U.S. defense manufacturer Northrop Grumman Corp. reported sales of $26.4 billion in 2011, a $1.7 billion -- 6 percent -- drop from 2010 and a sign of the times reflecting cutbacks and lower demand on both sides of the Atlantic.

European defense manufacturers also face challenging pressures on profits and sales as EU governments fighting a cash crunch are told by Brussels to consolidate and share defense resources.

Northrop Grumman business results released Wednesday indicated the defense manufacturer's aerospace, electronics and information systems all were a few percentage points lower while revenue from its smaller technical services dropped 16 percent.

Among other programs, lower-than-anticipated F-35 deliveries weighed on the aerospace division.

Northrop Grumman has revisited the criteria it uses to state its total backlog, Defense Industry Daily said on its Web site. The change contributes $3 billion out of a $7.3 billion backlog decrease from the previous year, and brings the total down 15.6 percent to $39.5 billion with a 59 percent funding ratio.

Northrop Grumman excludes unexercised contract options and unfunded indefinite-delivery/indefinite-quantity orders from its backlog numbers.

"Fourth quarter and full year results demonstrate our progress in achieving superior operating performance and effective cash deployment," Northrop Grumman Chairman, Chief Executive Officer and President Wes Bush said.

"Our businesses drove higher operating income, earnings, cash and a strong book-to-bill ratio for the quarter," he said, citing results for the fourth quarter of 2011.

"Our 2012 guidance reflects our continued commitment to performance, affordability for our customers and strong cash generation.

"While we are in a challenging environment, we believe that we can continue to create value for shareholders, customers and employees," Bush said.

Other than defense sales, Northrop Grumman is working with NASA on innovative space programs. It is also active in the increasingly competitive unmanned aircraft market.

For NASA the company is exploring high-power solar electric propulsion flight system technology to enable deep space and human exploration missions.

In January, Northrop Grumman and the U.S. Navy reported tests on technology that could help extend the operating range and flight duration of future carrier-based unmanned systems.

Despite those developments, analysts said the global defense market may he heading for a downturn.

Last month European Defense Agency head Catherine Ashton urged EU members to pool and share defense resources more aggressively.

Analysts said such pooling, if successful, could mean lower orders for the defense industry. Planned alignment of the British, French and Germans has proven elusive and met with resistance.