Northrop Grumman 2010 Annual Report Download - page 77

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NORTHROP GRUMMAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations – Northrop Grumman Corporation and its subsidiaries (Northrop Grumman or the
company) provide technologically advanced, innovative products, services, and solutions in aerospace, electronics,
information systems, shipbuilding and technical services. 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, Electronic Systems, Information Systems, Shipbuilding and Technical Services. 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.
Aerospace Systems is a leading developer, integrator, producer and supporter of manned and unmanned aircraft,
spacecraft, high-energy laser systems, microelectronics and other systems and subsystems critical to maintaining
the nation’s security and leadership in technology. These systems are used, primarily by U.S. Government
customers, in many different mission areas including intelligence, surveillance and reconnaissance;
communications; battle management; strike operations; electronic warfare; missile defense; earth observation;
space science; and space exploration.
Electronic Systems is a leader in the design, development, manufacture, and support of solutions for sensing,
understanding, anticipating, and controlling the environment for our global military, civil, and commercial
customers and their operations. The segment provides a variety of defense electronics and systems, airborne fire
control radars, situational awareness systems, early warning systems, airspace management systems, navigation
systems, communications systems, marine systems, space systems, and logistics services.
Information Systems is a leading global provider of advanced solutions for Department of Defense (DoD), national
intelligence, federal civilian, state and local agencies, and commercial customers. Products and services are
focused on the fields of command, control, communications, computers and intelligence; air and missile defense;
airborne reconnaissance; intelligence processing; decision support systems; cybersecurity; information technology;
and systems engineering and integration.
Shipbuilding is the nation’s sole industrial designer, builder and refueler of nuclear-powered aircraft carriers, the
sole supplier and builder of amphibious assault and expeditionary warfare ships to the U.S. Navy, the sole builder
of National Security Cutters for the U.S. Coast Guard, one of only two companies currently designing and
building nuclear-powered submarines for the U.S. Navy and one of only two companies that builds the
U.S. Navy’s current fleet of DDG-51 Arleigh Burke-class destroyers. Shipbuilding is also a full-service systems
provider for the design, engineering, construction and life cycle support of major programs for surface ships and
a provider of fleet support and maintenance services for the U.S. Navy.
Technical Services is a provider of logistics, infrastructure, and sustainment support, while also providing a wide
array of technical services, including training and simulation.
As prime contractor, principal subcontractor, partner, or preferred supplier, Northrop Grumman participates in
many high-priority defense and non-defense technology programs in the U.S. and abroad. Northrop Grumman
conducts most of its business with the U.S. Government, principally the DoD. The company is therefore affected
by, among other things, the federal budget process. The company also conducts business with local, state, and
foreign governments and generates domestic and international commercial sales.
Financial Statement Reclassification – Certain amounts in the prior year financial statements and related notes have
been reclassified to conform to the current presentation of the businesses described in Note 8.
Principles of Consolidation – The consolidated financial statements include the accounts of Northrop Grumman and
its subsidiaries. All intercompany accounts, transactions, and profits among Northrop Grumman and its
subsidiaries are eliminated in consolidation.
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