant transaction. Financial data for Newport News were based on actual
results provided by Newport News' management. This analysis indicated the
following low, mean, median and high implied multiples for each group of the
selected transactions, as compared to the multiples implied for Newport News
based on the consideration in the offer and the merger of $67.50 per share:

Shipbuilding Industry
Enterprise Value ------------------------ Implied
as Multiple of: Low Mean Median High Newport News
--------------- ----- ----- ------ ----- ------------

Latest 12 Months
Revenue 0.4x 0.9x 0.9x 1.3x 1.2x
EBITDA 7.8x 8.8x 8.6x 10.5x 9.4x
EBIT................... 8.3x 10.9x 10.9x 13.4x 11.7x

Equity Value
as Multiple of:
---------------

Latest 12 months earnings 12.2x 18.4x 19.4x 24.4x 20.6x

Defense Industry
Enterprise Value ------------------------ Implied
as Multiple of: Low Mean Median High Newport News
--------------- ----- ----- ------ ----- ------------

Latest 12 Months
Revenue 0.5x 1.2x 1.1x 2.1x 1.2x
EBITDA 4.9x 9.1x 9.3x 13.7x 9.4x
EBIT................... 6.1x 11.7x 11.1x 16.6x 11.7x

Equity Value
as Multiple of:
---------------

Latest 12 months earnings 10.0x 17.7x 18.1x 27.1x 20.6x

Credit Suisse First Boston then applied a range of selected multiples
derived from the selected transactions of latest 12 months revenue, EBITDA,
EBIT and earnings to corresponding financial data of Newport News. This
analysis indicated an aggregate implied equity reference range for Newport News
of approximately $2,286 million to $2,741 million after adjustment for net
debt, option proceeds and certain obligations related to the SECT and the
change in control in the offer and the merger. Using this aggregate equity
reference range, Credit Suisse First Boston then derived an implied per share
equity reference range for Newport News common stock. This analysis indicated
the following implied per share equity reference range:

Implied Per Share Equity
Reference Range
------------------------

Newport News Common Stock $60.38-$72.40

Selected Companies Analysis. Credit Suisse First Boston compared financial,
operating and stock market data of Newport News to corresponding data for the
following four publicly traded companies in the defense industry:

. Lockheed Martin Corporation

. General Dynamics Corporation

. Raytheon Company

. Northrop Grumman Corporation

Credit Suisse First Boston reviewed enterprise values as multiples of
estimated calendar years 2002 and 2003 revenue, EBITDA and EBIT. Credit Suisse
First Boston also reviewed equity values as multiples of estimated calendar
years 2002 and 2003 earnings. All multiples for the selected companies were
based on closing

stock prices on November 6, 2001. Estimated financial data for Newport News and
the selected companies were based on publicly available research analysts'
estimates and, except for General Dynamics, excluded pension income. This
analysis indicated the following low, mean, median and high multiples for the
selected companies, as compared to the multiples for Newport News on April 20,
2001, five days prior to the announcement of General Dynamics' offer for
Newport News:

Defense Industry
Enterprise Value ------------------------ Implied
as Multiple of: Low Mean Median High Newport News
--------------- ----- ----- ------ ----- ------------

Estimated Calendar Year
2002 Revenue 0.9x 1.1x 1.2x 1.3x 1.0x
2002 EBITDA 9.0x 9.6x 9.3x 10.9x 7.8x
2002 EBIT............ 10.4x 14.2x 15.0x 16.3x 9.8x

Estimated Calendar Year
2003 Revenue 0.8x 1.0x 1.0x 1.2x NA
2003 EBITDA 7.8x 8.4x 8.0x 9.8x NA
2003 EBIT............ 9.0x 11.7x 12.1x 13.7x NA

Enterprise Value
as Multiple of:
---------------

Estimated Calendar Year
2002 Earnings 16.5x 24.5x 24.5x 32.4x 16.5x
2003 Earnings........ 14.1x 19.4x 18.8x 25.9x NA

Credit Suisse First Boston then applied a range of selected multiples
derived from the selected companies of estimated calendar years 2002 and 2003
revenue, EBITDA, EBIT and earnings to corresponding financial data of Newport
News. Estimated financial data for Newport News were based on internal
estimates of Newport News' management. This analysis indicated an aggregate
implied equity reference range for Newport News of approximately $2,168 million
to $2,509 million after adjustment for net debt, option proceeds and certain
obligations related to the SECT and the change in control in the offer and the
merger. Using this aggregate equity reference range, Credit Suisse First Boston
then derived an implied per share equity reference range for Newport News
common stock. This analysis indicated the following implied per share equity
reference range:

Implied Per
Share Equity
Reference Range
---------------

Newport News Common Stock $57.26-$66.25

Northrop Grumman.

Discounted Cash Flow Analysis. Credit Suisse First Boston estimated the
present value of the stand-alone, unlevered, after-tax free cash flows that
Northrop Grumman could generate for the fiscal years 2002 to 2010, based on
internal estimates of Northrop Grumman's management. Credit Suisse First Boston
then calculated two ranges of estimated terminal values by applying selected
multiples ranging from 8.0x to 9.0x to Northrop Grumman's projected fiscal year
2010 EBITDA and by applying a selected perpetuity growth rate ranging from 3.0%
to 4.0% to the estimated stand-alone, unlevered, after-tax free cash flows that
Northrop Grumman could generate for the fiscal year 2011. The present value of
the resulting range of cash flows and the resulting ranges of terminal values
were then calculated using selected discount rates ranging from 9.5% to 10.0%.

This analysis indicated an aggregate implied equity reference range for
Northrop Grumman of approximately $11,007 million to $13,507 million after
adjustment for net debt and option proceeds. Using this aggregate equity
reference range, Credit Suisse First Boston then derived an implied per share
equity reference range for Northrop Grumman common stock. This analysis
indicated the following implied per share equity

reference range, as compared to the closing price for Northrop Grumman common
stock on November 6, 2001 of $98.52:

Implied Per Share
Equity Reference
Range
-----------------

Northrop Grumman Common Stock $122.23-$149.99

Pro Forma Analysis.

Credit Suisse First Boston analyzed the potential pro forma effect of the
merger on Northrop Grumman's estimated earnings per share, assuming no
synergies or one-time charges relating to the merger or amortization of
goodwill and excluding pension income, for calendar years 2002 and 2003, based
on internal estimates of the managements of Newport News and Northrop Grumman.
Based on the consideration in the offer and the merger of $67.50 and assuming
31% of the consideration consists of cash and 69% consists of stock, this
analysis indicated that the merger could be dilutive to Northrop Grumman's
estimated earnings per share for calendar years 2002 and 2003. The actual
results achieved by the combined company may vary from projected results and
the variations may be material.

Other Factors. In the course of preparing its opinion, Credit Suisse First
Boston also reviewed and considered other information and data, including:

. the equity values as a multiple of earnings, excluding pension income, and
the enterprise values as a multiple of EBITDA, excluding pension income,
for estimated calendar years 2002 and 2003 of selected companies in the
defense industry as compared to the corresponding multiples for Northrop
Grumman;

. research analysts' reports for Northrop Grumman common stock; and

. historical price performance and trading characteristics of Northrop
Grumman common stock and the relationship between movements in Northrop
Grumman common stock and movements in selected stock indices of related
industries.

Miscellaneous. Newport News has agreed to pay Credit Suisse First Boston for
its financial advisory services upon consummation of the offer and the merger
an aggregate fee equal to 0.45% of the total fair market value of the
consideration, including liabilities assumed, to be paid by Northrop Grumman in
the offer and the merger. Newport News also has agreed to reimburse Credit
Suisse First Boston for all out-of-pocket expenses, including fees and expenses
of legal counsel and any other advisor retained by Credit Suisse First Boston,
and to indemnify Credit Suisse First Boston and related parties against
liabilities, including liabilities under the federal securities laws, arising
out of its engagement.

Credit Suisse First Boston and its affiliates have in the past provided
investment banking and financial services to Newport News, Northrop Grumman and
certain of their affiliates, for which services Credit Suisse First Boston and
its affiliates have received, and expect to receive, compensation. In the
ordinary course of business, Credit Suisse First Boston and its affiliates may
actively trade the securities of Newport News and Northrop Grumman and their
affiliates for their own and their affiliates' accounts and for the accounts of
customers and, accordingly, may at any time hold long or short positions in
those securities.

Purpose and Structure of the Merger

The purpose of the merger is for Northrop Grumman to acquire all Newport
News shares not tendered and exchanged pursuant to the offer. Pursuant to the
merger, each then outstanding Newport News share (other than shares owned by
Northrop Grumman, Newport News or Purchaser Corp. I and shares for which
appraisal rights are perfected in accordance with Delaware law) would be
converted into the right to receive the same number of Northrop Grumman shares
or the same amount of cash as was paid in the offer.

Under Delaware law, the approval of the Newport News board of directors and
the affirmative vote of a majority of the votes entitled to be cast by the
holders of all the outstanding shares as of the record date are required to
approve and adopt the merger agreement. The Newport News board of directors has
approved the merger agreement, and the only remaining required corporate action
of Newport News is the adoption of the merger agreement by the affirmative vote
of a majority of the outstanding Newport News shares. Because Northrop Grumman
and its affiliates own approximately 80.7% of the outstanding shares as of the
record date, the adoption of the merger agreement is assured without the vote
of any other stockholder.

Newport News stockholders may have appraisal rights in connection with the
merger. See "Appraisal Rights."

The Merger Agreement

The following is a summary of the provisions of the merger agreement which
relate to the merger. This summary does not purport to be a complete
description of the terms and conditions of the merger agreement and is
qualified in its entirety by reference to the merger agreement, a copy of which
is attached as Annex C to this information statement/prospectus. We urge you to
read it carefully.

The Merger. The merger agreement provides that following the completion of
the offer and subject to the conditions set forth in the merger agreement,
Newport News will be merged with and into Purchaser Corp. I. Following the
merger, Purchaser Corp. I will continue as the surviving corporation and the
separate corporate existence of Newport News will cease. However, in the event
that a tax opinion of Northrop Grumman's legal counsel is not delivered, as
provided for in the merger agreement, on the closing date of the merger, then
at the effective time of the merger Purchaser Corp. I will be merged with and
into Newport News in accordance with Delaware law. In that case, following the
merger, Newport News will continue as the surviving corporation and the
separate corporate existence of Purchaser Corp. I will cease.

Effective Time of the Merger. The merger will become effective upon the
filing of a certificate of merger with the Secretary of State of the State of
Delaware or at a later date as agreed by Northrop Grumman, Purchaser Corp. I
and Newport News.

Certificate of Incorporation; Bylaws; Directors and Officers. The merger
agreement provides that at the effective time of the merger and without any
further action on the part of Newport News or Purchaser Corp. I, the
certificate of incorporation and bylaws attached as Annex IV to the merger
agreement will be the certificate of incorporation and bylaws of the surviving
corporation. The merger agreement also provides that the directors of Purchaser
Corp. I and the officers of Newport News, immediately prior to the effective
time, will be the initial directors and officers of the surviving corporation,
each to hold office in accordance with the applicable provisions of the
certificate of incorporation and bylaws of Purchaser Corp. I, until their
successors are duly elected or appointed and qualified.

Appointment of Newport News Directors by Northrop Grumman. Shortly after
Purchaser Corp. I had purchased shares in the offer, which comprised
approximately 80.7% of all outstanding shares, all members of the Newport News
board of directors except for Hon. Gerald L. Baliles and Hon. Charles A.
Bowsher resigned. W. Burks Terry, John H. Mullan and Albert F. Myers were
appointed by Northrop Grumman to serve on the Newport News board of directors.

Conversion of Shares. The merger agreement provides that each share of
Newport News common stock issued and outstanding immediately prior to the
effective time of the merger (other than Newport News common stock owned by
Newport News, Purchaser Corp. I or Northrop Grumman and Newport News common
stock for which appraisal rights have been exercised in accordance with
Delaware law) will be converted pursuant to the

merger into the right to receive, upon the surrender of the certificate
formerly representing the shares of Newport News common stock either 0.7193
shares of Northrop Grumman common stock or $67.50 net in cash (subject to the
proration procedures and limitations described above), the same per share
consideration paid to the holders of Newport News who tendered in the offer.
The merger agreement further provides that, immediately prior to the effective
time of the merger, all Newport News common stock owned by Newport News,
Purchaser Corp. I or Northrop Grumman will be canceled and will cease to exist.

Treatment of Dissenting Shares. The merger agreement provides that shares of
Newport News common stock outstanding immediately prior to the effective time
of the merger that are held by persons who are entitled to appraisal rights and
who have complied in all respects with the provisions of Section 262 of the
Delaware General Corporation Law will not be converted into the right to
receive the merger consideration but instead the holders of those dissenting
shares will be entitled to payment of the fair value of such dissenting shares
in accordance with the provisions of Section 262 of the Delaware General
Corporation Law. The merger agreement further provides, however, that
dissenting shares held by any person who waives, withdraws, fails to perfect or
otherwise loses the right to payment of the fair value of the shares pursuant
to Section 262 of the Delaware General Corporation Law will be treated as if
those shares had been converted into the right to receive the merger
consideration as of the effective time of the merger. See "Appraisal Rights."

Treatment of Stock Options, Performance Shares and Restricted Stock.
Pursuant to the merger agreement, Newport News is required to cancel each
outstanding and unexercised option to purchase shares of Newport News common
stock granted under any stock option plan, program, agreement or arrangement of
Newport News or any of its subsidiaries (not including Newport News' Deferred
Compensation Plan or Deferred Compensation Plan for Nonemployee Directors)
which is outstanding and unexercised immediately prior to completion of the
offer. In consideration of the cancellation, the holder of each option is
entitled to receive a payment in cash from Newport News in an amount equal to
the product of (x) the excess, if any, of the per share value of the offer
consideration over the exercise price per share of Newport News common stock
subject to the option and (y) the number of shares of Newport News common stock
subject to the option.

Pursuant to the merger agreement, Newport News is required to cancel each
right of any kind, whether vested or unvested, contingent or accrued, to
receive shares of Newport News common stock or benefits measured by the value
of a number of shares of Newport News common stock which is outstanding
immediately prior to completion of the offer. In consideration of the
cancellation, the holder of each stock-based award is entitled to receive a
payment in cash from Newport News in an amount equal to the product of (x) the
per share value of the offer consideration and (y) the number of shares of
Newport News common stock subject to the stock-based award, provided, however,
that holders who have elected to defer payment to a deferred compensation plan
are credited with a fully vested amount of cash equal to the payment.

Pursuant to the merger agreement, each award of any kind, whether vested or
unvested, consisting of shares of Newport News common stock issued under a
stock plan, which is outstanding immediately prior to completion of the offer,
which is then not vested, will fully vest and each holder is allowed to tender
the Newport News stock-based award pursuant to the offer on a guaranteed
delivery of shares basis with all of the same rights and limitations as any
other tendering stockholder.

Any cash payments required to be made pursuant to the above were made by
Newport News as promptly as practicable following completion of the offer.

No additional stock options, stock-based awards and Newport News stock-based
awards or other equity-based awards or rights to acquire Newport News common
stock is permitted to be granted after the signing of the merger agreement.

Representations and Warranties. The merger agreement contains a number of
customary representations and warranties relating to each of the parties and
their ability to complete the merger. All representations and warranties
contained in the merger agreement will not survive the merger or the
termination of the merger agreement.

Covenants. The merger agreement contains various customary covenants of the
parties. Certain of these covenants ceased to be applicable following the date
that Northrop Grumman appointed Albert F. Myers, John H. Mullan, and W. Burks
Terry to serve on the Newport News board of directors. A description of certain
of these covenants which continue to be applicable follows:

Reasonable Efforts. The merger agreement provides that each of Northrop
Grumman and Newport News will use best efforts to complete and make effective
the transactions contemplated by the merger agreement.

Tax Opinion. The merger agreement requires Northrop Grumman and Newport News
to use reasonable efforts to obtain from Northrop Grumman's legal counsel on
the closing date, an opinion to the effect that (x) the offer and the merger
will qualify for U.S. federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code and (y) Northrop
Grumman, Purchaser Corp. I and Newport News will each be a party to a
reorganization within the meaning of Section 368(b) of the Internal Revenue
Code.

Directors and Officers Indemnification and Insurance. The merger agreement
requires Northrop Grumman to cause the surviving corporation to indemnify,
defend and hold harmless the present and former directors and executive
officers of Newport News and its subsidiaries from and against all losses,
claims, damages and expenses (including reasonable attorneys' fees and
expenses) arising out of or relating to actions or omissions, or alleged
actions or omissions, occurring at or prior to the completion of the merger to
the fullest extent permitted by law. The merger agreement also provides that
for a period of six years after the date of the completion of the merger,
Northrop Grumman will cause to be maintained in effect the policies of
directors' and officers' liability insurance currently maintained by Newport
News with respect to claims arising from or relating to actions or omissions,
or alleged actions or omissions, occurring on or prior to that date. Northrop
Grumman may at its discretion substitute for such policies currently maintained
by Newport News directors and officers liability insurance policies with
reputable and financially sound carriers providing for no less favorable
coverage. After the merger, Northrop Grumman will indemnify the directors and
officers of Newport News with respect to matters relating to the merger
agreement.

Stockholders Meeting. The merger agreement provides that to the extent
necessary to complete the merger, Newport News is required to convene and hold
a meeting of its stockholders for the purpose of adopting the merger agreement
and to file with the SEC and mail to Newport News' stockholders a proxy or
information statement and related materials with respect to the stockholders
meeting. Subject to fiduciary duties of the Newport News board of directors and
the provisions of the merger agreement, the Newport News board of directors is
required to recommend in the proxy or information statement that the holders of
the Newport News common stock vote in favor of adopting the merger agreement,
and Newport News is required to use its reasonable efforts to solicit that
approval. At the stockholders meeting, Northrop Grumman is required to cause
Purchaser Corp. I to vote all Newport News common stock then owned by it in
favor of the adoption of the merger agreement.

Employee Benefit Matters. For not less than two years following the
completion of the offer, Northrop Grumman will provide to current and former
employees of Newport News and its subsidiaries comparable compensation and
employee benefits that are in the aggregate not less favorable then the
compensation and employee benefits provided to them prior to the completion of
the offer, excluding, however, stock-based plans and equity-based compensation
arrangements. Northrop Grumman and its subsidiaries (including the surviving
corporation) will credit the Newport News employees with all years of service
for which they received credit under any comparable Newport News plan, except
to the extent that such service credits would result in a duplication of
benefits, and, under medical plans, will waive pre-existing condition
limitations and provide credit for co-payments and deductibles incurred prior
to the effective time. Newport News has also agreed to terminate its Employee
Stock Purchase and Accumulation Plan at the effective time of the merger.

Conditions to the Merger. Under the merger agreement, the respective
obligations of Northrop Grumman, Purchaser Corp. I and Newport News to complete
the merger are subject to the satisfaction of the conditions that

(1) the merger agreement has been adopted by the requisite vote of Newport
News' stockholders, (2) completion of the offer has occurred and (3) no party
is subject to any order or injunction of a court of competent jurisdiction
which prohibits the merger.

Termination Events. The merger agreement contains various termination
events, some of which ceased to be applicable upon completion of the offer. A
description of certain termination events which continue to be applicable
follows:

. by mutual written consent of Northrop Grumman, Purchaser Corp. I and
Newport News;

. by either Northrop Grumman or Newport News if any court of competent
jurisdiction in the United States issues a final order, decree or ruling
or takes any other final action permanently enjoining, restraining or
otherwise prohibiting the offer or the merger; or

. by either Northrop Grumman or Newport News if the approval of Newport
News' stockholders is not obtained, if such stockholder approval is
necessary unless the failure to obtain the stockholder approval is the
result of a material breach by the party seeking to terminate the
agreement.

Amendment. Except as otherwise expressly provided for in the merger
agreement, the merger agreement may be amended by the execution and delivery of
a written instrument by or on behalf of Northrop Grumman, Purchaser Corp. I and
Newport News at any time before or after approval by Newport News'
stockholders, provided that after approval by Newport News' stockholders, no
amendment to the merger agreement will be made without approval of Newport
News' stockholders to the extent such approval is required under the Delaware
General Corporation Law.

Delisting of Newport News Shares Following the Merger

Because the shares of Newport News common stock will be canceled as a result
of the merger, the shares will be delisted from the New York Stock Exchange and
the Chicago Stock Exchange. The shares are currently registered under the
Exchange Act. Registration of the shares under the Exchange Act will be
terminated and Newport News will be relieved of the obligation to comply with
the public reporting requirements of the Exchange Act, including the obligation
to comply with the proxy rules under the Exchange Act.

Regulatory Approvals

The notifications required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the Antitrust Division of the Department of
Justice have been filed and Northrop Grumman and Newport News received
clearance on October 23, 2001.

Other than the SEC's declaring the effectiveness of the registration
statement of which this information statement/prospectus is a part and the
filing of a certificate of merger under the Delaware General Corporation Law
with respect to the merger, Northrop Grumman believes that there are no other
material regulatory or governmental approvals required in order for the merger
to be completed.

Plans for Newport News After the Merger

Northrop Grumman intends to keep the headquarters of Newport News in Newport
News, Virginia and to retain Newport News' management team. Northrop Grumman
also intends to continue to operate Newport News' main shipyard located in
Newport News, Virginia. This plan is meant to ensure that the shipyards of
Newport News remain active in the future. Northrop Grumman does not anticipate
any reduction in the production trades or engineering work force at the
facility. The directors of Purchaser Corp. I will be the initial directors of
the surviving corporation, and the officers of Newport News will be the initial
officers of the surviving corporation. Upon the completion of the merger,
Northrop Grumman intends to conduct a detailed review of Newport News and its
assets, corporate structure, capitalization, operations, policies, management
and personnel. After that review, Northrop Grumman will determine what actions
or changes, if any, would be desirable in light of the circumstances that then
exist.

Accounting Treatment

The acquisition of Newport News by Northrop Grumman's wholly owned
subsidiary, Purchaser Corp. I, will be accounted for under the purchase method
of accounting under U.S. generally accepted accounting principles, which means
that Newport News' results of operations will be included with Northrop
Grumman's from the closing date and its consolidated assets and liabilities
will be recorded at their fair values at the same date.

Fees and Expenses

Northrop Grumman has retained Salomon Smith Barney Inc. to act as the dealer
manager in connection with the offer and to provide various financial advisory
services to Northrop Grumman in connection with the offer and merger. Salomon
Smith Barney will receive reasonable and customary compensation for these
services and will be reimbursed for out-of-pocket expenses, including
reasonable expenses of counsel and other advisors. Northrop Grumman has agreed
to indemnify Salomon Smith Barney and related persons against various
liabilities and expenses in connection with its services as the dealer manager
and financial advisor, including various liabilities and expenses under the
U.S. federal securities laws. From time to time, Salomon Smith Barney and its
affiliates may actively trade the debt and equity securities of Northrop
Grumman and Newport News for their own account or for the accounts of customers
and, accordingly, may hold a long or short position in those securities.
Salomon Smith Barney has in the past performed various investment banking and
financial advisory services for Northrop Grumman for which they have received
customary compensation.

Northrop Grumman has retained D. F. King & Co., Inc. as information agent in
connection with the offer and merger. The information agent may contact holders
of Newport News shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward material relating to the offer and merger to beneficial owners of
Newport News shares. Northrop Grumman will pay the information agent reasonable
and customary compensation for these services in addition to reimbursing the
information agent for its reasonable out-of-pocket expenses. Northrop Grumman
has agreed to indemnify the information agent against various liabilities and
expenses in connection with the offer, including various liabilities under the
U.S. federal securities laws.

In addition, Northrop Grumman has retained Mellon Investor Services LLC as
the exchange agent. Northrop Grumman will pay the exchange agent reasonable and
customary compensation for its services in connection with the offer and
merger, will reimburse the exchange agent for its reasonable out-of-pocket
expenses and will indemnify the exchange agent against various liabilities and
expenses, including various liabilities under the U.S. federal securities laws.

Northrop Grumman will not pay any fees or commissions to any broker, dealer
or other person for soliciting tenders of Newport News shares pursuant to the
offer and merger. Northrop Grumman will reimburse brokers, dealers, commercial
banks and trust companies and other nominees, upon request, for customary
clerical and mailing expenses incurred by them in forwarding merger materials
to their customers.

Source and Amount of Funds

The offer and merger are not conditioned upon any financing arrangements. In
addition to the Northrop Grumman shares to be issued in connection with the
offer and merger, Northrop Grumman estimates that the total amount of funds
required to purchase all of the outstanding Newport News shares and to pay
related fees and expenses will be between approximately $800,000,000 and
$900,000,000, depending upon the actual number of Newport News shares
outstanding. Northrop Grumman expects to fund the cash portion of the offer
from working capital and its currently available line of credit.

The line of credit is in the form of a five-year revolving credit facility,
dated as of March 30, 2001, among Northrop Systems, Northrop Grumman and
Litton, as borrowers, the lenders party thereto, The Chase Manhattan

Bank and Credit Suisse First Boston, as co-administrative agents, The Chase
Manhattan Bank, as payment agent, Salomon Smith Barney Inc., as syndication
agent, The Bank of Nova Scotia and Deutsche Banc Alex. Brown, Inc., as
co-documentation agents, and JP Morgan and Credit Suisse First Boston, as joint
lead arrangers and joint bookrunners, with an aggregate principal amount of up
to $2,500,000,000 which is referred to as Exhibit 10.3 in the registration
statement of which this information statement/prospectus is a part. The
facility is an unsecured senior credit facility and contains usual and
customary affirmative and negative covenants, including 32 customary financial
covenants. Interest rates for the loan will be adjusted LIBOR (which will at
all times include statutory reserves) or the adjusted base rate, at Northrop
Grumman's election, in each case plus spreads depending upon a schedule of
certain specified Standard & Poor's and Moody's Investors Service's ratings of
Northrop Grumman. Northrop Grumman may elect periods of one, two, three or six
months for adjusted LIBOR borrowings under the loan. If Northrop Grumman's
credit ratings remain the same and it were to borrow under the facility on, for
example, June 20, 2001, then the interest rate under the five-year facility it
would be LIBOR plus 1.025%. Northrop Grumman has no current plans or
arrangements to finance or repay the borrowings, if and when it borrows under
the facility.

Certain Relationships with Newport News

Except as set forth in this information statement/prospectus, neither
Northrop Grumman nor, to the best of its knowledge, any of Northrop Grumman's
directors, executive officers or other affiliates has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of Newport News, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as described in this information
statement/prospectus, there have been no contacts, negotiations or transactions
since January 1, 1998, between Northrop Grumman or, to the best of its
knowledge, any of Northrop Grumman's directors, executive officers or other
affiliates on the one hand, and Newport News or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, a tender offer or
other acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets. Neither Northrop Grumman, nor, to the
best of its knowledge, any of Northrop Grumman's directors, executive officers
or other affiliates has since January 1, 1998 had any transaction with Newport
News or any of its executive officers, directors or affiliates that would
require disclosure under the rules and regulations of the SEC applicable to the
merger. As of the date of this information statement/prospectus Northrop
Grumman beneficially owns 26,241,019 shares of Newport News common stock,
representing approximately 80.7% of the outstanding Newport News shares as of
December 5, 2001. No director of Northrop Grumman owns any shares of Newport
News common stock.

Confidentiality Agreement. Northrop Grumman and Newport News entered into a
confidentiality agreement dated October 5, 2001 pursuant to which Northrop
Grumman and Newport News agreed not to disclose the other's confidential
information or to use the other's confidential information other than for the
purpose of evaluating a possible transaction between Northrop Grumman and
Newport News. This summary is qualified in its entirety by reference to the
confidentiality agreement, which was filed with the SEC as Exhibit (e)(1) on
Northrop Grumman's amended Schedule TO, dated October 9, 2001, and incorporated
in this information statement/prospectus by reference.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain members of Newport News management and the board of directors (as
well as other employees of Newport News) have certain interests in the merger
that are described below that are in addition to their interests as
stockholders generally. The board of directors took these interests into
account in adopting the merger agreement.

Change in Control. The completion of the offer constituted a "change in
control" for all purposes under Newport News' employee benefit plans and
arrangements.

Treatment of Stock Options, Performance Shares and Restricted Stock.
Pursuant to the merger agreement, at the completion of the offer, Newport News
cancelled each outstanding and unexercised option to purchase shares of Newport
News common stock granted under any stock option plan, program, agreement or
arrangement of Newport News or any of its subsidiaries (not including Newport
News' Deferred Compensation Plan or Deferred Compensation Plan for Nonemployee
Directors) which was outstanding and unexercised immediately prior to
completion of the offer. In consideration of the cancellation, the holder of
each option became entitled to receive a payment in cash from Newport News in
an amount equal to the product of (x) the excess, if any, of the per share
value of the offer consideration ($67.50) over the exercise price per share of
Newport News common stock subject to the option and (y) the number of shares of
Newport News common stock. The amounts that became payable in respect of this
cancellation (net of the applicable exercise prices) at the completion of the
offer to Messrs. Fricks, Schievelbein, Little, Clarkson, Ream, all other
executive officers of Newport News as a group, and all directors of Newport
News (including Mr. Fricks) as a group were $19,073,318, $8,557,741,
$2,815,348, $4,073,021, $212,817, $11,860,857 and $20,694,223, respectively.

In addition, pursuant to the merger agreement, at the completion of the
offer, Newport News cancelled each right of any kind to receive shares of
Newport News common stock or benefits measured by the value of a number of
shares of Newport News common stock which was outstanding immediately prior to
completion of the offer. In consideration of the cancellation, the holder of
each stock-based award became entitled to receive a payment in cash from
Newport News in an amount equal to the product of (x) the per share value of
the offer consideration ($67.50) and (y) the number of shares of Newport News
common stock subject to the stock-based award. Each of these holders elected to
defer payment to a deferred compensation plan and was credited with a fully
vested amount of cash equal to the payment.

Pursuant to the merger agreement, at the completion of the offer, each award
of any kind consisting of shares of Newport News common stock issued under a
stock plan which was outstanding immediately prior to completion of the offer
but was then not vested became fully vested, and each holder was allowed to
tender the Newport News stock-based award pursuant to the offer on a guaranteed
delivery of shares basis with all of the same rights and limitations as any
other tendering stockholder. The number of shares of Newport News common stock
that became vested at the completion of the offer held by Messrs. Fricks,
Schievelbein, Little, Clarkson, Ream, all other executive officers of Newport
News as a group, and all directors of Newport News (including Mr. Fricks) as a
group are 0, 0, 0, 0, 7,500, 0 and 11,186, respectively.

Deferred Compensation Plans. In connection with the offer and the merger,
Newport News amended its Deferred Compensation Plan and Deferred Compensation
Plan for Nonemployee Directors to provide that the account balances for all
participants will be valued and paid out ninety days following the completion
of the offer. The value of the deferred compensation that became vested and
payable at the completion of the offer, as of September 30, 2001, plus the
amounts that were deferred in respect of stock-based awards at the completion
of the offer (as described above), to Messrs. Fricks, Schievelbein, Little,
Clarkson, Ream, all other executive officers of Newport News as a group, and
all directors of Newport News (including Mr. Fricks) as a group are
$17,044,055, $8,704,253, $3,833,666, $4,000,862, $563,400, $15,047,554 and
$17,283,667, respectively.

Annual Incentive Plan. In connection with the offer and the merger, Newport
News amended its Annual Incentive Plan to provide that:

(1) at the completion of the offer, Messrs. Fricks, Schievelbein, Little,
Clarkson and Ream became entitled to be paid full-year (not pro rated)
annual bonuses assuming performance was achieved at the maximum level
(the amounts that became payable to Messrs. Fricks, Schievelbein,
Little, Clarkson and Ream are $1,430,000, $652,500, $275,000, $261,000
and $372,000, respectively);

(2) with respect to participants who are not described in clause (1) above,
upon termination of employment on or before December 31, 2001, either by
Newport News other than for cause or, in the case of participants in the
Change in Control Severance Plan (as defined below), by such participant
due to constructive termination under the Change in Control Severance
Plan, the participant will be paid a pro rata annual bonus based on the
higher of target or actual Company performance through termination of
employment; and

(3) with respect to participants who are not described in clause (1) above
and remain employed through December 31, 2001, an annual bonus based on
actual Company performance for the 2001 plan year.

Restoration Plan. In connection with the offer and the merger, Newport News
amended its Retirement Benefit Restoration Plan to clarify that any employees
in a position designated as ECP Level 5 or above are eligible to participate in
such plan, and to clarify that any amounts paid under the Annual Incentive Plan
for 2001 will be taken into account for purposes of determining benefits
payable under the Retirement Benefit Restoration Plan.

SERP. In connection with the offer and the merger, Newport News amended its
Supplemental Executive Retirement Plan to clarify that any amounts paid under
the Annual Incentive Plan for 2001 will be taken into account for purposes of
determining benefits payable under the Supplemental Executive Retirement Plan.

Change in Control Severance Plan. In connection with the offer and the
merger, Newport News amended its Change in Control Severance Benefit Plan for
Key Executives (referred to herein as the "Change in Control Severance Plan")
to require that the obligations accrued under the Change in Control Severance
Plan be funded in the rabbi trust (which is described below), to clarify that
any amounts paid under the Annual Incentive Plan for 2001 will be taken into
account for purposes of determining benefits payable under the Change in
Control Severance Plan, and to clarify that certain executives may voluntarily
terminate their employment for any reason or no reason within the 30 day period
following the first anniversary of the change in control and receive severance
payments and benefits under the Change in Control Severance Plan. If,
immediately following the completion of the merger, the employment of each
executive officer were involuntarily terminated (including as a result of a
termination without cause or due to constructive termination under the Change
in Control Severance Plan), the estimated amounts of cash payments (including
severance payments and any additional change in control benefits under the
Retirement Benefit Restoration Plan and Supplemental Executive Retirement Plan)
that could become payable to Messrs. Fricks, Little, Clarkson, Ream and all
other executive officers of Newport News as a group (excluding Mr.
Schievelbein) as a result of the offer and the merger are $6,193,487,
$3,585,600, $2,502,902, $1,488,000, and $5,066,069, respectively. The foregoing
amounts exclude any payments that may be required to be made in respect of any
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended.

Rabbi Trust. At the completion of the offer, Newport News became obligated
to fund the rabbi trust within 30 days of that event. The rabbi trust is an
irrevocable trust, the assets of which may be used only to pay amounts under
certain specified benefit plans to which the rabbi trust applies, unless
Newport News becomes insolvent, in which case the assets in the trust will be
available to satisfy the claims of creditors. In connection with the offer and
the merger, Newport News amended the rabbi trust to provide that the amounts to
be funded pursuant to the underlying trust agreement will include the estimated
amount of severance or other benefits that may become

payable to participants of the specified benefit plans, assuming for such
purpose that such participants were terminated immediately following the
completion of the offer under circumstances that would give rise to their
entitlement to such benefits. The plans and agreements to which the rabbi trust
applies are the Change in Control Severance Plan, the Deferred Compensation
Plan, the Retirement Benefit Restoration Plan, the Supplemental Executive
Retirement Plan and the employment agreements with Messrs. Fricks and
Schievelbein. The amount of Newport News' funding obligation with respect to
the rabbi trust is approximately $210,000,000.

Agreement with Mr. Schievelbein. Northrop Grumman has entered into a
retention bonus agreement with Mr. Schievelbein for a two-year period beginning
at the completion of the offer. The retention bonus agreement became effective
upon completion of the offer and replaced his prior employment agreement at
that time. During each year of the two-year period, Northrop Grumman will pay
him at least $435,000 in base salary and a bonus of at least $400,000. Northrop
Grumman will also grant him stock options to purchase 15,000 shares of Northrop
Grumman common stock with a four-year vesting schedule and 8,000 shares of
restricted stock with a three-year performance period. Northrop Grumman will
also pay him retention bonus payments of $2,787,500 no later than January 31,
2003 and $1,087,500 thirty days following the second anniversary of the
completion of the offer, so long as he has remained continuously employed with
Northrop Grumman through such dates. Mr. Schievelbein will also receive each of
the retention bonus payments if Northrop Grumman terminates his employment
other than for cause, or if he terminates his employment following certain
adverse job-related actions by Northrop Grumman (for example, a reduction in
his compensation or relocation to which he does not consent), or if he dies or
becomes permanently disabled. If his termination is for any other reason, he
will forfeit any unpaid benefits under the retention bonus agreement. Northrop
Grumman will also provide Mr. Schievelbein with an enhanced supplemental
retirement benefit by adding three years to both his years of service and years
of participation under the plan and five years to his age under the plan.

By entering into the retention bonus agreement, Mr. Schievelbein waived his
right to terminate his employment during the two-year period following the
completion of the offer and receive severance pay under Newport News' Change in
Control Severance Benefit Plan for Key Employees; provided, however, that
Northrop Grumman has agreed that a termination of employment by Mr.
Schievelbein following certain adverse job-related actions by Northrop Grumman
shall be deemed for purposes of the Change in Control Severance Plan to be a
termination of employment due to a "constructive termination;" provided,
further, that in such event the severance benefits that he would be entitled to
receive under the Change in Control Severance Plan will be offset (other than
any required continuation of welfare benefits) by any cash payments or benefit
credits provided to him pursuant to the bonus retention agreement. Except as
modified by the bonus retention agreement, Mr. Schievelbein will continue to
retain all of his rights under the Change in Control Severance Plan (including,
without limitation, rights relating to the gross-up payment for any so-called
"golden parachute" excise taxes and related taxes). In addition, any cash
payments and benefit credits provided to him pursuant to the bonus retention
agreement, when paid, will reduce the severance benefits payable to Mr.
Schievelbein under that plan.

Agreement with Mr. Fricks. In connection with the offer and the merger,
Newport News has amended its employment agreement with Mr. Fricks to provide
corporate aircraft service for up to 30 hours of airtime per year until his
normal retirement date at age 65, grossed-up for federal and state income tax
purposes.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The discussion below reflects the opinion of Fried, Frank, Harris, Shriver &
Jacobson, outside counsel to Northrop Grumman, as to the material U.S. federal
income tax consequences of the offer and the merger to Newport News, and the
holders of Newport News common stock who are citizens or residents of the
United States or that are domestic corporations. The discussion below:

. is based upon current provisions of the Internal Revenue Code, currently
applicable Treasury regulations promulgated under the Internal Revenue
Code, and judicial and administrative decisions, all of which are subject
to change, possibly with retroactive effect;

. does not purport to address all aspects of U.S. federal income taxation
that may affect particular stockholders in light of their particular
circumstances, that are generally assumed to be known by investors or that
may affect stockholders to which special provisions of the U.S. federal
income tax laws may apply based on their particular circumstances or
status (see "--Qualifications" below);

. assumes that the shares of Newport News common stock are held as capital
assets;

. assumes that the offer and the merger and related transactions will take
place in accordance with all of the terms and conditions of the merger
agreement without the waiver or modification of any of those terms or
conditions; and

. does not address possible tax consequences of the offer or the merger
under foreign, state or local laws.

Neither Northrop Grumman nor Newport News has requested a ruling from the
Internal Revenue Service with regard to any of the U.S. federal income tax
consequences of the offer or the merger. The opinions of counsel will not be
binding on the Internal Revenue Service and there can be no assurance that the
Internal Revenue Service will not challenge the conclusions reflected in Fried,
Frank, Harris, Shriver & Jacobson's opinions and that a court would not sustain
a challenge of that type.

General Considerations--Tax Opinion--Direction of the Merger.

Under the merger agreement, the merger will be effected by merging Newport
News with and into Purchaser Corp. I, with Purchaser Corp. I surviving. Fried,
Frank, Harris, Shriver & Jacobson has provided an opinion, based on certain
assumptions and representations of Northrop Grumman and Newport News that if
the merger is effected in this manner, the offer and the merger will be treated
for federal income tax purposes as a single integrated transaction that
constitutes a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code. Under the terms of the merger agreement, Northrop
Grumman and Newport News will seek to have Fried, Frank, Harris, Shriver &
Jacobson confirm its opinion at the time of the merger, based on the actual
facts existing at the time.

In the event the confirming opinion referred to above cannot be obtained,
the merger will be restructured as a merger of Purchaser Corp. I into Newport
News. If the merger is restructured, the offer and the merger will not qualify
as a reorganization and the exchange of Newport News shares for Northrop
Grumman shares and/or cash pursuant to the offer or merger will be a fully
taxable transaction to the Newport News stockholders. See "Tax Consequences if
the Offer and the Merger Are Not Treated as a Reorganization" below.

The principal assumptions underlying the opinion of Fried, Frank, Harris,
Shriver & Jacobson are that:

. Representations, in all material respects the same as those provided by
Northrop Grumman, Purchaser Corp. I and Newport News at the time of the
initial opinion can and will be provided at the time of the merger based
on the actual facts existing at that time.

. The offer, the merger and related transactions will take place in
accordance with all of the terms and conditions of the offer and the
merger agreement without the waiver or modification of any of those terms
or conditions.

. The value of the Northrop Grumman stock issued to Newport News
stockholders pursuant to the offer and the merger will represent a
sufficient percentage of the value of all consideration furnished to the
Newport News stockholders in the offer and the merger to satisfy the
continuity of shareholder interest requirement of Treas. Reg. 1.368- 1(e).
The initial opinion assumes that at least a 45% level of continuity would
be achieved. For this purpose, consideration paid in the offer or the
merger to Newport News or its Stock Employee Compensation Trust would not
be taken into account. In addition, consideration paid in the offer for
any Newport News common stock issued after the date of the merger
agreement pursuant to the exercise of stock options, for "restricted
stock" or for Newport News common stock held at the date of the merger
agreement by the Stock Employee Compensation Trust that is sold to third
parties in accordance with the merger agreement before the offer closes,
will or will not be taken into account, depending on which treatment
produces the lowest level of continuity. For purposes of determining
continuity, the value of Northrop Grumman stock issued in the offer will
be the lesser of the value of such stock on the date the offer closes or
the date the merger occurs.

Tax Consequences of the Offer and the Merger if They Are Treated as a
Reorganization

Assuming the offer and the merger are treated together as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, the material
federal income tax consequences to Newport News and Newport News stockholders
of the offer and the merger are as set forth below. For a discussion of the tax
consequences if the offer and the merger are not treated as a reorganization,
see "Tax Consequences if the Offer and the Merger Are Not Treated as a
Reorganization" below.

Consequences to Newport News Stockholders

Only Shares of Northrop Grumman Common Stock Received. Except as discussed
below with respect to cash received in lieu of a fractional share of Northrop
Grumman common stock, a Newport News stockholder who receives solely shares of
Northrop Grumman common stock in exchange for the holder's shares of Newport
News common stock will not recognize gain or loss. The tax basis of the shares
of Northrop Grumman common stock will be the same as the tax basis of the
shares of Newport News common stock exchanged. The holding period of the shares
of Northrop Grumman common stock received will include the holding period of
the shares of Newport News common stock exchanged.

Only Cash Received. A Newport News stockholder who receives solely cash in
the offer and the merger in exchange for the stockholder's shares of Newport
News common stock generally will recognize capital gain or loss measured by the
difference between the amount of cash received and the tax basis of the
exchanged shares of Newport News common stock. This capital gain or loss will
be long-term capital gain or loss if the stockholder's holding period with
respect to his or her Newport News common stock exceeds one year as of the
effective time of the exchange pursuant to the offer or the merger, as the case
may be. If, however, a stockholder who receives solely cash in the offer and
the merger constructively owns shares of Newport News common stock for which
consideration other than cash will be received, or actually or constructively
owns shares of Northrop Grumman common stock after the offer and the merger,
the consequences to the stockholder may be similar to those discussed below
under "--Shares of Northrop Grumman Common Stock and Cash Received--Treatment
of Gain Recognized," except that the amount of consideration treated as a
dividend might not be limited to the amount of the stockholder's gain realized
in the transaction. See also "--Shares of Northrop Grumman Common Stock and
Cash Received--Effect of Overlapping or Constructive Ownership" for a general
discussion of the effect of a stockholder's overlapping or constructive
ownership on the dividend/capital gain issue.

Shares of Northrop Grumman Common Stock and Cash Received

General. Except as discussed below with respect to cash received in lieu of
a fractional share of Northrop Grumman common stock, a Newport News stockholder
who receives both shares of Northrop Grumman common stock and cash in exchange
for shares of Newport News common stock will recognize gain equal to the lesser
of:

. the amount, if any, by which the sum of the amount of cash and fair market
value, as of the effective time of the exchange pursuant to the offer or
the merger as the case may be, of Northrop Grumman common stock received
with respect to the stockholder's Newport News stock exceeds the
stockholder's tax basis in the Newport News common stock exchanged; and

. the amount of cash received in the exchange.

No loss will be recognized in the exchange. For this purpose gain or loss
must be calculated separately for each identifiable block of shares surrendered
in the exchange, and a loss realized on one block of shares cannot be used to
offset a gain realized on another block of shares. Any recognized capital gain
will be long-term capital gain if the stockholder's holding period with respect
to its Newport News common stock exceeds one year as of the effective time of
the exchange pursuant to the offer or the merger, as the case may be.

Treatment of Gain Recognized. Any gain recognized will be treated as gain
from the sale or exchange of stock, except in the circumstances described in
this paragraph. These circumstances primarily include cases where there is
overlapping or constructive ownership or where the stock election is
oversubscribed. A Newport News stockholder will be required to treat any gain
recognized as a dividend, to the extent of the stockholders' ratable share of
earnings and profits, if, as a result of the deemed redemption described in
step (2) below, the stockholders' interest in Northrop Grumman was not reduced
sufficiently to cause the cash received to be not "essentially equivalent to a
dividend" under Section 302 of the Internal Revenue Code. Whether a
stockholder's interest was reduced sufficiently to cause the cash received to
be not "essentially equivalent to a dividend" requires a determination based on
a stockholder's particular facts and circumstances. However, the Internal
Revenue Service has indicated in published rulings that a distribution that
results in any reduction in interest of a small, minority stockholder in a
publicly held corporation will sufficiently reduce the stockholder's interest
in the corporation if the stockholder exercises no control with respect to
corporate affairs. In addition, if the deemed redemption described in step (2)
below is "substantially disproportionate" with respect to the stockholder, the
gain recognized will be taxed as capital gain. The deemed redemption generally
will be substantially disproportionate if the percentage of Northrop Grumman
common stock owned after the deemed redemption described in step (2) below is
less than 80 percent of the percentage of Northrop Grumman common stock owned
after step (1) below.

For purposes of determining whether a stockholder's interest has been
reduced, a Newport News stockholder will be treated as if the stockholder had
engaged in a hypothetical transaction in which the stockholder and all other
Newport News stockholders (though it is unclear whether Newport News
stockholders who receive solely cash in the offer and the merger are counted
for this purpose) (1) received solely shares of Northrop Grumman common stock
in exchange for all of their shares of Newport News common stock, and (2)
thereafter had a portion of those shares of Northrop Grumman common stock
redeemed for the cash portion of the consideration pursuant to the merger. A
Newport News stockholder's hypothetical interest in Northrop Grumman after step
(1) is compared to the stockholder's interest in Northrop Grumman subsequent to
the deemed redemption in step (2). In each case, subject to limited exceptions,
shares of Northrop Grumman common stock actually or constructively owned, under
the constructive ownership rules described in "--Effect of Overlapping or
Constructive Ownership" below, by a stockholder will be considered owned for
purposes of applying these tests.

Effect of Overlapping or Constructive Ownership. Under the applicable
constructive ownership rules of Section 318 of the Internal Revenue Code, a
stockholder will, in general, be treated as owning shares owned by some family
members and other related entities, or that are subject to options owned or
deemed owned by that person. The actual or constructive ownership of shares of
Northrop Grumman or Newport News common stock may have the effect of causing a
Newport News stockholder who would otherwise qualify for capital gain treatment
to fail to so qualify and subject the stockholder to dividend treatment on the
cash portion of the offer or the merger consideration to the extent of the
stockholder's ratable share of earnings and profits, even if the stockholder
receives solely cash in the offer and the merger. Therefore, Newport News
stockholders who:

. constructively own shares of Newport News common stock; or

. actually or constructively own shares of Northrop Grumman common stock;

should consult their tax advisors as to the tax consequences of receiving cash,
whether or not the stockholder intends to make a stock election.

Tax Basis and Holding Period of Shares of Northrop Grumman Common Stock
Received in the Offer and the Merger. The tax basis of the shares of Northrop
Grumman common stock received in the offer and the merger will be the same as
the tax basis of the exchanged shares of Newport News common stock, increased
by the amount of gain recognized on the exchange with respect to those shares
of Newport News common stock, decreased by the tax basis of any portion of
those shares of Newport News common stock that are converted into cash in lieu
of receipt of a fractional share of Northrop Grumman common stock, and further
decreased by the amount of cash received with respect to those shares of
Newport News common stock, other than cash received in lieu of a fractional
share interest. The holding period of the shares of Northrop Grumman common
stock received will include the holding period of the exchanged shares of
Newport News common stock.

Fractional Shares

A Newport News stockholder who receives cash in lieu of a fractional share
of Northrop Grumman common stock should be treated as having received the
fractional share of Northrop Grumman common stock and then having exchanged the
fractional share for cash in a redemption by Northrop Grumman. Gain or loss
recognized as a result of that exchange would generally be equal to the cash
amount received for the fractional share of Northrop Grumman common stock less
the proportion of the stockholder's tax basis in shares of Newport News common
stock exchanged and allocable to the fractional share of Northrop Grumman
common stock. It is possible, however, that the cash received in lieu of a
fractional share of Northrop Grumman common stock would instead be treated in
the same manner as other cash received in the offer and the merger. See
"--Shares of Northrop Grumman Common Stock and Cash Received."

Consequences to Northrop Grumman and Newport News

Neither Northrop Grumman nor Newport News will recognize gain or loss as a
result of the offer and the merger.

Tax Consequences if the Offer and the Merger Are Not Treated as a
Reorganization.

Consequences to the Newport News Stockholders. If the offer and the merger
are not treated as a reorganization, because of a restructuring of the merger
or otherwise, a sale or exchange of Newport News common stock pursuant to the
offer or the merger will generally constitute a fully taxable transaction to an
exchanging Newport News stockholder, including a Newport News stockholder who
receives only Northrop Grumman stock pursuant to the offer or the merger.
Accordingly, a Newport News stockholder will generally recognize capital gain
or loss equal to the difference between the amount of cash plus the fair market
value of any Northrop Grumman stock received and the tax basis of the shares of
Newport News common stock exchanged therefor. This capital gain or loss will be
long-term capital gain or loss if the stockholder's holding period with respect
to his or her Newport News common stock exchanged exceeds one year as of
closing of the offer, in the case of shares exchanged in the offer, and one
year as of the closing of the merger, in the case of shares exchanged pursuant
to the merger. In that case, the basis of any Northrop Grumman stock received
in the offer will be the fair market value of such stock at the time the offer
closes, in the case of shares exchanged in the offer, and the fair market value
of such stock the time the merger closes, in the case of shares exchanged
pursuant to the merger. The holding period of any Northrop Grumman stock
received in or offer or the merger, will begin on the day after the offer
closes, in the case of Northrop Grumman stock received in the offer and on the
date after the merger closes in the case of Northrop Grumman stock received
pursuant to the merger.

Consequences to Northrop Grumman and Newport News. If the offer and the
merger fail to qualify as a reorganization because the merger is restructured,
neither Northrop Grumman nor Newport News will recognize gain or loss as a
result of the offer and the merger. If the merger fails to qualify as a
reorganization for some

other reason, Newport News could, under some circumstances, be required to
recognize gain equal to the excess of the fair market value of its assets over
their tax basis.

Backup Withholding. For a discussion of potential backup withholding with
respect to consideration received by Newport News stockholders, see the
prospectus, dated November 13, 2001, which was previously mailed to
stockholders.

Qualifications. As noted above, the foregoing discussion does not address
aspects of U.S. federal income taxation that may be relevant to Newport News
stockholders to which special provisions of the U.S. federal income tax law may
apply based on their particular circumstances or status. For example, the
discussion does not address aspects of U.S. federal income taxation that may be
relevant to:

. dealers in securities or currencies;

. traders in securities;

. financial institutions;

. tax-exempt organizations;

. insurance companies;

. persons holding shares of Newport News common stock as part of a hedging,
"straddle" conversion or other integrated transaction;

. non-United States persons;

. persons whose functional currency is not the United States dollar;

. persons who acquired their shares of common stock through the exercise of
employee stock options or otherwise as compensation; or

. stockholders who exercise appraisal rights.

The preceding discussion sets forth the material U.S. federal income tax
consequences of the offer and the merger but does not purport to be a complete
analysis or discussion of all potential tax effects relevant thereto. Thus,
Newport News stockholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the offer and the merger, including tax
return reporting requirements, whether gain, if any, will be treated as capital
gain or a dividend, the applicability and effect of U.S. federal, state, local
and other applicable tax laws and the effect of any proposed changes in the tax
laws.

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Northrop Grumman common stock is listed on the New York Stock Exchange and
the Pacific Exchange under the symbol "NOC." Newport News common stock is
listed on the New York Stock Exchange under the symbol "NNS." The table below
sets forth, for the calendar quarters indicated, the high and low sales prices
per share reported on the New York Stock Exchange and the dividends declared on
Northrop Grumman common stock and on Newport News common stock.

Northrop Grumman Newport News
Common Stock Common Stock
------------------------ -----------------------
High Low Dividends High Low Dividends
------- ------ --------- ------ ------ ---------

1999:
First Quarter.............................. $ 75.63 $56.63 $0.40 $34.00 $27.00 $0.04
Second Quarter............................. 73.88 57.31 0.40 34.25 25.69 0.04
Third Quarter.............................. 75.94 59.56 0.40 32.94 29.75 0.04
Fourth Quarter............................. 63.31 47.00 0.40 33.00 24.75 0.04
2000:
First Quarter.............................. 55.63 42.63 0.40 30.75 24.94 0.04
Second Quarter............................. 81.38 51.19 0.40 37.75 27.38 0.04
Third Quarter.............................. 93.25 64.38 0.40 45.56 36.50 0.04
Fourth Quarter............................. 93.88 74.00 0.40 57.69 41.88 0.04
2001:
First Quarter.............................. 99.09 79.13 0.40 57.75 45.19 0.04
Second Quarter............................. 97.06 76.41 0.40 65.69 47.94 0.04
Third Quarter.............................. 104.50 76.41 0.40 67.50 60.94 0.04
Fourth Quarter (through December 12, 2001). 110.56 88.50 0.40 73.84 66.25 0.04

--------
(a) For comparability, quarterly dividend amounts for Newport News are based on
the Newport News quarterly financial statement periods instead of the
calendar quarterly periods.

As of November 29, 2001, Newport News had 32,512,951 shares issued and
outstanding with the shares of common stock being Newport News' only class of
voting securities that would be entitled to vote for directors at a
stockholders meeting if one were to be held, each share being entitled to one
vote of these shares, with 26,241,019 or 80.7% held by Northrop Grumman. On May
8, 2001, the last full trading day prior to the public announcement of the
offer and the merger, the last sale price per Northrop Grumman common share on
the New York Stock Exchange was $91.50 and the last sale price per Newport News
common share was $65.00. On December 12, 2001, the most recent practicable date
prior to the filing of this information statement/prospectus, the last sale
price of Newport News' common stock was $68.20 and the last sale price of
Northrop Grumman was $94.64.

DESCRIPTION OF NORTHROP GRUMMAN COMMON STOCK

The following description of the terms of the capital stock of Northrop
Grumman is not meant to be complete and is qualified by reference to Northrop
Grumman's certificate of incorporation, which is incorporated by reference. See
"Where You Can Find More Information."

Northrop Grumman has authority to issue 400,000,000 shares of common stock,
par value $1.00 per share. As of October 26, 2001, 85,793,930 shares of common
stock were outstanding. The common stock is listed on the New York Stock
Exchange and on the Pacific Exchange.

Dividends. Dividends may be paid on the common stock and on any class or
series of stock entitled to participate with the common stock as to dividends,
but only when and as declared by the Northrop Grumman board of directors.

Voting Rights. Each holder of Northrop Grumman common stock is entitled to
one vote per share on all matters submitted to a vote of stockholders and does
not have cumulative voting rights for the election of directors.

Liquidation. If Northrop Grumman liquidates, holders of common stock are
entitled to receive all remaining assets available for distribution to
stockholders after satisfaction of its liabilities and the preferential rights
of any preferred stock that may be outstanding at that time.

Owner Rights. Northrop Grumman's outstanding common shares are fully paid
and nonassessable. The holders of Northrop Grumman's common stock do not have
any preemptive, conversion or redemption rights.

Registrar and Transfer Agent. The registrar and transfer agent for the
Northrop Grumman common stock is EquiServe Trust Company.

Preferred Share Purchase Rights. Northrop Grumman has adopted a rights plan
pursuant to which a preferred share purchase right is attached to each share of
common stock that is or becomes outstanding prior to October 31, 2008. The
rights become exercisable 10 days after the public announcement that any person
or group has (1) acquired 15% or more of the outstanding shares of Northrop
Grumman common stock, or (2) initiated a tender offer for shares of Northrop
Grumman common stock, which, if completed, would result in any person or group
acquiring 15% or more of the outstanding shares of Northrop Grumman common
stock. Once exercisable, each right will entitle the holder to purchase one
one-thousandth of a share of Northrop Grumman Series A junior participating
preferred stock, par value $1.00 per share, at a price of $250.00 per one
one-thousandth of a share, subject to adjustment. Alternatively, under some
circumstances involving an acquisition of 15% or more of Northrop Grumman
common stock outstanding, each right will entitle its holder to purchase, at a
fifty percent discount, a number of shares of Northrop Grumman common stock
having a market value of two times the exercise price of the right. Northrop
Grumman may (1) exchange the rights at an exchange ratio of one share of
Northrop Grumman common stock per right, and (2) redeem the rights, at a price
of $0.01 per right, at any time prior to an acquisition of 15% or more of the
outstanding shares of Northrop Grumman common stock by any person or group.

Some Important Charter and Statutory Provisions. Northrop Grumman's
certificate of incorporation provides for the division of the Northrop Grumman
board of directors into three classes of directors, each serving staggered,
three year terms. Northrop Grumman's certificate of incorporation further
provides generally that any alteration, amendment or repeal of the sections of
the certificate of incorporation dealing with the following subjects requires
the approval of the holders of at least 80% of the outstanding voting power,
unless the action is approved by a majority of the Northrop Grumman board of
directors:

. the election and classification of the board of directors;

. liability of directors; and

. the vote requirements for amendments to the certificate of incorporation.

If any of these changes to the certificate of incorporation are approved by the
Northrop Grumman board of directors, the approval of a majority of the
outstanding voting power is required to make these changes effective.

These provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of Northrop Grumman.

COMPARISON OF RIGHTS OF HOLDERS OF NORTHROP GRUMMAN SHARES AND NEWPORT NEWS
SHARES

Upon completion of the merger, stockholders of Newport News will be entitled
to become stockholders of Northrop Grumman, rather than stockholders of Newport
News. As Northrop Grumman stockholders, the rights of former Newport News
stockholders will be governed by Northrop Grumman's charter and bylaws, which
differ in material respects from Newport News' charter and bylaws. Delaware is
the jurisdiction of incorporation of Northrop Grumman and Newport News and as
such stockholders will continue to be governed by the Delaware General
Corporation Law.

The following is a comparison of:

. the current rights of Newport News stockholders under the Delaware General
Corporation Law and the Newport News charter and bylaws; and

. the rights Newport News stockholders would have as Northrop Grumman
stockholders under the Delaware General Corporation Law and the Northrop
Grumman charter and bylaws upon the completion of the offer and the merger.

The following summary is not intended to be complete and is qualified in its
entirety by reference to the Delaware General Corporation Law, the Newport News
charter and bylaws, and the Northrop Grumman charter and bylaws, as
appropriate. Copies of the Newport News charter and bylaws and the Northrop
Grumman charter and bylaws are incorporated by reference herein and will be
sent to Newport News stockholders, upon request. See "Where You Can Find More
Information."

Northrop Grumman Newport News
-----------------------------------------------------------------------------------------------------------------
Board of Directors
-----------------------------------------------------------------------------------------------------------------

Classified Boards
-----------------------------------------------------------------------------------------------------------------

Delaware law permits a certificate of incorporation to The Newport News charter provides that the board
provide that a board of directors be divided into classes, of directors is to be divided into three classes of
with each class having a term of office longer than one directors, each as nearly equal in number as
year but no longer than three years. possible, with each director elected for a term
expiring at the third succeeding annual meeting of
The Northrop Grumman charter provides that the board of stockholders after his or her election.
directors is to be divided into three classes of directors,
each as nearly equal in number as possible, with each
director elected for a term expiring at the third succeeding
annual meeting of stockholders after his or her election.

Removal of Directors
-----------------------------------------------------------------------------------------------------------------

The Northrop Grumman charter provides that directors The Newport News charter and bylaws are silent
may be removed only for cause and only by the as to removal of directors. As such Delaware law
affirmative vote of the holders of not less than 80% of governs and provides for removal of directors only
the voting power of all outstanding shares of capital for cause by a vote of the holders of a majority of
stock of Northrop Grumman having general voting the then outstanding shares entitled to vote.
power entitled to vote in connection with the election of
a director, regardless of class and voting together as a
single voting class; provided, however, that where the
removal is approved by a majority of Continuing
Directors (as defined in the Northrop Grumman charter),
the affirmative vote of a majority of the voting power of
all outstanding shares of Voting Stock entitled to vote in
connection with the election of that director, regardless
of class and voting together as a single voting class, is
required for approval of removal.

Northrop Grumman Newport News
---------------------------------------------------------------------------------------------------------------

Filling of Board Vacancies
---------------------------------------------------------------------------------------------------------------
In accordance with the Delaware General Corporation The Newport News charter provides that any
Law, under the Northrop Grumman charter vacancies vacancy on the board of directors that results in
and newly created directorships may be filled solely by an increase in the number of directors may be
a majority of the directors then in office or a sole filled by a majority of the board of directors then
remaining director (even though less than a quorum). in office, provided that a quorum is present. Any
However, the Delaware General Corporation Law also other vacancy occurring in the board of directors
provides that if the directors then in office constitute may be filled by a majority of the directors then
less than a majority of the corporation's board of in office, even if less than a quorum, or by a sole
directors, then, upon application by stockholders remaining director.
representing at least 10% of outstanding shares entitled
to vote for those directors, the Court of Chancery may
order a stockholder election of directors to be held.

Size of Board
---------------------------------------------------------------------------------------------------------------

The Northrop Grumman bylaws provide that the number The Newport News charter and bylaws provide
of directors shall be fixed from time to time by that the number of directors shall consist of not
resolution of the board of directors but shall not be less less than 3 nor more than 16 directors, with the
than 3. As of November 8, 2001, the board of directors exact number of directors to be determined from
shall consist of 10 directors until changed as provided in time to time by the board of directors pursuant to
the bylaws. a resolution adopted by the affirmative vote of a
majority of the entire board of directors.

Quorum
--------------------------------------------------------------------------------------------------------------------

The Northrop Grumman bylaws provide for a quorum of A majority of the directors then in office (but not less
a majority of the board of directors, except that when the than one-third of the total number of directors
board of directors consists of one director, then the one constituting the entire board of directors) shall
director shall constitute a quorum. constitute a quorum.

----------------------------------------------------------------------------------------------------------------
Stockholders Meeting
----------------------------------------------------------------------------------------------------------------

Annual Meeting
----------------------------------------------------------------------------------------------------------------

Held between May 1 and July 1 of each year on such Held on date fixed by board of directors.
date as fixed by the board of directors.

Calling a Special Meeting
----------------------------------------------------------------------------------------------------------------

Under the Northrop Grumman charter and bylaws, Subject to the rights of the holders of any series of
special stockholder meetings may be called at any time preferred stock to elect directors under specified
by a majority of the board of directors, the Chairman of circumstances, special meetings shall be called by the
the board of directors or by the President and Chief board of directors on the date the board of directors
Executive Officer. designates.

Northrop Grumman Newport News
----------------------------------------------------------------------------------------------------------------

Quorum Requirements
----------------------------------------------------------------------------------------------------------------

The presence in person or by proxy of the holders of a The presence in person or by proxy of the holders
majority of the shares entitled to vote at the meeting of a majority of the shares entitled to vote at the
constitutes a quorum for that meeting, except as meeting constitutes a quorum for that meeting,
otherwise provided by the Delaware General except as otherwise provided by the Delaware
Corporation Law. General Corporation Law.

Certain Voting Requirements
----------------------------------------------------------------------------------------------------------------

Under the Northrop Grumman bylaws (except as Under the Newport News bylaws (except as
otherwise provided by the Northrop Grumman charter or otherwise provided by law, the bylaws or the
by applicable law), action by Northrop Grumman charter), the vote of a majority of any quorum is
stockholders generally is taken by the affirmative vote, sufficient to elect directors and to pass any
at a meeting at which a quorum is present, of a majority resolution within the power of the holders of all the
of the outstanding shares entitled to vote on that action outstanding shares.
(including certain extraordinary actions, including
mergers, consolidations and amendments to the
Northrop Grumman charter). However, the Northrop
Grumman charter requires the affirmative vote of the
holders of not less than 80% of outstanding shares of
voting stock to approve an amendment of certain articles
in the charter. The charter also requires a supermajority
(80%) stockholder vote to approve a Business
Combination (as defined in the Northrop Grumman
charter) involving specific related persons.

Stockholder Action by Written Consent
----------------------------------------------------------------------------------------------------------------

Under the Northrop Grumman charter and bylaws, any Under the Newport News bylaws, any person
action required or permitted to be taken by stockholders seeking to have stockholders authorize or take
must be effected at a duly called annual meeting or at a corporate action by written consent without a
special meeting of stockholders, unless any action meeting must request to the Secretary that a record
requiring or permitting stockholder approval is approved date be fixed for such purpose. Consents must be
by a majority of the continuing directors, in which case signed by a sufficient number of stockholders to
that action may be authorized or taken by the written take that action and delivered to Newport News.
consent of the holders of outstanding shares of voting
stock (as defined in the Northrop Grumman charter)
having not less than the minimum voting power that
would be necessary to authorize or take such action at a
meeting of stockholders at which all shares entitled to
vote thereon were present and voted provided all other
requirements of applicable law and the charter have
been satisfied.

Northrop Grumman Newport News
-------------------------------------------------------------------------------------------------------------

Advance Notice for Stockholder Nomination and Other Business
-------------------------------------------------------------------------------------------------------------
The Northrop Grumman bylaws provide that with To be properly brought before the meeting,
respect to any stockholder meeting, nominations of business must be either (a) specified in the notice
persons for election to the board of directors and the of meeting (or any supplement thereto) given by or
proposal of business to be considered by stockholders at the direction of the board of directors, (b)
may be made only (a) by or at the direction of the otherwise properly brought before the meeting by
board of directors, (b) by a stockholder of record who or at the direction of the board of directors, or
is entitled to vote and who has complied with the (c) otherwise properly brought before the meeting
advance notice procedures set forth in the bylaws, or by a stockholder entitled to vote at that meeting. In
(c) pursuant to Northrop Grumman's notice with addition to any other applicable requirements, for
respect to that meeting. business to be properly brought before the annual
meeting by a stockholder, the stockholder must
have given timely notice in writing to the Secretary
of Newport News. To be timely, a stockholder's
notice shall be delivered to the secretary at the
principal executive offices of Newport News not
later than the close of business on the seventieth
day nor earlier than the close of business on the
ninetieth day prior to the first anniversary of the
preceding year's annual meeting.

Northrop Grumman Newport News

--------------------------------------------------------------------------------------------------------------
Amendments to Organizational Documents
--------------------------------------------------------------------------------------------------------------
Certificate of Incorporation
--------------------------------------------------------------------------------------------------------------
Under the Delaware General Corporation Law, the Subject to the charter and applicable law, Newport
affirmative vote of the holders of a majority of the News reserves the right to amend, alter, change or
outstanding shares entitled to vote is required to amend repeal any provision contained in the charter.
the Northrop Grumman charter. In addition,
amendments that make changes relating to the capital The same Delaware law provisions regarding
stock by increasing or decreasing the par value or the amendments to the certificate of incorporation
aggregate number of authorized shares of a class or that applicable to Northrop Grumman are also applicable
adversely affect the rights of that class, must be to Newport News.
approved by the affirmative vote of the holders of a
majority of the outstanding shares of each class of stock
affected, unless, in the case of an increase in the number
of shares, the certificate of incorporation takes away that
right, and provided that, if the amendment adversely
affects some series, then only those series have such
vote. The Northrop Grumman charter provides that
specified articles may be adopted, repealed, rescinded,
altered or amended only by the affirmative vote of the
holders of not less than 80% of the voting power of all
outstanding shares of voting stock, regardless of class
and voting together as a single voting class, and where
that action is proposed by an interested stockholder (as
defined in the Northrop Grumman charter) or an
associate or affiliate (each as defined in the Northrop
Grumman charter) of an interested stockholder, by the
majority of the voting power of all of the outstanding
shares of voting stock, voting together as a single class,
other than shares held by the interested person; provided,
however, that where the action is approved by a majority
of the continuing directors (as defined in the Northrop
Grumman charter), the affirmative vote of a majority of
the voting power of all outstanding shares of voting
stock, regardless of class and voting together as a single
voting class shall be required for approval of that action.

Northrop Grumman Newport News

------------------------------------------------------------------------------------------------------------------

Bylaws

------------------------------------------------------------------------------------------------------------------
Under the Northrop Grumman charter and bylaws, the The board of directors has the power to make, alter,
bylaws may be adopted, repealed, rescinded, altered or amend or repeal any and all of the bylaws, but any
amended by (a) the stockholders, but only by the bylaws so made, altered or repealed by the board of
affirmative vote of the holders of not less than 80% of directors may be amended, altered or repealed by the
the voting power of all outstanding shares of voting stockholders.
stock, regardless of class and voting together as a single
voting class and, where such action is proposed by an
interested stockholder or by any associate or affiliate of
an interested stockholder, by a majority of the voting
power of all outstanding shares of voting stock,
regardless of class and voting together as a single class,
other than the shares held by such interested
stockholders; provided, however, that where such action
is approved by a majority of the continuing directors, the
affirmative vote of the holders of a majority of the
voting power of all outstanding shares of voting stock,
regardless of class and voting together as a single voting
class, shall be required for approval of that action or
(b) the board of directors.
------------------------------------------------------------------------------------------------------------------
Capitalization
------------------------------------------------------------------------------------------------------------------
Authorized Stock
------------------------------------------------------------------------------------------------------------------
Common stock: 400 million shares; preferred stock: 10 Common stock: 70 million shares; preferred stock: 10
million shares. million shares.

Preferred Stock
------------------------------------------------------------------------------------------------------------------
The board of directors is authorized to issue preferred The board of directors is authorized to issue preferred
stock from time to time in one or more series, with stock from time to time in one or more series, with
terms to be fixed by the board of directors. terms to be fixed by the board of directors.

Rights Plans
------------------------------------------------------------------------------------------------------------------
Northrop Grumman entered into a Rights Agreement, Newport News entered into a Rights Agreement,
dated January 31, 2001, between Northrop Grumman dated June 10, 1998, between Newport News and
and EquiServe Trust Company, N.A., as amended. EquiServe Trust Company, N.A. (formerly known as
First Chicago Trust Company of New York), as
amended.

Northrop Grumman Newport News

----------------------------------------------------------------------------------------------------------------
Business Combinations
----------------------------------------------------------------------------------------------------------------

Under the Delaware General Corporation Law, the The Newport News charter and bylaws are silent as to
affirmative vote of a majority of the outstanding shares business combinations. The same Delaware law
is needed to adopt a plan of merger or consolidation. provisions regarding business combinations
applicable to Northrop Grumman are also applicable
The Delaware General Corporation Law prohibits a to Newport News.
Delaware corporation which has a class of stock which
is listed on a national stock exchange or which has 2,000 The full text of Section 203 of the Delaware General
or more stockholders of record from engaging in a Corporation Law has been annexed as Schedule B to
business combination with an interested stockholder the prospectus dated November 13, 2001 and is
(generally, the beneficial owner of 15% or more of the incorporated in this information statement/prospectus
corporation's outstanding voting stock) for three years by reference.
following the time the stockholder became an interested
stockholder, unless, prior to that time, the corporation's
board of directors approved either the business
combination or the transaction that resulted in the
stockholder becoming an interested stockholder, or if at
least two-thirds of the outstanding shares not owned by
that interested stockholder approve the business
combination at a meeting of stockholders, or if, upon
becoming an interested stockholder, that stockholder
owned at least 85% of the outstanding shares (excluding
those held by officers, directors and some employee
stock plans.)

In addition to the Delaware General Corporation Law
requirements, the Northrop Grumman charter provides
that, subject to various exceptions, any business
combination between Northrop Grumman or any
subsidiary and an interested stockholder (as defined in
the Northrop Grumman charter) must be approved by
the holders of at least 80% of the voting power of all
outstanding voting stock, regardless of class and voting
together as a single voting class and a majority of the
voting power of all outstanding shares of voting stock,
other than the shares held by any interested stockholder
which is a party to such business combination or by any
affiliate or associates of such interested stockholder,
regardless of class and voting together as a single voting
class.

BENEFICIAL SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT

Set forth below is the ownership, as of December 5, 2001 (except as
otherwise stated), of the number of shares and percentage of Newport News
common stock beneficially owned by (a) each director of Newport News, (b) each
required executive officer of Newport News, (c) all executive officers and
directors of Newport News as a group and (d) all persons beneficially owning
more than 5% of the outstanding Newport News common stock.

Shares of Newport News Aggregate Percentage
Common Stock Owned (a) Owned (b)
---------------------- --------------------

William P. Fricks (Ret.).................................... 0 0
Hon. Gerald L. Baliles...................................... 0 0
Hon. Charles A. Bowsher..................................... 0 0
W. Burks Terry.............................................. 0 0
Albert F. Myers............................................. 0 0
John H. Mullan.............................................. 0 0
Thomas C. Schievelbein...................................... 0 0
Alfred Little, Jr........................................... 0 0
Stephen B. Clarkson......................................... 0 0
William G. Cridlin, Jr...................................... 0 0
All directors and executive officers as a group (16) persons 0 0
Northrop Grumman Corporation and Purchaser Corp. I.......... 26,241,019 80.7%
1840 Century Park East
Los Angeles, CA 90067

--------
(a) Except as described in the notes below, each director, executive officer
and 5% holder has sole voting and dispositive power over the shares
beneficially owned, as set forth in this column.
(b) Except as indicated, each person or group beneficially owns less than 1% of
the outstanding Newport News common stock. All percentages are based on
32,522,528 shares of Newport News common stock outstanding as of December
5, 2001.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Newport News' executive officers, directors and persons owning more than 10% of
Newport News' common stock to file reports of ownership and changes in
ownership of Newport News' common stock and derivative securities of

Newport News with the SEC and the New York Stock Exchange. All directors and
executive officers filed on a timely basis all reports required to be filed in
2000, except for a single report of a single sale of Newport News common stock
in August 2000, which was inadvertently filed late by Mr. Stephen R. Wilson,
formerly a member of the Newport News board of directors.

LEGAL MATTERS

The legality of Northrop Grumman common stock offered by the prospectus,
dated November 13, 2001, and filed with the SEC as part of the Form S-4, will
be passed upon by John H. Mullan, Corporate Vice President and Secretary of
Northrop Grumman. Mr. Mullan is paid a salary by Northrop Grumman, is a
participant in various employee benefit plans offered to employees of Northrop
Grumman generally and owns and has options to purchase shares of Northrop
Grumman common stock.

Certain other legal matters in connection with the offer and the merger will
be passed upon for Northrop Grumman and Purchaser Corp. I by Fried, Frank,
Harris, Shriver & Jacobson (a partnership including professional corporations),
New York, New York, and for Newport News by Cravath, Swaine & Moore, New York,
New York.

EXPERTS

The consolidated financial statements and related financial statement
schedule incorporated in this information statement/prospectus by reference
from Northrop Systems' Annual Report on Form 10-K/A for the year ended December
31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

With respect to the unaudited interim financial information of Northrop
Grumman Corporation for the periods ended March 31, 2001, June 30, 2001 and
September 30, 2001 and of Northrop Grumman Systems Corporation (formerly
Northrop Grumman Corporation) for the periods ended March 31, 2000, June 30,
2000 and September 30, 2000 which is incorporated herein by reference, Deloitte
& Touche LLP have applied limited procedures in accordance with professional
standards for a review of such information. However, as stated in their reports
included in Northrop Grumman's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001 and incorporated by
reference herein, they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because such reports are
not "reports" or a "part" of the registration statement prepared or certified
by an accountant within the meaning of Sections 7 and 11 of the Act.

The consolidated financial statements incorporated in this information
statement/prospectus by reference from Litton's Annual Report on Form 10-K for
the year ended July 31, 2000 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

The audited financial statements of Newport News Shipbuilding Inc.
incorporated by reference in this information statement/prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said reports.

The representatives of Deloitte & Touche LLP and Arthur Andersen LLP are not
expected to be present at the stockholders' meeting to be held on January 18,
2002.

OTHER MATTERS

Newport News does not intend to hold a 2002 annual meeting prior to the
scheduled completion of the merger. If the merger is not completed and Newport
News does hold a 2002 annual meeting, Newport News will notify you of such
meeting, including the date by which stockholder proposals must be received at
Newport News' executive offices in order to be considered for inclusion in the
proxy materials relating to such meeting.

Newport News does not intend to bring any other matters before the special
meeting, and is not aware of any other matters that are expected to be brought
properly before the special meeting.

WHERE YOU CAN FIND MORE INFORMATION

Northrop Grumman and Newport News file annual, quarterly and special
reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy this information at the following
locations of the SEC:

Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 233 Broadway 500 West Madison Street
Room 1024 13th Floor Suite 1400
Washington, D.C. 20549 New York, New York 10279 Chicago, Illinois 60661

You may obtain information on the operation of the Public Reference Rooms by
calling the SEC at 1-800-SEC-0330. You may also obtain copies of this
information by mail from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.

The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers like Northrop
Grumman and Newport News who file electronically with the SEC. The address of
that site is http://www.sec.gov.

Northrop Grumman filed a registration statement on Form S-4 on November 20,
2001 with the SEC under the Securities Act of 1933 to register the Northrop
Grumman common stock to be issued in the offer and the merger. The prospectus
is a part of the registration statement. As allowed by SEC rules, the
prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement. In
addition, on May 23, 2001 Northrop Grumman also filed with the SEC a statement
on Schedule TO pursuant to Rule 14d-3 under the Exchange Act to furnish various
information about the offer. You may obtain copies of the Form S-4 and the
Schedule TO, and any amendments to those documents, in the manner described
above.

The SEC allows Newport News to "incorporate by reference" information into
this information
statement/prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this information
statement/prospectus, except for any information superseded by information
contained directly in this information statement/prospectus.

This information statement/prospectus incorporates by reference the
documents listed below that Northrop Grumman, Litton Industries Inc. and
Newport News have previously filed with the SEC. These documents contain
important information about Northrop Grumman and Newport News and their
business, financial condition and results of operations.

The following documents filed by Northrop Grumman with the SEC are
incorporated by reference:

. Registration Statement on Form S-4, as filed on May 23, 2001 and as
amended on June 6, 2001, June 27, 2001, November 6, 2001, November 13,
2001, November 16, 2001 and November 20, 2001, and as it may be amended
from time to time;

. Annual Report on Form 10-K/A, for the fiscal year ended December 31, 2000,
as filed on March 8, 2001;

. Quarterly Reports on Form 10-Q for the period ended March 31, 2001, as
filed on May 10, 2001, for the period ended June 30, 2001, as filed on
August 9, 2001 and for the period ended September 30, 2001, as filed on
November 5, 2001;

. Proxy Statement for the Annual Meeting of Stockholders held on May 16,
2001, as filed on April 13, 2001;

. The description of Northrop Grumman's common stock set forth in Northrop
Grumman's registration statement on Form S-3 filed by Northrop Grumman
pursuant to Section 12 of the Exchange Act, including any amendment or
report filed for purposes of updating the description as filed on October
10, 2001;

. Current Reports on Form 8-K, as filed on April 17, 2001, and as amended on
Form 8-K/A, as filed on June 14, 2001, and as filed on November 14, 2001,
November 16, 2001 and November 21, 2001; and

. Tender Offer Statement on Schedule TO, as filed on May 23, 2001, and as
amended on May 24, 2001, June 15, 2001, June 19, 2001, June 21, 2001, July
6, 2001, July 20, 2001, August 3, 2001, August 10, 2001, August 17, 2001,
August 21, 2001, August 31, 2001, September 14, 2001, September 21, 2001,
September 28, 2001, October 5, 2001, October 9, 2001, October 9, 2001,
October 12, 2001, October 19, 2001, October 24, 2001, October 26, 2001,
November 5, 2001, November 7, 2001, November 8, 2001, November 13, 2001,
November 14, 2001, November 26, 2001, November 28, 2001, and November 30
2001, and as it may be amended from time to time.

The following documents filed by Litton with the SEC are incorporated by
reference:

. Annual Report on Form 10-K for the fiscal year ended July 31, 2000, as
filed on October 11, 2000; and

. Quarterly Report on Form 10-Q for the period ended January 31, 2001, as
filed on March 6, 2001.

The following documents filed by Newport News with the SEC are incorporated
by reference:

. Solicitation/Recommendation Statement on Schedule 14D-9, as filed on June
6, 2001 and as amended on June 7, 2001, June 18, 2001, June 19, 2001, June
21, 2001, June 25, 2001, July 9, 2001, July 20, 2001, July 25, 2001,
August 3, 2001, August 6, 2001, August 10, 2001, August 17, 2001, August
20, 2001, August 31, 2001, September 4, 2001, September 17, 2001,
September 21, 2001, September 24, 2001, September 28, 2001, October 1,
2001, October 4, 2001, October 5, 2001, October 9, 2001, October 9, 2001,
October 12, 2001, October 15, 2001, October 19, 2001, October 22, 2001,
October 24, 2001, October 26, 2001, October 29, 2001, November 5, 2001,
November 6, 2001, November 7, 2001, November 8, 2001, November 13, 2001,
November 26, 2001, November 27, 2001, November 28, 2001, and November 30,
2001, and as it may be amended from time to time;

. Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as
filed on March 26, 2001;

. Quarterly Reports on Form 10-Q for the period ended March 18, 2001, as
filed on April 27, 2001, for the period ended June 17, 2001, as filed on
July 19, 2001 and for the period ended September 16, 2001 as filed on
October 25, 2001;

. The description of Newport News' common stock set forth in Newport News'
registration statement on Form 10 filed by Newport News pursuant to
Section 12 of the Exchange Act, including any amendment or report filed
for purposes of updating the description as filed on October 30, 1996; and

. Current Reports on Form 8-K, as filed on April 25, 2001, November 8, 2001,
November 14, 2001, and November 30, 2001.

All documents filed by Northrop Grumman or Newport News pursuant to Section
12(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this information
statement/prospectus and prior to the date of the special meeting shall also be
deemed to be incorporated in this information statement/prospectus and to be a
part hereof from the dates of filing such documents or reports. Any statement
contained herein or in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this information
statement/prospectus to the extent that a statement/prospectus contained herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this information statement/prospectus.

Documents incorporated by reference are available from us without charge
upon request to the information agent, D. F. King & Co., Inc., 77 Water Street,
New York, New York 10005, toll-free at 1-800-758-5378. In order to ensure
timely delivery, any request should be submitted no later than January 8, 2002
(10 calendar days before the special meeting). If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.

We have not authorized anyone to give any information or make any
representation about the offer that is different from, or in addition to, that
contained in this information statement/prospectus or in any of the materials
that we have incorporated by reference into this information
statement/prospectus. Therefore, if anyone does give you information of this
sort, you should not rely on it. If you are in a jurisdiction where offers to
exchange or sell, or solicitations of offers to exchange or purchase, the
securities offered by this information
statement/prospectus are unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
information statement/prospectus does not extend to you. The information
contained in this information statement/prospectus speaks only as of the date
of this information statement/prospectus unless the information specifically
indicates that another date applies.

ANNEX A

SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW--APPRAISAL RIGHTS.

(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (S) 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S) 251 (other than a merger effected pursuant to (S)
251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or (S) 264
of this title:

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of (S) 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to (S)(S) 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S) 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

A-1

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder electing
to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to (S) 228 or
(S) 253 of this title, then either a constituent corporation before the
effective date of the merger or consolidation, or the surviving or resulting
corporaiton within ten days thereafter, shall notify each of the holders of
any class or series of stock of such constitutent corporation who are
entitled to appraisal rights of the approval of the merger or consolidation
and that appraisal rights are available for any or all shares of such class
or series of stock of such constituent corporation, and shall include in
such notice a copy of this section; provided that, if the notice is given on
or after the effective date of the merger or consolidation, such notice
shall be given by the surviving or resulting corporation to all such holders
of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date
of mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent corporation that are entitled to
appraisal rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation
may fix, in advance, a record date that shall be not more than 10 days prior
to the date the notice is given, provided, that if the notice is given on or
after the effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.

A-2

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation

A-3

of the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.

A-4

ANNEX B

DIRECTORS AND EXECUTIVE OFFICERS OF
NORTHROP GRUMMAN

The name, age, business address, present principal occupation or employment
and five-year employment history of each of the directors and executive
officers of Northrop Grumman are set forth below. Unless otherwise indicated,
each position set forth opposite an individual's name refers to employment with
Northrop Grumman and each individual has held that position for at least the
last five years. Each director and executive officer listed below is a citizen
of the United States of America. Unless otherwise indicated below, the business
address of each person is c/o Northrop Grumman, 1840 Century Park East, Los
Angeles, California 90067.

Directors (Including Executive Officers Who Are Directors)

Name and Business Address Age Present Principal Occupation or
Employment; Five Year Employment History

John T. Chain, Jr. 66 Director of Northrop Grumman since 1991.
General, United States Air Force (Ret.) and
Chairman of the Board, Thomas Group, Inc.,
a management consulting company. General
Chain has been Chairman of Thomas Group,
Inc. since May 1998 and has been a member
of the board of directors of Thomas Group
since May 1995. He has also served as the
President of Quarterback Equity Partners,
Inc. since December 1996. He served as
Special Assistant to the Chairman of
Burlington Northern Santa Fe Corporation
from November 1995 to March 1996, and as an
Executive Vice President of Burlington
Northern from 1991 to November 1995. During
his military career, General Chain's
commands included military assistant to the
Secretary of the Air Force, Director of
Politico-Military Affairs, Department of
State and Chief of Staff of Supreme
Headquarters Allied Powers Europe. After
serving as Commander in Chief, Strategic
Air Command, he retired from the Air Force
in February 1991. General Chain serves as a
director of R.J. Reynolds, Inc. and Kemper
Insurance Company.

Lewis W. Coleman 59 Director of Northrop Grumman since 2001.
President, Gordon and Betty Moore
Foundation. Mr. Coleman became President of
the Gordon and Betty Moore Foundation in
January 2001. In December 2000, he resigned
as Chairman of Banc of America Securities
LLC, a subsidiary of Bank of America
Corporation, after having served in that
position since joining Banc of America
Securities, LLC in December 1995. Prior to
that, he spent ten years at BankAmerica
Corporation where he held various positions
including Chief Financial Officer, head of
World Banking Group and head of Capital
Markets. Previous to that he spent thirteen
years with Wells Fargo & Co. in a variety
of wholesale and retail banking positions.
He is also on the board of directors of
Chiron Corporation.

Vic Fazio 59 Director of Northrop Grumman since 2000.
Senior Partner, Clark & Weinstock, a
consulting firm. Mr. Fazio served as a

B-1

Member of Congress for 20 years
representing California's third
congressional district. During that time he
served as a member of the Armed Services,
Budget and Ethics Committees and was a
member of the House Appropriations
Committee where he served as Subcommittee
Chair or ranking member for 18 years. Mr.
Fazio was a member of the elected
Democratic Leadership in the House from
1991-1998 including four years as Chair of
the Democratic Caucus, the third ranking
position in the party. From 1975 to 1978
Mr. Fazio served in the California Assembly
and was a member of the staff of the
California Assembly Speaker from 1971 to
1975. Upon leaving Congress in early 1999,
he became a Senior Partner at Clark &
Weinstock, a strategic communications
consulting firm. He is a member of numerous
boards of directors including The
California Institute, Coro National Board
of Governors, which he chairs, the U.S.
Capitol Historical Society, the Board of
the U.S. Capitol Visitors Center and the
Board of Visitors, The University of
California at Davis Medical School.

Phillip Frost 64 Director of Northrop Grumman since 1996.
Chairman of the board of directors and
Chief Executive Officer of IVAX
Corporation, a pharmaceutical company. Dr.
Frost has served as Chairman of the board
of directors and Chief Executive Officer of
IVAX Corporation since 1987 and served as
President from 1991 to 1995. Dr. Frost was
Chairman of the Department of Dermatology
at Mt. Sinai Medical Center of Greater
Miami, Miami Beach, Florida from 1972 to
1990 and was Chairman of the board of
directors of Key Pharmaceuticals, Inc. from
1972 to 1986. He is Chairman of Whitman
Education Group and Vice Chairman of
Continucare Corporation. He is also Vice
Chairman of the Board of Trustees of the
University of Miami and is a member of the
Board of Governors of the American Stock
Exchange.

Kent Kresa 63 Director of Northrop Grumman since 1987.
Chairman and Chief Executive Officer. Mr.
Kresa was elected President and Chief
Operating Officer of the company in 1987.
He was named Chief Executive Officer in
1989 and Chairman of the board of directors
in 1990. Mr. Kresa is a member of the
National Academy of Engineering and is a
past Chairman of the Board of Governors of
the Aerospace Industries Association.

Charles R. Larson 64 Director of Northrop Grumman since 2000.
Admiral, United States Navy (Ret.). Admiral
Larson is recognized as the first Naval
officer to be selected as a White House
Fellow. He also served as Naval aide to the
President. He served as superintendent of
the U.S. Naval Academy from 1983 to 1986
and in 1991 he became senior military
commander in the Pacific. He returned to
U.S. Naval Academy in 1994,

B-2

where he served as superintendent until
1998. Currently, Admiral Larson is Chairman
of the board of directors of the U.S. Naval
Academy Foundation, Vice Chairman of the
Board of Regents of the University System
of Maryland and serves on the board of
directors of such organizations as
Constellation Energy Group, Inc., Edge
Technologies, Inc., Fluor Global Services,
the Atlantic Council, Military.com and the
National Academy of Sciences' Committee on
International Security and Arms Control. In
addition, he is a member of the Council on
Foreign Relations and is a senior fellow of
The CNA Corporation.

Jay H. Nussbaum 57 Director of Northrop Grumman since 2001.
Executive Vice President of Oracle Service
Industries, a subsidiary of Oracle
Corporation. Oracle Service Industries
serves the U.S. government, education,
health care, communications, utilities and
financial services industries. Mr. Nussbaum
joined Oracle in 1992 as the Senior Vice
President and General Manager of what was
then Oracle Federal. He came to Oracle
after a successful 24-year career with
Xerox Corporation, where his last position
was President, Integrated Systems
Operations. Mr. Nussbaum received his
bachelor's degree in Business from the
University of Maryland. He is a member of
the University's Chancellor's Advisory
Board and was Alumnus of the Year in 1989.
Mr. Nussbaum also serves on the board of
directors of KPMG Consulting and the Armed
Forces Communications and Electronics
Association (AFCEA) and is active in
several other business and charitable
organizations in the Washington area.

Aulana L. Peters 59 Director of Northrop Grumman since 1992.
Ms. Peters is a retired partner of the law
firm of Gibson, Dunn & Crutcher where she
was a partner from 1988 to December 2000.
Effective January 1, 2001 she was elected
to the Public Oversight Board of the AICPA.
From 1984 to 1988 she served as
Commissioner of the Securities and Exchange
Commission. Ms. Peters is a director of
Callaway Golf Company, Minnesota Mining and
Manufacturing Company, and Merrill Lynch &
Co., Inc. She is also a member of the board
of directors of Community Television for
Southern California (KCET). Ms. Peters
served as a member of the Financial
Accounting Standards Board Steering
Committee for its Financial Reporting
Project and as a member of the Public
Oversight Board's Panel on Audit
Effectiveness.

John Brooks Slaughter 67 Director of Northrop Grumman since 1993.
President and Chief Executive Officer, The
National Action Council for Minorities in
Engineering, Inc. Dr. Slaughter held
electronics engineering positions with
General Dynamics Convair and the U.S. Navy
Electronics Laboratory. In 1975, he became
Director of the Applied Physics Laboratory
of the University of Washington. In 1977,
he was appointed Assistant Director

B-3

for Astronomics, Atmospherics, Earth and
Ocean Sciences at the National Science
Foundation. From 1979 to 1980, he served as
Academic Vice President and Provost of
Washington State University. In 1980, he
returned to the National Science Foundation
as Director and served in that capacity
until 1982 when he became Chancellor of the
University of Maryland, College Park. From
1988 to July 1999, Dr. Slaughter was
President of Occidental College in Los
Angeles and in August 1999, he assumed the
position of Melbo Professor of Leadership
in Education at the University of Southern
California. In June 2000, Dr. Slaughter was
named President and Chief Executive Officer
of The National Action Council for
Minorities in Engineering, Inc. He is a
member of the National Academy of
Engineering, a fellow of the American
Academy of Arts and Sciences and serves as
a director of Solutia, Inc. and
International Business Machines Corporation.

Ronald D. Sugar 53 Director of Northrop Grumman since 2001.
Named President and Chief Operating Officer
of Northrop Grumman in September 2001. He
previously served as President and Chief
Executive Officer of Litton Industries,
Inc., a subsidiary of Northrop Grumman
Corporation, and Corporate Vice President
of Northrop Grumman. Dr. Sugar was elected
President and Chief Executive Officer of
Litton Industries, Inc. when it became a
subsidiary of Northrop Grumman on April 3,
2001, and was also elected as Corporate
Vice President and a member of the board of
directors of Northrop Grumman at that time.
He joined Litton Industries as President
and Chief Operating Officer in June 2000
and was elected to the board of directors
of Litton Industries in September 2000. Dr.
Sugar served as President and Chief
Operating Officer of TRW Aerospace &
Informations System and as a Member of the
Chief Executive Office of TRW, Inc. from
1998 to 2000. He joined TRW in 1981 and
served as Executive Vice President and
Chief Financial Officer from 1994 to 1996
and Executive Vice President and General
Manager of the TRW Automotive Electronics
Group from 1996 to 1998. He is also a
member of the National Security
Telecommunications Advisory Committee, the
Conference Board Council of Operating
Executives and the Board of Governors of
the Aerospace Industries Association and is
a Trustee of the National Defense
Industrial Association.

Executive Officers Who Are Not Directors (as of October 2001)

Name and Business Address Age Present Principal Occupation or
Employment; Five Year Employment History

Herbert W. Anderson 62 Corporate Vice President, President and
Chief Executive Officer of Northrop Grumman
Information Technology. In 1988, he was
named President and Chief Executive Officer
of Logicon, Inc., a subsidiary of Northrop
Grumman. Prior to this, Mr. Anderson was
Corporate Vice President and General
Manager of Data Systems and Services
Division.

B-4

Frank G. Brandenberg 55 Corporate Vice President and President of
Northrop Grumman's Component Technologies
sector. Mr. Brandenberg joined Litton
Industries, in 1999 from EA Industries
Inc., where he was President and Chief
Executive Officer. From 1987 through 1997,
Mr. Brandenberg held various senior
management positions with UNISYS Corp.,
including President of the client/server
systems business unit and Deputy President
of its computer systems group.

Ralph D. Crosby, Jr. 54 Corporate Vice President and President,
Northrop Grumman Integrated Systems since
1998. Prior to this, Mr. Crosby was
Corporate Vice President and General
Manager, Commercial Aircraft Division.
Prior to September 1996, he was Corporate
Vice President and Deputy General Manager,
Commercial Aircraft Division. Prior to
March 1996, he was Corporate Vice President
and Deputy General Manager, Military
Aircraft Systems Division. Prior to January
1996, he was Corporate Vice President and
General Manager of B-2 Division.

Philip A. Dur 57 Corporate Vice President and President,
Northrop Grumman Ship Systems since October
1, 2001. Prior to this, he was Vice
President, Program Operations for the
Company's Electronic Sensors & Systems
Section from November, 2000 and prior to
that, he had been Vice President,
International Development that Sector.
Prior to this and subsequent to his
retirement on September 30, 1995 from the
U.S. Navy with the Rank of Rear Admiral,
Mr. Dur was Vice President, Operations
Development at Tenneco Inc. until February
1996, when he became Executive Vice
President of Tenneco's Walker-Gillete
European Division, a position that he held
until July, 1997 when he became Vice
President of Tenneco's Automotive Division.

J. Michael Hateley 55 Corporate Vice President and Chief Human
Resources and Administrative Officer for
Northrop Grumman Corporation since December
1999. Prior to this election, he had served
as vice president of personnel for the
corporation since January 1999. Mr. Hateley
joined the company in 1976 and has held
vice president positions in human resources
at the company's Electronics Division, at
the Aircraft Division, at the B-2 Division
and at the Military Aircraft Systems
Division.

Robert W. Helm 50 Corporate Vice President, Government
Relations of Northrop Grumman since 1993.

Robert P. Iorizzo 60 Corporate Vice President and President of
Northrop Grumman's Electronic Systems
sector. Prior to this, he served as Vice
President and General Manager of the
sector's Command, Control, Communications,
Intelligence and Naval Systems (C3I&N)
business area since 1997. Prior to this, he
was General Manager of the Space Division
of Westinghouse Electric Corporation.

B-5

John H. Mullan 59 Corporate Vice President and Secretary of
Northrop Grumman since 1999. Prior to this,
Mr. Mullan was Acting Secretary. Prior to
May 1998, he was Senior Corporate Counsel.

Albert F. Myers 55 Corporate Vice President and Treasurer of
Northrop Grumman since 1994.

Roseanne P. O'Brien 57 Corporate Vice President, Communications of
Northrop Grumman since August 2000. Prior
to this, Ms. O'Brien was Vice President,
Communications. Ms. O'Brien was Senior
Consultant to Alleghany Teledyne, Inc. from
1996 to 1999.

Thomas C. Schievelbein 48 Corporate Vice President for Northrop
Grumman and President and Chief Operating
Officer of its Newport News sector since
November 2001. Prior to this, he was
Executive Vice President and Chief
Operating Officer for Newport News
Shipbuilding Inc. since 1999. Prior to
1999, Mr. Schievelbein was Executive Vice
President for Newport News.

W. Burks Terry 50 Corporate Vice President and General
Counsel of Northrop Grumman since August
2000. Prior to this, Mr. Terry became Vice
President, Deputy General Counsel and
Sector Counsel in October 1998 and prior to
October 1998 he was Vice President and
Assistant General Counsel.

Richard B. Waugh, Jr. 58 Corporate Vice President and Chief
Financial Officer of Northrop Grumman since
1993.

Sandra J. Wright 46 Corporate Vice President and Controller
since 2001. Prior to this, she was the
Corporate Vice President and Controller for
Litton Industries in 2000. Ms. Wright was
Vice President and Controller of Aerojet, a
Gencorp Company from 1999 to 2000 and
Director of Financial Planning of Aerojet
prior to that.

B-6

DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER CORP. I

The name, age, business address, present principal occupation or employment
and five-year employment history of each of the directors and executive
officers of Purchaser Corp. I are set forth below. Each director and executive
officer listed below is a citizen of the United States of America. Unless
otherwise indicated below, the business address of each person is c/o Northrop
Grumman, 1840 Century Park East, Los Angeles, California 90067.

Directors (Including Executive Officers Who Are Directors)

Name and Present Principal Occupation or Employment; Five-Year
Business Address Age Office(s) Employment History
---------------- --- ----------------------------- -----------------------------------------------------

Albert F. Myers 55 Director Corporate Vice President and Treasurer of
Northrop Grumman since 1994.

W. Burks Terry 50 President; Director Corporate Vice President and General Counsel of
Northrop Grumman since August 2000. Prior to
this, Mr. Terry became Vice President, Deputy
General Counsel and Sector Counsel in
October 1998 and prior to October 1998 he was
Vice President and Assistant General Counsel.

John H. Mullan 59 Vice President and Secretary; Corporate Vice President and Secretary of
Director Northrop Grumman since 1999. Prior to this,
Mr. Mullan was Acting Secretary. Prior to May
1998, he was Senior Corporate Counsel.

B-7

The letter of election and transmittal, certificates for Northrop Grumman
shares and any other required documents should be sent or delivered by each
Newport News stockholder or his or her broker, dealer, commercial bank, trust
company or other nominee to the exchange agent at one of its addresses set
forth below.

The Exchange Agent for the offer and merger is:

MELLON INVESTOR SERVICES LLC

By Mail: By Overnight Delivery: By Hand Delivery:

Mellon Investor Services LLC Mellon Investor Services LLC Mellon Investor Services LLC
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271

By Facsimile Transmission:
(for Eligible Institutions only)
Fax: (201) 296-4293
Confirm by Telephone:
(201) 296-4860

Any questions or requests for assistance or additional copies of the
information statement/prospectus, the letter of election and transmittal and
related offer materials may be directed to the information agent at its
telephone numbers and location listed below. You may also contact your local
broker, commercial bank, trust company or nominee for assistance concerning our
offer.

The Information Agent for the offer and merger is:

D. F. King & Co., Inc.
77 Water Street
New York, New York 10005

Banks and Brokers Call Collect: (212) 269-5550

All Others Call Toll Free: (800) 758-5378

PART II. INFORMATION NOT REQUIRED IN INFORMATION STATEMENT/PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation-a "derivative action"), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceedings, had no reasonable cause to believe their conduct
was unlawful.

A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's certificate of
incorporation, bylaws, disinterested director vote, stockholder vote, agreement
or otherwise.

As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article EIGHTEENTH of Northrop Grumman's restated certificate of
incorporation, as amended, provides:

"A director of the Corporation shall not be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the directors'
duty of loyalty to the Corporation or to its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derives
any improper personal benefit. If, after approval of this Article by the
stockholders of the Corporation, the General Corporation Law of the State of
Delaware is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended. Any repeal or
modification of this Article by the stockholders of the Corporation as provided
in Article SEVENTEENTH hereof shall not adversely affect any right or protection
of a director of the Corporation existing at the time of such repeal or
modification."

Northrop Grumman has purchased insurance on behalf of any person who is
or was a director, officer, employee or agent of Northrop Grumman, or is or was
serving at the request of Northrop Grumman as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not Northrop
Grumman would have the power to indemnify him against such liability under the
provisions of Northrop Grumman's restated certificate of incorporation, as
amended.

II-1

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------

2.1 Amended and Restated Agreement and Plan of Merger dated as of
January 23, 2001, among Systems, Litton, Northrop Grumman and LII
Acquisition Corp., filed as exhibit 2.2 to Form S-4 Registration
Statement No. 333-54800 filed with the SEC on February 1, 2001 and
incorporated herein by reference.

3.1 Amended and Restated Certificate of Incorporation of Northrop
Grumman Corporation, filed as exhibit 3.1 to Registration
Statement No. 333-54800 filed with the SEC on February 1, 2001 and
incorporated herein by this reference.

3.2 Certificate of Amendment of Certificate of Incorporation of
Northrop Grumman Corporation filed as exhibit 3.2 to Form 10-Q
filed with the SEC on May 10, 2001 and incorporated herein by this
reference.

3.3 Restated Bylaws of Northrop Grumman Corporation, filed as exhibit
3.2 to Form 10-K filed with the SEC on March 27, 2001 and
incorporated herein by reference.

4.1 Rights Agreement dated as of January 31, 2001 between Northrop
Grumman Corporation and EquiServe Trust Company, N.A. filed as
exhibit 4.3 to Form S-4 Registration Statement No. 333-54800 filed
with the SEC on March 27, 2001 and incorporated herein by this
reference.

4.2 Indenture dated as of April 13, 1998 between Litton and The Bank
of New York, Trustee, under which Litton's 6.05% senior notes due
2003 and 6.75% senior debentures due 2018 were issued, filed as
Exhibit 4.1 to Litton's April 30, 1998 Quarterly Report on Form
10-Q, and incorporated herein by reference.

4.3 Supplemental Indenture with respect to the Indenture dated April
13, 1998, dated as of April 3, 2001, among Litton, Northrop
Grumman Corporation, Systems and The Bank of New York, as trustee
filed as exhibit 4.5 to Form 10-Q filed with the SEC on May 10,
2001 and incorporated herein by this reference.

4.4 Indenture dated as of December 15, 1991 between Litton and The
Bank of New York, Trustee, under which Litton's 7.75% and 6.98%
debentures due 2026 and 2036 were issued and specimens of such
debentures, filed as Exhibit 4.1 of Litton's April 30, 1996
Quarterly Report on Form 10-Q, and incorporated herein by
reference.

4.7 Supplemental Indenture with respect to the Indenture dated
December 15, 1991, dated as of April 3, 2001, among Litton,
Northrop Grumman Corporation, Systems and The Bank of New York, as
trustee filed as exhibit 4.7 to Form 10-Q filed with the SEC on
May 10, 2001 and incorporated herein by this reference.

II-2

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------

4.8 Form of Exchange Security for Litton's $400,000,000 8% senior
notes due 2009, filed as Exhibit 4.3 to Litton's April 30, 2000
Quarterly Report on Form 10-Q, and incorporated herein by
reference.

*5.1 Form of Opinion of John H. Mullan regarding the validity of the
securities being registered.

*8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson regarding
certain tax matters.

***8.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson regarding
certain tax matters.

10.1 Employment Agreement with Dr. Ronald D. Sugar, filed as exhibit
99(e)(7) to the Solicitation/Recommendation Statement on Schedule
14D- 9 filed with the SEC by Litton on January 5, 2001 and
incorporated herein by reference.

10.2 Form of $2,500,000,000 364-Day Revolving Credit Agreement among
Northrop Grumman Corporation, Systems, Litton, the Lenders party
thereto, The Chase Manhattan Bank and Credit Suisse First Boston,
as Co-Administrative Agents, Salomon Smith Barney Inc., as
Syndication Agent, and The Bank of Nova Scotia and Deutsche Banc
Alex. Brown, Inc. as Co-Documentation Agents, filed as Exhibit
10.6 to Amendment No. 2 to Form S-4 Registration Statement No.
333-54800 filed with the SEC on March 27, 2001 and incorporated
herein by reference.

10.3 Form of $2,500,000,000 Five-Year Revolving Credit Agreement among
Northrop Grumman, Systems, Litton, the Lenders party thereto, The
Chase Manhattan Bank and Credit Suisse First Boston, as
Co-Administrative Agents, Salomon Smith Barney Inc., as
Syndication Agent, and The Bank of Nova Scotia and Deutsche Banc
Alex. Brown, Inc. as Co-Documentation Agents, filed as Exhibit
10.7 to Amendment No. 2 to Form S-4 Registration Statement No.
333-54800 filed with the SEC on March 27, 2001 and incorporated
herein by reference.

10.4 Letter Agreement dated January 31, 2001 between Systems and Dr.
Ronald D. Sugar, filed as exhibit 99(e)(16) to Amendment No. 3 to
Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the SEC by Litton on February 1, 2001 and incorporated herein by
reference.

10.5 Form of Officers Certificate establishing the terms of Systems' 7
1/8% Notes due 2011 and 7 3/4% Debentures due 2031, filed as
Exhibit 10.9 to Form 8-K filed by Northrop Grumman on April 17,
2001 and incorporated herein by reference.

10.6 Grumman of Litton Indenture Form of Guarantee by Northrop
Indebtedness, filed as Exhibit 10.10 to Form 8-K filed by Northrop
Grumman Corporation on April 17, 2001 and incorporated herein by
reference.

10.7 Form of Guarantee by Northrop Grumman of Systems Indenture
Indebtedness, filed as Exhibit 10.11 to Form 8-K filed by Northrop
Grumman Corporation on April 17, 2001 and Incorporated herein by
reference.

II-3

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------

10.8 Form of Guarantee by Systems of Litton Indenture Indebtedness,
filed as Exhibit 10.12 to Form 8-K filed by Northrop Grumman
Corporation on April 17, 2001 and incorporated herein by
reference.

10.9 Form of Guarantee by Litton of Systems Indenture Indebtedness,
filed as Exhibit 10.13 to Form 8-K filed by Northrop Grumman
Corporation on April 17, 2001 and incorporated herein by
reference.

10.10 1973 Incentive Compensation Plan as amended December 16, 1998
(incorporated by reference to Form 10-K filed March 23, 1999).

10.11 1973 Incentive Compensation Plan as amended December 16, 1998
(incorporated by reference to Form 10-K filed March 23, 1999).

10.12 Northrop Grumman Corporation Supplemental Plan 2 (incorporated by
reference to Form 10-K filed February 22, 1996) and amended as of
June 19, 1996 (incorporated by reference to Form 10-K filed March
30, 1998).

10.13 Northrop Grumman Corporation ERISA Supplemental Plan I
(incorporated by reference to Form 10-K filed February 28, 1994).

10.14 Retirement Plan for Independent Outside Directors as amended April
24, 1998 (incorporated by reference to Form 10-K filed March 23,
1999).

10.15 1987 Long-Term Incentive Plan, as amended (incorporated by
reference to Form SE filed March 30, 1989).

10.16 Executive Life Insurance Policy (incorporated by reference to Form
10-K filed February 22, 1996).

10.17 Executive Accidental Death, Dismemberment and Plegia Insurance
Policy (incorporated by reference to Form 10-K filed February 22,
1996).

10.18 Executive Long-Term Disability Insurance Policy (incorporated by
reference to Form 10-K filed February 22, 1996).

10.19 Key Executive Medical Plan Benefit Matrix (incorporated by
reference to Form 10-K filed February 22, 1996).

10.20 Executive Dental Insurance Policy Group Numbers 5134 and 5135
(incorporated by reference to Form 10-K filed February 22, 1996).

10.21 Group Excess Liability Policy (incorporated by reference to Form
10-K filed February 22, 1996).

10.22 Northrop Grumman 1993 Long-Term Incentive Stock Plan, as amended
and restated (incorporated by reference to Form S-8 Registration
Statement filed November 25, 1998).

II-4

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------

10.23 Northrop Corporation 1993 Stock Plan for Non-Employee Directors
(incorporated by reference to Northrop Corporation 1993 Proxy
Statement filed March 30, 1993), amended as of September 21, 1994
(incorporated by reference to Form 10-K filed March 21, 1995).

10.24 Northrop Grumman Corporation 1995 Stock Option Plan for
Non-Employee Directors (incorporated by reference to 1995 Proxy
Statement filed March 30, 1995).

10.25 Form of Northrop Grumman Corporation March 2000 Special Agreement
(effective March 1, 2000) (incorporated by reference to Form 10-Q
filed November 4, 1999).

10.26 Executive Deferred Compensation Plan (effective December 29, 1994)
(incorporated by reference to Form 10-K filed February 25, 1997).

10.27 Northrop Grumman Corporation Non-Employee Directors Equity
Participation Plan, as Amended March 15, 2000 (incorporated by
reference to Form 10-Q filed May 9, 2000).

10.28 CPC Supplemental Executive Retirement Program (incorporated by
reference to Form 10-K filed March 30, 1998).

10.29 Northrop Grumman Estate Enhancement Program, effective January 1,
2001 (incorporated by reference to Form 10-K filed on March 8,
2001).

10.30 Special Officer Retiree Medical Plan as amended December 19, 2000
(incorporated by reference to Form 10-K filed on March 8, 2001).

10.31 Northrop Grumman Corporation March 2000 Change-in-Control
Severance Plan Incorporated by reference to Form 10-Q filed
November 4, 1999).

**10.32 Retention Bonus Agreement between Northrop Grumman Corporation and
Thomas C. Schievelbein, dated November 7, 2001.

15.1 Letter from Independent Accountant regarding unaudited accounting
information.

*21.1 Subsidiaries.

23.1 Consent of Deloitte & Touche LLP (for Northrop Systems).

23.2 Consent of Deloitte & Touche LLP (for Litton Industries).

*23.3 Consent of John H. Mullan (included in Exhibit 5.1).

*23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson (included in
Exhibit 8.1).

23.5 Consent of Arthur Andersen LLP (for Newport News).

*24.1 Power of Attorney.

II-5

EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------

**24.2 Power of Attorney for Sandra J. Wright.

**24.3 Power of Attorney for Jay H. Nussbaum.

*99.1 Form of Notice of Guaranteed Delivery.

*99.2 Form of Letter of Election and Transmittal.

*99.3 Form of Letter to Brokers, Dealers, etc.

*99.4 Form of Letter to Clients.

*99.5 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

99.6 Press Release, dated May 9, 2001 filed pursuant to Rule 425 under
the Securities Act of 1933, with the SEC on May 9, 2001 and
incorporated herein by reference.

99.7 Press Release, dated May 21, 2001 filed pursuant to Rule 425 under
the Securities Act of 1933 with the SEC on May 21, 2001 and
incorporated herein by reference

***99.8 Form of Letter of Election and Transmittal.

***99.9 Form of Notice of Guaranteed Delivery.

***99.10 Form of Letter to Brokers, Dealers, etc.

***99.11 Form of Letter to Clients.

***99.12 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

99.13 Form of Letter of Election and Transmittal.

99.14 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

------------
* Previously filed as an exhibit to Northrop Grumman Corporation's Form S-4
(file no. 333-61506) dated May 23, 2001.

** Previously filed as an exhibit to Northrop Grumman Corporation's Amendment
No. 4 to Form S-4 (file no. 333-61506) dated November 6, 2001.

*** Previously filed as an exhibit to Northrop Grumman Corporation's Amendment
No. 7 to Form S-4 (file no. 333-61506) dated November 20, 2001.

II-6

ITEM 22. UNDERTAKINGS.

(A) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(B) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

(C)

(1) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.

(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (a) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(D) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.

(E) The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not subject of and included in the
registration statement when it became effective.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on this 13th day of December, 2001.

NORTHROP GRUMMAN CORPORATION

By: /s/ John H. Mullan
--------------------------------
John H. Mullan
Corporate Vice President and
Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

* Chairman of the Board and Chief December 13, 2001
------------------- Executive Officer and Director
Kent Kresa (Principal Executive Officer)

* President, Chief Operating Officer December 13, 2001
------------------- and Director
Ronald D. Sugar

* Corporate Vice President and Chief December 13, 2001
--------------------- Financial Officer
Richard B. Waugh, Jr. (Principal Financial Officer)

* Corporate Vice President and December 13, 2001
------------------- Controller
Sandra J. Wright (Principal Accounting Officer)

* Director December 13, 2001
-------------------
John T. Chain, Jr.

* Director December 13, 2001
-------------------
Lewis W. Coleman

* Director December 13, 2001
-------------------
Vic Fazio

* Director December 13, 2001
-------------------
Phillip Frost

II-8

Signature Title Date
--------- ----- ----

* Director December 13, 2001
-------------------
Charles R. Larson

* Director December 13, 2001
-------------------
Jay H. Nussbaum

* Director December 13, 2001
-------------------
Aulana L. Peters

* Director December 13, 2001
---------------------
John Brooks Slaughter

*By: /s/ John H. Mullan
-----------------------
Name: John H. Mullan
Title: Attorney-in-fact
Date: December 13, 2001

II-9