Company: NOC
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001133421-25-000053
Chunk: 46

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-10-21
Form: 10-Q
Item: Part I, Item 1
Chunk 46
---
 quarter of 2025, and a $128 million increase in non-divestiture-related unallocated corporate expense. These decreases were partially offset by higher operating income due to a $231 million pre-tax gain on sale for the training services divestiture and a $161 million increase in the FAS/CAS operating adjustment. Operating margin rate declined to 10.7 percent from 10.8 percent reflecting the items above. 

Year to date 2025 G&A costs as a percentage of sales decreased to 9.9 percent from 10.4 percent in the prior year period primarily due to cost management.

See “Segment Operating Results” below for further information by segment. For information regarding product and service operating costs and expenses, see “Product and Service Analysis” below.

Federal and Foreign Income Taxes

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures under IRC Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. The company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.

Current Quarter

Third quarter 2025 income tax expense increased $61 million, or 38 percent, due to a higher ETR and higher earnings before income taxes. The third quarter 2025 ETR increased to 16.9 percent from 13.6 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as a reduction in research credits in the current year due to enactment of the OBBBA, partially offset by lower interest expense on unrecognized tax benefits.

-26-

Table of ContentsNORTHROP GRUMMAN CORPORATION                        

Year to Date

Year to date 2025 income tax expense increased $18 million, or 3 percent, due to a higher ETR, which more than offset lower earnings before income taxes. The year to date 2025 ETR increased to 17.2 percent from 16.0 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as additional income tax expense in the current year related to nondeductible goodwill in the divested training services business, partially offset by lower interest expense