Northrop Grumman 2009 Annual Report Download - page 84

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In January 2009, the company streamlined its organizational structure by reducing the number of operating
segments from seven to five. The five segments are Aerospace Systems, which combines the former Integrated
Systems and Space Technology segments; Electronic Systems; Information Systems, which combines the former
Information Technology and Mission Systems segments; Shipbuilding; and Technical Services. Creation of the
Aerospace Systems and Information Systems segments is intended to strengthen alignment with customers,
improve the company’s ability to execute on programs and win new business, and enhance cost competitiveness.
Product sales are predominantly generated in the Aerospace Systems, Electronic Systems and Shipbuilding
segments, while the majority of the company’s service revenues are generated by the Information Systems and
Technical Services segments.
During the first quarter of 2009, the company realigned certain logistics, services, and technical support programs
and transferred assets from the Information Systems and Electronic Systems segments to the Technical Services
segment. This realignment is intended to strengthen the company’s core capability in aircraft and electronics
maintenance, repair and overhaul, life cycle optimization, and training and simulation services.
Sales and segment operating income in the tables below have been revised to reflect the above realignments for
all periods presented.
During the first quarter of 2009, the company transferred certain optics and laser programs from the Information
Systems segment to the Aerospace Systems segment. As the operating results of this business were not considered
material, the prior year sales and segment operating income were not reclassified to reflect this business transfer.
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 approximately
$31.0 billion, $29.3 billion, and $27.4 billion, or 91.8 percent, 90.7 percent, and 90.2 percent of total revenue
for the years ended December 31, 2009, 2008, and 2007, respectively.
Foreign Sales – Direct foreign sales amounted to approximately $1.6 billion, $1.7 billion, and $1.7 billion, or
4.9 percent, 5.3 percent, and 5.7 percent of total revenue for the years ended December 31, 2009, 2008, and
2007, respectively.
Discontinued Operations – The company’s discontinued operations are excluded from all of the data elements in the
following tables, except for assets by segment.
Assets – Substantially all of the company’s assets are located or maintained in the U.S.
Results of Operations By Segment
$ in millions 2009 2008 2007
Year Ended December 31
Sales and Service Revenues
Aerospace Systems $10,419 $ 9,825 $ 9,234
Electronic Systems 7,671 7,048 6,466
Information Systems 8,611 8,205 7,758
Shipbuilding 6,213 6,145 5,788
Technical Services 2,776 2,535 2,422
Intersegment eliminations (1,935) (1,443) (1,327)
Total sales and service revenues $33,755 $32,315 $30,341
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NORTHROP GRUMMAN CORPORATION
eBP - v54508-i003_a.pdf - Page 78 of 124 - March 11, 2010 - 20:02:40