Northrop Grumman 2012 Annual Report Download - page 65

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NORTHROP GRUMMAN CORPORATION
-55-
Discontinued Operations
Earnings for the former shipbuilding business and an adjustment to the gain from a previous divestiture, are reported
as discontinued operations, as presented in the following table:
Year Ended
December 31
$ in millions 2011 2010
Sales $1,646 $6,711
Earnings from discontinued operations 59 229
Income tax expense (28)(95)
Earnings, net of tax 31 134
Gain on divestiture, net of income tax expense of $1 in 2011 and a benefit of $5 in 2010 1 15
Earnings from discontinued operations, net of tax $ 32 $ 149
Tax rates on discontinued operations vary from the company’s effective tax rate generally due to the non-
deductibility of goodwill for tax purposes and the effects, if any, of capital loss carryforwards.
There were no assets or liabilities related to these discontinued operations included in the consolidated statements of
financial position as of December 31, 2012 or 2011.
4. SEGMENT INFORMATION
The company is aligned in four reportable segments: Aerospace Systems, Electronic Systems, Information Systems,
and Technical Services.
The company, from time to time, acquires or disposes of businesses and realigns contracts, programs or business
areas among and within its operating segments. Portfolio shaping and internal realignments are designed to more
fully leverage existing capabilities and enhance development and delivery of products and services.
Segment Realignment
On January 1, 2012, the company transferred its missile business (principally the Intercontinental Ballistic Missile
(ICBM) program), from Aerospace Systems to Technical Services. The segment sales and segment operating income
for the years ended December 31, 2011 and 2010, have been recast to reflect the missile business transfer. Sales of
$494 million and $474 million for the years ended December 31, 2011 and 2010, respectively, were transferred from
Aerospace Systems to Technical Services. Segment operating income of $44 million and $43 million for the years
ended December 31, 2011 and 2010, respectively, were transferred from Aerospace Systems to Technical Services.
U.S. Government Sales
Revenue from the U.S. Government (which includes Foreign Military Sales) includes revenue from contracts for
which Northrop Grumman is the prime contractor, as well as those for which the company is a subcontractor and the
ultimate customer is the U.S. Government. All of the company’s segments derive substantial revenue from the U.S.
Government. Sales to the U.S. Government amounted to $22.7 billion, $23.9 billion, and $25.5 billion, or 90.0
percent, 90.5 percent, and 90.6 percent, of total revenue for the years ended December 31, 2012, 2011, and 2010,
respectively.
Foreign Sales
Direct foreign sales amounted to $1.6 billion, or approximately 6 percent, of total revenue for each of the years
ended December 31, 2012, 2011, and 2010.
Discontinued Operations
The company’s discontinued operations are excluded from all of the amounts in the following tables.
Assets
Substantially all of the company’s operating assets are located or maintained in the U.S.