Northrop Grumman 2014 Annual Report Download - page 40

NORTHROP GRUMMAN CORPORATION
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PRODUCT AND SERVICE ANALYSIS
The following table presents product and service sales and operating costs and expenses by segment:
Year Ended December 31
$ in millions 2014 2013 2012
Segment Information: Sales Costs Sales Costs Sales Costs
Aerospace Systems
Product $ 7,986 $ 6,897 $ 8,210 $ 7,197 $ 8,729 $ 7,704
Service 2,011 1,785 1,804 1,602 1,248 1,055
Electronic Systems
Product 5,532 4,622 5,574 4,612 5,346 4,438
Service 1,419 1,181 1,575 1,311 1,604 1,325
Information Systems
Product 1,335 1,244 990 895 708 606
Service 4,887 4,367 5,606 5,068 6,648 5,989
Technical Services
Product 184 173 210 191 213 196
Service 2,615 2,365 2,633 2,390 2,806 2,555
Segment Totals
Total Product $ 15,037 $ 12,936 $ 14,984 $ 12,895 $ 14,996 $ 12,944
Total Service 10,932 9,698 11,618 10,371 12,306 10,924
Intersegment eliminations (1,990) (1,754) (1,941)(1,685)(2,084)(1,826)
Total Segment(1) $ 23,979 $ 20,880 $ 24,661 $ 21,581 $ 25,218 $ 22,042
(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
2014 - Product sales for 2014 were slightly higher than 2013, primarily due to higher product sales at Information
Systems, offset by lower product sales at Aerospace Systems. The increase at Information Systems was primarily
due to higher product sales on certain restricted and C2 programs. The decrease at Aerospace Systems was primarily
driven by lower product volume in unmanned and space programs, partially offset by the settlements described in
the Segment Operating Results section above.
Product costs for 2014 were slightly higher than 2013, primarily due to higher product costs at Information Systems,
offset by lower product costs at Aerospace Systems, consistent with the changes in product sales described above.
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 Systems and higher sales volume at Electronic Systems, as described above.
Service Sales and Service Costs
2014 - Service sales for 2014 decreased $686 million, or 6 percent, as compared with 2013. The decrease was
primarily driven by lower service sales at Information Systems, principally from reduced volume on restricted work
and the impacts of in-theater force reductions as described in the Segment Operating Results section above.
Service costs for 2014 decreased $673 million, or 6 percent, as compared with 2013 consistent with the change in
service sales described above.