Northrop Grumman 2011 Annual Report Download - page 56

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NORTHROP GRUMMAN CORPORATION
TECHNICAL SERVICES
Year Ended December 31
$ in millions 2011 2010 2009
Sales and service revenues $2,699 $3,230 $2,776
Segment operating income 216 206 161
As a percentage of segment sales 8.0% 6.4% 5.8%
Sales and Service Revenues
2011 – Technical Services revenue decreased $531 million, or 16 percent, as compared with 2010. The decrease is
primarily due to $626 million lower sales in Defense and Government Services Division (DGSD) and $87 million
lower sales in Training Solutions Division (TSD), partially offset by higher sales of $182 million in Integrated
Logistics and Modernization Division (ILMD). The lower sales in DGSD are primarily due to the reduced
participation in the NSTec joint venture. Effective January 1, 2011, the company reduced its participation in this
joint venture, resulting in no sales recorded for the joint venture for 2011, compared with sales of $579 million in
2010. The lower sales in TSD are primarily due to lower volume on the Joint Warfighting Center and Africa
Contingency Operations Training & Assistance programs and lower volume on completion of the Global Linguists
Solutions program. The higher sales in ILMD are primarily due to increased activity on the KC-10 program,
which began in February 2010.
2010 – Technical Services revenue increased $454 million, or 16 percent, as compared with 2009. The increase is
primarily due to $379 million higher sales in the ILMD. The increase in ILMD is primarily due to the continued
ramp-up of the recently awarded KC-10 and C-20 programs.
Segment Operating Income
2011 – Operating income at Technical Services increased $10 million, or 5 percent, as compared with 2010 and as
a percentage of sales increased 160 basis points. The increase is primarily due to effects of the change in
participation in the NSTec joint venture and performance improvements on several ILMD and DGSD programs,
partially offset by unfavorable program performance on KC-10 and lower sales volume on certain TSD programs.
2010 – Operating income at Technical Services increased $45 million, or 28 percent, as compared with 2009. The
increase is primarily due to the higher sales volume discussed above. Operating income as a percentage of sales
increased 60 basis points and reflects improved program performance and business mix changes.
BACKLOG
Definition
Total backlog at December 31, 2011, was approximately $39.5 billion. Total backlog includes both funded
backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm
orders for which funding is not currently contractually obligated by the customer). Unfunded backlog excludes
unexercised contract options and unfunded indefinite delivery indefinite quantity (IDIQ) orders (except for
authorized task orders, which are included up to the authorized value). For multi-year services contracts with
non-federal government customers having no stated contract values, backlog includes only the amounts committed
by the customer.
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