Northrop Grumman 2009 Annual Report Download - page 52

customer, recovery of insurance proceeds, and other discrete events. At the completion of a long-term contract, any
originally estimated costs not incurred or reserves not fully utilized (such as warranty reserves) could also impact
contract earnings. Where such items have occurred, and the effects are material, a separate description is provided.
For a more complete understanding of each segment’s product and services, see the business descriptions in
Part I, Item 1.
Program Descriptions
For convenience, a brief description of certain programs discussed in this Form 10-K are included in the
“Glossary of Programs” beginning on page 52.
AEROSPACE SYSTEMS
$ in millions 2009 2008 2007
Year Ended December 31
Sales and Service Revenues $10,419 $9,825 $9,234
Segment Operating Income 1,071 416 919
As a percentage of segment sales 10.3% 4.2% 10.0%
Sales and Service Revenues
2009 – Aerospace Systems revenue increased $594 million, or 6 percent, as compared with 2008. The increase
was primarily due to $201 million higher sales in Space Systems (SS), $201 million higher sales in Battle
Management & Engagement Systems (BM&ES), and $191 million higher sales in Strike & Surveillance Systems
(S&SS). The increase in SS was primarily due to the ramp-up of restricted programs awarded in 2008, partially
offset by decreased sales volume on the National Polar-orbiting Operational Environmental Satellite System
(NPOESS) and cancellation of the Transformational Satellite Communications System (TSAT) program. The
increase in BM&ES was primarily due to higher sales volume on the Broad Area Maritime Surveillance (BAMS)
Unmanned Aircraft System, the E-2D Advanced Hawkeye, and the EA-18G programs, partially offset by lower
sales volume on the E2-C as the program is nearing completion. The increase in S&SS was primarily due to
higher sales volume from Global Hawk High-Altitude Long-Endurance (HALE) Systems, F-35, F/A-18, and
B-2 programs, partially offset by decreased activity on the Kinetic Energy Interceptor (KEI) program, which was
terminated for convenience in 2009, and the Intercontinental Ballistic Missile (ICBM) program.
2008 – Aerospace Systems revenue increased $591 million, or 6 percent, as compared with 2007. The increase
was primarily due to $288 million higher sales in Advanced Products & Technology (AP&T), $233 million
higher sales in S&SS, and $100 million higher sales in SS. The increase in AP&T was primarily due to higher
sales volume associated with the N-UCAS program. The increase in S&SS was primarily due to higher sales
volume on the Global Hawk HALE Systems, KEI, and B-2 programs, partially offset by lower sales volume on
the F-35 program and the Multi-Platform Radar Technology Insertion Program (MP-RTIP). The increase in SS
was primarily due to higher sales volume on the James Webb Space Telescope (JWST) program, NPOESS, and
restricted programs, partially offset by lower sales volume on the Advanced Extremely High Frequency (AEHF)
and STSS programs, and termination of the Space Radar program in the second quarter of 2008.
Segment Operating Income
2009 – Aerospace Systems operating income increased $655 million, or 157 percent, as compared with 2008. The
increase was primarily due to a 2008 goodwill impairment charge of $570 million (see Note 10 to the consolidated
financial statements in Part II, Item 8), $61 million from the higher sales volume discussed above, and $24 million
in improved program performance. The $24 million in improved program performance was principally due to
$67 million in performance improvements in S&SS programs, primarily related to ICBM and Global Hawk HALE
Systems, partially offset by $33 million in lower performance across various programs in SS and BM&ES.
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NORTHROP GRUMMAN CORPORATION
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