Northrop Grumman 2013 Annual Report Download - page 43

NORTHROP GRUMMAN CORPORATION
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The following table presents product and service sales and operating costs and expenses by segment:
Year Ended December 31
$ in millions 2013 2012 2011
Segment Information: Sales Costs Sales Costs Sales Costs
Aerospace Systems
Product $ 8,210 $ 7,197 $ 8,729 $ 7,704 $ 8,701 $ 7,622
Service 1,804 1,602 1,248 1,055 1,263 1,125
Electronic Systems
Product 5,574 4,612 5,346 4,438 6,041 5,161
Service 1,575 1,311 1,604 1,325 1,331 1,141
Information Systems
Product 990 895 708 606 486 430
Service 5,606 5,068 6,648 5,989 7,435 6,725
Technical Services
Product 210 191 213 196 501 456
Service 2,633 2,390 2,806 2,555 2,692 2,477
Segment Totals
Total Product $14,984 $ 12,895 $14,996 $12,944 $15,729 $13,669
Total Service 11,618 10,371 12,306 10,924 12,721 11,468
Intersegment eliminations (1,941) (1,685) (2,084)(1,826)(2,038)(1,780)
Total Segment(1) $24,661 $ 21,581 $25,218 $22,042 $26,412 $23,357
(1) The reconciliation of segment operating income to total operating income, as well as a discussion of the
reconciling items, is included in the Segment Operating Results section above.
Product Sales and Product Costs
2013 - Product sales for 2013 were comparable with 2012, primarily due to lower product sales at Aerospace
Systems, offset by higher product sales at Information Systems and Electronic Systems. The decrease at Aerospace
Systems reflects the revision in the classification of certain operations, maintenance, and sustainment contracts from
product to service in 2013. The increase at Information Systems was primarily due to newly awarded product
contracts and the increase at Electronic Systems was primarily driven by higher volume as described in the Segment
Operating Results section above.
Product costs for 2013 were comparable with 2012, primarily due to lower product costs at Aerospace Systems,
offset by higher product costs at Information Systems and Electronic Systems. The decrease at Aerospace Systems
was consistent with the classification change noted above. The decrease was offset by newly awarded product
contracts at Information System and higher sales volume at Electronic Systems, as described above.
2012 - Product sales for 2012 decreased $733 million, or 5 percent, as compared with 2011, primarily due to lower
product sales at Electronic Systems and Technical Services, partially offset by higher product sales at Information
Systems. The decrease at Electronic Systems primarily relates to lower volume of approximately $90 million in
combat avionics and approximately $250 million in domestic and international postal automation programs. The
decline at Technical Services was due to the change in classification of the ICBM program from product to service
at the beginning of 2012, as the program transitioned from modernization to predominantly sustainment services.
The increase at Information Systems was primarily driven by higher intercompany volume.
Product costs for 2012 decreased by $725 million, or 5 percent, as compared with 2011, primarily due to lower sales
volume and increased performance improvement adjustments at Electronic Systems and the change in classification
of the ICBM program at Technical Services, offset by higher product volume at Information Systems, as described
above.
Service Sales and Service Costs
2013 - Service sales for 2013 decreased $688 million, or 6 percent, as compared with 2012, primarily due to lower
service sales at Information Systems, partially offset by higher service sales at Aerospace Systems. The decrease at
Information Systems is due to lower service sales across a number of programs, as described in the Segment
Operating Results section above. The higher service sales at Aerospace Systems reflects the revision in the