WASHINGTON — Work on the U.S. Air Force’s next-generation GPS payload and ground system programs helped ITT Exelis Inc.’s Geospatial Systems division overcome declines in its classified business to post a $50 million revenue gain for the first nine months of 2011, the company said Oct. 28.

In a filing with the U.S. Securities and Exchange Commission, ITT Exelis also cited work on the main camera for DigitalGlobe’s WorldView 3 commercial imaging satellite as a factor as Geospatial Systems reported sales of $902 million for the nine-month period ending Sept. 30. The company’s classified business declined by $30 million over that same period, the company said.

Geospatial Systems, one of four  divisions of ITT Exelis, booked $308 million in third-quarter revenue, an increase of nearly 20 percent over the same period last year. McLean, Va.-based ITT Exelis, which began trading publicly Nov. 1 after being spun off from ITT Corp., attributed the quarterly gains to the GPS ground system modernization effort, known as GPS OCX; sales of night vision goggles; and work on other, unidentified U.S. government programs.

Based in Rochester, N.Y., Geospatial Systems builds satellite payloads for navigation, imaging and environmental monitoring, as well as ground-based data handling and distribution systems. About 55 percent of the division’s business is space related, with night vision goggles, airborne sensors and related data handling systems and software accounting for the remainder.

Christopher D. Young, president of ITT Exelis Geospatial Systems, said the sensor side of the business is expected to remain relatively flat during the next several years. The data handling side is where the most growth potential lies, he said, even as he acknowledged that future U.S. Defense Department budgets are uncertain as the nation seeks to rein in spending.

In a Nov. 1 interview, Young attributed the decline in the division’s classified business to a pair of programs, one of which was canceled for budgetary reasons. ITT lost its role on the other program, he said.

Young offered no further details about the classified work, but numerous industry sources said last year that ITT had been dropped from a U.S. National Reconnaissance Office program to develop two large optical spy satellites capable of collecting highly detailed imagery. Geospatial Systems had been expected to provide the imaging cameras for the so-called Next Generation Optical System, but was replaced in that capacity by Goodrich ISR Systems of Danbury, Conn.

Lockheed Martin Space Systems of Sunnyvale, Calif., is the designated prime contractor on the multibillion-dollar Next Generation Optical system, currently in the design phase. In addition to Goodrich, subcontractors on the program include Northrop Grumman Electronic Systems of Linthicum, Md., which is supplying the payload electronics.

Geospatial Systems’ biggest sensor program is the Advanced Baseline Imager (ABI) for the U.S. National Oceanic and Atmospheric Administration’s next-generation geostationary orbiting weather satellite system, slated for first launch in December 2014. The company is under contract to supply two ABI sensors for that program, with options for two more, and also has a contract to supply two similar sensors for Japan’s Himawari weather satellite program.

Another brewing international opportunity for the ABI is South Korea. Young said South Korea is expected to begin a procurement next year for a geostationary-orbiting weather and communications satellite and that Geospatial Systems is a contender to supply the main environmental imaging sensor, along with Astrium of Europe.

ITT Exelis also is the camera supplier on the Lockheed Martin team competing to supply a high-resolution satellite imaging system to the United Arab Emirates. Also competing for the long-awaited contract are a Raytheon-Ball Aerospace team and Astrium Satellites.

Award of that contract has been delayed by complications including changes to the program’s scope, Young said. “I don’t see it happening before the end of the year,” he said.

Geospatial Systems is strongly positioned in the U.S. commercial market for high-resolution satellite imaging cameras, with contracts to supply that hardware to the U.S. National-Geospatial Intelligence Agency’s two main providers, DigitalGlobe and GeoEye. The company expects to soon deliver the imaging camera for GeoEye’s GeoEye 2 satellite, Young said.

For the whole of ITT Exelis, whose other divisions are Electronic Systems, Mission Systems and Information Systems, revenue for the three months ending Sept. 30 was $1.529 billion, up $163 million from the same period a year earlier, according to the Securities and Exchange Commission filing. Revenue for the first nine months of the year was $4.374 billion, up $112 million from the first three quarters of 2010.

Operating income for the quarter was $178 million, which is flat relative to the same period last year. For the first nine months of the year, operating income was $456 million, down $57 million from last year, a decline the company attributed to reduced demand for surge-related military equipment and a higher percentage of lower-margin service revenue.

Warren Ferster is the Editor-in-Chief of SpaceNews and is responsible for all the news and editorial coverage in the weekly newspaper, the spacenews.com Web site and variety of specialty publications such as show dailies. He manages a staff of seven reporters...