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Lockheed Martin Corporation (NYSE:LMT), the world’s biggest defense contractor, released its second quarter earnings on Tuesday. It reported a net sales of $11.92 billion, up 3.3 percent from $11.5 billion in the same quarter last year. Net profit jumped to $781 million, or $2.38 per share, up 5.3 percent from $748 million in the same quarter of 2011. The better than expected performance was because of strong revenues from space systems and overall cost cutting measures.

Analysts contacted by Reuters were expecting a total sales of $11.29 billion and $1.91 earning per share. Profits at electronics systems division increased 10 percent, while revenues jumped 2.3 percent. The sales of aeronautics business was almost flat with just 0.5 percent increase, but earnings saw 14 percent jump. Space systems recorded the highest revenue growth of 18 percent, with a 7.2 percent increase in profits. Information systems and global solutions witnessed a decline in revenues and profits, the sales were down 4.2 percent and earnings fell 2.3 percent.

Bob Stevens, chairman and CEO of the company, said in the official release, “Our solid performance in the second quarter is a result of our responsive strategy and dedicated team, that focus on delivering value to our customers and shareholders. While the threat of sequestration has created uncertainty for our industry, we are maintaining an unwavering commitment to program execution and cost reduction throughout the organization.”

Lockheed Martin, along with all the American defense contractors, is unclear regarding the future of its operations due to the looming fear of Pentagon budget cuts. Lockheed is involved in contracts worth billions of dollars with the Pentagon, which makes it more vulnerable to spending cuts.

Mr. Stevens has warned that if the $1.2 trillion spending cuts by the federal government comes into effect, Lockheed will have to lay off about 10,000 employees. The cuts will prove devastating to the military modernization programs and defense manufacturers. The company has to give its employees a 60 days’ notice before the sequestration on January 2.