Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The company is aligned into four segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services.

The company, from time to time, acquires or disposes of businesses and realigns contracts, programs or business areas among and within its operating segments. Portfolio shaping and internal realignments are designed to more fully leverage existing capabilities and enhance development and delivery of products and services.

U.S. Government Sales

Sales to the U.S. Government include sales from contracts for which Northrop Grumman is the prime contractor, as well as those for which the company is a subcontractor and the ultimate customer is the U.S. Government. Each of the company’s segments derives substantial revenue from the U.S. Government. Sales to the U.S. Government amounted to $21.3 billion, $22.3 billion and $23.4 billion, or 86 percent, 88 percent and 89 percent, of total sales for the years ended December 31, 2013, 2012 and 2011, respectively.

International Sales

International sales (which include foreign military sales) amounted to $2.5 billion, $2.1 billion and $2.1 billion, or 10 percent, 8 percent and 8 percent, of total sales for the years ended December 31, 2013, 2012 and 2011, respectively.

Discontinued Operations

The company’s discontinued operations are excluded from the amounts in the following tables.

Assets

Substantially all of the company’s operating assets are located or maintained in the U.S.

Results of Operations By Segment

The following table presents sales and operating income by segment:

	Year Ended December 31
$ in millions	2013			2012			2011
Sales
Aerospace Systems		$10,014			$ 9,977			$ 9,964
Electronic Systems	7,149			6,950			7,372
Information Systems	6,596			7,356			7,921
Technical Services	2,843			3,019			3,193
Intersegment eliminations	(1,941		)	(2,084		)	(2,038		)
Total sales	24,661			25,218			26,412
Operating income
Aerospace Systems	1,215			1,218			1,217
Electronic Systems	1,226			1,187			1,070
Information Systems	633			761			766
Technical Services	262			268			260
Intersegment eliminations	(256		)	(258		)	(258		)
Total segment operating income	3,080			3,176			3,055
Reconciliation to operating income:
Net FAS/CAS pension adjustment	168			132			400
Unallocated corporate expenses	(119		)	(168		)	(166		)
Other	(6		)	(10		)	(13		)
Total operating income		$ 3,123			$3,130			$ 3,276

Net FAS/CAS Pension Adjustment

The net FAS/CAS pension adjustment is the difference between pension expense determined in accordance with GAAP and pension expense allocated to the operating segments determined in accordance with CAS. The increase in net FAS/CAS pension adjustment for 2013, as compared to 2012, reflects an update for actual demographic experience as of January 1, 2013, which resulted in an increase to the company's2013 CAS pension expense. The decrease in the 2012 net FAS/CAS pension adjustment, as compared to 2011, is primarily due to increased GAAP pension expense resulting from amortization of prior year actuarial losses and reduced CAS pension expense resulting from a plan amendment in 2011.

Unallocated Corporate Expenses

Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS regulations and the Federal Acquisition Regulation, and are therefore not allocated to the segments. Such costs consist of a portion of management and administration, legal, environmental, compensation costs, retiree benefits, and certain unallowable costs such as lobbying activities, among others. The decrease in unallocated corporate expenses for 2013, as compared to 2012, is primarily due to lower year-over-year provisions for disallowed costs and litigation matters and the favorable settlement of overhead claims, partially offset by changes in deferred tax assets due to lower blended state income tax rates.

Intersegment Sales and Operating Income

Sales between segments are recorded at values that include hypothetical operating income for the performing segment based on that segment’s estimated operating margin rate for external sales. Such hypothetical operating income is eliminated in consolidation. Intersegment sales and operating income before eliminations were as follows:

	Year Ended December 31
$ in millions	2013					2012					2011
	Sales		Operating Income			Sales		Operating Income			Sales		Operating Income
Intersegment sales and operating income
Aerospace Systems		$ 149			$ 18		$ 171			$ 20		$ 134		$	18
Electronic Systems	629			125		607			110		649			131
Information Systems	504			63		682			78		687			68
Technical Services	659			50		624			50		568			41
Total		$1,941			$256		$2,084			$258		$2,038			$258

Other Financial Information

	December 31
$ in millions	2013		2012
Assets
Aerospace Systems		$ 6,490		$ 6,657
Electronic Systems	4,400		4,551
Information Systems	6,887		6,940
Technical Services	1,367		1,313
Segment assets	19,144		19,461
Corporate assets (1)	7,237		7,082
Total assets		$26,381		$26,543

(1) Corporate assets principally consist of cash and cash equivalents and deferred tax assets.

	Capital Expenditures						Depreciation and Amortization
$ in millions	2013		2012		2011		2013		2012		2011
Aerospace Systems		$198		$154		$184		$210		$196		$200
Electronic Systems	76		84		121		134		139		144
Information Systems	27		40		45		81		100		121
Technical Services	3		3		1		4		4		4
Corporate	60		50		141		66		71		75
Total from continuing operations		$364		$331		$492		$495		$510		$544

The depreciation and amortization expense above includes amortization of purchased intangible assets, as well as amortization of deferred and other outsourcing costs.