During the fourth quarter of 2011, we realigned an immaterial supply chain services business from our Aeronautics business segment to our Electronic Systems business segment. The realignment had no effect on our consolidated results of operations, financial position, or cash flows. The financial information in the following table has been reclassified to reflect this realignment. (a) FAS pension expense increased in 2011 compared to 2010, and in 2010 compared to 2009, due to the decrease in the discount rate each year, together with the effect of the recognition of investment losses from 2008, partially offset by the effects of investment gains in 2009 and 2010 (each as compared to our 8.50% long-term rate of return assumption). The segment operating profit includes pension expense only as determined and funded in accordance with U.S. Government Cost Accounting Standards (CAS). The non-cash FAS/CAS pension adjustment represents the difference between pension expense calculated in accordance with GAAP and pension costs calculated and funded in accordance with CAS. The non-cash FAS/CAS pension adjustment is expected to be about $835 million in 2012. For more information, see the related discussion in Critical Accounting Policies under the caption “Postretirement Benefit Plans”). (b) The change in stock compensation expense and other, net between the periods primarily was due to fluctuations in expense associated with various corporate activities, none individually significant. The following segment discussions also include information relating to negotiated backlog for each segment. Total negotiated backlog was approximately $80.7 billion, $78.4 billion, and $77.3 billion at December 31, 2011, 2010, and 2009. These amounts included both funded backlog (unfilled firm orders for which funding has been both authorized and appropriated by the customer – Congress in the case of U.S. Government agencies) and unfunded backlog (firm orders for which funding has not yet been appropriated). Negotiated backlog does not include unexercised options or task orders to be issued under indefinite-delivery, indefinite-quantity (IDIQ) contracts. Funded backlog was approximately $55.1 billion at December 31, 2011. Our net sales are derived from long-term contracts for DD&P activities and for services provided to the U.S. Government as well as FMS conducted through the U.S. Government. We account for these contracts, as well as DD&P contracts with non-U.S. Government customers, under the POC method of accounting which represent approximately 95% of our net sales. We derive our remaining net sales from contracts to provide services to non-U.S. Government customers, which we account for under the services method of accounting. Under the POC method of accounting, we record sales on contracts based upon our progress towards completion on a particular contract as well as our estimate of the profit to be earned at completion. Cost-reimbursable contracts, which account for the majority of our net sales, provide for the payment of allowable costs plus a fee. For fixed-priced contracts, net sales and cost of sales are recognized as products are delivered or as costs are incurred. Due to the nature of the POC method of accounting, changes in our cost of sales are typically accompanied by a related change in our net sales. 32 (In millions) 2011 2010 2009 Net Sales Aeronautics $14,362 $13,109 $11,988 Electronic Systems 14,622 14,399 13,630 Information Systems & Global Solutions 9,381 9,921 9,599 Space Systems 8,134 8,242 8,650 Total $46,499 $45,671 $43,867 Operating Profit Aeronautics $ 1,630 $ 1,498 $ 1,567 Electronic Systems 1,788 1,748 1,648 Information Systems & Global Solutions 874 814 874 Space Systems 989 968 967 Total business segments 5,281 5,028 5,056 Unallocated corporate expense: Non-cash FAS/CAS pension adjustment: FAS pension expense (1,821) (1,442) (1,036) Less: CAS expense (899) (988) (580) Non-cash FAS/CAS pension adjustment (a) (922) (454) (456) Severance and other charges (136) (220) — Stock compensation expense and other, net (b) (243) (305) (233) Total unallocated corporate expense, net (1,301) (979) (689) Total operating profit $ 3,980 $ 4,049 $ 4,367