Northrop Grumman 2010 Annual Report Download - page 56

Segment Operating Income
2010 – Electronic Systems operating income increased $54 million, or 6 percent, as compared with 2009. The
increase is primarily due to net performance improvements in land and self protection programs, higher volume
in Targeting Systems, and lower operating loss provisions in postal automation programs.
2009 – Electronic Systems operating income increased $22 million, or 2 percent, as compared with 2008. The
increase was primarily due to $79 million from the higher sales volume discussed above, partially offset by
$57 million in higher unfavorable performance adjustments in 2009. The higher unfavorable performance
adjustments in 2009 were due to adjustments of $98 million in ISR Systems, primarily on the Flats Sequencing
System postal automation program, partially offset by favorable performance adjustments in targeting systems and
land and self protection programs. Operating performance adjustments in 2008 included royalty income of
$60 million and a $20 million charge for the MESA Wedgetail program associated with potential liquidated
damages arising from the prime contractor’s announced schedule delay in completing the program.
INFORMATION SYSTEMS
$ in millions 2010 2009 2008
Year Ended December 31
Sales and Service Revenues $8,395 $8,536 $8,174
Segment Operating Income 756 624 626
As a percentage of segment sales 9.0% 7.3% 7.7%
Sales and Service Revenues
2010 – Information Systems revenue decreased $141 million, or 2 percent, as compared with 2009. The decrease
is primarily due to $130 million lower sales in Intelligence Systems and $57 million lower sales in Civil Systems,
partially offset by $55 million higher sales in Defense Systems. The decrease in Intelligence Systems is primarily
due to lower sales volume on restricted programs and the loss of the Navstar Global Positioning System
Operational Control Segment (GPS OCX) program. The decrease in Civil Systems is primarily due to lower
sales volume on the New York City Wireless (NYCWiN) and Armed Forces Health Longitudinal Technology
Application (AHLTA) programs. The increase in Defense Systems is primarily due to program growth on
Battlefield Airborne Communications Node (BACN), Joint National Integration Center Research and
Development Contract (JRDC) and Integrated Battle Command System (IBCS) activities, partially offset by
lower sales volume on the Trailer Mounted Support System (TMSS) program as it nears completion, and
decreased Systems and Software Engineer Support activities.
2009 – Information Systems revenue increased $362 million, or 4 percent, as compared with 2008. The increase
was primarily due to $285 million in higher sales in Intelligence Systems and $194 million in higher sales in
Defense Systems, partially offset by $123 million in lower sales in Civil Systems. The increase in Intelligence
Systems was primarily due to program growth on the Counter Narco-Terrorism Program Office (CNTPO),
Guardrail Common Sensor System indefinite delivery indefinite quantity (IDIQ) and certain restricted programs,
partially offset by lower sales volume on the Navstar GPS OCX program. The increase in Defense Systems was
primarily due to program growth on TMSS, Airborne and Maritime/Fixed Stations Joint Tactical Radio Systems
and BACN programs, partially offset by fewer delivery orders on the Force XXI Battle Brigade and Below
(FBCB2) I-Kits program. The decrease in Civil Systems was primarily due to lower volume on NYCWiN and
Virginia IT outsourcing (VITA) programs.
Segment Operating Income
2010 – Information Systems operating income increased $132 million, or 21 percent, as compared with 2009 and
as percentage of sales increased 170 basis points. The increase is primarily due to performance improvements on
Civil Systems programs. In 2009, operating income included $37 million of non-recurring costs associated with
the sale of ASD.
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NORTHROP GRUMMAN CORPORATION