As we announced earlier today, we had a segment operating margin rate of 11.9% in the third quarter, and year to date, an exceptional segment operating margin rate of 12%.
In addition, earnings per share in the quarter were $6.63, an increase of 13% compared to last year.
And our transaction-adjusted free cash generation continues to be strong, increasing 15% year to date.
We ended the quarter with just over $4 billion in cash, providing significant flexibility in support of our capital deployment initiatives.
With respect to the top line, our year-to-date organic growth was 8%.
During the third quarter, this included employee leave-taking at a higher level than planned, a tighter labor market, and certain supply chain challenges.
Based on the team's strong third-quarter performance and in consideration of macroeconomic factors as we see them today, we are increasing our guidance for segment OM and earnings per share for the year and narrowing our sales guidance to approximately $36 billion.
And in the third quarter, after just 28 months in engineering, manufacturing, and development, we achieved a critical milestone, clearing the wafer production.
Northrop Grumman supplies the scramjet propulsion system for HAWC, allowing speeds of greater than Mach 5.
For the bomber, the B-21 program continues to advance.
The GBSD program has ramped significantly this year, and we now expect that it will add just over $1 billion in incremental revenue to our 2021 results and another approximately $500 million of incremental revenue in 2022.
For both B-21 and GBSD, we have applied digital transformation concept as a key enabler to reduce risk, increase productivity, shorten cycle time, and improve the system's ability to adapt to changing threats.
To this end, during the third quarter, our next-generation electronic warfare system, which will equip domestic F-16, had its first test flight on a testbed aircraft at the Northern Lightning exercise.
We anticipate an EMD contract for next-generation electronic warfare in 2022 with an overall lifetime opportunity of up to $3 billion.
And consistent with increased demand in this area, we received $1.2 billion in restricted space awards in the third quarter.
We continued to return cash to shareholders through our buyback program and quarterly dividend, returning over $800 million in the quarter.
Slide 4 provides a bridge between third-quarter 2020 and third-quarter 2021 sales, excluding sales from the IT services divestiture, our organic growth was 3%.
Compared to the third quarter of 2020, our earnings per share increased 13% to $6.63.
Strong segment operational performance contributed about $0.14 of growth and lower corporate unallocated added another $0.55.
This included a $60 million benefit from insurance settlements related to shareholder litigation involving the former Orbital ATK business prior to our acquisition.
Pension costs contributed $0.17 of growth, driven by higher non-service FAS income.
Our marketable securities performance represented a headwind of $0.17 compared to the third quarter of 2020, which benefited from particularly strong equity markets.
Aeronautics sales declined 6% for the quarter.
Year to date, its sales are down 1%.
This quarter, we experienced slightly lower volume across the portfolio, including restricted efforts, F-35, B-2 DMS, and Global Hawk programs.
At Defense Systems, sales decreased by 24% in the quarter and 22% year to date.
On an organic basis, sales were down roughly 2% in the quarter and year-to-date periods driven by the completion of our activities on the Lake City small-caliber ammunition contract last year.
Lake City represented a sales headwind of roughly $75 million in the quarter and $335 million year to date.
Mission Systems sales were down 5% in the quarter and up 4% year to date.
Organically, MS sales increased 1% in Q3, and year to date, they are up a robust 9%.
And finally, Space Systems continued to deliver outstanding sales growth, increasing 22% in the third quarter and 28% year to date.
We delivered another quarter of excellent performance with segment operating margin rate at 11.9%.
Aeronautics third-quarter operating income decreased to 10% due to lower sales volume and a $42 million unfavorable EAC adjustment on the F-35 program.
The AS operating margin rate decreased to 9.7% in Q3 as a result of this adjustment with year-to-date operating margin slightly ahead of last year at 10.1%.
The Defense Systems operating income decreased by 19% in the quarter and 16% year to date largely due to the impact of the IT services divestiture.
Operating margin rate increased to 12.4% in the quarter and 12% year to date, largely driven by improved performance and contract mix in Battle Management and Missile Systems, partially offset by lower net favorable EAC adjustments.
At Mission Systems, operating income was relatively flat in the quarter and up 10% year to date.
Third-quarter operating margin rate improved to 15.3% and year to date was 15.5%, reflecting strong program performance and changes in business mix as a result of the IT services divestiture.
Space Systems operating income rose 29% in the quarter and 36% year to date, driven by higher sales volume.
Operating margin rate was also higher at 10.7% in the quarter and 10.9% year to date, driven by higher net favorable EAC adjustments.
In Q4 of 2020, the IT services business contributed almost $600 million of sales, and the equipment sale at AS generated over $400 million.
Q4 of 2021 also has four fewer working days than the same period in 2020, representing a headwind of about 6%.
Adjusting for these three items, our Q4 2021 sales would grow at 3% to 4% based on our latest full-year guidance.
Based on what we now see, we expect sales of approximately $36 billion.
Our segment operating margin rate guidance is 10 basis points higher at 11.7% to 11.9%, reflecting our continued strong performance.
Our net FAS/CAS pension adjustment has increased $60 million for the full year as a result of the annual demographic update we performed in Q3.
Other corporate unallocated costs are $70 million below our previous guidance, now at approximately $120 million for the year.
As I mentioned, our corporate unallocated costs benefited from a $60 million insurance settlement in Q3, as well as additional benefits from state taxes.
These updates translate into an increase of 50 basis points in our operating margin rate to a range of 16% to 16.2% in our updated guidance.
Remember that the gain from the IT services divestiture in Q1 contributed approximately 5 percentage points of overall operating margin benefit for the full year.
We continue to project the 2021 effective federal tax rate in the high 17% range, excluding the effects of the divestiture, which is consistent with our prior guidance.
Segment performance is contributing about $0.15 of the increase with the benefits to corporate unallocated and pension contributing the remainder.
In total, this represents an $0.80 improvement in our transaction-adjusted earnings per share guidance.
With this latest increase, our 2021 earnings per share guidance is up by about $2 since our initial guidance in the beginning of the year.
Year to date, we've generated over $2.1 billion of transaction-adjusted free cash flow, up 15% compared to 2020, and we ended the quarter with over $4 billion in cash on the balance sheet.
Keep in mind that we have a roughly $200 million payroll tax payment in Q4 from the Cares Act legislation with the second similar payment in 2022.
Our healthy cash position has enabled us to repurchase over $2.7 billion of stock so far this year, on track with our full-year target of $3 billion or more.
We expect Space to be our fastest-growing segment again in 2022, driven by GBSD, NGI, and several restricted efforts as they continue to ramp.
Regarding Aeronautics Systems, after several years of strong growth, our latest 2021 sales guidance calls for a mid-single-digit decline, and we see that trend continuing in 2022.
We're also projecting lower sales on JSTARS, F-18, as well as our restricted portfolio.
Altogether, we currently expect 2022 sales at the company level to reflect continued organic growth.
Looking at segment margin, we expect the strong results we've demonstrated in 2021 to continue in 2022 with excellent program performance offsetting a portion of the 20 to 30 basis point benefit we generated from pension-related overhead rate changes in Q1 of 2021.
Lower CAS pension recoveries and higher corporate unallocated expenses are currently projected to create an earnings per share headwind next year of more than $2.
As you can see on Slide 13, our CAS recoveries are currently expected to be lower by $350 million next year.
In addition, as we've noted in the past, current tax law would require companies to amortize R&D costs over five years, starting in 2022, which would increase our cash taxes by around $1 billion next year and smaller amounts in subsequent years.

Summary:
In addition, earnings per share in the quarter were $6.63, an increase of 13% compared to last year.
During the third quarter, this included employee leave-taking at a higher level than planned, a tighter labor market, and certain supply chain challenges.
We anticipate an EMD contract for next-generation electronic warfare in 2022 with an overall lifetime opportunity of up to $3 billion.
Slide 4 provides a bridge between third-quarter 2020 and third-quarter 2021 sales, excluding sales from the IT services divestiture, our organic growth was 3%.
Compared to the third quarter of 2020, our earnings per share increased 13% to $6.63.
Aeronautics sales declined 6% for the quarter.
At Defense Systems, sales decreased by 24% in the quarter and 22% year to date.
Aeronautics third-quarter operating income decreased to 10% due to lower sales volume and a $42 million unfavorable EAC adjustment on the F-35 program.
Adjusting for these three items, our Q4 2021 sales would grow at 3% to 4% based on our latest full-year guidance.
Based on what we now see, we expect sales of approximately $36 billion.
Our healthy cash position has enabled us to repurchase over $2.7 billion of stock so far this year, on track with our full-year target of $3 billion or more.
We expect Space to be our fastest-growing segment again in 2022, driven by GBSD, NGI, and several restricted efforts as they continue to ramp.
Regarding Aeronautics Systems, after several years of strong growth, our latest 2021 sales guidance calls for a mid-single-digit decline, and we see that trend continuing in 2022.
Altogether, we currently expect 2022 sales at the company level to reflect continued organic growth.
As you can see on Slide 13, our CAS recoveries are currently expected to be lower by $350 million next year.