Northrop Grumman 2010 Annual Report Download - page 58

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2009 – Shipbuilding operating income was $299 million as compared with operating loss of $2.3 billion in 2008.
The increase was primarily due to the 2008 goodwill impairment charge of $2.5 billion (See Note 12 to the
consolidated financial statements in Part II, Item 8), and improved performance in Expeditionary Warfare as
compared to 2008. In 2008, the Expeditionary Warfare business had net negative performance adjustments of
$263 million due principally to adjustments on the LHD 8 contract, cost growth and schedule delays on the
LPD program and the effects of Hurricane Ike on a subcontractor’s performance.
TECHNICAL SERVICES
$ in millions 2010 2009 2008
Year Ended December 31
Sales and Service Revenues $3,230 $2,776 $2,535
Segment Operating Income 206 161 144
As a percentage of segment sales 6.4% 5.8% 5.7%
Sales and Service Revenues
2010 – Technical Services revenue increased $454 million, or 16 percent, as compared with 2009. The increase is
primarily due to $379 million higher sales in the Integrated Logistics and Modernization Division (ILMD). The
increase in ILMD is primarily due to the continued ramp-up of the recently awarded KC-10 and C-20
programs.
2009 – Technical Services revenue increased $241 million, or 10 percent, as compared with 2008. The increase
was primarily due to $245 million higher sales in ILMD, and $74 million higher sales in Training Solutions
Division (TSD), partially offset by $72 million lower sales in Defense and Government Services Division
(DGSD). The increase in ILMD was due to increased task orders for the CNTPO program and higher demand
on the Hunter Contractor Logistics Support (CLS) programs in support of the DoD’s surge in Intelligence,
Surveillance, and Reconnaissance (ISR) initiatives. The increase in TSD was due to higher volume on various
training and simulation programs including the Joint Warfighting Center Support, Saudi Arabia National Guard
Modernization and Training, Global Linguist Solutions, National Level Exercise 2009 and African Contingency
Operations Training Assistance programs. These increases were partially offset by lower 2009 sales in DGSD due
to the completion of the Joint Base Operations Support program in 2008.
Segment Operating Income
2010 – Operating income at Technical Services increased $45 million, or 28 percent, as compared with 2009.
The increase is primarily due to the higher sales volume discussed above. Operating income as a percentage of
sales increased 60 basis points and reflects improved program performance and business mix changes.
2009 – Operating income at Technical Services increased $17 million, or 12 percent, as compared with 2008.
The increase was primarily due to the higher sales volume discussed above and $3 million from performance
improvements across numerous programs.
BACKLOG
Definition
Total backlog at December 31, 2010, was approximately $64.2 billion. Total backlog includes both funded
backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm
orders for which funding is not currently contractually obligated by the customer). Unfunded backlog excludes
unexercised contract options and unfunded indefinite delivery indefinite quantity (IDIQ) orders. For multi-year
services contracts with non-federal government customers having no stated contract values, backlog includes only
the amounts committed by the customer.
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NORTHROP GRUMMAN CORPORATION