Please note that during this call, management will reiterate forward-looking statements that were made in the press release issued this morning. Please refer to this press release as well as the company's SEC filings for a more detailed description of the factors that may cause actual results to differ materially from those anticipated. Also please note that this call is being simultaneously broadcast over the Internet.I would now like to turn the call over to Michael Strianese. Mike, please go ahead. Michael T. Strianese Thanks, Eric, and good morning, everyone. Thanks for joining us. We started the year with a strong first quarter, overall. And as always I wanted to thank the 60,000 men and women of L-3 for just a tremendous job in the first quarter and their focus and excellent program execution. We saw very strong orders combined with new awards, recompetes and follow-on business that drove the results this quarter. Internal funded orders were $4.1 billion, which generated a book-to-bill ratio of 1.14 and resulting in a backlog at March 31 of $11.4 billion. Net sales were $3.6 billion, which were up -- essentially flat with the 2011 first quarter with our diluted earnings per share of $2.01, up from $1.85 in last year's first quarter, that's about a 9% increase. The C3ISR business continued to lead with very strong performance, an increase in sales of about 16% compared to last year's first quarter. Driving the growth there were increased volumes for airborne ISR, logistics support and fleet management services for our DoD customers, as well as new business for international airborne ISR platforms. Recent competitive wins helped us deliver solid sales in the AM&M segments, in the Contractor Logistics Support business area and an acquisition resulted in modest growth for Electronic Systems. Offsetting the sales performance were headwinds from the continued challenging defense environment where the largest impact was felt in the Government Services area. We continue to focus on growing and integrating businesses, generating maximum efficiencies from operations that are aligned with both customer and production requirements.
As always the key aspect -- a key aspect of our strategy is our disciplined approach to acquisitions, where we continue to enhance our core business extending our addressable markets and strengthening our technology capabilities.In February, we completed the acquisition of Kollmorgen Electro-Optical, KEO. It's a great addition to L-3's integrated Sensor Systems business with technologies that provides situational awareness and enhance our existing products including infrared images, targeting systems and ISR sensors and laser range finders. Also we recently announced an agreement to acquire Thales' civil aircraft training and simulation business. With an installed base of over 540 simulators and a global customer base, this business complements the linked simulation business and will extend our addressable markets with a full range of total training systems solutions for both military and, now, commercial customers globally. We expect the Thales transaction to be completed this summer. We also completed an acquisition of a small company in the shipboard electronic control systems area called MAPCO. It folds in well with our [indiscernible] business unit, which designs customized high-end systems for the cruise ship industry and mega yachts. Each of these acquisitions is a great example of our disciplined strategy of pursuing acquisition candidates that expand our markets, product offerings, technologies, and our customer base and deliver compelling valuations. The Engility spinoff, I just wanted to give you a brief update. In February 9, we received the private letter ruling from the IRS that supports the tax-free spinoff for L-3 and its shareholders. On March 29, we filed our 410 registration statement with the SEC and are in the review process now. We're currently expected to complete the transaction on schedule by the end of June. Of course, the ultimate timing is subject to certain conditions and approvals, including completion of the SEC review. We are all looking forward to launching Engility and the opportunities for our National Security Solutions business that will bring L-3 as we sharpen our focus on building our value-added products and solutions business. Read the rest of this transcript for free on seekingalpha.com