UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 27, 2010 (January 27, 2010)
GENERAL DYNAMICS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Delaware |
1-3671 |
13-1673581 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 2941 Fairview Park Drive, Suite 100, Falls Church, Virginia |
22042-4513 | |
| ( Address of Principal Executive Offices) | (Zip Code) |
(703) 876-3000
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, If Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On January 27, 2010, General Dynamics announced its financial results for the quarter and year ended December 31, 2009. A copy of the press release is being furnished as Exhibit 99.1 to this Form 8-K and is hereby incorporated by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits (furnished only)
| 99.1 | General Dynamics press release dated January 27, 2010, with respect to the company’s financial results for the quarter and year ended December 31, 2009. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GENERAL DYNAMICS CORPORATION | ||
| by | /s/ John W. Schwartz | |
| John W. Schwartz Vice President and Controller (Authorized Officer and Chief Accounting Officer) | ||
Dated: January 27, 2010
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Exhibit 99.1
News
January 27, 2010
Contact: Rob Doolittle
Tel: 703 876 3199
rdoolitt@generaldynamics.com
General Dynamics Reports Strong Results for Fourth Quarter, Full-Year 2009
| • | Operating margins increase in Q4 as company maintains focus on effective execution |
| • | Cash generation exceeds earnings from continuing operations |
| • | Management provides 2010 full-year EPS guidance |
FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported 2009 fourth-quarter earnings from continuing operations of $618 million, or $1.58 per share on a fully diluted basis, compared to 2008 fourth-quarter earnings from continuing operations of $630 million, or $1.62 per share fully diluted. Full-year 2009 earnings from continuing operations were $2.41 billion, or $6.20 per share on a fully diluted basis, compared to $2.48 billion and $6.22 per share, respectively, for 2008. Revenue was $7.9 billion in the fourth quarter and $32 billion for the full-year, an increase of 9.2 percent over full-year 2008.
Margins
Company-wide operating margins increased to 12 percent for the fourth quarter of 2009, driven by improved performance at each of the company’s defense businesses. Notably, operating margins increased in Combat Systems by 160 basis points; Marine Systems and Information Systems and Technology also improved margin performance, by 50 and 80 basis points, respectively, in the quarter.
Cash
Net cash provided by operating activities totaled $1.5 billion in the fourth quarter and $2.86 billion for the full year. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $1.36 billion in the quarter and $2.47 billion for the year. Free cash flow as a percentage of earnings from continuing operations was 103 percent for the year.
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Backlog
The company’s total backlog was $65.5 billion at the end of the fourth quarter, reflecting increases in both Aerospace and Combat Systems over the end of the third quarter. In Aerospace, new-aircraft order activity continued to be strong in the fourth quarter. Combat Systems received significant orders in the quarter as well, including a $2.2 billion contract for a foreign military sale of light armored vehicles, and $320 million for design, engineering, modernization and enhancements of Stryker vehicles for the U.S. Army.
Funded backlog at the end of fourth-quarter 2009 was $45.9 billion. In addition, the estimated potential contract value, representing management’s estimate of the value of unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $17.6 billion at year-end 2009. Total potential contract value, the sum of all backlog components, was $83.1 billion at the end of the year.
Net Earnings
General Dynamics’ net earnings for the fourth quarter of 2009 were $614 million, compared to fourth-quarter 2008 net earnings of $612 million. Net earnings for the full year were $2.39 billion in 2009, compared to $2.46 billion in 2008.
“General Dynamics performed well in 2009,” said Jay L. Johnson, president and chief executive officer. “The strength of our diverse portfolio was evident as continuing customer demand for our defense-related products balanced the impact of the global economic challenges on business aviation. By marrying that strength with our commitment to financial performance and effective execution, the business generated strong margins and excellent cash flow in the fourth quarter and for the full year.
“Based on the company’s performance in 2009 and our current understanding of the year ahead, we expect 2010 earnings to be in the range of $6.40 to $6.50 per share, fully diluted,” Johnson said.
General Dynamics, headquartered in Falls Church, Virginia, employs approximately 91,700 people worldwide. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. More information about the company is available on the Internet at www.generaldynamics.com.
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Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s expectations, estimates, understandings, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company’s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.
WEBCAST INFORMATION: General Dynamics will webcast its fourth-quarter 2009 securities analyst conference call, scheduled for 11:30 a.m. Eastern Time on Wednesday, January 27, 2010. The webcast will be a listen-only audio event, available at www.generaldynamics.com. An on-demand replay of the webcast will be available by 2:30 p.m. January 27 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 888-286-8010 (international: 617-801-6888); passcode 28124007. The phone replay will be available from 2:30 p.m. January 27 until midnight February 3, 2010.
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EXHIBIT A
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
| Fourth Quarter |
Variance |
||||||||||||||
| 2009 |
2008 |
$ |
% |
||||||||||||
| Revenues |
$ | 7,898 | $ | 7,852 | $ | 46 | 0.6 | % | |||||||
| Operating costs and expenses |
6,947 | 6,914 | (33 | ) | |||||||||||
| Operating earnings |
951 | 938 | 13 | 1.4 | % | ||||||||||
| Interest, net |
(43 | ) | (24 | ) | (19 | ) | |||||||||
| Other, net |
1 | 14 | (13 | ) | |||||||||||
| Earnings from continuing operations before income taxes |
909 | 928 | (19 | ) | (2.0 | )% | |||||||||
| Provision for income taxes |
291 | 298 | 7 | ||||||||||||
| Earnings from continuing operations |
$ | 618 | $ | 630 | $ | (12 | ) | (1.9 | )% | ||||||
| Discontinued operations, net of tax |
(4 | ) | (18 | ) | 14 | ||||||||||
| Net earnings |
$ | 614 | $ | 612 | $ | 2 | 0.3 | % | |||||||
| Earnings per share - basic |
|||||||||||||||
| Continuing operations |
$ | 1.60 | $ | 1.62 | $ | (0.02 | ) | (1.2 | )% | ||||||
| Discontinued operations |
$ | (0.01 | ) | $ | (0.05 | ) | $ | 0.04 | |||||||
| Net earnings |
$ | 1.59 | $ | 1.57 | $ | 0.02 | 1.3 | % | |||||||
| Basic weighted average shares outstanding (in millions) |
385.8 | 389.0 | |||||||||||||
| Earnings per share - diluted |
|||||||||||||||
| Continuing operations |
$ | 1.58 | $ | 1.62 | $ | (0.04 | ) | (2.5 | )% | ||||||
| Discontinued operations |
$ | (0.01 | ) | $ | (0.05 | ) | $ | 0.04 | |||||||
| Net earnings |
$ | 1.57 | $ | 1.57 | $ | — | 0.0 | % | |||||||
| Diluted weighted average shares outstanding (in millions) |
390.1 | 389.6 | |||||||||||||
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EXHIBIT B
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
| Twelve Months |
Variance |
||||||||||||||
| 2009 |
2008 |
$ |
% |
||||||||||||
| Revenues |
$ | 31,981 | $ | 29,300 | $ | 2,681 | 9.2 | % | |||||||
| Operating costs and expenses |
28,306 | 25,647 | (2,659 | ) | |||||||||||
| Operating earnings |
3,675 | 3,653 | 22 | 0.6 | % | ||||||||||
| Interest, net |
(160 | ) | (66 | ) | (94 | ) | |||||||||
| Other, net |
(2 | ) | 17 | (19 | ) | ||||||||||
| Earnings from continuing operations before income taxes |
3,513 | 3,604 | (91 | ) | (2.5 | )% | |||||||||
| Provision for income taxes |
1,106 | 1,126 | 20 | ||||||||||||
| Earnings from continuing operations |
$ | 2,407 | $ | 2,478 | $ | (71 | ) | (2.9 | )% | ||||||
| Discontinued operations, net of tax |
(13 | ) | (19 | ) | 6 | ||||||||||
| Net earnings |
$ | 2,394 | $ | 2,459 | $ | (65 | ) | (2.6 | )% | ||||||
| Earnings per share - basic |
|||||||||||||||
| Continuing operations |
$ | 6.24 | $ | 6.26 | $ | (0.02 | ) | (0.3 | )% | ||||||
| Discontinued operations |
$ | (0.03 | ) | $ | (0.05 | ) | $ | 0.02 | |||||||
| Net earnings |
$ | 6.21 | $ | 6.21 | $ | — | 0.0 | % | |||||||
| Basic weighted average shares outstanding (in millions) |
385.5 | 396.2 | |||||||||||||
| Earnings per share - diluted |
|||||||||||||||
| Continuing operations |
$ | 6.20 | $ | 6.22 | $ | (0.02 | ) | (0.3 | )% | ||||||
| Discontinued operations |
$ | (0.03 | ) | $ | (0.05 | ) | $ | 0.02 | |||||||
| Net earnings |
$ | 6.17 | $ | 6.17 | $ | — | 0.0 | % | |||||||
| Diluted weighted average shares outstanding (in millions) |
387.9 | 398.7 | |||||||||||||
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EXHIBIT C
REVENUES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS
| Fourth Quarter |
Variance |
||||||||||||||||
| 2009 |
2008 |
$ |
% |
||||||||||||||
| Revenues: |
|||||||||||||||||
| Aerospace |
$ | 1,181 | $ | 1,532 | $ | (351 | ) | (22.9 | )% | ||||||||
| Combat Systems |
2,486 | 2,332 | 154 | 6.6 | % | ||||||||||||
| Marine Systems |
1,551 | 1,380 | 171 | 12.4 | % | ||||||||||||
| Information Systems and Technology |
2,680 | 2,608 | 72 | 2.8 | % | ||||||||||||
| Total |
$ | 7,898 | $ | 7,852 | $ | 46 | 0.6 | % | |||||||||
| Operating earnings: |
|||||||||||||||||
| Aerospace |
$ | 167 | $ | 264 | $ | (97 | ) | (36.7 | )% | ||||||||
| Combat Systems |
367 | 308 | 59 | 19.2 | % | ||||||||||||
| Marine Systems |
156 | 132 | 24 | 18.2 | % | ||||||||||||
| Information Systems and Technology |
282 | 253 | 29 | 11.5 | % | ||||||||||||
| Corporate |
(21 | ) | (19 | ) | (2 | ) | (10.5 | )% | |||||||||
| Total |
$ | 951 | $ | 938 | $ | 13 | 1.4 | % | |||||||||
| Operating margins: |
|||||||||||||||||
| Aerospace |
14.1 | % | 17.2 | % | |||||||||||||
| Combat Systems |
14.8 | % | 13.2 | % | |||||||||||||
| Marine Systems |
10.1 | % | 9.6 | % | |||||||||||||
| Information Systems and Technology |
10.5 | % | 9.7 | % | |||||||||||||
| Total |
12.0 | % | 11.9 | % | |||||||||||||
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EXHIBIT D
REVENUES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS
| Twelve Months |
Variance |
||||||||||||||||
| 2009 |
2008 |
$ |
% |
||||||||||||||
| Revenues: |
|||||||||||||||||
| Aerospace |
$ | 5,171 | $ | 5,512 | $ | (341 | ) | (6.2 | )% | ||||||||
| Combat Systems |
9,645 | 8,194 | 1,451 | 17.7 | % | ||||||||||||
| Marine Systems |
6,363 | 5,556 | 807 | 14.5 | % | ||||||||||||
| Information Systems and Technology |
10,802 | 10,038 | 764 | 7.6 | % | ||||||||||||
| Total |
$ | 31,981 | $ | 29,300 | $ | 2,681 | 9.2 | % | |||||||||
| Operating earnings: |
|||||||||||||||||
| Aerospace |
$ | 707 | $ | 1,021 | $ | (314 | ) | (30.8 | )% | ||||||||
| Combat Systems |
1,262 | 1,111 | 151 | 13.6 | % | ||||||||||||
| Marine Systems |
642 | 521 | 121 | 23.2 | % | ||||||||||||
| Information Systems and Technology |
1,151 | 1,075 | 76 | 7.1 | % | ||||||||||||
| Corporate |
(87 | ) | (75 | ) | (12 | ) | (16.0 | )% | |||||||||
| Total |
$ | 3,675 | $ | 3,653 | $ | 22 | 0.6 | % | |||||||||
| Operating margins: |
|||||||||||||||||
| Aerospace |
13.7 | % | 18.5 | % | |||||||||||||
| Combat Systems |
13.1 | % | 13.6 | % | |||||||||||||
| Marine Systems |
10.1 | % | 9.4 | % | |||||||||||||
| Information Systems and Technology |
10.7 | % | 10.7 | % | |||||||||||||
| Total |
11.5 | % | 12.5 | % | |||||||||||||
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EXHIBIT E
PRELIMINARY CONSOLIDATED BALANCE SHEET (UNAUDITED)
DOLLARS IN MILLIONS
| December 31, 2009 |
December 31, 2008 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and equivalents |
$ | 2,263 | $ | 1,621 | ||||
| Accounts receivable |
3,678 | 3,469 | ||||||
| Contracts in process |
4,449 | 4,341 | ||||||
| Inventories |
2,126 | 2,029 | ||||||
| Other current assets |
733 | 490 | ||||||
| Total current assets |
13,249 | 11,950 | ||||||
| Noncurrent assets: |
||||||||
| Property, plant and equipment, net |
2,912 | 2,872 | ||||||
| Intangible assets, net |
2,098 | 1,617 | ||||||
| Goodwill |
12,269 | 11,413 | ||||||
| Other assets |
549 | 521 | ||||||
| Total noncurrent assets |
17,828 | 16,423 | ||||||
| Total assets |
$ | 31,077 | $ | 28,373 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Short-term debt and current portion of long-term debt |
$ | 705 | $ | 911 | ||||
| Accounts payable |
2,365 | 2,443 | ||||||
| Customer advances and deposits |
4,313 | 4,154 | ||||||
| Other current liabilities |
2,988 | 2,852 | ||||||
| Total current liabilities |
10,371 | 10,360 | ||||||
| Noncurrent liabilities: |
||||||||
| Long-term debt |
3,159 | 3,113 | ||||||
| Other liabilities |
5,124 | 4,847 | ||||||
| Commitments and contingencies |
||||||||
| Total noncurrent liabilities |
8,283 | 7,960 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock |
482 | 482 | ||||||
| Surplus |
1,518 | 1,346 | ||||||
| Retained earnings |
15,093 | 13,287 | ||||||
| Treasury stock |
(3,463 | ) | (3,349 | ) | ||||
| Accumulated other comprehensive loss |
(1,207 | ) | (1,713 | ) | ||||
| Total shareholders’ equity |
12,423 | 10,053 | ||||||
| Total liabilities and shareholders’ equity |
$ | 31,077 | $ | 28,373 | ||||
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EXHIBIT F
PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
DOLLARS IN MILLIONS
| Twelve Months Ended |
||||||||
| December 31, 2009 |
December 31, 2008 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net earnings |
$ | 2,394 | $ | 2,459 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation of property, plant and equipment |
344 | 301 | ||||||
| Amortization of intangible assets |
218 | 146 | ||||||
| Stock-based compensation expense |
117 | 105 | ||||||
| Excess tax benefit from stock-based compensation |
(5 | ) | (31 | ) | ||||
| Deferred income tax provision |
227 | 196 | ||||||
| Discontinued operations, net of tax |
13 | 19 | ||||||
| (Increase) decrease in assets, net of effects of business acquisitions: |
||||||||
| Accounts receivable |
(151 | ) | (386 | ) | ||||
| Contracts in process |
(112 | ) | 73 | |||||
| Inventories |
(72 | ) | (183 | ) | ||||
| Increase (decrease) in liabilities, net of effects of business acquisitions: |
||||||||
| Accounts payable |
(92 | ) | (38 | ) | ||||
| Customer advances and deposits |
145 | 849 | ||||||
| Other current liabilities |
(306 | ) | (203 | ) | ||||
| Other, net |
135 | (183 | ) | |||||
| Net cash provided by operating activities |
2,855 | 3,124 | ||||||
| Cash flows from investing activities: |
||||||||
| Business acquisitions, net of cash acquired |
(811 | ) | (3,224 | ) | ||||
| Capital expenditures |
(385 | ) | (490 | ) | ||||
| Purchases of held-to-maturity securities |
(337 | ) | — | |||||
| Sales/maturities of available-for-sale securities |
254 | 1,423 | ||||||
| Purchases of available-for-sale securities |
(152 | ) | (1,406 | ) | ||||
| Proceeds from sale of assets, net |
43 | 34 | ||||||
| Other, net |
(4 | ) | — | |||||
| Net cash used by investing activities |
(1,392 | ) | (3,663 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net proceeds from (repayment of) commercial paper |
(904 | ) | 904 | |||||
| Proceeds from fixed-rate notes |
747 | 995 | ||||||
| Dividends paid |
(577 | ) | (533 | ) | ||||
| Purchases of common stock |
(209 | ) | (1,522 | ) | ||||
| Proceeds from option exercises |
142 | 144 | ||||||
| Excess tax benefit from stock-based compensation |
5 | 31 | ||||||
| Repayment of fixed-rate notes |
— | (500 | ) | |||||
| Repayment of senior notes |
— | (150 | ) | |||||
| Other, net |
(10 | ) | (87 | ) | ||||
| Net cash used by financing activities |
(806 | ) | (718 | ) | ||||
| Net cash used by discontinued operations |
(15 | ) | (13 | ) | ||||
| Net increase (decrease) in cash and equivalents |
642 | (1,270 | ) | |||||
| Cash and equivalents at beginning of period |
1,621 | 2,891 | ||||||
| Cash and equivalents at end of period |
$ | 2,263 | $ | 1,621 | ||||
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EXHIBIT G
PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS
| Fourth Quarter 2009 |
Fourth Quarter 2008 |
|||||||||||||||
| Quarter |
Year-to-date |
Quarter |
Year-to-date |
|||||||||||||
| Non-GAAP Financial Measures: |
||||||||||||||||
| Free cash flow from operations: |
||||||||||||||||
| Net cash provided by operating activities |
$ | 1,498 | $ | 2,855 | $ | 805 | $ | 3,124 | ||||||||
| Capital expenditures |
(134 | ) | (385 | ) | (176 | ) | (490 | ) | ||||||||
| Free cash flow from operations (A) |
$ | 1,364 | $ | 2,470 | $ | 629 | $ | 2,634 | ||||||||
| Return on invested capital: |
||||||||||||||||
| Earnings from continuing operations |
$ | 2,407 | $ | 2,478 | ||||||||||||
| After-tax interest expense |
117 | 91 | ||||||||||||||
| After-tax amortization expense |
149 | 100 | ||||||||||||||
| Net operating profit after taxes |
2,673 | 2,669 | ||||||||||||||
| Average debt and equity |
15,003 | 14,390 | ||||||||||||||
| Return on invested capital (B) |
17.8 | % | 18.5 | % | ||||||||||||
| Other Financial Information: |
||||||||||||||||
| Return on equity (C) |
21.7 | % | 21.4 | % | ||||||||||||
| Debt-to-equity (D) |
31.1 | % | 40.0 | % | ||||||||||||
| Debt-to-capital (E) |
23.7 | % | 28.6 | % | ||||||||||||
| Book value per share (F) |
$ | 32.21 | $ | 26.00 | ||||||||||||
| Total taxes paid |
$ | 246 | $ | 113 | ||||||||||||
| Company-sponsored research and development (G) |
$ | 123 | $ | 125 | ||||||||||||
| Employment |
91,700 | 92,300 | ||||||||||||||
| Sales per employee (H) |
$ | 346,500 | $ | 342,600 | ||||||||||||
| Shares outstanding |
385,704,691 | 386,710,589 | ||||||||||||||
| (A) | We believe free cash flow from operations is a measurement that is useful to investors, because it portrays our ability to generate cash from our core businesses for such purposes as repaying maturing debt, funding business acquisitions and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities. |
| (B) | We believe return on invested capital is a measurement that is useful to investors, because it reflects our ability to generate returns from the capital we have deployed in our operations. We use ROIC to evaluate investment decisions and as a performance measure in evaluating management. We define ROIC as net operating profit after taxes for the latest 12-month period divided by the sum of the average debt and shareholders’ equity for the same period. Net operating profit after taxes is defined as earnings from continuing operations plus after-tax interest and amortization expense. The most directly comparable GAAP measure to net operating profit after taxes is earnings from continuing operations. |
| (C) | Return on equity is calculated by dividing earnings from continuing operations for the latest 12-month period by our average equity during that period. |
| (D) | Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period. |
| (E) | Debt-to-capital ratio is calculated as total debt divided by the sum of total debt plus total equity as of the end of the period. |
| (F) | Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period. |
| (G) | Includes independent research and development and bid and proposal costs and Gulfstream product development costs. |
| (H) | Sales per employee is calculated by dividing revenues for the latest 12-month period by our average number of employees during that period. |
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EXHIBIT H
BACKLOG (UNAUDITED)
DOLLARS IN MILLIONS
| Fourth Quarter 2009 |
Funded |
Unfunded |
Total Backlog |
Estimated Potential Contract Value* |
Total Potential Contract Value | ||||||||||||
| Aerospace |
$ | 18,891 | $ | 433 | $ | 19,324 | $ | 1,361 | $ | 20,685 | |||||||
| Combat Systems |
11,431 | 1,985 | 13,416 | 2,327 | 15,743 | ||||||||||||
| Marine Systems |
7,111 | 15,362 | 22,473 | 1,072 | 23,545 | ||||||||||||
| Information Systems and Technology |
8,423 | 1,909 | 10,332 | 12,815 | 23,147 | ||||||||||||
| Total |
$ | 45,856 | $ | 19,689 | $ | 65,545 | $ | 17,575 | $ | 83,120 | |||||||
| Third Quarter 2009 |
|||||||||||||||||
| Aerospace |
$ | 18,811 | $ | 444 | $ | 19,255 | $ | 1,361 | $ | 20,616 | |||||||
| Combat Systems |
11,508 | 1,355 | 12,863 | 2,645 | 15,508 | ||||||||||||
| Marine Systems |
8,011 | 15,479 | 23,490 | 1,170 | 24,660 | ||||||||||||
| Information Systems and Technology |
8,467 | 2,174 | 10,641 | 13,024 | 23,665 | ||||||||||||
| Total |
$ | 46,797 | $ | 19,452 | $ | 66,249 | $ | 18,200 | $ | 84,449 | |||||||
| Fourth Quarter 2008 |
|||||||||||||||||
| Aerospace |
$ | 21,861 | $ | 618 | $ | 22,479 | $ | 2,342 | $ | 24,821 | |||||||
| Combat Systems |
12,127 | 2,831 | 14,958 | 2,732 | 17,690 | ||||||||||||
| Marine Systems |
10,482 | 15,963 | 26,445 | 1,510 | 27,955 | ||||||||||||
| Information Systems and Technology |
7,242 | 3,003 | 10,245 | 10,263 | 20,508 | ||||||||||||
| Total |
$ | 51,712 | $ | 22,415 | $ | 74,127 | $ | 16,847 | $ | 90,974 | |||||||
| * | The estimated potential contract value represents management’s estimate of our future contract value under unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including aircraft fleet customers’ options to purchase new aircraft. Because the value in the unfunded IDIQ arrangements is subject to the customer’s future exercise of an indeterminate quantity of delivery orders, we recognize these contracts in backlog only when they are funded. Unexercised options are recognized in backlog when the customer exercises the option and establishes a firm order. |
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EXHIBIT I
FOURTH QUARTER 2009 SIGNIFICANT ORDERS (UNAUDITED)
DOLLARS IN MILLIONS
We received the following significant contract orders during the fourth quarter of 2009:
Combat Systems
| • | Approximately $2.2 billion from the U.S. Army for Light Armored Vehicles for a Foreign Military Sale (FMS). |
| • | Approximately $190 from the Army for the Stryker wheeled armored vehicle modernization program, bringing the total contract value to over $210. |
| • | Approximately $160 from the Army to build M1A1 Situational Awareness (SA) tanks for Iraq. The contract has a potential value of approximately $200. |
| • | Approximately $130 from the Army for design and engineering work and enhancements for Stryker vehicles in support of Operating Enduring Freedom. |
Marine Systems
| • | Approximately $80 from the U.S. Navy for management and support of nuclear-maintenance work for submarines. |
| • | Approximately $80 from the Navy for additional engineering services associated with the detail design and construction of the DDG-1000 Zumwalt-class destroyer. The contract award has a potential value of approximately $190. |
Information Systems and Technology
| • | Approximately $210 from the Army for initial outfitting and transition support of the newly renovated Walter Reed National Military Medical Center and the newly constructed Fort Belvoir Community Hospital. The contract has a potential value of over $320. |
| • | A task order worth approximately $110 from the Army to modernize classroom training technology under the Information Technology Enterprise Technology Solutions-2 Services (ITES-2S) indefinite delivery, indefinite quantity (IDIQ) contract. |
| • | An IDIQ contract from the Army with a potential value of $200 to develop the Consolidated Product-Line Management system, which will improve the Army’s ability to manage its live combat training system product lines. |
| • | An IDIQ contract from the Federal Aviation Administration with a potential value of approximately $220 to maintain its legacy telephony system. |
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EXHIBIT J
GULFSTREAM SUPPLEMENTAL DATA (UNAUDITED)
| Fourth Quarter |
Twelve Months |
|||||||||||||||
| 2009 |
2008 |
2009 |
2008 |
|||||||||||||
| Green Deliveries (units): |
||||||||||||||||
| Large aircraft |
19 | 20 | 75 | 87 | ||||||||||||
| Mid-size aircraft |
1 | 21 | 19 | 69 | ||||||||||||
| Total |
20 | 41 | 94 | 156 | ||||||||||||
| Outfitted Deliveries (units): |
||||||||||||||||
| Large aircraft |
18 | 21 | 78 | 87 | ||||||||||||
| Mid-size aircraft |
3 | 17 | 32 | 65 | ||||||||||||
| Total |
21 | 38 | 110 | 152 | ||||||||||||
| Pre-owned Activity: |
||||||||||||||||
| Units |
1 | — | 6 | 2 | ||||||||||||
| Revenues (millions) |
$ | 5 | $ | 1 | $ | 124 | $ | 18 | ||||||||
| Operating earnings (millions) |
$ | (5 | ) | $ | (22 | ) | $ | (37 | ) | $ | (19 | ) | ||||
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