Northrop Grumman completes Huntington Ingalls spin off

Huntington Ingalls Industries, Inc. (NYSE:HII) has begun operating as a new, independent and publicly traded company as trading of its shares commenced this morning. Huntington Ingalls Industries, America's largest military shipbuilder, was previously a business sector of Northrop Grumman until effectively separating on March 31, 2011, in a spin off.

"Our strategy," said Mike Petters, president and CEO of Huntington Ingalls Industries, "is to better align our business with the U.S. Navy's priorities and to continue improving our shipbuilding performance while meeting our customer commitments. Operating as an independent company will allow us greater focus and agility to accomplish these important objectives, which should create significant value for our shareholders."

The Huntington Ingalls Industries name reflects the long-standing legacies of the two shipbuilding business divisions of the new entity: Newport News Shipbuilding and Ingalls Shipbuilding. Collis P. Huntington founded Newport News Shipbuilding in 1886, and Ingalls Shipbuilding was established in 1938 by the Ingalls Iron Works of Birmingham, Ala., a company founded by the Ingalls family.

"Incorporating the names of our founding families and legacy companies into our new enterprise will build upon our 125-year tradition of demonstrated commitment to quality, customer focus and building the best military ships in the world," Petters said. "I am very excited about our future, about the strength and depth of our leadership team, and the skill and dedication of our shipbuilders."

Work today at Huntington Ingalls includes the construction of the Gerald R. Ford-class aircraft carriers, the refueling and complex overhaul of Nimitz-class aircraft carriers, construction of Virginia-class submarines, submarine design and life-cycle management, as well as fleet services for naval ships all over the world. The company is also constructing San Antonio-class amphibious transport dock ships and an America-class multipurpose amphibious assault ship and has built 28 of 62 Arleigh Burke-class destroyers with long-lead materials awarded on the first two ships in the continuation of the program. Recently, the company was awarded a fourth National Security Cutter construction contract for the U.S. Coast Guard, with the third ship expected to be complete by year's end.

Northrop Grumman Corporation (NYSE: NOC) today announced that its stockholders of record at the close of business of the New York Stock Exchange (NYSE) on March 30, 2011, received one share of HII common stock for every six shares of Northrop Grumman common stock held. Stockholders will receive cash in lieu of fractional shares of HII. As a result of the spin-off, Northrop Grumman will report Shipbuilding financial results as discontinued operations for the 2011 first quarter and all prior periods.

"Today's completion of the separation of Huntington Ingalls from Northrop Grumman is an important milestone benefitting both companies. We thank HII for their many contributions to our company and the defense of our nation, and wish them the best as an independent company," said Wes Bush, Northrop Grumman chief executive officer and president.

"Northrop Grumman will now be focused on its core markets of aerospace systems, electronic systems, information systems and technical services. Our portfolio has tremendous capability, technology and synergy across these areas, and we are fully dedicated to delivering innovative and mission-critical systems and products. Going forward, we will create value for shareholders, customers and employees through a more focused portfolio and continued performance improvement," Bush concluded.

The distribution of HII shares will be made in book entry form and no action or payment by Northrop Grumman stockholders of record is required to receive HII shares. No physical share certificates of HII will be issued. An information statement containing details of the spin-off and important information about HII was mailed to Northrop Grumman stockholders on March 21, 2011.

The HII spin-off has been structured to qualify as a tax-free distribution to Northrop Grumman stockholders for U.S. Federal tax purposes, except for the cash received in lieu of fractional shares. Northrop Grumman stockholders should consult their tax advisors with respect to U.S. federal, state, local and foreign tax consequences of the HII spin-off.

Credit Suisse served as lead financial advisor and joint lead financing arranger. Perella Weinberg Partners served as financial advisor. JPMorgan Chase served as joint lead financing arranger. Gibson, Dunn & Crutcher served as legal advisor.

March 31, 2011