Company: NOC
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001133421-25-000053
Chunk: 15

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-10-21
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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 and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates.Revenue RecognitionContract EstimatesContract sales may include estimates of variable consideration, including cost or performance incentives (such as award and incentive fees), un-priced change orders, requests for equitable adjustment (REAs) and contract claims. Variable consideration is included in total estimated sales to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We estimate variable consideration as the most likely amount to which we expect to be entitled. We recognize changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis. Net estimate-at-completion (EAC) adjustments represent the cumulative effect of the changes on current and prior periods; sales and operating margins in future periods are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss is expected to result on an individual performance 

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Table of ContentsNORTHROP GRUMMAN CORPORATION                        

obligation, the entire amount of the estimable future loss, including an allocation of general and administrative expense, is charged against income in the period the loss is identified.B-21 ProgramDuring the fourth quarter of 2023, we recognized a projected loss of $1.56 billion across the five low-rate initial production (LRIP) options on the B-21 program. During the first quarter of 2025, we recognized an additional $477 million loss across the five LRIP options. As of September 30, 2025, the remaining loss accrual on the B-21 program totaled $1.6 billion, which is included in Other current liabilities.Net EAC AdjustmentsThe following table presents the effect of aggregate net EAC adjustments: Three Months Ended September 30Nine Months Ended September 30$ in millions, except per share data2025202420252024Revenue$181 $131 $383 $242 Operating income81 136 107 268 Net earnings(1)64 107 85 212 Diluted earnings per share(1)0.45 0.73 0.59 1.43 (1)