Driven by a solid showing at its aircraft making segment and a boost from pension income, Lockheed Martin [LMT] on Jan. 27 delivered strong fourth quarter financial results, although the outlook for 2015 is a bit subdued owing to the lingering effects of sequestration.

Net income soared 85 percent to $904 million, $2.82 earnings per share (EPS) from $488 million($1.50 EPS) a year ago, benefiting from a swing to pension income and higher operating profit in the Aeronautics Segment due to risk retirement on the F-22 fighter jet program and higher deliveries of C-130 transport planes. The results were 3 cents shy of consensus estimates.

The earnings results were dampened by a non-cash $107 million (33 cents EPS) goodwill impairment charge stemming from market pressures in the Technical Services  business, partially offset by the retroactive reinstatement of the federal research and development tax credit for 2014, which added back $45 million (14 cents EPS) to the bottom line. A year ago Lockheed Martin’s fourth quarter net income suffered from nearly $300 million in charges related to goodwill impairment and workforce reductions, and pension expenses.

Sales in the quarter increased nearly 9 percent to $12.5 billion from $11.5 billion due to gains at the Missiles and Fire Control, Space Systems, Mission Systems and Training, and Aeronautics Segments, which more than offset a decline at Information Systems & Global Solutions. Key program drivers for the growth included the F-35 Joint Strike Fighter, C-130 aircraft, air and missile defense programs, tactical missile programs, radar surveillance programs, NASA’s Orion space crew vehicle, and government satellite programs.

Lockheed Martin achieved its target of 20 percent of total sales from international customers in 2014 and has set a new goal of at least 25 percent of its business coming from foreign buyers within a few years, Marillyn Hewson, the company’s chairman, president and CEO, said on an earnings call. She pointed out that 25 percent of the company’s $80.5 billion backlog at the end of 2014 is from international orders.

Most of the international growth will come from missile defense and aircraft programs, particularly the F-35, Hewson said. And despite the steep drop in oil prices, she said that Lockheed Martin’s customers in the Middle East that she spoke with during the fourth quarter “reaffirmed their unwavering desire to secure the most effective solutions and products essential for national security in spite of any volatility in world oil markets and price levels.” She added later that these governments have built up substantial monetary reserves.

Sales in 2014 overall were up nearly a percent to $45.6 billion—with 20 percent international business—from $45.4 billion in 2013 while net income climbed 20 percent to $3.6 billion ($11.21 EPS) from nearly $3 billion ($9.13 EPS). Bruce Tanner, Lockheed Martin’s chief financial officer, said the company did about $900 million in acquisitions last year and that just under $250 million of the top line growth was from acquired businesses, meaning organic sales were down slightly.

In 2015 sales are forecast to be down, about 3 percent lower at the mid-point of the range, to between $43.5 billion and $45 billion. Tanner said inorganic sales should be up about $750 million, indicating that organic revenues will fall further. Backlog is expected to remain above $80 billion, which would be the fifth straight year doing so.

Earnings this year are expected to be between $10.80 and $11.10 EPS, lower than expected due to lower than expected pension income. The guidance excludes the potential impact of an extension of the R&D tax credit into 2015, which would provide a 14 cents EPS benefit.

Lockheed Martin didn’t provide guidance for 2016, but Tanner said the company expects growth to resume in 2016, particularly in the Aeronautics segment, including organic growth. That growth is expected to continue beyond 2016, he added.

Hewson said that acquisitions will remain part of the company’s strategy for adding capabilities and opening new markets.

Free cash flow in 2014 was $3 billion and the company returned more than 120 percent of that to shareholders through $1.9 billion in stock repurchases and $1.8 billion in dividend payments.