Company: NOC
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001133421-25-000053
Chunk: 91

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-10-21
Form: 10-Q
Item: Part I, Item 2
Chunk 91
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 operating income at Mission Systems and Defense Systems. Segment operating margin rate decreased to 10.1 percent from 11.0 percent primarily due to the B-21 loss provision, partially offset by higher operating margin rates at Defense Systems and Mission Systems.

FAS/CAS Operating Adjustment 

The third quarter 2025 and year to date 2025 FAS/CAS operating adjustment reflects higher CAS pension expense largely driven by plan asset returns in prior years and changes in certain CAS actuarial assumptions as of December 31, 2024.

Unallocated Corporate Expense

Current Quarter

The change in third quarter 2025 unallocated corporate expense is primarily due to higher deferred state tax expense largely related to the repeal of mandatory capitalization of research and development expenditures under IRC Section 174 upon enactment of the OBBBA.

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Table of ContentsNORTHROP GRUMMAN CORPORATION                        

Year to Date

The change in year to date 2025 unallocated corporate expense is primarily due to a $231 million gain on the sale of our training services business, partially offset by an $18 million increase in unallowable state taxes and transaction costs associated with the divestiture. Non-divestiture-related unallocated corporate expense increased primarily due to higher deferred state tax expense largely related to the repeal of mandatory capitalization of research and development expenditures under IRC Section 174, as well as the prior year including a $26 million increase in our estimated recovery of certain environmental remediation costs.

Net EAC Adjustments - We record changes in estimated contract earnings at completion (net EAC adjustments) using the cumulative catch-up method of accounting. Net EAC adjustments can have a significant effect on segment operating income and margin rate.

The aggregate favorable and unfavorable EAC adjustments are presented in the table below:

Three Months Ended September 30Nine Months Ended September 30$ in millions2025202420252024Favorable EAC adjustments$433 $369 $1,161 $1,091 Unfavorable EAC adjustments(352)(233)(1,054)(823)Net EAC adjustments$81 $136 $107 $268 

Net EAC adjustments by segment are presented in the table below:

Three Months Ended September 30Nine Months Ended September 30$ in millions2025202420252024Aeronautics Systems$(66)$48 $(225)$165 Defense Systems35 10 141 45 Mission Systems121 16 163 11