PASCAGOULA, Miss., June 17, 2002 (PRIMEZONE) -- Northrop Grumman Corporation (NYSE:NOC) today said it has signed a Memorandum of Understanding (MOU) with the U.S. Navy and General Dynamics' (NYSE:GD) Bath Iron Works to reallocate construction responsibilities for the San Antonio (LPD 17) class amphibious assault ships and certain USS Arleigh Burke (DDG 51) class Aegis guided missile destroyers.
As a result of this agreement, Northrop Grumman Ship Systems will assume responsibility for the construction of all 12 San Antonio class LPDs. Northrop Grumman will also assume responsibility for the program's life cycle support.
In exchange, Bath Iron Works will construct DDG 102, a contract that was won by Northrop Grumman Ship Systems in December 2001. Bath Iron Works will also be awarded additional DDG work as determined by the Department of the Navy.
"By redistributing LPD ship construction and placing them all with one company, the Navy will ensure that construction costs and scheduling are optimized, allowing the entire project to move forward to completion," said Dr. Philip A. Dur, Northrop Grumman corporate vice president and president of the Ship Systems sector. "We believe this is an equitable arrangement; and the beneficiaries will be the American taxpayers and the Navy-Marine Corps Team."
The original LPD shipbuilding program awarded in 1996 called for Northrop Grumman Ship Systems to build eight ships, and Bath Iron Works to build four ships. In addition, Northrop Grumman will continue to build one DDG a year under a new multiyear contract. The company does not expect the reallocation between the programs to impact previously announced financial guidance.
Northrop Grumman is now utilizing all three of its Gulf Coast facilities to build LPD 17 and expects to maintain the same operating structure for additional ships.
"This action will further stabilize the LPD program and optimize the workload at all three of our facilities," Dur said. "We intend to continue our efforts toward improved cost and schedule performance."
Construction on the first ship began in June 2000 and fabrication on the second began in March 2002. The first ship, LPD 17, will be delivered to the Navy in 2004.
Northrop Grumman's Ship Systems sector includes primary operations in Pascagoula and Gulfport, Miss.; New Orleans and Tallulah, La.; and in a network of fleet support offices in the U.S. and Japan. The sector, which currently employs more than 17,000 shipbuilding professionals, primarily in Mississippi and Louisiana, is one of the nation's leading full service systems companies for the design, engineering, construction, and life cycle support of major surface ships for the U.S. Navy, U.S. Coast Guard and international navies, and for commercial vessels of all types.
Northrop Grumman Corporation is an $18 billion, global defense company with its worldwide headquarters in Los Angeles. Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, systems integration, information technology and nuclear and non-nuclear shipbuilding and systems. With nearly 100,000 employees and operations in 44 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers.
Note: Certain statements and assumptions in this release contain or are based on "forward-looking" information (that the company believes to be within the definition in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties. Such "forward-looking" information includes the statements above as to future impacts on revenues and earnings. Such statements are subject to numerous assumptions and uncertainties, many of which are outside the company's control. These include the company's ability to successfully integrate its acquisitions, assumptions with respect to future revenues, expected program performance and cash flows, the outcome of contingencies including litigation, environmental remediation, acquisitions and divestitures of businesses, and anticipated costs of capital investments. The company's operations are subject to various additional risks and uncertainties resulting from its position as a supplier, either directly or as subcontractor or team member, to the U.S. Government and its agencies as well as to foreign governments and agencies; actual outcomes are dependent upon factors, including, without limitation, the company's 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; acquisition or termination of government contracts; the outcome of political and legal processes; legal, financial, and governmental risks related to international transactions and domestic and global needs for ships, military aircraft, military and civilian electronic systems and support, information technology, electronic components and other products; as well as other economic, political and technological risks and uncertainties and other risk factors set out in the company's filings from time to time with the Securities and Exchange Commission, including, without limitation, the company's reports on Form 10-K and Form 10-Q.
In addition, Northrop Grumman filed a registration statement on Form S-4 (File No. 333-83672) and a tender offer statement on Schedule TO with the SEC on March 4, 2002, with respect to its offer to exchange all outstanding shares of TRW capital stock for Northrop Grumman stock. These documents contain important information. TRW shareholders should read these documents and any amendments or supplements thereto before making any decision regarding the offer to exchange. Copies of such documents may be obtained without charge at the SEC's website at www.sec.gov or from D.F. King & Co., Inc. the information agent for the offer to exchange, at 800-755-7250.