RESTON, Va., Jan. 27, 2021 /PRNewswire/ -- General
Dynamics (NYSE: GD) today reported quarterly net earnings of
$1 billion, or $3.49 per diluted share, on $10.5 billion in revenue. For the full year, net
earnings were $3.2 billion, or
$11.00 per diluted share, on revenue
of $37.9 billion.
On a sequential basis, both net earnings and earnings per share
(EPS) were up 20% from the previous quarter. Operating margin was
12.3% in the quarter, up 90 basis points sequentially and up 20
basis points from the year-ago quarter. Backlog grew 9.8% in the
quarter to a record-high $89.5
billion.
"Our continued focus on operating performance and on protecting
the health and safety of our employees contributed to strong
sequential improvements in earnings, margin and cash flow," said
Phebe N. Novakovic, chairman and
chief executive officer. "Our defense segments continued to capture
significant awards, leading to a record-high backlog, while our
aerospace segment not only remained very profitable, but actually
improved its margins throughout the year, even as the broader
business aviation industry contracted severely due to the
pandemic."
Margin
Company-wide operating margin was 12.3%, up 90
basis points from the prior quarter. Aerospace margin was 16.5%, up
220 basis points from the prior quarter.
Cash
Net cash provided by operating activities in the
quarter totaled $2.6 billion, or 256%
of net earnings. For the year, net cash provided by operating
activities totaled $3.9 billion, or
122% of net earnings. Free cash flow from operations, defined as
net cash provided by operating activities less capital
expenditures, was $2.2 billion for
the quarter, a 221% conversion of net earnings, and $2.9 billion for the year, a 91% conversion of
net earnings. During the quarter, the company reduced its net debt
by $1.7 billion, invested
$345 million in capital expenditures,
paid $315 million in dividends, and
repurchased $100.7 million in shares
at an average price of $143.80,
ending 2020 with $2.8 billion in cash
and equivalents on hand.
Backlog
Orders remained strong across the company with
a consolidated book-to-bill of 1.8-to-1 for the quarter and
1.1-to-1 for the year. In addition to backlog of $89.5 billion, management's estimate of
additional value in unfunded indefinite delivery/indefinite
quantity (IDIQ) contracts and unexercised options was $45.2 billion at year-end. Total estimated
contract value, representing the sum of all backlog components was
$134.7 billion, up 6.7% for the
year.
Significant awards in the fourth quarter included a $9.5 billion option exercise from the U.S. Navy
for construction and test of the first two Columbia-class
submarines; $4.4 billion maximum
potential value contract from the U.S. Department of Defense to
provide cloud solutions for Office 365 deployment and migration; a
$3.3 billion maximum potential value
contract from the U.S. State Department to provide business process
support services; a $695 million
contract from the U.S. Army to provide information technology and
professional services; $620 million
for several key contracts for classified customers; a $405 million initial task order on a $4.3 billion maximum potential value contract to
upgrade Abrams tanks for the Army; a $230
million initial task order on an Army contract with a
maximum potential contract value of $1.2
billion to produce Stryker Initial Maneuver Short-Range Air
Defense (IM-SHORAD) vehicles; $375
million from the Navy to provide lead yard services for the
Virginia-class submarine program; and $265
million from the Navy for maintenance and repair services
for three ship classes.
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; ship construction and
repair; land combat vehicles, weapons systems and munitions; and
technology products and services. General Dynamics employs more
than 100,000 people worldwide and generated $37.9 billion in revenue in 2020. 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, its
Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K.
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 2020 financial results conference call
at 9 a.m. EST on Wednesday, January 27,
2021. The webcast will be a listen-only audio event
available at www.gd.com. An on-demand replay
of the webcast will be available one hour after the end of the call
and end on February 3, 2021. To hear
a recording of the conference call by telephone, please call
877-344-7529 (international: 412-317-0088); passcode 10151195.
Charts furnished to investors and securities analysts in connection
with General Dynamics' announcement of its financial results are
available at www.gd.com. General Dynamics intends to
supplement those charts on its website after its earnings call
today to include information about 2021 guidance presented during
the call.
EXHIBIT
A
|
CONSOLIDATED
STATEMENT OF EARNINGS - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
|
Three Months Ended
December 31
|
|
Variance
|
|
2020
|
|
2019*
|
|
$
|
|
%
|
Revenue
|
$
|
10,481
|
|
|
$
|
10,773
|
|
|
$
|
(292)
|
|
|
(2.7)
|
%
|
Operating costs and
expenses
|
(9,188)
|
|
|
(9,465)
|
|
|
277
|
|
|
|
Operating
earnings
|
1,293
|
|
|
1,308
|
|
|
(15)
|
|
|
(1.1)
|
%
|
Other, net
|
12
|
|
|
16
|
|
|
(4)
|
|
|
|
Interest,
net
|
(120)
|
|
|
(110)
|
|
|
(10)
|
|
|
|
Earnings before
income tax
|
1,185
|
|
|
1,214
|
|
|
(29)
|
|
|
(2.4)
|
%
|
Provision for income
tax, net
|
(183)
|
|
|
(194)
|
|
|
11
|
|
|
|
Net
earnings
|
$
|
1,002
|
|
|
$
|
1,020
|
|
|
$
|
(18)
|
|
|
(1.8)
|
%
|
Earnings per
share—basic
|
$
|
3.50
|
|
|
$
|
3.53
|
|
|
$
|
(0.03)
|
|
|
(0.8)
|
%
|
Basic weighted
average shares outstanding
|
286.3
|
|
|
288.8
|
|
|
|
|
|
Earnings per
share—diluted
|
$
|
3.49
|
|
|
$
|
3.51
|
|
|
$
|
(0.02)
|
|
|
(0.6)
|
%
|
Diluted weighted
average shares outstanding
|
287.1
|
|
|
290.9
|
|
|
|
|
|
|
|
*
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
EXHIBIT
B
|
CONSOLIDATED
STATEMENT OF EARNINGS - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
|
Year Ended
December 31
|
|
Variance
|
|
2020
|
|
2019*
|
|
$
|
|
%
|
Revenue
|
$
|
37,925
|
|
|
$
|
39,350
|
|
|
$
|
(1,425)
|
|
|
(3.6)
|
%
|
Operating costs and
expenses
|
(33,792)
|
|
|
(34,780)
|
|
|
988
|
|
|
|
Operating
earnings
|
4,133
|
|
|
4,570
|
|
|
(437)
|
|
|
(9.6)
|
%
|
Other, net
|
82
|
|
|
92
|
|
|
(10)
|
|
|
|
Interest,
net
|
(477)
|
|
|
(460)
|
|
|
(17)
|
|
|
|
Earnings before
income tax
|
3,738
|
|
|
4,202
|
|
|
(464)
|
|
|
(11.0)
|
%
|
Provision for income
tax, net
|
(571)
|
|
|
(718)
|
|
|
147
|
|
|
|
Net
earnings
|
$
|
3,167
|
|
|
$
|
3,484
|
|
|
$
|
(317)
|
|
|
(9.1)
|
%
|
Earnings per
share—basic
|
$
|
11.04
|
|
|
$
|
12.09
|
|
|
$
|
(1.05)
|
|
|
(8.7)
|
%
|
Basic weighted
average shares outstanding
|
286.9
|
|
|
288.3
|
|
|
|
|
|
Earnings per
share—diluted
|
$
|
11.00
|
|
|
$
|
11.98
|
|
|
$
|
(0.98)
|
|
|
(8.2)
|
%
|
Diluted weighted
average shares outstanding
|
287.9
|
|
|
290.8
|
|
|
|
|
|
|
|
*
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
EXHIBIT
C
|
REVENUE AND
OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Three Months Ended
December 31
|
|
Variance
|
|
2020
|
|
2019 (a)
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
2,435
|
|
|
$
|
2,930
|
|
|
$
|
(495)
|
|
|
(16.9)
|
%
|
Marine
Systems
|
2,857
|
|
|
2,565
|
|
|
292
|
|
|
11.4
|
%
|
Combat
Systems
|
1,960
|
|
|
1,972
|
|
|
(12)
|
|
|
(0.6)
|
%
|
Technologies
(b)
|
3,229
|
|
|
3,306
|
|
|
(77)
|
|
|
(2.3)
|
%
|
Total
|
$
|
10,481
|
|
|
$
|
10,773
|
|
|
$
|
(292)
|
|
|
(2.7)
|
%
|
Operating
earnings:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
401
|
|
|
$
|
480
|
|
|
$
|
(79)
|
|
|
(16.5)
|
%
|
Marine
Systems
|
247
|
|
|
199
|
|
|
48
|
|
|
24.1
|
%
|
Combat
Systems
|
309
|
|
|
284
|
|
|
25
|
|
|
8.8
|
%
|
Technologies
(b)
|
352
|
|
|
360
|
|
|
(8)
|
|
|
(2.2)
|
%
|
Corporate
|
(16)
|
|
|
(15)
|
|
|
(1)
|
|
|
(6.7)
|
%
|
Total
|
$
|
1,293
|
|
|
$
|
1,308
|
|
|
$
|
(15)
|
|
|
(1.1)
|
%
|
Operating
margin:
|
|
|
|
|
|
|
|
Aerospace
|
16.5
|
%
|
|
16.4
|
%
|
|
|
|
|
Marine
Systems
|
8.6
|
%
|
|
7.8
|
%
|
|
|
|
|
Combat
Systems
|
15.8
|
%
|
|
14.4
|
%
|
|
|
|
|
Technologies
(b)
|
10.9
|
%
|
|
10.9
|
%
|
|
|
|
|
Total
|
12.3
|
%
|
|
12.1
|
%
|
|
|
|
|
|
|
(a)
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
|
|
(b)
|
Effective December
31, 2020, we have reorganized our Mission Systems and Information
Technology business units into a single reporting unit —
Technologies — to better reflect the way we are running the
business, the overlap and commonality of customers, and customer
demand for end-to-end solutions melding technology, hardware and
software.
|
EXHIBIT
D
|
REVENUE AND
OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Year Ended
December 31
|
|
Variance
|
|
2020
|
|
2019 (a)
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
8,075
|
|
|
$
|
9,801
|
|
|
$
|
(1,726)
|
|
|
(17.6)
|
%
|
Marine
Systems
|
9,979
|
|
|
9,183
|
|
|
796
|
|
|
8.7
|
%
|
Combat
Systems
|
7,223
|
|
|
7,007
|
|
|
216
|
|
|
3.1
|
%
|
Technologies
(b)
|
12,648
|
|
|
13,359
|
|
|
(711)
|
|
|
(5.3)
|
%
|
Total
|
$
|
37,925
|
|
|
$
|
39,350
|
|
|
$
|
(1,425)
|
|
|
(3.6)
|
%
|
Operating
earnings:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
1,083
|
|
|
$
|
1,532
|
|
|
$
|
(449)
|
|
|
(29.3)
|
%
|
Marine
Systems
|
854
|
|
|
785
|
|
|
69
|
|
|
8.8
|
%
|
Combat
Systems
|
1,041
|
|
|
996
|
|
|
45
|
|
|
4.5
|
%
|
Technologies
(b)
|
1,211
|
|
|
1,311
|
|
|
(100)
|
|
|
(7.6)
|
%
|
Corporate
|
(56)
|
|
|
(54)
|
|
|
(2)
|
|
|
(3.7)
|
%
|
Total
|
$
|
4,133
|
|
|
$
|
4,570
|
|
|
$
|
(437)
|
|
|
(9.6)
|
%
|
Operating
margin:
|
|
|
|
|
|
|
|
Aerospace
|
13.4
|
%
|
|
15.6
|
%
|
|
|
|
|
Marine
Systems
|
8.6
|
%
|
|
8.5
|
%
|
|
|
|
|
Combat
Systems
|
14.4
|
%
|
|
14.2
|
%
|
|
|
|
|
Technologies
(b)
|
9.6
|
%
|
|
9.8
|
%
|
|
|
|
|
Total
|
10.9
|
%
|
|
11.6
|
%
|
|
|
|
|
|
|
(a)
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
|
|
(b)
|
Effective December
31, 2020, we have reorganized our Mission Systems and Information
Technology business units into a single reporting unit —
Technologies — to better reflect the way we are running the
business, the overlap and commonality of customers, and customer
demand for end-to-end solutions melding technology, hardware and
software.
|
EXHIBIT
E
|
REVENUE AND
OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Three Months
Ended
|
|
Variance
|
|
December 31,
2020
|
|
September 27, 2020
(a)
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
2,435
|
|
|
$
|
1,975
|
|
|
$
|
460
|
|
|
23.3
|
%
|
Marine
Systems
|
2,857
|
|
|
2,405
|
|
|
452
|
|
|
18.8
|
%
|
Combat
Systems
|
1,960
|
|
|
1,801
|
|
|
159
|
|
|
8.8
|
%
|
Technologies
(b)
|
3,229
|
|
|
3,250
|
|
|
(21)
|
|
|
(0.6)
|
%
|
Total
|
$
|
10,481
|
|
|
$
|
9,431
|
|
|
$
|
1,050
|
|
|
11.1
|
%
|
Operating
earnings:
|
|
|
|
|
|
|
|
Aerospace
|
$
|
401
|
|
|
$
|
283
|
|
|
$
|
118
|
|
|
41.7
|
%
|
Marine
Systems
|
247
|
|
|
223
|
|
|
24
|
|
|
10.8
|
%
|
Combat
Systems
|
309
|
|
|
270
|
|
|
39
|
|
|
14.4
|
%
|
Technologies
(b)
|
352
|
|
|
314
|
|
|
38
|
|
|
12.1
|
%
|
Corporate
|
(16)
|
|
|
(18)
|
|
|
2
|
|
|
11.1
|
%
|
Total
|
$
|
1,293
|
|
|
$
|
1,072
|
|
|
$
|
221
|
|
|
20.6
|
%
|
Operating
margin:
|
|
|
|
|
|
|
|
Aerospace
|
16.5
|
%
|
|
14.3
|
%
|
|
|
|
|
Marine
Systems
|
8.6
|
%
|
|
9.3
|
%
|
|
|
|
|
Combat
Systems
|
15.8
|
%
|
|
15.0
|
%
|
|
|
|
|
Technologies
(b)
|
10.9
|
%
|
|
9.7
|
%
|
|
|
|
|
Total
|
12.3
|
%
|
|
11.4
|
%
|
|
|
|
|
|
|
(a)
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
|
|
(b)
|
Effective December
31, 2020, we have reorganized our Mission Systems and Information
Technology business units into a single reporting unit —
Technologies — to better reflect the way we are running the
business, the overlap and commonality of customers, and customer
demand for end-to-end solutions melding technology, hardware and
software.
|
EXHIBIT
F
|
CONSOLIDATED
BALANCE SHEET
|
DOLLARS IN
MILLIONS
|
|
|
(Unaudited)
|
|
|
|
December 31,
2020
|
|
December 31,
2019*
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
2,824
|
|
|
$
|
902
|
|
Accounts
receivable
|
3,161
|
|
|
3,544
|
|
Unbilled
receivables
|
8,024
|
|
|
7,857
|
|
Inventories
|
5,745
|
|
|
6,306
|
|
Other current
assets
|
1,789
|
|
|
1,679
|
|
Total current
assets
|
21,543
|
|
|
20,288
|
|
Noncurrent
assets:
|
|
|
|
Property, plant and
equipment, net
|
5,100
|
|
|
4,475
|
|
Intangible assets,
net
|
2,117
|
|
|
2,315
|
|
Goodwill
|
20,053
|
|
|
19,677
|
|
Other
assets
|
2,495
|
|
|
2,594
|
|
Total noncurrent
assets
|
29,765
|
|
|
29,061
|
|
Total
assets
|
$
|
51,308
|
|
|
$
|
49,349
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
|
3,003
|
|
|
$
|
2,920
|
|
Accounts
payable
|
2,952
|
|
|
3,162
|
|
Customer advances and
deposits
|
6,276
|
|
|
7,148
|
|
Other current
liabilities
|
3,733
|
|
|
3,571
|
|
Total current
liabilities
|
15,964
|
|
|
16,801
|
|
Noncurrent
liabilities:
|
|
|
|
Long-term
debt
|
9,995
|
|
|
9,010
|
|
Other
liabilities
|
9,688
|
|
|
9,560
|
|
Total noncurrent
liabilities
|
19,683
|
|
|
18,570
|
|
Shareholders'
equity:
|
|
|
|
Common
stock
|
482
|
|
|
482
|
|
Surplus
|
3,124
|
|
|
3,039
|
|
Retained
earnings
|
33,498
|
|
|
31,633
|
|
Treasury
stock
|
(17,893)
|
|
|
(17,358)
|
|
Accumulated other
comprehensive loss
|
(3,550)
|
|
|
(3,818)
|
|
Total shareholders'
equity
|
15,661
|
|
|
13,978
|
|
Total liabilities
and shareholders' equity
|
$
|
51,308
|
|
|
$
|
49,349
|
|
|
|
*
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
EXHIBIT
G
|
CONSOLIDATED
STATEMENT OF CASH FLOWS - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
Year Ended
December 31
|
|
2020
|
|
2019
|
Cash flows from
operating activities—continuing operations:
|
|
|
|
Net
earnings
|
$
|
3,167
|
|
|
$
|
3,484
|
|
Adjustments to
reconcile net earnings to net cash from operating
activities:
|
|
|
|
Depreciation of
property, plant and equipment
|
523
|
|
|
466
|
|
Amortization of
intangible and finance lease right-of-use assets
|
355
|
|
|
363
|
|
Equity-based
compensation expense
|
128
|
|
|
133
|
|
Deferred income tax
(benefit) provision
|
(127)
|
|
|
92
|
|
(Increase) decrease
in assets, net of effects of business acquisitions:
|
|
|
|
Accounts
receivable
|
371
|
|
|
176
|
|
Unbilled
receivables
|
(116)
|
|
|
(1,303)
|
|
Inventories
|
502
|
|
|
(376)
|
|
Increase (decrease)
in liabilities, net of effects of business acquisitions:
|
|
|
|
Accounts
payable
|
(215)
|
|
|
6
|
|
Customer advances and
deposits
|
(707)
|
|
|
(105)
|
|
Other, net
|
(23)
|
|
|
45
|
|
Net cash provided by
operating activities
|
3,858
|
|
|
2,981
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(967)
|
|
|
(987)
|
|
Other, net
|
(7)
|
|
|
(7)
|
|
Net cash used by
investing activities
|
(974)
|
|
|
(994)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
fixed-rate notes
|
3,960
|
|
|
—
|
|
Repayment of
fixed-rate notes
|
(2,000)
|
|
|
—
|
|
Dividends
paid
|
(1,240)
|
|
|
(1,152)
|
|
Purchases of common
stock
|
(587)
|
|
|
(231)
|
|
Repayment of
floating-rate notes
|
(500)
|
|
|
—
|
|
(Repayment of)
proceeds from credit facility, net
|
(441)
|
|
|
291
|
|
Proceeds from
commercial paper, gross (maturities greater than 3
months)
|
420
|
|
|
—
|
|
Repayment of
commercial paper, gross (maturities greater than 3
months)
|
(420)
|
|
|
—
|
|
Repayment of
commercial paper, net
|
—
|
|
|
(850)
|
|
Other, net
|
(95)
|
|
|
(55)
|
|
Net cash used by
financing activities
|
(903)
|
|
|
(1,997)
|
|
Net cash used by
discontinued operations
|
(59)
|
|
|
(51)
|
|
Net increase
(decrease) in cash and equivalents
|
1,922
|
|
|
(61)
|
|
Cash and
equivalents at beginning of year
|
902
|
|
|
963
|
|
Cash and
equivalents at end of year
|
$
|
2,824
|
|
|
$
|
902
|
|
EXHIBIT
H
|
ADDITIONAL
FINANCIAL INFORMATION - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
Other Financial
Information:
|
|
|
|
|
|
|
|
|
December 31,
2020
|
|
December 31,
2019*
|
|
|
|
|
Debt-to-equity
(a)
|
83.0
|
%
|
|
85.3
|
%
|
|
|
|
|
Debt-to-capital
(b)
|
45.4
|
%
|
|
46.0
|
%
|
|
|
|
|
Book value per share
(c)
|
$
|
54.67
|
|
|
$
|
48.26
|
|
|
|
|
|
Shares
outstanding
|
286,477,836
|
|
|
289,610,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
2020
|
|
2019
|
|
2020
|
|
2019*
|
Income tax payments,
net
|
$
|
419
|
|
|
$
|
85
|
|
|
$
|
764
|
|
|
$
|
572
|
|
Company-sponsored
research and development (d)
|
$
|
83
|
|
|
$
|
114
|
|
|
$
|
374
|
|
|
$
|
466
|
|
Return on sales
(e)
|
9.6
|
%
|
|
9.5
|
%
|
|
8.4
|
%
|
|
8.9
|
%
|
Return on equity
(f)
|
|
|
|
|
22.0
|
%
|
|
26.4
|
%
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures:
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Earnings before
interest, taxes, depreciation and amortization:
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
1,002
|
|
|
$
|
1,020
|
|
|
$
|
3,167
|
|
|
$
|
3,484
|
|
Interest,
net
|
120
|
|
|
110
|
|
|
477
|
|
|
460
|
|
Provision for income
tax, net
|
183
|
|
|
194
|
|
|
571
|
|
|
718
|
|
Depreciation of
property, plant and equipment
|
147
|
|
|
114
|
|
|
523
|
|
|
466
|
|
Amortization of
intangible and finance lease right-of-use assets
|
88
|
|
|
90
|
|
|
355
|
|
|
363
|
|
Earnings before
interest, taxes, depreciation and amortization (g)
|
$
|
1,540
|
|
|
$
|
1,528
|
|
|
$
|
5,093
|
|
|
$
|
5,491
|
|
|
|
|
|
|
|
|
|
Free cash flow
from operations:
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
2,562
|
|
|
$
|
2,394
|
|
|
$
|
3,858
|
|
|
$
|
2,981
|
|
Capital
expenditures
|
(345)
|
|
|
(381)
|
|
|
(967)
|
|
|
(987)
|
|
Free cash flow from
operations (h)
|
$
|
2,217
|
|
|
$
|
2,013
|
|
|
$
|
2,891
|
|
|
$
|
1,994
|
|
|
|
|
|
|
|
|
|
Return on invested
capital:
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
$
|
3,167
|
|
|
$
|
3,484
|
|
After-tax interest
expense
|
|
|
|
|
386
|
|
|
373
|
|
After-tax
amortization expense
|
|
|
|
|
280
|
|
|
287
|
|
Net operating profit
after taxes
|
|
|
|
|
3,833
|
|
|
4,144
|
|
Average invested
capital
|
|
|
|
|
32,431
|
|
|
29,620
|
|
Return on invested
capital (i)
|
|
|
|
|
11.8
|
%
|
|
14.0
|
%
|
|
Notes describing the
calculation of the other financial information and a reconciliation
of non-GAAP financial measures are on the following
page.
|
|
|
*
|
Prior-period
information has been restated for the retrospective application of
a change in accounting principle related to the amortization of
actuarial gains and losses for our qualified U.S. government
pension plans, which we adopted in the fourth quarter of
2020.
|
EXHIBIT H
(Cont.)
|
ADDITIONAL
FINANCIAL INFORMATION - (UNAUDITED)
|
DOLLARS IN
MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
|
(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 net earnings divided by revenue.
|
|
|
(f)
|
Return on equity is
calculated by dividing net earnings 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 net earnings. The most directly comparable GAAP
measure to EBITDA is net earnings.
|
|
|
(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
net earnings 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 net earnings.
|
EXHIBIT
I
|
BACKLOG -
(UNAUDITED)
|
DOLLARS IN
MILLIONS
|
|
|
|
Funded
|
|
Unfunded
|
|
Total
Backlog
|
|
Estimated
Potential
Contract Value (a)
|
|
Total
Estimated
Contract Value
|
Fourth Quarter
2020:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
11,308
|
|
|
$
|
318
|
|
|
$
|
11,626
|
|
|
$
|
2,800
|
|
|
$
|
14,426
|
|
Marine
Systems
|
|
23,646
|
|
|
26,336
|
|
|
49,982
|
|
|
4,876
|
|
|
54,858
|
|
Combat
Systems
|
|
14,341
|
|
|
226
|
|
|
14,567
|
|
|
9,774
|
|
|
24,341
|
|
Technologies
|
|
9,488
|
|
|
3,826
|
|
|
13,314
|
|
|
27,727
|
|
|
41,041
|
|
Total
|
|
$
|
58,783
|
|
|
$
|
30,706
|
|
|
$
|
89,489
|
|
|
$
|
45,177
|
|
|
$
|
134,666
|
|
Third Quarter
2020:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
11,640
|
|
|
$
|
324
|
|
|
$
|
11,964
|
|
|
$
|
2,888
|
|
|
$
|
14,852
|
|
Marine
Systems
|
|
23,958
|
|
|
17,124
|
|
|
41,082
|
|
|
14,666
|
|
|
55,748
|
|
Combat
Systems
|
|
14,511
|
|
|
200
|
|
|
14,711
|
|
|
6,593
|
|
|
21,304
|
|
Technologies
(b)
|
|
10,112
|
|
|
3,651
|
|
|
13,763
|
|
|
26,242
|
|
|
40,005
|
|
Total
|
|
$
|
60,221
|
|
|
$
|
21,299
|
|
|
$
|
81,520
|
|
|
$
|
50,389
|
|
|
$
|
131,909
|
|
Fourth Quarter
2019:
|
|
|
|
|
|
|
|
|
|
|
Aerospace
|
|
$
|
13,168
|
|
|
$
|
181
|
|
|
$
|
13,349
|
|
|
$
|
2,989
|
|
|
$
|
16,338
|
|
Marine
Systems
|
|
20,012
|
|
|
24,175
|
|
|
44,187
|
|
|
5,453
|
|
|
49,640
|
|
Combat
Systems
|
|
14,474
|
|
|
439
|
|
|
14,913
|
|
|
4,322
|
|
|
19,235
|
|
Technologies
(b)
|
|
9,876
|
|
|
4,620
|
|
|
14,496
|
|
|
26,485
|
|
|
40,981
|
|
Total
|
|
$
|
57,530
|
|
|
$
|
29,415
|
|
|
$
|
86,945
|
|
|
$
|
39,249
|
|
|
$
|
126,194
|
|
|
|
(a)
|
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.
|
|
|
(b)
|
Effective December
31, 2020, we have reorganized our Mission Systems and Information
Technology business units into a single reporting unit —
Technologies — to better reflect the way we are running the
business, the overlap and commonality of customers, and customer
demand for end-to-end solutions melding technology, hardware and
software.
|
EXHIBIT
I-1
|
BACKLOG -
(UNAUDITED)
|
DOLLARS IN
MILLIONS
|
https://mma.prnewswire.com/media/1427217/Exhibit_I_1.jpg
EXHIBIT
I-2
|
BACKLOG BY SEGMENT
- (UNAUDITED)
|
DOLLARS
IN MILLIONS
|
https://mma.prnewswire.com/media/1427218/EXHIBIT_I_2_Aerospace.jpg
https://mma.prnewswire.com/media/1427219/EXHIBIT_I_2_Marine_Systems.jpg
https://mma.prnewswire.com/media/1427220/EXHIBIT_I_2_Combat_Systems.jpg
https://mma.prnewswire.com/media/1427221/EXHIBIT_I_2_Technologies.jpg
https://mma.prnewswire.com/media/1427222/EXHIBIT_I_2_Segment_Key.jpg
EXHIBIT
J
|
FOURTH QUARTER
2020 SIGNIFICANT ORDERS - (UNAUDITED)
|
DOLLARS IN
MILLIONS
|
We received the following significant contract awards during the
fourth quarter of 2020:
Marine Systems:
- $9.5 billion from the U.S. Navy
for construction of the first two Columbia-class submarines, as
well as associated design and engineering support.
- $375 from the Navy to provide
lead yard services for the Virginia-class submarine program.
- $265 from the Navy to provide
maintenance and repair services for the San Antonio-class
amphibious transport dock, Whidbey Island-class dock landing ship
and Ticonderoga-class guided-missile cruiser programs.
- $215 from the Navy to provide
engineering, technical, design and planning yard support services
for operational strategic and attack submarines.
- $95 from the Navy to provide
ongoing planning yard services for the Arleigh Burke-class (DDG-51)
guided-missile destroyer program.
- $60 from the Navy to produce a
large vertical array fixture for Navy submarine acoustic detection
efforts.
Combat Systems:
- $405 from the U.S. Army to
upgrade Abrams tanks to the M1A2 System Enhancement Package Version
3 (SEPv3) configuration. The contract has a maximum potential value
of $4.3 billion.
- $230 from the Army to produce
Stryker Initial Maneuver Short-Range Air Defense (IM-SHORAD)
vehicles. The contract has a maximum potential value of
$1.2 billion.
- A contract from the Army to provide maintenance, training and
support services for the Stryker fleet. The contract has a maximum
potential value of $430.
- $215 from the Canadian government
for various munitions and ordnance.
- $175 from the Army for various
munitions and ordnance.
- $80 for the production of Pandur
6x6 wheeled combat vehicles for the Austrian Federal Ministry of
Defence.
- $55 to produce ASCOD tracked
combat vehicles for an international customer.
Technologies:
- The Defense Enterprise Office Solutions (DEOS) contract from
the General Services Administration in partnership with the
Department of Defense (DoD) and Defense Information Systems Agency
(DISA) to stand up cloud environments and support the migration of
over 3.2 million existing DoD Office 365 users to the cloud. The
contract has a maximum potential value of $4.4 billion.
- An IDIQ award from the U.S. Department of State to provide
overseas consular services to support visa processing and other
functions for U.S. embassies and consultants under the Global
Support Strategy (GSS) program. The program has a maximum potential
contract value of $3.3 billion among
three awardees.
- A contract to provide enterprise information technology,
communications and mission command support services to U.S. Army
Europe. The contract has a maximum
potential value of $695.
- $620 for several key contracts
for classified customers.
- $110 to develop and deliver a
digital engineering environment for the U.S. Air Force.
- $105 from the National
Geospatial-Intelligence Agency (NGA) for network storage and data
center services.
- $90 from the Navy to provide
sustainment services for the Navy's next-generation Mobile User
Objective System (MUOS) satellite communications system.
|
EXHIBIT
K
|
AEROSPACE
SUPPLEMENTAL DATA - (UNAUDITED)
|
|
|
|
Fourth
Quarter
|
|
Twelve
Months
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Gulfstream
Aircraft Deliveries (units):
|
|
|
|
|
|
|
|
|
Large-cabin
aircraft
|
|
34
|
|
|
35
|
|
|
105
|
|
|
114
|
|
Mid-cabin
aircraft
|
|
6
|
|
|
9
|
|
|
22
|
|
|
33
|
|
Total
|
|
40
|
|
|
44
|
|
|
127
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
Aerospace
Book-to-Bill:
|
|
|
|
|
|
|
|
|
Orders*
|
|
$
|
2,347
|
|
|
$
|
4,652
|
|
|
$
|
7,091
|
|
|
$
|
11,674
|
|
Revenue (excluding
pre-owned aircraft sales)
|
|
2,435
|
|
|
2,774
|
|
|
8,075
|
|
|
9,509
|
|
Book-to-Bill
Ratio
|
|
0.96x
|
|
|
1.68x
|
|
|
0.88x
|
|
|
1.23x
|
|
|
|
*
|
Does not include
customer defaults, liquidated damages, cancellations, foreign
exchange fluctuations and other backlog adjustments.
|
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SOURCE General Dynamics