On the call today are our Chairman and CEO, Wes Bush; and our CFO, Jim Palmer. Please go to Slide 3. At this time, I'd like to turn the call over to Wes.Wesley G. Bush All right. Thanks, Steve. Good morning, everyone. Thanks for joining us on our second quarter conference call. This was an outstanding quarter in a challenging environment. Segment operating margin rate, EPS, cash from operations and free cash flow all improved over last year. And new business awards totaled $8.8 billion, a book to bill of 140% which increased our backlog to $41.5 billion. Our focus on superior program performance, cost reductions and customer affordability, in combination with effective cash deployment, continues to generate solid financial results and create shareholder value. All 4 of our businesses performed well. Together, they generated segment operating income roughly equal to last year's second quarter despite lower sales. And segment operating margin rate increased 50 basis points to 12.5%. Earnings per share increased 4% to $1.88, and on a pension-adjusted basis, earnings per share increased 13%. Cash was also a highlight for the quarter. Cash from operations totaled $876 million, and after capital expenditures of $51 million, we generated free cash flow of $825 million. During the quarter, we continued to execute our balanced cash deployment strategy. In the second quarter, we repurchased 4.9 million shares of common stock for approximately $295 million. Year-to-date repurchases totaled 9.3 million shares for approximately $560 million. We also announced a 10% increase in our quarterly dividend in the second quarter, maintaining a competitive dividend payout ratio on a pension-adjusted basis, continues to be a priority in our cash deployment strategy. Year-to-date, we've returned $820 million to our shareholders through share repurchases and dividends, which is consistent with our pattern of returning more than 100% of free cash flow to our shareholders over the last several years.
Turning to guidance. Based on our year-to-date result, we're increasing 2012 earnings per share guidance to a range of $7.05 to $7.25 from the prior range of $6.70 to $6.95. Our sales guidance for the year is unchanged. 2012 guidance assumes that continuing resolution of the fourth quarter, but our guidance does not contemplate extraordinary customer actions in anticipation of a potential sequestration at the beginning of 2013. We continue to see modest organic sales growth in key domain areas, which is being offset by our portfolio-shaping actions and lower volume for other programs due to ramp-downs and cancellations.We continue to capture new business in our key focus areas of C4ISR, Unmanned, Cyber and Logistics and Modernization based on our competitive discriminators in these areas. Our $8.8 billion in new awards included several large awards in our strategic focus areas. These include: $1.6 billion for NATO AGS; as well as multimillion dollar contracts for the next-generation Fire Scout unmanned helicopters; F-16 airport fire control radars for Thailand, Iraq and Oman; Cybersecurity projects; and a contract to upgrade the U.S. Air Force's electronic attack pods. We also recorded $1.4 billion in awards for the James Webb Space Telescope. This quarter's awards resulted in a 6% increase in our total backlog. So overall, it was a very good quarter. But as we look ahead, we see an increasing risk profile due to budget uncertainty. This uncertainty becomes more critical as we progress through the year, and we recognize that it's also a major area of concern for all of our stakeholders. As the government formulates future Defense budgets, we are preparing for various potential scenarios, including sequestration. Like others in our industry, we are very concerned about sequestration's serious negative consequences for national security and the Defense Industrial Base, and the shareholders, customers, employees, suppliers and all the communities that rely on the Defense Industrial Base. Read the rest of this transcript for free on seekingalpha.com