Northrop Grumman 2011 Annual Report Download - page 86

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NORTHROP GRUMMAN CORPORATION
Accounts receivable consisted of the following:
December 31
$ in millions 2011 2010
Due From U.S. Government
Amounts billed $ 812 $ 900
Recoverable costs and accrued profit on progress completed - unbilled 1,594 1,718
2,406 2,618
Due From Other Customers
Amounts billed 249 280
Recoverable costs and accrued profit on progress completed - unbilled 363 458
612 738
Total accounts receivable 3,018 3,356
Allowance for doubtful accounts (54) (27)
Total accounts receivable, net $2,964 $3,329
9. INVENTORIED COSTS, NET
Inventoried costs consisted of the following:
December 31
$ in millions 2011 2010
Production costs of contracts in process $ 1,629 $1,521
General and administrative expenses 221 190
1,850 1,711
Progress payments received (1,100) (962)
750 749
Product inventory 123 147
Total inventoried costs, net $ 873 $ 896
10. INCOME TAXES
The company’s effective tax rate on earnings from continuing operations for the year ended December 31, 2011
was 32.3 percent, as compared with 19.5 percent and 30.7 percent for the years ended December 31, 2010 and
2009, respectively. The company’s effective tax rate reflects deductions for domestic manufacturing and research
tax credits, and a deduction for employee stock ownership plan dividends in all years, as well as the impact of
settlements with the Internal Revenue Service (IRS) in 2010 and 2009.
During 2010, the company received final approval from the IRS and the U.S. Congressional Joint Committee on
Taxation (Joint Committee) of the IRS’ examination of the company’s tax returns for the years 2004 through
2006. As a result of the settlement, the company recognized a net tax benefit of approximately $298 million (of
which $66 million was in cash), which was recorded as a reduction to the company’s provision for income taxes.
During 2009, the company reached a final settlement with the IRS regarding its audit of the company’s tax returns
for 2001 through 2003 and recognized $75 million of net benefit upon settlement, including $20 million of
interest.
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