RESTON, Va., Jan. 29, 2020 /PRNewswire/ -- General
Dynamics (NYSE: GD) today reported quarterly net earnings of
$1 billion on $10.8 billion in revenue. Full-year earnings from
continuing operations were $3.5
billion on revenue of $39.4
billion. Full-year revenue and operating earnings grew in
all five segments.
Fourth-quarter's net earnings grew 12.2% over fourth-quarter
2018. On a per share basis, diluted earnings per share (EPS) were
$3.51, a 14.3% increase over the
year-ago quarter. For the year, diluted EPS from continuing
operations were $11.98, a 6.8%
increase from 2018.
"We continue to improve performance and focus on lines of
business that will deliver value for our customers and sustained
superior results for our shareholders," said Phebe N. Novakovic, chairman and chief executive
officer. "Our fourth-quarter and full-year performance, coupled
with strong order intake, leaves us well positioned to create
enduring value."
SEGMENT HIGHLIGHTS
Aerospace
Aerospace revenue was $2.9 billion for the quarter, up 8.4% over the
year-ago quarter, for full-year revenue of $9.8 billion. Operating earnings were
$480 million for the quarter, up
25.7% over the year-ago quarter, and $1.5
billion for the year. Operating margin was 16.4% for the
quarter, up 230 basis points over the year-ago quarter, and 15.6%
for the year. Backlog grew during the fourth quarter to
$13.3 billion, up 17.4% from the end
of 2018. Book-to-bill was 1.7-to-1 for the quarter and 1.2-to-1 for
the year. Gulfstream received FAA type and production certification
of its G600 in the second quarter and deliveries began in the third
quarter. In the fourth quarter, Gulfstream unveiled the G700 and
announced the first orders for the new aircraft, scheduled to begin
customer deliveries in 2022.
Combat Systems
Combat Systems reported fourth-quarter
revenue of $2 billion, up 13.1% over
the year-ago quarter, for full-year revenue of $7 billion. Operating earnings were $284 million, up 8.8% over the year-ago quarter,
for full-year operating earnings of $996
million. Operating margin was 14.4% for the quarter and
14.2% for the year. The segment was selected in 2019 to produce
light armored vehicles for the Canadian Army. It continues to
develop new platforms to meet future customer needs, including
Mobile Protected Firepower and new variants of the Stryker.
Information Technology
Information Technology reported
fourth-quarter revenue of $2 billion
and $8.4 billion for the year.
Operating earnings were $172 million
for the fourth quarter and $628
million for the year. Operating margin was 8.5% for the
quarter, up 40 basis points over the year-ago quarter, and 7.5% for
the year. Total backlog was $9.1
billion, up 14.7% from the end of 2018. Total estimated
contract value, which includes management's estimate of value in
unfunded indefinite delivery, indefinite quantity (IDIQ) contracts
and unexercised options, was $28.1
billion, up 12.4% from the end of 2018. Book-to-bill was
1-to-1 for the quarter and 1.1-to-1 for the year.
Mission Systems
Mission Systems reported
fourth-quarter revenue of $1.3
billion, up 2.5% from the year-ago quarter, for full-year
revenue of $4.9 billion. Operating
earnings were $188 million for the
quarter, up 3.9% from the year-ago quarter, and $683 million for the year. Operating margin was
14.7% for the quarter, up 20 basis points from the year-ago
quarter, and 13.8% for the year. Backlog was $5.4 billion. Book-to-bill was 1-to-1 for the
year. Significant awards included a contract from the U.S. Navy to
modernize ground stations for satellite communications systems with
a maximum potential value of $730
million.
Marine Systems
Marine Systems reported quarterly
revenue of $2.6 billion, up 11.7%
from the year-ago quarter, for full-year revenue of $9.2 billion. Operating earnings were
$199 million for the quarter and
$785 million for the year. Operating
margin was 7.8% for the quarter and 8.5% for the year. The award in
the fourth quarter of a $22.2 billion
contract for Virginia-class submarines expanded the segment's
backlog to $44.2 billion, up 66.1%
from the end of 2018. Book-to-bill was 8.1-to-1 for the quarter and
2.9-to-1 for the year.
About General Dynamics
Headquartered in Reston, Virginia, General Dynamics is a global
aerospace and defense company that offers a broad portfolio of
products and services in business aviation; combat vehicles,
weapons systems and munitions; IT services; C4ISR solutions; and
shipbuilding and ship repair. General Dynamics employs more than
100,000 people worldwide and generated $39.4
billion in revenue in 2019. More information is available at
www.gd.com.
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, projections and assumptions. These
statements are not guarantees of future performance and involve
risks and uncertainties that 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 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 and full-year 2019 financial results conference call
at 9 a.m. EST on Wednesday, January 29,
2020. The webcast will be a listen-only audio event
available at www.gd.com. An on-demand replay of the
webcast will be available by 12 noon on January 29 and will continue for 12 months. To
hear a recording of the conference call by telephone, please call
877-344-7529 (international: 412-317-0088); passcode 10137702. The
phone replay will be available through January 29, 2020. Charts furnished to investors
and securities analysts in connection with General Dynamics'
announcement of its financial results for the quarter and year
ended December 31, 2019, are
available on its website at www.gd.com. General
Dynamics intends to supplement those charts on its website after
its earnings call today to include information about 2020 guidance
presented on its earnings call.
EXHIBIT
A
|
CONSOLIDATED
STATEMENT OF EARNINGS - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
|
|
Three Months Ended
December 31
|
|
|
Variance
|
|
|
2019
|
|
2018
|
|
$
|
|
|
%
|
Revenue
|
|
$
|
10,773
|
|
|
$
|
10,378
|
|
|
$
|
395
|
|
|
3.8
|
%
|
Operating costs and
expenses
|
|
(9,445)
|
|
|
(9,152)
|
|
|
(293)
|
|
|
|
Operating
earnings
|
|
1,328
|
|
|
1,226
|
|
|
102
|
|
|
8.3
|
%
|
Interest,
net
|
|
(110)
|
|
|
(112)
|
|
|
2
|
|
|
|
Other,
net
|
|
(4)
|
|
|
18
|
|
|
(22)
|
|
|
|
Earnings before
income tax
|
|
1,214
|
|
|
1,132
|
|
|
82
|
|
|
7.2
|
%
|
Provision for income
tax, net
|
|
(194)
|
|
|
(223)
|
|
|
29
|
|
|
|
Net
earnings
|
|
$
|
1,020
|
|
|
$
|
909
|
|
|
$
|
111
|
|
|
12.2
|
%
|
Earnings per
share—basic
|
|
$
|
3.53
|
|
|
$
|
3.10
|
|
|
$
|
0.43
|
|
|
13.9
|
%
|
Basic weighted
average shares outstanding
|
|
288.8
|
|
|
293.2
|
|
|
|
|
|
Earnings per
share—diluted
|
|
$
|
3.51
|
|
|
$
|
3.07
|
|
|
$
|
0.44
|
|
|
14.3
|
%
|
Diluted weighted
average shares outstanding
|
|
290.9
|
|
|
296.4
|
|
|
|
|
|
EXHIBIT
B
|
CONSOLIDATED
STATEMENT OF EARNINGS - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
|
Year Ended
December 31
|
|
Variance
|
|
2019
|
|
2018*
|
|
$
|
|
%
|
Revenue
|
$
|
39,350
|
|
|
$
|
36,193
|
|
|
$
|
3,157
|
|
|
8.7
|
%
|
Operating costs and
expenses
|
(34,702)
|
|
|
(31,736)
|
|
|
(2,966)
|
|
|
|
Operating
earnings
|
4,648
|
|
|
4,457
|
|
|
191
|
|
|
4.3
|
%
|
Interest,
net
|
(460)
|
|
|
(356)
|
|
|
(104)
|
|
|
|
Other, net
|
14
|
|
|
(16)
|
|
|
30
|
|
|
|
Earnings from
continuing operations before income tax
|
4,202
|
|
|
4,085
|
|
|
117
|
|
|
2.9
|
%
|
Provision for income
tax, net
|
(718)
|
|
|
(727)
|
|
|
9
|
|
|
|
Earnings from
continuing operations
|
3,484
|
|
|
3,358
|
|
|
126
|
|
|
3.8
|
%
|
Discontinued
operations, net of tax
|
—
|
|
|
(13)
|
|
|
13
|
|
|
|
Net
earnings
|
$
|
3,484
|
|
|
$
|
3,345
|
|
|
$
|
139
|
|
|
4.2
|
%
|
Earnings per
share—basic
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
12.09
|
|
|
$
|
11.37
|
|
|
$
|
0.72
|
|
|
6.3
|
%
|
Discontinued
operations
|
—
|
|
|
(0.04)
|
|
|
0.04
|
|
|
|
Net
earnings
|
$
|
12.09
|
|
|
$
|
11.33
|
|
|
$
|
0.76
|
|
|
6.7
|
%
|
Basic weighted
average shares outstanding
|
288.3
|
|
|
295.3
|
|
|
|
|
|
Earnings per
share—diluted
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
11.98
|
|
|
$
|
11.22
|
|
|
$
|
0.76
|
|
|
6.8
|
%
|
Discontinued
operations
|
—
|
|
|
(0.04)
|
|
|
0.04
|
|
|
|
Net
earnings
|
$
|
11.98
|
|
|
$
|
11.18
|
|
|
$
|
0.80
|
|
|
7.2
|
%
|
Diluted weighted
average shares outstanding
|
290.8
|
|
|
299.2
|
|
|
|
|
|
|
|
*
|
2018 results include
the unfavorable impact of one-time charges of approximately $75
associated with costs to complete the acquisition of CSRA Inc. In
the table above, approximately $45 of compensation-related costs
was reported in operating costs and expenses, and approximately $30
of transaction costs was reported in other, net.
|
EXHIBIT
C
|
REVENUE AND
OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Three Months Ended
December 31
|
|
Variance
|
|
2019
|
|
2018
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
2,930
|
|
|
$
|
2,704
|
|
|
$
|
226
|
|
|
8.4
|
%
|
Combat
Systems
|
1,972
|
|
|
1,744
|
|
|
228
|
|
|
13.1
|
%
|
Information
Technology
|
2,024
|
|
|
2,382
|
|
|
(358)
|
|
|
(15.0)
|
%
|
Mission
Systems
|
1,282
|
|
|
1,251
|
|
|
31
|
|
|
2.5
|
%
|
Marine
Systems
|
2,565
|
|
|
2,297
|
|
|
268
|
|
|
11.7
|
%
|
Total
|
$
|
10,773
|
|
|
$
|
10,378
|
|
|
$
|
395
|
|
|
3.8
|
%
|
Operating
earnings:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
480
|
|
|
$
|
382
|
|
|
$
|
98
|
|
|
25.7
|
%
|
Combat
Systems
|
284
|
|
|
261
|
|
|
23
|
|
|
8.8
|
%
|
Information
Technology
|
172
|
|
|
194
|
|
|
(22)
|
|
|
(11.3)
|
%
|
Mission
Systems
|
188
|
|
|
181
|
|
|
7
|
|
|
3.9
|
%
|
Marine
Systems
|
199
|
|
|
213
|
|
|
(14)
|
|
|
(6.6)
|
%
|
Corporate
|
5
|
|
|
(5)
|
|
|
10
|
|
|
(200.0)
|
%
|
Total
|
$
|
1,328
|
|
|
$
|
1,226
|
|
|
$
|
102
|
|
|
8.3
|
%
|
Operating
margin:
|
|
|
|
|
|
|
|
Aerospace
|
16.4
|
%
|
|
14.1
|
%
|
|
|
|
|
Combat
Systems
|
14.4
|
%
|
|
15.0
|
%
|
|
|
|
|
Information
Technology
|
8.5
|
%
|
|
8.1
|
%
|
|
|
|
|
Mission
Systems
|
14.7
|
%
|
|
14.5
|
%
|
|
|
|
|
Marine
Systems
|
7.8
|
%
|
|
9.3
|
%
|
|
|
|
|
Total
|
12.3
|
%
|
|
11.8
|
%
|
|
|
|
|
EXHIBIT
D
|
REVENUE AND
OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Year Ended
December 31
|
|
Variance
|
|
2019
|
|
2018*
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
9,801
|
|
|
$
|
8,455
|
|
|
$
|
1,346
|
|
|
15.9
|
%
|
Combat
Systems
|
7,007
|
|
|
6,241
|
|
|
766
|
|
|
12.3
|
%
|
Information
Technology
|
8,422
|
|
|
8,269
|
|
|
153
|
|
|
1.9
|
%
|
Mission
Systems
|
4,937
|
|
|
4,726
|
|
|
211
|
|
|
4.5
|
%
|
Marine
Systems
|
9,183
|
|
|
8,502
|
|
|
681
|
|
|
8.0
|
%
|
Total
|
$
|
39,350
|
|
|
$
|
36,193
|
|
|
$
|
3,157
|
|
|
8.7
|
%
|
Operating
earnings:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
1,532
|
|
|
$
|
1,490
|
|
|
$
|
42
|
|
|
2.8
|
%
|
Combat
Systems
|
996
|
|
|
962
|
|
|
34
|
|
|
3.5
|
%
|
Information
Technology
|
628
|
|
|
608
|
|
|
20
|
|
|
3.3
|
%
|
Mission
Systems
|
683
|
|
|
659
|
|
|
24
|
|
|
3.6
|
%
|
Marine
Systems
|
785
|
|
|
761
|
|
|
24
|
|
|
3.2
|
%
|
Corporate
|
24
|
|
|
(23)
|
|
|
47
|
|
|
204.3
|
%
|
Total
|
$
|
4,648
|
|
|
$
|
4,457
|
|
|
$
|
191
|
|
|
4.3
|
%
|
Operating
margin:
|
|
|
|
|
|
|
|
Aerospace
|
15.6
|
%
|
|
17.6
|
%
|
|
|
|
|
Combat
Systems
|
14.2
|
%
|
|
15.4
|
%
|
|
|
|
|
Information
Technology
|
7.5
|
%
|
|
7.4
|
%
|
|
|
|
|
Mission
Systems
|
13.8
|
%
|
|
13.9
|
%
|
|
|
|
|
Marine
Systems
|
8.5
|
%
|
|
9.0
|
%
|
|
|
|
|
Total
|
11.8
|
%
|
|
12.3
|
%
|
|
|
|
|
|
|
*
|
2018 results include
the unfavorable impact of approximately $45 of compensation-related
one-time charges associated with costs to complete the acquisition
of CSRA Inc. This amount was reported as a reduction of Corporate
operating earnings in the table above.
|
EXHIBIT
E
|
CONSOLIDATED
BALANCE SHEET
|
DOLLARS IN
MILLIONS
|
|
|
(Unaudited)
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
902
|
|
|
$
|
963
|
|
Accounts
receivable
|
3,544
|
|
|
3,759
|
|
Unbilled
receivables
|
7,857
|
|
|
6,576
|
|
Inventories
|
6,306
|
|
|
5,977
|
|
Other current
assets
|
1,171
|
|
|
914
|
|
Total current
assets
|
19,780
|
|
|
18,189
|
|
Noncurrent
assets:
|
|
|
|
Property, plant and
equipment, net
|
4,475
|
|
|
3,978
|
|
Intangible assets,
net
|
2,315
|
|
|
2,585
|
|
Goodwill
|
19,677
|
|
|
19,594
|
|
Other
assets
|
2,594
|
|
|
1,062
|
|
Total noncurrent
assets
|
29,061
|
|
|
27,219
|
|
Total
assets
|
$
|
48,841
|
|
|
$
|
45,408
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
|
2,920
|
|
|
$
|
973
|
|
Accounts
payable
|
3,162
|
|
|
3,179
|
|
Customer advances and
deposits
|
7,148
|
|
|
7,270
|
|
Other current
liabilities
|
3,571
|
|
|
3,317
|
|
Total current
liabilities
|
16,801
|
|
|
14,739
|
|
Noncurrent
liabilities:
|
|
|
|
Long-term
debt
|
9,010
|
|
|
11,444
|
|
Other
liabilities
|
9,453
|
|
|
7,493
|
|
Total noncurrent
liabilities
|
18,463
|
|
|
18,937
|
|
Shareholders'
equity:
|
|
|
|
Common
stock
|
482
|
|
|
482
|
|
Surplus
|
3,039
|
|
|
2,946
|
|
Retained
earnings
|
31,633
|
|
|
29,326
|
|
Treasury
stock
|
(17,358)
|
|
|
(17,244)
|
|
Accumulated other
comprehensive loss
|
(4,219)
|
|
|
(3,778)
|
|
Total shareholders'
equity
|
13,577
|
|
|
11,732
|
|
Total liabilities
and shareholders' equity
|
$
|
48,841
|
|
|
$
|
45,408
|
|
EXHIBIT
F
|
CONSOLIDATED
STATEMENT OF CASH FLOWS - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Year Ended
December 31
|
|
2019
|
|
2018
|
Cash flows from
operating activities—continuing operations:
|
|
|
|
Net earnings
|
$
|
3,484
|
|
|
$
|
3,345
|
|
Adjustments to
reconcile net earnings to net cash from operating
activities:
|
|
|
|
Depreciation
of property, plant and equipment
|
466
|
|
|
436
|
|
Amortization
of intangible and finance lease right-of-use assets
|
363
|
|
|
327
|
|
Equity-based
compensation expense
|
133
|
|
|
140
|
|
Deferred
income tax provision (benefit)
|
92
|
|
|
(3)
|
|
Discontinued
operations, net of tax
|
—
|
|
|
|
13
|
|
(Increase) decrease in
assets, net of effects of business acquisitions:
|
|
|
|
Accounts
receivable
|
176
|
|
|
417
|
|
Unbilled
receivables
|
(1,303)
|
|
|
(800)
|
|
Inventories
|
(376)
|
|
|
(591)
|
|
Other
current assets
|
8
|
|
|
310
|
|
Increase (decrease) in
liabilities, net of effects of business acquisitions:
|
|
|
|
Accounts
payable
|
6
|
|
|
(197)
|
|
Customer
advances and deposits
|
(105)
|
|
|
36
|
|
Other, net
|
37
|
|
|
(285)
|
|
Net cash provided by
operating activities
|
2,981
|
|
|
3,148
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(987)
|
|
|
(690)
|
|
Business acquisitions,
net of cash acquired
|
(19)
|
|
|
(10,099)
|
|
Proceeds from sales of
assets
|
14
|
|
|
562
|
|
Other, net
|
(2)
|
|
|
(7)
|
|
Net cash used by
investing activities
|
(994)
|
|
|
(10,234)
|
|
Cash flows from
financing activities:
|
|
|
|
Dividends
paid
|
(1,152)
|
|
|
(1,075)
|
|
(Repayments of)
proceeds from commercial paper, net
|
(850)
|
|
|
850
|
|
Purchases of common
stock
|
(231)
|
|
|
(1,769)
|
|
Proceeds from
fixed-rate notes
|
—
|
|
|
6,461
|
|
Proceeds from
floating-rate notes
|
—
|
|
|
1,000
|
|
Repayment of CSRA
accounts receivable purchase agreement
|
—
|
|
|
(450)
|
|
Other, net
|
236
|
|
|
69
|
|
Net cash (used)
provided by financing activities
|
(1,997)
|
|
|
5,086
|
|
Net cash used by
discontinued operations
|
(51)
|
|
|
(20)
|
|
Net decrease in
cash and equivalents
|
(61)
|
|
|
(2,020)
|
|
Cash and
equivalents at beginning of year
|
963
|
|
|
2,983
|
|
Cash and
equivalents at end of year
|
$
|
902
|
|
|
$
|
963
|
|
EXHIBIT
G
|
PRELIMINARY
FINANCIAL INFORMATION - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
Other Financial
Information:
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
Debt-to-equity
(a)
|
87.9
|
%
|
|
105.8
|
%
|
|
|
|
|
Debt-to-capital
(b)
|
46.8
|
%
|
|
51.4
|
%
|
|
|
|
|
Book value per share
(c)
|
$
|
46.88
|
|
|
$
|
40.64
|
|
|
|
|
|
Shares
outstanding
|
289,610,336
|
|
|
288,698,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Income tax payments,
net
|
$
|
85
|
|
|
$
|
227
|
|
|
$
|
572
|
|
|
$
|
532
|
|
Company-sponsored
research and
development (d)
|
$
|
114
|
|
|
$
|
146
|
|
|
$
|
466
|
|
|
$
|
502
|
|
Return on sales
(e)
|
9.5
|
%
|
|
8.8
|
%
|
|
8.9
|
%
|
|
9.3
|
%
|
Return on equity
(f)
|
|
|
|
|
27.2
|
%
|
|
28.1
|
%
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Earnings before
interest, taxes,
depreciation and amortization:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
1,020
|
|
|
$
|
909
|
|
|
$
|
3,484
|
|
|
$
|
3,358
|
|
Interest,
net
|
110
|
|
|
112
|
|
|
460
|
|
|
356
|
|
Provision for income
tax, net
|
194
|
|
|
223
|
|
|
718
|
|
|
727
|
|
Depreciation of
property, plant and
equipment
|
114
|
|
|
121
|
|
|
466
|
|
|
436
|
|
Amortization of
intangible and
finance lease right-of-use assets
|
90
|
|
|
100
|
|
|
363
|
|
|
327
|
|
Earnings before
interest, taxes,
depreciation and amortization
(g)
|
$
|
1,528
|
|
|
$
|
1,465
|
|
|
$
|
5,491
|
|
|
$
|
5,204
|
|
|
|
|
|
|
|
|
|
Free cash flow
from operations:
|
|
|
|
|
|
|
|
Net cash provided by
operating
activities
|
$
|
2,394
|
|
|
$
|
2,067
|
|
|
$
|
2,981
|
|
|
$
|
3,148
|
|
Capital
expenditures
|
(381)
|
|
|
(243)
|
|
|
(987)
|
|
|
(690)
|
|
Free cash flow from
operations (h)
|
$
|
2,013
|
|
|
$
|
1,824
|
|
|
$
|
1,994
|
|
|
$
|
2,458
|
|
|
|
|
|
|
|
|
|
Return on invested
capital:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
|
|
|
|
$
|
3,484
|
|
|
$
|
3,358
|
|
After-tax interest
expense
|
|
|
|
|
373
|
|
|
295
|
|
After-tax
amortization expense
|
|
|
|
|
287
|
|
|
258
|
|
Net operating profit
after taxes
|
|
|
|
|
4,144
|
|
|
3,911
|
|
Average invested
capital
|
|
|
|
|
29,620
|
|
|
25,367
|
|
Return on invested
capital (i)
|
|
|
|
|
14.0
|
%
|
|
15.4
|
%
|
|
|
|
(a)
|
Debt-to-equity ratio
is calculated as total debt divided by total equity as of year
end.
|
|
|
(b)
|
Debt-to-capital ratio
is calculated as total debt divided by the sum of total debt plus
total equity as of year end.
|
|
|
(c)
|
Book value per share
is calculated as total equity divided by total outstanding shares
as of year end.
|
|
|
(d)
|
Includes independent
research and development and Aerospace product-development
costs.
|
|
|
(e)
|
Return on sales is
calculated as earnings from continuing operations divided by
revenue.
|
|
|
(f)
|
Return on equity is
calculated by dividing earnings from continuing operations by our
average equity during the year.
|
|
|
(g)
|
We believe earnings
before interest, taxes, depreciation and amortization (EBITDA) is a
useful measure for investors because it provides another measure of
our profitability and our ability to service our debt. We calculate
EBITDA by adding back interest, taxes, depreciation and
amortization to earnings from continuing operations. The most
directly comparable GAAP measure to EBITDA is earnings from
continuing operations.
|
|
|
(h)
|
We believe free cash
flow from operations is a useful measure for investors because it
portrays our ability to generate cash from our businesses for
purposes such as repaying maturing debt, funding business
acquisitions, repurchasing our common stock and paying dividends.
We use free cash flow from operations to assess the quality of our
earnings and as a key performance measure in evaluating management.
The most directly comparable GAAP measure to free cash flow from
operations is net cash provided by operating activities.
|
|
|
(i)
|
We believe return on
invested capital (ROIC) is a useful measure for 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 divided by average
invested capital. Net operating profit after taxes is defined as
earnings from continuing operations plus after-tax interest and
amortization expense, calculated using the statutory federal income
tax rate. Average invested capital is defined as the sum of the
average debt and shareholders' equity excluding accumulated other
comprehensive loss. ROIC excludes goodwill impairments and
non-economic accounting changes as they are not reflective of
company performance. The most directly comparable GAAP measure to
net operating profit after taxes is earnings from continuing
operations.
|
EXHIBIT
H
|
BACKLOG -
(UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
|
Funded
|
|
Unfunded
|
|
Total
Backlog
|
|
Estimated
Potential
Contract Value*
|
|
Total
Estimated
Contract Value
|
Fourth Quarter
2019:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
13,168
|
|
|
$
|
181
|
|
|
$
|
13,349
|
|
|
$
|
2,989
|
|
|
$
|
16,338
|
|
Combat
Systems
|
|
14,474
|
|
|
439
|
|
|
14,913
|
|
|
4,322
|
|
|
19,235
|
|
Information
Technology
|
|
4,839
|
|
|
4,294
|
|
|
9,133
|
|
|
19,003
|
|
|
28,136
|
|
Mission
Systems
|
|
5,037
|
|
|
326
|
|
|
5,363
|
|
|
7,482
|
|
|
12,845
|
|
Marine
Systems
|
|
20,012
|
|
|
24,175
|
|
|
44,187
|
|
|
5,453
|
|
|
49,640
|
|
Total
|
|
$
|
57,530
|
|
|
$
|
29,415
|
|
|
$
|
86,945
|
|
|
$
|
39,249
|
|
|
$
|
126,194
|
|
Third Quarter
2019:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
11,195
|
|
|
$
|
188
|
|
|
$
|
11,383
|
|
|
$
|
2,065
|
|
|
$
|
13,448
|
|
Combat
Systems
|
|
15,069
|
|
|
449
|
|
|
15,518
|
|
|
4,255
|
|
|
19,773
|
|
Information
Technology
|
|
4,782
|
|
|
4,381
|
|
|
9,163
|
|
|
18,063
|
|
|
27,226
|
|
Mission
Systems
|
|
5,152
|
|
|
307
|
|
|
5,459
|
|
|
6,764
|
|
|
12,223
|
|
Marine
Systems
|
|
17,801
|
|
|
8,072
|
|
|
25,873
|
|
|
4,497
|
|
|
30,370
|
|
Total
|
|
$
|
53,999
|
|
|
$
|
13,397
|
|
|
$
|
67,396
|
|
|
$
|
35,644
|
|
|
$
|
103,040
|
|
Fourth Quarter
2018:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
11,208
|
|
|
$
|
167
|
|
|
$
|
11,375
|
|
|
$
|
3,130
|
|
|
$
|
14,505
|
|
Combat
Systems
|
|
16,174
|
|
|
424
|
|
|
16,598
|
|
|
4,187
|
|
|
20,785
|
|
Information
Technology
|
|
4,717
|
|
|
3,248
|
|
|
7,965
|
|
|
17,066
|
|
|
25,031
|
|
Mission
Systems
|
|
4,890
|
|
|
445
|
|
|
5,335
|
|
|
7,409
|
|
|
12,744
|
|
Marine
Systems
|
|
18,837
|
|
|
7,761
|
|
|
26,598
|
|
|
3,703
|
|
|
30,301
|
|
Total
|
|
$
|
55,826
|
|
|
$
|
12,045
|
|
|
$
|
67,871
|
|
|
$
|
35,495
|
|
|
$
|
103,366
|
|
|
|
*
|
The estimated
potential contract value includes work awarded on unfunded
indefinite delivery, indefinite quantity (IDIQ) contracts and
unexercised options associated with existing firm contracts,
including options and other agreements with existing customers to
purchase new aircraft and aircraft services. We recognize options
in backlog when the customer exercises the option and establishes a
firm order. For IDIQ contracts, we evaluate the amount of funding
we expect to receive and include this amount in our estimated
potential contract value. The actual amount of funding received in
the future may be higher or lower than our estimate of potential
contract value.
|
EXHIBIT H-1
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS
https://mma.prnewswire.com/media/1083176/EXHIBIT_H_1.jpg
EXHIBIT H-2
BACKLOG BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
https://mma.prnewswire.com/media/1083177/EXHIBIT_H_2_Aerospace.jpg
https://mma.prnewswire.com/media/1083178/EXHIBIT_H_2_Combat_Systems.jpg
https://mma.prnewswire.com/media/1083179/EXHIBIT_H_2_Information_Technology.jpg
https://mma.prnewswire.com/media/1083180/EXHIBIT_H_2_Mission_Systems.jpg
https://mma.prnewswire.com/media/1083181/EXHIBIT_H_2_Marine_Systems.jpg
https://mma.prnewswire.com/media/1083270/EXHIBIT_H_2_Key.jpg
EXHIBIT I
FOURTH QUARTER 2019
SIGNIFICANT ORDERS - (UNAUDITED)
DOLLARS IN
MILLIONS
We received the following significant contract awards during the
fourth quarter of 2019:
Combat Systems:
- $465 from the U.S. Army to
upgrade Abrams tanks to the M1A2 System Enhancement Package Version
3 configuration.
- $160 from the Army for various
munitions and ordnance.
- $150 for the production of Eagle
vehicles and related spares for Switzerland.
- $35 from the Army to provide
systems technical support for Abrams main battle tanks.
Information Technology:
- $800 to support the operations
and enhancement of several state health insurance programs.
- $355 for several key contracts to
provide intelligence services to classified customers.
- $150 to provide operations and
maintenance support services for a Department of Homeland Security
(DHS) data center.
- $105 from the National
Geospatial-Intelligence Agency (NGA) for network storage and data
center services.
- A contract from the U.S. Department of Education for
development, operation and maintenance of the Federal Student Aid
Application and Eligibility Determination System (AEDS). The
contract has a maximum potential value of $90.
- $75 to provide Military
Information Support Operations (MISO) to the U.S. Department of
Defense.
Mission Systems:
- A sole-source contract from the U.S. Navy to provide
sustainment services for the Navy's next-generation Mobile User
Objective System (MUOS) satellite communications system. The
contract has a maximum potential value of $730.
- $90 from the Navy to provide
sustainment services for Littoral Combat Ships (LCS), including
maintenance of in-service ships' Integrated Combat Management
System (ICMS). The contract has a maximum potential value of
$395.
- $60 from the Navy to modernize
and maintain fire-control systems for ballistic-missile submarines.
The contract has a maximum potential value of $300.
- $80 from the Army for computing
and communications equipment under the Common Hardware Systems-5
program.
- $60 to perform Strategic Systems
Program Alteration (SPALT) activities to rebuild and repair MK6
missile guidance systems for the Navy.
Marine Systems:
- $22.2 billion contract from the
Navy for the construction of nine submarines in Block V of the
Virginia-class submarine program and spare materials. The contract
includes $3.2 billion of
previously-awarded orders for advance materials. The contract
includes an option for a tenth submarine that if exercised would
bring the total contract value to $24.1
billion.
- $435 from the Navy to provide
design and development activities for Virginia-class
submarines.
- $300 from the Navy to provide
maintenance and repair services for the Arleigh Burke-class
(DDG-51) guided-missile destroyer, Independence-variant LCS and
Harpers Ferry-class dock landing ship (LSD) programs.
- $80 from the Navy to provide
planning yard services for the DDG-51 destroyer program.
- $45 from the Navy to provide
non-nuclear maintenance and repair services for submarines located
at the Naval Submarine Support Facility in New London, Connecticut.
EXHIBIT
J
|
AEROSPACE
SUPPLEMENTAL DATA - (UNAUDITED)
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gulfstream
Aircraft Deliveries (units):
|
|
|
|
|
|
|
|
|
Large-cabin
aircraft
|
|
35
|
|
|
34
|
|
|
114
|
|
|
92
|
|
Mid-cabin
aircraft
|
|
9
|
|
|
8
|
|
|
33
|
|
|
29
|
|
Total
|
|
44
|
|
|
42
|
|
|
147
|
|
|
121
|
|
Pre-owned Aircraft
Deliveries (units):
|
|
6
|
|
|
3
|
|
|
15
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
Aerospace
Book-to-Bill:
|
|
|
|
|
|
|
|
|
Orders (a)
|
|
$
|
4,652
|
|
|
$
|
2,117
|
|
|
$
|
11,674
|
|
|
$
|
7,596
|
|
Revenue (excluding
pre-owned aircraft sales)
|
|
2,774
|
|
|
2,650
|
|
|
9,509
|
|
|
8,322
|
|
Book-to-Bill Ratio
(b)
|
|
1.68x
|
|
|
0.80x
|
|
|
1.23x
|
|
|
0.91x
|
|
|
(a)
|
Does not include
customer defaults, liquidated damages, cancellations, foreign
exchange fluctuations and other backlog adjustments.
|
(b)
|
Gulfstream new
aircraft book-to-bill (value of new aircraft orders versus new
aircraft deliveries) was 2.0x in the fourth quarter and 1.4x for
the full year 2019.
|
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SOURCE General Dynamics