Ingalls Shipbuilding Inc. Hourly Employees ... - Benefits Online

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Your Benefit at RetirementYour pension benefit at retirement will be based on your total after-tax contributions (withinterest) to the Plan (if any), your pre-tax deposits to the Northrop Grumman Financial Securityand Savings Program (FSSP) Retirement Account (with earnings), and the vesting schedule.If you elect to roll over your FSSP Retirement Account balance to the Plan at retirement, andyou leave your after-tax contributions (with interest) in the Plan, you will receive the maximumbenefit from the Plan. However, if you do not roll over your FSSP Retirement Account balanceto the Plan at retirement, or if you choose to withdraw your after-tax contributions to the Plan,your pension benefit will be reduced (and potentially eliminated). See the “Normal Retirement”and “Early Retirement” sections for details.4

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Overview of the Ingalls Shipbuilding Inc. HourlyEmployees’ Retirement PlanEligibilityYou are eligible for the Plan if you are on the payroll as a common law employee andrepresented by one of the following unions participating in the Plan:• Metal Trades Department AFL-CIO Pascagoula Metal Trades Council• The Office Employees International Union AFL-CIO Local No. 204• The International Brotherhood of Electrical Workers Local No. 733• Mississippi Gulf Coast Independent Union of Guards & Watchmen Local No. 1• International Association of Machinists and Aerospace Workers, AFL-CIO, Lodge 1133(Department 33, Non-Destructive Test; Department 29, Hydraulics Pre-Test)• United Federation of Security Officers – Local No. 665.The following types of employees are not eligible to participate in the Plan:• Employees covered by a collective bargaining agreement that does not provide forparticipation• Leased employees• Nonresident aliens (non-U.S. citizens who reside abroad)• Employees on international payrolls• Individuals not treated as common law employees on payroll records.If you meet the eligibility criteria above, you will become a participant in the Plan when youcontribute at least 1% of your pre-tax pay to the FSSP Retirement Account. Your participation inthe FSSP Retirement Account may create a pension benefit from the Plan.ParticipationIf eligible, you are a participant in the Plan if:• Prior to June 1, 1993: You contributed after-tax dollars to the Plan (employeecontributions were mandatory to accrue a Plan benefit)• June 1, 1993 to Present: You deposit at least 1% of your pre-tax pay to the FSSPRetirement Account.Your maximum annuity benefit from the Plan is based on both your after-tax contributions tothe Plan and pre-tax deposits to the FSSP Retirement Account.5

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008ContributionsYour Contributions to the PlanPrior to June 1, 1993, after-tax employee contributions were mandatory to accrue a Planbenefit.Effective June 1, 1993, the Plan was integrated with the FSSP. As a result, in order toparticipate in the Plan, you must elect to contribute from 1% to 4% of your eligiblecompensation to the FSSP Retirement Account on a pre-tax basis. After-tax contributions areno longer required or allowed*.* If you are on a Company-approved leave of absence, including union leave, you can make after-taxcontributions to the Plan.Interest Earnings on Your ContributionsYour after-tax contributions to the Plan are credited with interest in the following amounts:• Through December 31, 1974: 4% interest• January 1, 1975 through December 31, 1987: 5% interest• On or after January 1, 1988: Greater of 5% per year or 120% of each year’s FederalMid-term Rate on the amount of your contributions plus interest as of December 31,1987.Earnings on the amount of your pre-tax deposits to the FSSP Retirement Account are equalto the greater of:• Actual earnings on the amount of your deposits• Interest at 5% compounded annually.Contribution Decisions and Your Benefit AmountYou will receive the maximum benefit from the Plan when you leave the Company if, atretirement, you:• Leave your after-tax contributions in the Plan, and• Roll over your pre-tax FSSP Retirement Account balance to the Plan.You will receive a reduced benefit (or potentially no benefit) if you:• Withdraw your after-tax contributions from the Plan, and/or• Do not roll over your pre-tax FSSP Retirement Account balance to the Plan uponretirement.Refund of Your ContributionsYou can receive a refund of your after-tax contributions to the Plan when you leave theCompany. For details, see “Refund of Your After-Tax Contributions” at the end of the“Payment Options” section.6

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Important Pension ConceptsThe following basic pension plan concepts are necessary to understand the Plan’s benefit.Vesting and Vesting ServiceVesting service is used only to determine if you have a right to a vested or deferred vestedbenefit (see “Deferred Vested Benefits”). Generally, your vesting service includesemployment with any member of the Company, subject to legal limitations. If you need helpdetermining if your business unit is part of the Company, call the NGBC.Your vesting service equals:• For service before June 1, 1993: One full month for each month (or partial month) inwhich you made after-tax contributions to the Plan, and• For service on or after June 1, 1993: One full month for each month (or partial month),beginning on your date of hire, for which you are paid (or are entitled to be paid) byNorthrop Grumman for service performed while covered by the Plan.If you were absent due to a disability, vacation, medical leave, layoff, or similar reason, andyou returned to work within the 12 calendar months following your first day of absence, youwill earn vesting service for your period of absence. If you were absent due to a militaryleave, you will earn vesting service for your period of absence, provided you returnto active employment in a timely manner following an honorable discharge.You become vested in the portion of your benefit that is provided by the Company based ona vesting schedule, as determined by your termination date (see “Vesting Schedules” below).You also become fully vested in your Company-provided benefit when you reach normalretirement age, regardless of years of service. You are always 100% vested in your owncontributions to the plan.Vesting SchedulesIf you terminate on or after January 1, 2000, your Company-provided benefit* is subject tothe following three-year vesting schedule:Years of vesting service Percentage of Company-provided benefits inwhich you are vestedLess than 2 years 0%2 years but less than 3 years 50%3 or more years 100%If you terminated prior to January 1, 2000, your Company-provided benefit* is subject to thefollowing seven-year vesting schedule:Years of vesting service Percentage of Company-provided benefits inwhich you are vestedLess than 3 years 0%3 years but less than 4 years 20%4 years but less than 5 years 40%5 years but less than 6 years 60%7

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 20086 years but less than 7 years 80%7 or more years 100%* Your Company-provided benefit is the benefit payable to you if you withdraw your after-taxcontributions and you do not roll over your pre-tax FSSP Retirement Account balance.Benefit ServicePrior to February 1, 1987, benefit service was used to determine the amount of your benefit.You received credit for one full month of benefit service for each month (or partial month)from your date of hire through January 31, 1987, excluding periods during which you madeno after-tax contributions to the Plan after July 15, 1967. In addition, you did not receivecredit for benefit service during periods of leave and layoff prior to July 15, 1967. No benefitservice is credited after January 31, 1987.Points ServicePoints service is used to determine your eligibility for the early retirement benefits offeredunder the 80-point rule (see the “Early Retirement” section). Points service is equal to vestingservice (after June 1, 1993).For service prior to June 1, 1993, please contact the NGBC.Union Leave of AbsenceIf you are on a Company-approved union leave of absence, you will continue to accruevesting and points service for each month in which you make contributions to the Plan.Breaks in Service and Restoration of ServiceA break in service occurs when you are no longer working for the Company for a period of atleast 12 consecutive months. Your break in service begins on the:• Day after you terminate your employment with the Company• First anniversary of an absence due to disability, vacation, leave (other than military leaveto the extent required by the Plan), layoff or similar reason• Second anniversary of an absence due to:⎯ Pregnancy⎯ Birth of a child of the individual⎯ Placement of a child within your home for adoption⎯ Caring for a child for a period immediately following birth or placement for adoption⎯ Any other period of leave recognized under the Family and Medical Leave Act of1993.Your break in service ends on the day you return to active work and perform an hour ofservice.Service ForfeitedIf you are not vested and you experience a break in service that lasts five or more years, you willforfeit your years of vesting, benefit and points service associated with:8

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008• Your after-tax contributions if you withdraw them and do not repay them (with interest)upon rehire, and• Your pre-tax FSSP Retirement Account deposits if you withdraw them.You will forfeit your benefit service as indicated below if you experience five consecutivebreak-in-service years after you are vested, or if your break in service is less than five years(whether or not you are vested):• You forfeit your benefit service associated with any after-tax contributions you made tothe Plan between July 15, 1967 and January 31, 1987, if you withdraw thosecontributions and do not repay them (with interest) upon rehire• You forfeit your benefit service associated with your FSSP Retirement Account deposits ifyou withdraw those deposits upon retirement. (You will not have an opportunity to repayyour deposits and restore your service under the Plan.)Service Retained or RestoredIf you experience five consecutive break-in-service years after you are vested, or if yourbreak in service is less than five years (whether or not you are vested), you retain your yearsof service as indicated below:• You retain your vesting service and points service• You retain your benefit service associated with any after-tax contributions you made tothe Plan between July 15, 1967 and January 31, 1987 if:⎯ You leave those contributions in the Plan⎯ You withdraw your contributions but repay them (with interest) upon rehire• You retain your benefit service associated with your FSSP Retirement Account deposits ifyou leave those deposits in the Plan.Repayment of ContributionsIf you are not vested and you experience a break in service that lasts five or more years, youmust redeposit your withdrawn after-tax contributions (with interest) in order to restore youryears of vesting, benefit and points service based on those contributions.If you experience five consecutive break-in-service years after you are vested, or if yourbreak in service is less than five years (whether or not you are vested), you must redeposityour withdrawn after-tax contributions (with interest) in order to restore your years of benefitservice based on those contributions.In either situation, your redeposit must be made in a single lump sum within five years fromyour date of rehire or five years after you made the withdrawal, whichever is earlier.Keep in mind that if you withdraw your FSSP Retirement Account balance, you will not havean opportunity to redeposit your deposits and restore your service under the Plan.Pension-Eligible CompensationCompensation for FAE purposes includes your W-2 pay (wages, salaries, fees forprofessional services, and other amounts received for services rendered in the course ofemployment with NG Ships Systems, Inc., to the extent that the amounts are potentiallyincluded in gross income), plus any pre-tax contributions to a Company-sponsored 401(k),403(b) or 125 benefit plan.9

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008The above is only a partial listing of pay components that are included in pension-eligiblecompensation. The complete list is contained in the legal plan document.Non-Duplication of BenefitsYou may participate in (meaning contribute to or accrue a benefit under) only one NorthropGrumman pension plan at any given time. If you are eligible to participate in two plans (forexample, as a result of an acquisition), you will be covered by the plan specified by yourpayroll.10

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Applying for Your BenefitOnce you decide on your retirement date, call the NGBC at 1-800-894-4194 or log in to MyBenefits Access available through Benefits OnLine at http://benefits.northropgrumman.comto begin the retirement process. In general, you must provide notice of your intent to retireand request your retirement kit two months prior to the date you want your retirement tobegin (which can be the first day of any month). For example, if you want to begin yourretirement on June 1, 2008, you must request your retirement kit by April 1, 2008.This applies to all types of retirement commencements, including early, normal, andpostponed retirement. The notice requirement is waived in cases where a Companyorganizedlayoff specified the applicable retirement date.As a participant in the Plan, it is your responsibility (or your surviving spouse’s responsibility,if applicable) to request your retirement kit and start the retirement process. Your retirementdate is the date you want to begin your pension benefit payments. Failure to call the NGBCor apply for retirement online through My Benefits Access as described in this section mayresult in a delay in payment or even a forfeiture of benefits.Please be prepared to provide the following information when you apply for retirement:• Your name and home address• Your telephone numbers (work and home)• Your Social Security number• Your current marital status• Your spouse’s name, Social Security number, and date of birth (if you are married)• Your anticipated last day of work with the Company• Your benefit commencement date (the date that you would like payments to begin)• Your beneficiary information⎯ If you would like to designate someone other than your spouse as a beneficiary,please provide the beneficiary’s name, date of birth, and Social Security number; youmust also provide your spouse’s information even if you choose to have someoneother than your spouse as a beneficiary*⎯ If you are not married, you can name a beneficiary for some payment options.* Written and notarized spousal consent is required if you elect a beneficiary other than your spouse.To complete the retirement process, you will need to confirm your date of birth, your maritalstatus, and your beneficiary’s date of birth (if applicable).If you have a qualified domestic relations order (QDRO) that awards any part of your pensionbenefit to a former spouse, such order should be submitted to the NGBC well in advance ofyour retirement date in order to avoid a delay in processing your retirement. You may obtaina copy of the Plan’s procedures regarding QDROs free of charge by contacting the DomesticRelations Matters Group at 1-888-887-5078.11

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Normal RetirementEligibility for Normal RetirementYou are eligible for a normal retirement benefit if your Northrop Grumman employment endson or after your normal retirement age, or if you terminate prior to normal retirement age witha vested benefit and defer payment until you reach normal retirement age. Your normalretirement date is the first day of the month coincident with or following your normalretirement age.Normal Retirement AgeYour normal retirement age for your benefit is age 65.Benefit Amount for Normal RetirementYour monthly accrued benefit at normal retirement is calculated based on whether youelect to:1. Roll over your pre-tax FSSP Retirement Account balance to the Plan*, and notwithdraw any of your after-tax contributions (with interest) from the Plan (indicatedas “FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” on benefitcommunications)2. Roll over your pre-tax FSSP Retirement Account balance to the Plan*, and withdrawyour after-tax contributions (with interest) from the Plan (indicated as “FSSP:Transferred In/After-Tax Deposits: Withdrawn” on benefit communications)3. Not roll over your pre-tax FSSP Retirement Account balance to the Plan, and notwithdraw any of your after-tax contributions (with interest) from the Plan (indicatedas “FSSP: Not Transferred/After-Tax Deposits: Not Withdrawn” on benefitcommunications)4. Not roll over your pre-tax FSSP Retirement Account balance to the Plan, andwithdraw your after-tax contributions (with interest) from the Plan (indicated as“FSSP: Not Transferred/After-Tax Deposits: Withdrawn” on benefit communications).Generally, the first option provides the largest monthly benefit from the Plan, and the lastoption provides the smallest monthly benefit.* You can roll over your pre-tax FSSP Retirement Account deposits to the Plan only if the amount ofthose deposits plus earnings (interest) is equal to or greater than $5,000 and you are retiring.Benefit FormulaThe normal retirement benefit formula under the first option above provides a benefit equal to:• The greater of:⎯ 70%* of your after-tax contributions to the Plan through January 31, 1987, or⎯ $11 times your months of benefit service as of January 31, 1987plus• 70%* of the sum of your pre-tax deposits to the FSSP Retirement Account plus yourafter-tax contributions made to the Plan on or after February 1, 1987.12

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008* If you terminate employment on or before March 4, 2007, 70% is replaced with 65%. However, if youare rehired on or after March 4, 2007, the 70% will apply to any after-tax contributions repaid to thePlan subsequent to your rehire, and to any after-tax contributions to the Plan and pre-tax deposits tothe FSSP Retirement Account that you did not withdraw prior to March 4, 2007.This formula assumes you roll over your pre-tax FSSP Retirement Account deposits to thePlan and do not withdraw any of your after-tax contributions (with interest) from the Plan(producing your “FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” benefit). If you donot roll over your pre-tax FSSP Retirement Account deposits and/or you withdraw your aftertaxcontributions, your monthly benefit will be reduced by:• The annuity equivalent of any withdrawn/distributed after-tax contributions with 5%interest• The annuity equivalent of your pre-tax FSSP Retirement Account balance that has notbeen rolled over to the Plan.Normal Retirement Benefit ExamplesSee the examples that follow. Although these illustrations use full years of age and service,your retirement benefit will be based on your actual years and months of age and service atthe time of your retirement. These examples are based on the “straight life annuity” form ofpayment.AssumptionsLet’s assume your termination date is January 31, 2008, your retirement date is February 1,2008, and you retire at age 65 with 30 years of service.• Benefit service as of January 31, 1987: 9 years (or 9 x 12 = 108 months of benefitservice)• After-tax contributions:⎯ Total: $12,000⎯ As of January 31, 1987: $7,000⎯ On or after February 1, 1987: $5,000• After-tax contributions with 5% interest at January 31, 2008: $28,000• Pre-tax FSSP Retirement Account deposits: $67,000• Pre-tax FSSP Retirement Account balance at January 31, 2008: $125,000These examples demonstrate the benefit amount under each of the four formulas describedunder “Benefit Amount for Normal Retirement.”Example 1 ⎯ FSSP: Transferred In/After-Tax Deposits: Not WithdrawnThis option assumes you roll over your pre-tax FSSP Retirement Account balance to thePlan and do not withdraw your after-tax contributions (with interest) from the Plan. Your“FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” Plan benefit would be determinedas follows.13

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008You would receive the greater of:• 70% x ($7,000) = $4,900.00 annuallyplusOR$11 x 108 months = $1,188.00 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total benefit = $55,300.00Under this option, your total annual benefit is equal to $4,900 + $50,400 = $55,300. Todetermine your monthly benefit, divide your annual benefit by 12.Example 2 ⎯ FSSP: Transferred In/After-Tax Deposits: WithdrawnThis option assumes you roll over your pre-tax FSSP Retirement Account balance to thePlan and withdraw your after-tax contributions (with interest) from the Plan. Your “FSSP:Transferred In/After-Tax Deposits: Withdrawn” Plan benefit would be determined as follows.First, we calculate your maximum benefit as the greater of:• 70% x ($7,000) = $4,900.00 annuallyplusOR$11 x 108 months = $1,188.00 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total maximum benefit = $55,300.00Then, we determine the annuity equivalent of your withdrawn after-tax contributions with 5%interest ($28,000 from the “Assumptions”), and subtract this amount from your totalmaximum benefit:• Annuity equivalent of after-taxcontributions with 5% interest$28,000 x factor of 0.0848 = $2,374.40• Total maximum benefit of $55,300minus14

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Annuity equivalent of withdrawnafter-tax contributions of $2,374.40 = $52,925.60To determine your monthly benefit, divide your annual benefit by 12.Because in this example you are withdrawing your after-tax contributions to the Plan, you willreceive two payments ⎯ the benefit shown above and a single lump payment of your aftertaxcontributions with interest.Example 3 ⎯ FSSP: Not Transferred/After-Tax Deposits: Not WithdrawnThis option assumes you do not roll over your pre-tax FSSP Retirement Account balance tothe Plan and do not withdraw your after-tax contributions (with interest) from the Plan. Your“FSSP: Not Transferred/After-Tax Deposits: Not Withdrawn” Plan benefit would bedetermined as follows.First, we calculate your maximum benefit as the greater of:• 70% x ($7,000) = $4,900.00 annuallyplusOR$11 x 108 months = $1,188.00 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total maximum benefit = $55,300.00Then, we determine the annuity equivalent of your pre-tax FSSP Retirement Accountbalance ($125,000 from the “Assumptions”) and subtract this from your total maximumbenefit:• Annuity equivalent of pre-taxFSSP Retirement Account balance$125,000 x 0.1007 = $12,587.50• Total maximum benefit of $55,300minusAnnuity equivalent of pre-taxRetirement Account balanceof $12,587.50 = $42,712.50To determine your monthly benefit, divide your annual benefit by 12.In this example, your pre-tax Retirement Account balance of $125,000 will be paid accordingto the FSSP plan rules and your instructions. In addition, you will receive the annuity benefitshown above.15

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Example 4 ⎯ FSSP: Not Transferred/After-Tax Deposits: WithdrawnThis option assumes you do not roll over your pre-tax FSSP Retirement Account balance tothe Plan and you withdraw your after-tax contributions (with interest) from the Plan. Your“FSSP: Not Transferred/After-Tax Deposits: Withdrawn” Plan benefit would be determined asfollows.First, we calculate your maximum benefit as the greater of:• 70% x ($7,000) = $4,900.00 annuallyplusOR$11 x 108 months = $1,188.00 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total maximum benefit = $55,300.00Then, we determine the annuity equivalents of your pre-tax FSSP Retirement Accountbalance ($125,000 from the “Assumptions”) and your withdrawn after-tax contributions with5% interest ($28,000 from the “Assumptions”), and subtract them from your total maximumbenefit:• Annuity equivalent of pre-taxFSSP Retirement Account balance$125,000 x 0.1007 = $12,587.50• Annuity equivalent of after-taxcontributions with 5% interest$28,000 x factor of 0.0848 = $2,374.40• Total maximum benefit of $55,300minusAnnuity equivalent of pre-taxRetirement Account balanceof $12,587.50minusAnnuity equivalent of withdrawnafter-tax contributions of $2,374.40 = $40,338.10To determine your monthly benefit, divide your annual benefit by 12.Because in this example you are withdrawing your after-tax contributions to the Plan, you willreceive two payments ⎯ the benefit shown above and a single lump payment of your aftertaxcontributions with interest. Also, your pre-tax Retirement Account balance of $125,000will be paid according to the FSSP plan rules and your instructions.16

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Early RetirementEligibility for Early RetirementYou are eligible for an early retirement benefit if you retire at any time after you turn age 55provided you have five years of service.Your early retirement date can be the first day of any month coincident with or following thedate you become eligible, subject to the rules described in “Applying for Your Benefit.”Early Retirement BenefitUnreduced Benefit at Age 62If you were actively employed by the Company on or after January 1, 1996, and youterminate your employment after reaching age 55 with at least five years of vesting service,you are eligible to receive an unreduced (normal retirement) benefit* beginning at age 62.If you elect to begin receiving your benefit before age 62 and have terminated after meetingthe early retirement eligibility requirements described directly above, your early retirementbenefit is determined as a normal retirement benefit* and then is reduced to a percentage ofthat amount as shown in the table below.Your age whenpayments beginPercentage of yournormal retirement benefitthat you receive62 100%61 94%60 88%59 82%58 76%57 70%56 64%55 58%The table is shown in percentagesfor whole ages. Partial years will beprorated in years and months.80-Point RuleIf you were actively employed on or after January 1, 2000 and terminate your employment(or become disabled) after reaching age 60 with at least 80 points (age plus years of pointsservice), you are eligible to receive an unreduced benefit* at retirement.* Annuity equivalents for offsets are determined using factors at your early retirement age, not yournormal retirement age.Early Retirement Benefit ExamplesSee the examples that follow. Although these illustrations use full years of age and service,your retirement benefit will be based on your actual years and months of age and service atthe time of your retirement. These examples are based on the straight life annuity form ofpayment.17

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008AssumptionsLet’s assume your termination date is January 31, 2008, your retirement date is February 1,2008, and you retire at age 60 with 19 years of benefit and points service:• Benefit service as of January 31, 1987: 0 years (or 0 months of benefit service)• After-tax contributions:⎯ Total: $5,000⎯ As of January 31, 1987: $0⎯ On or after February 1, 1987: $5,000• After-tax contributions with 5% interest at January 31, 2008: $12,000• Pre-tax FSSP Retirement Account deposits: $67,000• Pre-tax FSSP Retirement Account balance at January 31, 2008: $125,000.In this example, you don’t have 20 years of points service, so you are not eligible for the 80-point rule. Instead, we apply the reduction factors described under “Unreduced Benefit atAge 62.” These examples demonstrate the benefit amount under each of the four formulasdescribed under “Benefit Amount for Normal Retirement,” reduced for early retirement.Example 1 ⎯ FSSP: Transferred In/After-Tax Deposits: Not WithdrawnThis option assumes you roll over your pre-tax FSSP Retirement Account balance to thePlan and do not withdraw your after-tax contributions (with interest) from the Plan. Your“FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” Plan early retirement benefitwould be determined as follows.1. First, determine your normal retirement benefitYou would receive the greater of:• 70% x ($0) = $0 annuallyplusOR$11 x 0 months = $0 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total benefit = $50,400.00Under this option, your total annual normal retirement benefit is equal to $0 + $50,400 =$50,400.2. Then, calculate your early retirement benefitAt age 60, you receive 88% of your normal retirement benefit:• 88% x $50,400 = $44,352 annuallyTo determine your monthly benefit, divide your annual benefit by 12.18

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Example 2 ⎯ FSSP: Transferred In/After-Tax Deposits: WithdrawnThis option assumes you roll over your pre-tax FSSP Retirement Account balance to thePlan and withdraw your after-tax contributions (with interest) from the Plan. Your “FSSP:Transferred In/After-Tax Deposits: Withdrawn” Plan early retirement benefit would bedetermined as follows.1. First, determine your normal retirement benefitYou would receive the greater of:• 70% x ($0) = $0 annuallyplusOR$11 x 0 months = $0 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total benefit = $50,400.00Then, we determine the annuity equivalent of your withdrawn after-tax contributions with5% interest ($12,000 from the “Assumptions”), and subtract this amount from your totalmaximum benefit:• Annuity equivalent of after-taxcontributions with 5% interest$12,000 x factor of 0.1082 = $1,298.40• Total maximum benefit of $50,400minusAnnuity equivalent of withdrawnafter-tax contributions of $1,298.40 = $49,101.602. Then, calculate your early retirement benefitAt age 60, you receive 88% of your normal retirement benefit:• 88% x $49,101.60 = $43,209.41 annuallyTo determine your monthly benefit, divide your annual benefit by 12.Because in this example you are withdrawing your after-tax contributions to the Plan, you willreceive two payments ⎯ the benefit shown above and a single lump payment of your aftertaxcontributions with interest.Example 3 ⎯ FSSP: Not Transferred/After-Tax Deposits: Not WithdrawnThis option assumes you do not roll over your pre-tax FSSP Retirement Account balance tothe Plan and do not withdraw your after-tax contributions (with interest) from the Plan. Your19

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008“FSSP: Not Transferred/After-Tax Deposits: Not Withdrawn” Plan early retirement benefitwould be determined as follows.1. First, determine your normal retirement benefitYou would receive the greater of:• 70% x ($0) = $0 annuallyplusOR$11 x 0 months = $0 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total benefit = $50,400.00Then, we determine the annuity equivalent of your pre-tax FSSP Retirement Accountbalance ($125,000 from the “Assumptions”) and subtract this from your total maximumbenefit:• Annuity equivalent of pre-taxRetirement Account balance$125,000 x factor of 0.1392 = $17,400.00• Total maximum benefit of $50,400minusAnnuity equivalent of pre-taxRetirement Account balanceof $17,400 = $33,000.002. Then, calculate your early retirement benefitAt age 60, you receive 88% of your normal retirement benefit:• 88% x $33,000 = $29,040 annuallyTo determine your monthly benefit, divide your annual benefit by 12.In this example, your pre-tax Retirement Account balance of $125,000 will be paid accordingto the FSSP plan rules and your instructions. In addition, you will receive the annuity benefitshown above.Example 4 ⎯ FSSP: Not Transferred/After-Tax Deposits: WithdrawnThis option assumes you do not roll over your pre-tax FSSP Retirement Account balance tothe Plan and you withdraw your after-tax contributions (with interest) from the Plan. Your“FSSP: Not Transferred/After-Tax Deposits: Withdrawn” Plan early retirement benefit wouldbe determined as follows.20

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 20081. First, determine your normal retirement benefitYou would receive the greater of:• 70% x ($0) = $0 annuallyplusOR$11 x 0 months = $0 annually• 70% x ($67,000 + $5,000) = $50,400.00 annuallyequals• Total benefit = $50,400.00Then, we determine the annuity equivalents of your pre-tax FSSP Retirement Accountbalance ($125,000 from the “Assumptions”) and your withdrawn after-tax contributionswith 5% interest ($12,000 from the “Assumptions”), and subtract them from your totalmaximum benefit:• Annuity equivalent of pre-taxRetirement Account balance$125,000 x factor of 0.1392 = $17,400.00• Annuity equivalent of after-taxcontributions with 5% interest$12,000 x factor of 0.1082 = $1,298.40• Total maximum benefit of $50,400minusAnnuity equivalent of pre-taxRetirement Account balanceof $17,400minusAnnuity equivalent of withdrawnafter-tax contributions of $1,298.40 = $31,701.602. Then, calculate your early retirement benefitAt age 60, you receive 88% of your normal retirement benefit:• 88% x $31,701.60 = $27,897.41 annuallyTo determine your monthly benefit, divide your annual benefit by 12.Because in this example you are withdrawing your after-tax contributions to the Plan, you willreceive two payments ⎯ the benefit shown above and a single lump payment of your aftertaxcontributions with interest. Also, your pre-tax Retirement Account balance of $125,000will be paid according to the FSSP plan rules and your instructions.21

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Example — Unreduced Benefit at Age 62Let’s use the same example as above, except that you retire at age 62. Because you arecommencing your benefit at age 62 with more than five years of benefit service, you wouldreceive an unreduced (normal retirement) benefit in the amount of $50,400 per year underthe “FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” option.Example — 80-Point RuleLet’s assume that you retire on April 1, 2009 at age 60 with 25 years of service. Because youare age 60 with at least 80 points, and you are retiring after the 80-point rule went into effect,you would receive an unreduced (normal retirement) benefit in the amount of $50,400 peryear under the “FSSP: Transferred In/After-Tax Deposits: Not Withdrawn” option.22

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Deferred Vested BenefitsEligibility for Deferred Vested BenefitsYou are eligible to receive a deferred vested benefit if you terminate employment with avested benefit before normal retirement age and do not meet the eligibility requirements forearly retirement at that time. If you have less than five years of vesting service*, you canbegin receiving your deferred vested benefit when you reach normal retirement age (age 65).Your benefit will be calculated as a normal retirement benefit**.You may begin receiving your deferred vested benefit in a reduced amount as early as age55 if you have at least five years of vesting service* (see the table that follows for reductionamounts).You must commence your benefit no later than April 1 following the year in which you reachage 70½.Benefit Amount for Deferred Vested BenefitsIf you were not actively employed by the Company on or after January 1, 1996, or youterminated prior to age 55, you may elect to begin receiving your benefit before age 65 if youhave 5 of more years of vesting service. Your deferred vested benefit is determined as anormal retirement benefit** and then is reduced to a percentage of that amount as shown inthe table below.Your age whenpayments beginPercentage of yournormal retirement benefitthat you receive65 100%64 94%63 88%62 82%61 76%60 70%59 64%58 58%57 52%56 46%55 40%The table is shown in percentagesfor whole ages. Partial years will beprorated in years and months.* Five years of vesting service if you terminated after January 1, 2000; seven years if you terminatedemployment before January 1, 2000.** Annuity equivalents for offsets are determined using factors based on your age at your terminationdate, not your normal retirement age.23

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Disability BenefitsIf you retire due to disability, you may be eligible for a disability benefit if you:• Have at least 15 years of vesting service as of your date of disability• Have not attained age 65 as of your date of disability• Are awarded Social Security disability benefits.Benefit AmountYour monthly disability benefit will be equal to your normal retirement benefit* without areduction for early retirement.Call the NGBC if you have questions about the offsets to your Company-provided disabilitybenefit that may result if you commence an early retirement pension benefit.Commencement DateAfter your termination of employment, you may begin receiving a disability benefit on the firstday of the month following the date you meet the eligibility requirements described above.* Annuity equivalents for offsets are determined using factors based on your age at your terminationdate, not your normal retirement age.24

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008If You Die Before Benefit Payments BeginMarried ParticipantsIf you die after your benefit is vested (partially or fully) but before your retirement benefitcommences, your spouse will be eligible for a pre-retirement death benefit from the Plan.If your death occurred before December 31, 2004, your eligible spouse is the individual towhom you have been married for at least one year as of the date of your death.If your death occurs on or after December 31, 2004, your eligible spouse is the individualto whom you are married at the time of your death — there is no one-year requirement.Your spouse’s eligibility for the pre-retirement death benefit remains in effect whether or notyou leave the Company, but will end on the earliest of:• Your retirement date• The date on which you no longer have a legal eligible spouse.A former spouse can be deemed an eligible spouse for all or part of any pre-retirementspouse benefit from the Plan, if provided under a Qualified Domestic Relations Order(QDRO).Pre-retirement Death BenefitIf you die before your benefit payments are scheduled to begin, your spouse’s benefit isequal to the total amount that would have been paid to you had you elected the 100% jointand survivor annuity form of payment.If your spouse is your beneficiary for your FSSP Retirement Account and your after-taxcontributions, then your spouse’s benefit will be based on the decision he/she makes withregard to your after-tax contributions and pre-tax FSSP Retirement Account balance asoutlined under “Benefit Amount for Normal Retirement.”Generally, the amount of the benefit paid to your spouse will be based on your age, after-taxcontributions, pre-tax deposits, vesting service, points and benefit service at the time of yourdeath. In addition, if your spouse elects to commence the benefit before the date you wouldhave attained normal retirement age, the Plan’s early or deferred vested retirement factorswill be applied.Duration of BenefitYour spouse’s benefit is payable monthly for the duration of his or her life. When your spousedies, if the amount of your after-tax contributions (with interest) and/or pre-tax FSSPRetirement Account balance remaining in the Plan* is greater than the total benefit paid toyour surviving spouse as an annuity, the excess amount is paid as a lump sum to yourspouse’s estate. No other payments are made from the Plan.* If you designate someone other than your spouse as your beneficiary for your after-tax contributionsor your pre-tax FSSP Retirement Account, or if your spouse elects to withdraw these contributionsprior to receiving a pre-retirement death benefit, then the provisions in this paragraph will not apply(because these contributions did not remain in the Plan after the commencement of your spouse’sbenefit).25

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Unmarried ParticipantsIf you are not married and you die before your retirement benefit commences, your after-taxcontributions (with interest) will be paid as a lump sum to your designated beneficiary on file.If you have no designated beneficiary, the lump sum distribution will be paid to your estate.26

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008If You Die After Payments Begin:Supplemental Post-Retirement Death BenefitEligibilityYour spouse (or other designated beneficiary) is eligible to receive a Supplemental Post-Retirement Death Benefit in the event of your death if you retire from active employment and:• Initiate your retirement no later than the first day of the month following your termination date,and• Select a benefit commencement date* that is within two months of the first day of the monthfollowing your termination date.* Benefit commencement dates must always be the first day of a month.Benefit AmountThe benefit amount you receive is based on your years of vesting service, as shown below:Years of Vesting Service Death BenefitLess than 7 $07 but less than 15 $5,00015 or more $10,000When you retire, you will make a separate beneficiary election for this benefit. Spousalconsent is required if you are married and you elect a beneficiary other than your spouse.Your survivors can sign an heir agreement to receive the benefit if:• You do not designate a primary or contingent beneficiary,• Your designated primary beneficiary predeceases you, and you do not have a contingentbeneficiary, or• Your designated primary beneficiary and contingent beneficiary predecease you.Otherwise, the benefit is paid to your estate.27

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Payment OptionsThe Plan provides several optional forms of payment to help meet your retirement needs.Your form of payment election cannot be changed on or after your retirement date.Spousal ConsentIf you are married when you retire, written and notarized spousal consent is required if youelect any option other than the 50%, 75%, or 100% Joint and Survivor option with yourspouse designated as the beneficiary.Forms of Payment• Straight Life Annuity — You receive monthly payments for your lifetime. When youdie, the Plan does not pay benefits to anyone else. If you are married when you retire,your spouse must consent in writing to this form of distribution. If you are single whenyou retire, your benefit normally will be paid as a straight life annuity, unless you electone of the other forms of payment for which you qualify.• Joint and Survivor Annuity (50%, 75% or 100%) ⎯ You receive a monthly benefit foryour lifetime. When you die, your spouse or other named beneficiary receives a monthlypayment equal to 50%, 75% or 100% of your monthly benefit (whichever you selected)for the rest of his or her lifetime. The monthly benefit you receive during your lifetime issmaller than the monthly benefit you would receive under the straight life annuity option,because benefits are paid over the joint lifetimes of you and your beneficiary. If yourbeneficiary dies before you but after your benefit payments are scheduled to begin, thePlan pays benefits for your lifetime only.If you are married when you retire, your benefit normally will be paid on a 100% joint andsurvivor basis with your spouse as the designated survivor, unless you elect one of theother forms of payment for which you qualify. If you are married when you retire andchoose a form of payment other than a 50%, 75% or 100% joint and survivor annuity withyour spouse as beneficiary, your spouse must provide written, notarized consent.If your spouse or beneficiary dies before your benefit payments are scheduled to begin,you should notify the NGBC immediately and select a different payment option. Afterthe date your benefit payments are scheduled to begin, they will not be recalculated fora change in marital status.If you elect a beneficiary other than your spouse, IRS rules may limit the level of thesurvivor benefit and may prevent the election of a joint annuitant who is significantlyyounger than you for joint and survivor annuity options other than the 50% option. Pleasecontact the NGBC for more information.Note: If you elect a joint and survivor annuity with your spouse as your beneficiary, andyour spouse dies within two years of your benefit commencement date, your benefit willbe reverted (or "popped up") to the straight life annuity benefit amount effective on thefirst day of the month following your spouse's death.28

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008• Level Income Annuity — You receive a greater monthly payment for the monthsbefore you reach age 62, the Social Security early retirement age. At age 62, yourmonthly payment amount is reduced by an estimate of your age 62 Social Securitybenefit. If you commence your Social Security benefit at age 62 and it is approximatelyequal to the reduction provided in your retirement benefit calculation, this optionenables your income to “level out” pre- and post-age 62. If you are married when youretire, your spouse must consent in writing to this form of distribution.Here’s how your benefit would be calculated:• Your pre-62 monthly benefitequalsYour benefit calculated under the straight life annuity form of payment (reduced, asapplicable, for early retirement)plusYour estimated Social Security benefitmultiplied byA Level Income annuity factor based on your age• Your post-62 monthly benefitequalsYour pre-62 monthly benefitminusYour estimated Social Security benefitYour first post-62 benefit payment will take place on the first of the month coincidentwith or following your 62 nd birthday.Example — Assume you retire at age 60 with a straight life annuity benefit of $1,000per month, and the Level Income annuity factor is 0.85. Further, assume the Planestimate of your age 62 Social Security benefit is $500 and your actual age 62 SocialSecurity payment is $550.Your retirement benefit calculation will show Plan payments for a level income option asfollows:• Pre-62 monthly benefit from the PlanStraight life annuity of $1,000plus$500 x 0.85 = $1,425• Post-62 monthly benefit from the Plan$1,425 − $500 = $92529

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008If you elect this option and commence your actual Social Security benefit at age 62,your total monthly income will be as follows:• Pre-62 monthly benefit from the Plan = $1,425• Post-62 total monthly benefitPost-62 monthly benefit of $925plusyour actual Social Security benefit of $550 = $1,475As a result, your pre- and post-62 income remains approximately level.Note: The age at which you may begin your Social Security benefits depends on the yearof your birth. Be sure to confirm your eligible start date with the Social SecurityAdministration. Social Security benefits that start before age 65 are reduced, becausepayments are made over a longer period of time. Your actual Social Security benefit maybe more or less than the estimate used to determine your Plan benefit under the levelincome option. However, your level income payments will not be adjusted if that is thecase.• Joint and Survivor with Level Income ⎯ This option takes into account yourestimated Social Security benefit in order to provide you with a level payment when youreach Social Security age and provides a percentage of your benefit (calculated withouttaking into account the level income option) to your beneficiary after your death. You canelect to have your beneficiary receive 50%, 75% or 100% of the amount that you wouldreceive if you elected only the joint and survivor annuity (without the level incomefeature).For example, you might elect this option when you are age 58, and choose a 50% joint andsurvivor benefit to be paid to your spouse. If you die at age 60, your spouse will receive50% of the amount that you would have received if you had elected a 50% joint andsurvivor annuity without a level income feature (not 50% of the amount that you werereceiving at the time of your death).If you are married when you retire and you choose this form of payment, your spousemust provide written, notarized consent. If you elect a beneficiary other than yourspouse, certain IRS rules may limit the level of the survivor benefit and may also preventthe election of a joint annuitant who is significantly younger than you for joint and survivorannuity options other than the 50% option. Please contact the NGBC for moreinformation.• Ten Year Certain and Continuous — You receive a monthly benefit for your lifetime.Electing this form of payment means there will be a reduction in the amount of your straightlife annuity benefit based on your age at retirement.If you die before 120 payments have been made, the remainder of the 120 paymentswill be paid to your designated beneficiary. If your beneficiary dies after you but before120 payments have been made, the remainder of the 120 payments will be paid to yourbeneficiary’s estate in a lump sum. If your beneficiary predeceases you before the 120payments have been made, you may designate another beneficiary, provided youobtain your spouse’s consent, if applicable. You may designate your estate or a trust as30

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008your designated beneficiary for this payment option. If you are married when you retire,your spouse must consent in writing to this form of distribution.• Ten Year Certain and Continuous with Level Income ⎯ This option takes into accountyour estimated Social Security benefit in order to provide you with an approximately levelpayment when you reach Social Security age and provides guaranteed benefit paymentsfor 120 months. You will receive a benefit for the duration of your life.You receive a greater monthly payment for the months before you reach age 62, the SocialSecurity early retirement age. At age 62, your monthly payment amount is reduced by anestimate of your age 62 Social Security benefit. If you commence your Social Securitybenefit at age 62 and it is approximately equal to the reduction provided in your retirementbenefit calculation, this option enables your income to “level out” pre- and post-age 62.If you die before 120 payments have been made, the remainder of the 120 payments ⎯either the pre-62 benefit amount or post-62 benefit amount ⎯ will be paid to yourdesignated beneficiary. If your beneficiary dies after you but before 120 payments havebeen made, you may designate another beneficiary, provided you obtain your spouse’sconsent, if applicable. You may designate your estate or a trust as your designatedbeneficiary for this payment option. If you are married when you retire, your spouse mustconsent in writing to this form of distribution.• Lump Sum — The single lump sum option is available only for your accrued “FSSP: NotTransferred/After-Tax Deposits: Withdrawn” benefit ⎯ meaning your resulting benefit if youdo not roll over your pre-tax FSSP Retirement Account balance to the Plan and youwithdraw your after-tax contributions (with interest) from the Plan. If, after your terminationdate, your annual “FSSP: Not Transferred/After-Tax Deposits: Withdrawn” benefit is $5,000or less, you can elect to receive your benefit as a lump sum. Your commencement date forthis benefit can be the first day of any month following your termination date, subject to therules for commencing your benefit. Trailing pay and other data included in your benefitcalculation after your benefit commencement date will not impact your eligibility to elect alump sum, even if it increases your annual benefit to be more than $5,000.Electing a lump sum payment means you are electing to receive, in a single payment, theactuarial present value of the straight life annuity benefit ⎯ there will be no furtherpayments from the Plan.If you are married when you retire, your spouse must provide written, notarized consentto this form of distribution. The lump sum amount will depend on your age at retirement,the interest rate used and a mortality table. For a list of the applicable interest rates,please access Benefits OnLine at http://benefits.northropgrumman.com, or contact theNGBC.If you elect the lump sum form of payment for your Part A benefit, you must make a directrollover to an IRA or to another qualified plan in order to defer income taxes on thepayment. Any taxable amount not directly rolled over will have 20% automaticallywithheld for federal income taxes.31

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Refund of Your After-Tax ContributionsIf you leave the Company, you can ask for a refund of any after-tax contributions (withinterest) to the Plan as a single lump sum payment, which will be paid as soon asadministratively possible. If the amount of your after-tax contributions with interest is equal toor greater than $5,000, your spouse must provide notarized written consent in order for youto receive a lump sum.If you are vested in your accrued benefit when you leave the Company, you can elect towithdraw your after-tax contributions (with interest) in the form of a lump sum, straight lifeannuity if you’re single, or joint and survivor annuity if you are married. The remainingaccrued benefit is determined by offsetting the annuity equivalent of your withdrawn after-taxcontributions (with interest) and is payable on or after your early retirement age.If you elect an annuity form of payment, and the amount of your after-tax contributions (withinterest) and your rolled-over pre-tax FSSP Retirement Account deposits remaining in thePlan is greater than the total benefit paid to you and/or your surviving spouse (or designatedbeneficiary with spousal consent) over your lifetime(s), at the time of death the excessamount is paid as a lump sum to your spouse, contingent beneficiary or estate, asapplicable. No other payments are made from the Plan.32

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Tax ConsiderationsMaximum Benefits for Tax PurposesPlan benefits are limited to an annual maximum by federal law. In addition, federal tax lawlimits the amount of compensation that may be used to calculate your benefits. Those limitsmay be raised in accordance with Internal Revenue Service (IRS) regulations.When You Pay TaxesGenerally, when you receive your monthly retirement benefit payments, you are subject tofederal income tax and, in some states, state and local income tax.*If you receive a lump sum payment of your benefit before you have reached age 55, thepayment may be subject to a 10% penalty tax in addition to the federal ― and, if applicable,state and local ― tax. You can delay paying taxes on your lump sum distribution — andavoid the additional 10% tax — by rolling over your lump sum payment to an individualretirement account (IRA) or another employer’s retirement plan within 60 days of your lumpsum payment date.The additional 10% tax does not apply in the following situations:• If your beneficiary receives a lump sum distribution as a result of your death• If you receive a disability benefit in the form of a lump sum.* Does not apply to after-tax contributions to the Plan. Taxes were withheld prior to contributions beingmade.33

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008General Plan InformationYour benefits belong to you and, except in the case of a qualified domestic relations order(QDRO), Internal Revenue Service (IRS) levy, or garnishment orders under the Federal DebtCollection Procedures Act or the Mandatory Victims Restitution Act, may not be sold,assigned, transferred, pledged, or garnished. See “Payment of Benefits to Alternate Payees”for details about QDROs.Facility of PaymentIf you (or your beneficiary) are unable to manage your own affairs, any payments due maybe paid to someone who is legally authorized to conduct your affairs, or deposited in yourbank account or directly or indirectly paid for your comfort, support, and maintenance.Payment of Benefits to Alternate PayeesThe Employee Retirement Income Security Act (ERISA) requires the plan administrator toobey qualified domestic relations orders (QDROs). A QDRO is a legal judgment, decree, ororder that recognizes the rights of someone other than the Plan participant (namely, analternate payee) under the Plan with respect to child or other dependent support, alimony, ormarital property rights.If you become legally separated or divorced, a portion of your benefits under the Plan maybe assigned to someone else to satisfy a legal obligation you may have to a spouse, formerspouse, child, or other dependent. These payments may begin while you are still employed,but only after meeting the specific retirement eligibility requirements.There are specific requirements that a QDRO must meet to be accepted by the planadministrator. In addition, there are specific procedures regarding the amount and timing ofpayments.The Northrop Grumman Domestic Relations Matters Group administers QDROs. If you are ormay be subject to such an order, call the Northrop Grumman Domestic Relations MattersGroup at 1-888-887-5078 to request a copy of the Plan’s QDRO procedures and a modelQDRO for your use. Issues pertaining to the qualified status of a domestic relations ordermay be pursued in federal court.Top Heavy RulesCertain tax rules ⎯ called “top heavy” rules ⎯ apply if a large percentage of the Plan’sbenefits accrue in favor of key employees, as key employees are defined by the InternalRevenue Code. The administrator will notify you if your benefits are affected by top heavyrules.Loss of BenefitsCertain circumstances result in a loss or delay of benefits, such as, among others, thosedescribed below:34

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008• If you terminate employment with Northrop Grumman before becoming vested, youreceive no Company-funded benefits from the Plan.• If you move and do not notify the NGBC of your new address, you will not receivebenefits until you contact the plan administrator. If you fail to notify the plan administratorof your new address and you cannot be located, in some cases you may forfeit yourbenefit. However, your benefit will be reinstated if you provide your new address to theplan administrator.• Failure to notify the NGBC in a timely manner before your retirement date (as describedin the “Applying for Your Benefit” section) may result in a delay in payment or even aforfeiture of benefits.• If the Plan is terminated before you retire, you are unable to earn benefits after the dateof plan termination. If there are not enough funds to pay all benefits at termination, thePension Benefit Guaranty Corporation (PBGC) guarantees all or a portion of the benefityou earned before the Plan terminated.• If you die before commencing benefit payments under the Plan, any Company-fundedbenefits you had earned will be forfeited unless it is payable to a qualifying spouse.Your ERISA RightsIn 1974, Congress passed the Employee Retirement Income Security Act (ERISA) tosafeguard the interests of participants and beneficiaries under employee benefit plans. As aparticipant of the Plan, you have certain rights and protections under ERISA, as outlined inthe following statement adapted from regulations of the U.S. Department of Labor.As a plan participant, under ERISA you have the right to receive information about your planand benefits:• Examine without charge, at the plan administrator’s office or other convenient location, alldocuments governing the Plan, including plan documents, trust agreements, and a copyof the latest annual report filed by the Program with the U.S. Department of Labor.• Obtain copies of all plan documents and other documents governing the operation of thePlan, including copies of the latest annual report and updated SPD, by writing to the planadministrator. The plan administrator may charge a reasonable fee for the copies.• Receive a summary of the Plan’s annual financial reports. You do not have to ask foryour copy of the summary — the plan administrator sends it to you each year.• Receive a written explanation of the reason for denial, if your claim for a pension benefitis denied by the plan administrator, in whole or in part, and obtain copies of documentsrelating to the decision without charge. As explained later, you have the right to have theplan administrator review and reconsider your claim within certain time schedules.• Obtain a statement telling you if you have a right to receive a pension at normalretirement age and if so, what your estimated benefits would be at normal retirement ageif you stop working under the Plan now. If you do not have a right to a pension, thestatement will tell you how many more years you have to work to get a right to a pension.This statement must be requested in writing and is not required to be given more thanonce every 12 months. The plan administrator must provide the statement free of charge.Prudent Actions by Plan FiduciariesIn addition to creating rights for plan participants, ERISA imposes duties on the Planfiduciaries, the people responsible for operating the Plan. At Northrop Grumman, planfiduciaries may include employees who make certain discretionary decisions about the35

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008management or administration of the Plan. Fiduciaries also may include outside investmentadvisors and trustees.Fiduciaries have a duty to operate the Plan prudently and in the interest of you and otherplan participants and beneficiaries. Fiduciaries who violate ERISA may be removed and/orrequired to make good on losses that they caused the Plan.No one, including Northrop Grumman or any other person, may fire you or otherwisediscriminate against you in any way to prevent you from obtaining a benefit or exercisingyour rights under ERISA.Enforcing Your ERISA RightsUnder ERISA, there are several steps you can take to enforce your rights. For instance, ifyou request plan documents or the latest annual report from the Plan and you do not receivethem within 30 days, you may file suit in federal court. In such a case, the court may requirethe plan administrator to provide the materials and pay you up to $110 a day until youreceive them, unless the materials were not sent for a reason beyond the control of the planadministrator or the plan administrator otherwise had a reasonable basis for not providingthem.If you have a claim for benefits that is denied or ignored, in whole or in part, and you havebeen through all of the Plan’s appeals procedures (as explained later in this document), thenyou may file suit in a state or federal court. In addition, if you disagree with the Plan’sdecision (or lack of decision) concerning the qualified status of a domestic relations order,you may file suit in a federal court.If a fiduciary misuses the Plan’s money, or if you are discriminated against for asserting yourrights, you may seek assistance from the U.S. Department of Labor, or you may file suit infederal court.In addition to deciding what damages, if any, should be awarded, the court will decide whoshould pay the court costs and legal fees. If you are successful, the court may order theperson you sued to pay them. If you lose, the court may order you to pay these costs andfees (for example, if it finds your claim to be frivolous).Assistance with Your QuestionsIf you have any questions about the Plan, you should call the NGBC at 1-800-894-4194between the hours of 9:00 a.m. and 6:00 p.m. Eastern Time. If you have any questions aboutyour rights under ERISA or about this statement outlining your rights, or if you needassistance in obtaining documentation from the Plan administrator, you should contact thenearest regional office of the Employee Benefits Security Administration, U.S. Department ofLabor, listed in your telephone directory. You also may contact the Division of TechnicalAssistance and Inquiries, Employee Benefits Security Administration, U.S. Department ofLabor, 200 Constitution Avenue, N.W., Washington, DC 20210. You may also obtain certainpublications about your rights and responsibilities under ERISA by calling the publicationshotline of the Employee Benefits Security Administration at 1-866-444-3272.36

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Discretionary Authority of Plan AdministratorThe Plan Administrator or its delegate shall have full and sole discretionary authority tointerpret all plan documents and to make all interpretive and factual determinations as towhether any individual is entitled to receive any benefit under the terms of this Plan. ThePlan Administrator or its delegate shall determine, exercising its discretion, appropriatecourses of action in light of the reason and purpose for which this Plan is established andmaintained. Any construction of the terms of any plan document and any determination offact adopted by the Plan Administrator or its delegate shall be final and legally binding on allparties.Incorrect Payment of BenefitsIf the Plan Administrator or its delegates, in their full discretion, determine that the Plan madean incorrect payment of benefits, and that a correction is necessary or desirable under thelaw, the Plan may recover the amounts incorrectly paid either by requiring the payee toreturn the excess to the Plan, by reducing any future Plan payments to the payee, or by anyother method deemed reasonable to the Plan Administrator or its delegates.Claims and Appeals ProcessesClaiming BenefitsIf you believe you are entitled to benefits other than those provided to you, you may file anotice claim for benefits with the plan administrator. To do so, you must send a written noticeto the plan administrator at the following address:Administrative Committee ⎯ Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanNorthrop Grumman Corporation1840 Century Park East, 90/129/CCLos Angeles, CA 90067You will receive notice of the plan administrator’s decision on your claim for benefitsgenerally within 60 days after the plan administrator receives your claim. In special cases,the plan administrator may require an additional 90 days to consider your claim. In suchcase, you will receive, within the original 60-day time period, written notice of the need foradditional time, the reasons the additional time is necessary, and the date the planadministrator expects to reach its decision.If your claim for a benefit is denied, in whole or in part, you (or your beneficiary) must receivea written explanation of the reason for the denial from the plan administrator. This writtennotice will include:• Specific reasons for the denial• References to plan provisions on which the denial is based• A description of additional materials or information that are necessary• Procedures for appealing the decision, including applicable time limits• A statement of your right to bring a civil action under Section 502(a) of ERISA following adenial of your claim on appeal.You or your authorized representative may review all documents related to any denial ofbenefits.37

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Appealing Claims DecisionsIf you disagree with the plan administrator’s decision regarding your benefits claim, you have65 days from the receipt of the original denial to request a review. This request should bemade in writing and sent to the plan administrator at the following address:Administrative Committee ⎯ Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanNorthrop Grumman Corporation1840 Century Park East, 90/129/CCLos Angeles, CA 90067Your request should state all the grounds on which your request for a review is based. Youshould state any facts, address any issues, and make any comments that support yourrequest. Besides having the right to appeal, you or your authorized representative also hasthe right to examine, at locations and times convenient to the plan administrator, or to receivecopies of, upon request and free of charge, any documents, records or other informationrelevant to your claim.The claim appeal will be reviewed by the administrative committee, and ordinarily you will benotified, in writing, of a decision within 60 days. In special cases, the plan administrator mayrequire an additional 60 days to consider your appeal. You will be notified within the initial 60-day period if extra time is required and the reason the extra time is required.You will receive written notification of the final decision, including, for an adverse decision:• Specific reasons for the decision• References to specific plan provisions on which the decision is based• A statement that you are entitled to receive, upon request and free of charge, reasonableaccess to, and copies of, all documents, records or other information relevant to yourclaim• A statement of your right to bring a civil action under Section 502(a) of ERISA following adenial of your claim on appeal.The final decision will be sent to you in writing, together with an explanation of how thedecision was made. The decision of the plan administrator is final and conclusive.If your claim appeal is denied, you may bring legal action in court provided you abide bycertain time limitations. Specifically, you may not bring legal action against a party under thePlan after the latest of:• One year from the time the claim arises• 90 days from the final disposition of the claim by the Administrative Committee.In addition, the action must be filed before the time limit described above and any otherwiseapplicable statute of limitations expires, whichever comes first. For details on when a claimarises, see the plan document.Pension Benefit Guaranty Corporation (PBGC)If the Plan is terminated, benefits under this plan are insured by the Pension BenefitGuaranty Corporation (PBGC), a federal government agency. Generally the PBGC38

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008guarantees most vested normal age retirement benefits, early retirement benefits, andcertain survivors’ pensions. However, the PBGC does not guarantee all types of benefitsunder covered plans, and the amount of benefit protection is subject to certain limitations.The PBGC guarantees vested benefits at the level in effect on the date of plan termination.However, if a plan was in effect for less than five years before it terminates, or if benefitswere increased within the five years before plan termination, not all of the Plan’s vestedbenefits or the benefit increase may be guaranteed. In addition, there is a ceiling on theamount of monthly benefit that the PBGC guarantees, which is adjusted annually.You can receive more information on PBGC insurance protection and its limits from thePBGC directly at:Office of CommunicationPension Benefit Guaranty Corporation1200 K Street, N.W.Washington, DC 20005-4026202-326-4000Funding and Plan AssetsThe cost of the Plan is paid by the plan sponsor and through employee contributions. All plansponsor contributions are actuarially determined.All assets of the Plan are held in a master trust. Plan assets are held for the exclusive benefitof the Plan participants. The assets of the master trust can become the property of NorthropGrumman only after all Plan obligations have been satisfied. Contributions to a plan may bereturned to Northrop Grumman if the Internal Revenue Service (IRS) fails to issue a favorabledetermination letter concerning the Plan, if the contributions were made in error, or if the IRSdetermines that the contributions are not deductible.All reasonable and proper administrative expenses of the Plan, including counsel fees, may bepaid from the Plan assets.About this Guide and the Plan DocumentsIn accordance with the disclosure requirement of ERISA, this guide serves as a summaryplan description (SPD) of the Ingalls Shipbuilding Inc. Hourly Employees’ Retirement Plan.As such, it is intended to provide you with a brief explanation of your pension plan. It is notan official plan document, and neither the plan documents nor this guide constitutes animplied or expressed contract of employment. The actual terms of the Plan are contained inthe plan documents, which are available from the NGBC for a fee.The official plan text and trust agreement govern the operation of the Plan and payment of allbenefits. In the event of any ambiguity in or omission from this guide, or any conflict betweenthis guide and the official plan text and trust agreement, the official plan text and trustagreement govern.39

Ingalls Shipbuilding Inc. Hourly Employees’ Retirement PlanSummary Plan DescriptionDRAFT January 2008Future of the ProgramThe Company or its delegates may amend, suspend or terminate the Plan at any time by writtenresolution.When plan amendments are made that materially affect benefits, a summary of the changeswill be communicated to affected plan participants. If the Plan is terminated, plan benefits willimmediately become vested for affected participants.Contact InformationThe following chart contains contact information, provided in accordance with ERISA, whichmay be helpful to you. For more information on your ERISA rights, see “Your ERISA Rights”and “Enforcing Your ERISA Rights.”Plan SponsorNG Ship Systems, Inc.Northrop Grumman Corporation1840 Century Park East, 90/129/CCLos Angeles, CA 90067Plan Sponsor EIN 94-304767Type of PlanDefined benefit pension planType of Funding Under a trustPlan Number 005Plan NameIngalls Shipbuilding Inc. Hourly Employees’ Retirement PlanPlan Administrator Administrative Committee ⎯ Ingalls Shipbuilding Inc. Hourly Employees’Retirement PlanNorthrop Grumman Corporation1840 Century Park East, 90/129/CCLos Angeles, CA 90067Agent for Service ofLegal ProcessPlan TrusteePlan Year End December 311-800-894-4194Corporate SecretaryNorthrop Grumman Corporation1840 Century Park East, 90/129/CCLos Angeles, CA 90067State Street Bank and Trust CompanyMaster Trust Client ServicesOne Enterprise Drive - W6CNorth Quincy, MA 0217140