General Dynamics Reports First-Quarter 2013 Results

             General Dynamics Reports First-Quarter 2013 Results

- Diluted EPS increases 3.2 percent

- Cash generation, margin performance underscore commitment to execution

PR Newswire

FALLS CHURCH, Va., April 24, 2013

FALLS CHURCH, Va., April 24, 2013 /PRNewswire/ --General Dynamics (NYSE: GD)
today reported first-quarter 2013 net earnings of $571 million, or $1.62 per
share on a diluted basis, compared to 2012 first-quarter net earnings of $564
million, or $1.57 per diluted share. First-quarter 2013 revenues were $7.4
billion.

Margins

Company-wide operating margins for the first quarter of 2013 were 11.4
percent, compared to 11.3 percent in first-quarter 2012.

Cash

Net cash provided by operating activities in the quarter totaled $504
million. Free cash flow from operations, defined as net cash provided by
operating activities less capital expenditures, was $429 million in
first-quarter 2013. In comparison, for the first quarter of 2012, net cash
provided by operating activities was $414 million, and free cash flow from
operations was $324 million.

Capital Deployment

The company repurchased 1 million outstanding shares on the open market in the
first quarter, at an average price per share of $70. In addition, in March,
the board of directors increased the company's quarterly dividend by 10
percent to $0.56 per share. This represents the 16th consecutive annual
dividend increase by the company.

Backlog

Funded backlog at the end of first-quarter 2013 was $42.4 billion, and total
backlog was $48.5 billion. Significant awards received in the quarter include
a $55 million order for production of Hydra-70 rockets, a $160 million
contract for two additional combat and seaframe control systems for U.S. Navy
Littoral Combat Ships and an award valued at more than $100 million for
infrastructure support and modernization of a new government complex in
northern Virginia.

In addition to total backlog, estimated potential contract value was $25.2
billion, representing management's estimate of value in unfunded indefinite
delivery, indefinite quantity (IDIQ) contracts and unexercised options. Total
potential contract value, the sum of all backlog components, was $73.6 billion
at the end of the quarter.

"General Dynamics' first-quarter performance reflects our continued focus on
operations, cost improvement and cash generation, as well as our commitment to
meeting our customers' requirements," said Phebe N. Novakovic, chairman and
chief executive officer. "This is a strong start toward achieving our
objectives for the year."

General Dynamics, headquartered in Falls Church, Virginia, employs
approximately 89,900 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.

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 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 first-quarter
securities analyst conference call, scheduled for 9 a.m. EDT on Wednesday,
April 24, 2013. 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 12 p.m. EDT on April 24 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 76133512. The phone replay will be
available from 12 p.m. April 24 through May 1, 2013.



EXHIBIT A
CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
                               First Quarter               Variance
                               2012           2013         $            %
Revenues                       $          $         $        (2.3)%
                               7,579         7,404       (175)
Operating costs and expenses   6,719          6,557        162
Operating earnings             860            847          (13)         (1.5)%
Interest, net                  (39)           (23)         16
Earnings before income taxes   821            824          3            0.4 %
Provision for income taxes     257            253          4
Net earnings                   $        $       $       1.2 %
                               564            571           7
Earnings per share - basic     $         $       $        2.5 %
                               1.58          1.62         0.04
Basic weighted average shares  357.0          351.9
outstanding
Earnings per share - diluted   $         $       $        3.2 %
                               1.57          1.62         0.05
Diluted weighted average       359.4          353.5
shares outstanding



EXHIBIT B
REVENUES AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
                              First Quarter               Variance
                              2012           2013         $            %
Revenues:
Aerospace                     $          $         $       9.6 %
                              1,623         1,778       155
Combat Systems                1,911          1,553        (358)        (18.7)%
Marine Systems                1,605          1,626        21           1.3 %
Information Systems and       2,440          2,447        7            0.3 %
Technology
Total                         $          $         $        (2.3)%
                              7,579         7,404       (175)
Operating earnings:
Aerospace                     $        $       $       14.4 %
                              271            310          39
Combat Systems                203            215          12           5.9 %
Marine Systems                185            159          (26)         (14.1)%
Information Systems and       218            185          (33)         (15.1)%
Technology
Corporate                     (17)           (22)         (5)          (29.4)%
Total                         $        $       $       (1.5)%
                              860            847         (13)
Operating margins:
Aerospace                     16.7 %         17.4 %
Combat Systems                10.6 %         13.8 %
Marine Systems                11.5 %         9.8 %
Information Systems and       8.9 %          7.6 %
Technology
Total                         11.3 %         11.4 %



EXHIBIT C
PRELIMINARY CONSOLIDATED BALANCE SHEETS
DOLLARS IN MILLIONS
                                                       (Unaudited)
                                December 31, 2012      March 31, 2013
ASSETS
Current assets:
Cash and equivalents            $            $           
                                  3,296              3,745
Accounts receivable             4,204                  4,261
Contracts in process            4,964                  5,073
Inventories                     2,776                  2,863
Other current assets            504                    408
Total current assets            15,744                 16,350
Noncurrent assets:
Property, plant and equipment,  3,403                  3,374
net
Intangible assets, net          1,383                  1,310
Goodwill                        12,048                 11,934
Other assets                    1,731                  1,641
Total noncurrent assets         18,565                 18,259
Total assets                    $            $          
                                 34,309               34,609
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable                $            $           
                                  2,469              2,503
Customer advances and deposits  6,042                  5,958
Other current liabilities       3,109                  3,308
Total current liabilities       11,620                 11,769
Noncurrent liabilities:
Long-term debt                  3,908                  3,909
Other liabilities               7,391                  7,349
Total noncurrent liabilities    11,299                 11,258
Shareholders' equity:
Common stock                    482                    482
Surplus                         1,988                  1,961
Retained earnings               17,860                 18,234
Treasury stock                  (6,165)                (6,201)
Accumulated other              (2,775)                (2,894)
comprehensive loss
Total shareholders' equity      11,390                 11,582
Total liabilities and           $            $          
shareholders' equity             34,309               34,609



EXHIBIT D
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS
                                            Three Months Ended
                                            April 1, 2012      March 31, 2013
Cash flows from operating activities:
Net earnings                                $          $       
                                             564                  571
Adjustments to reconcile net earnings to
net cash provided by

 operating activities:
Depreciation of property, plant and         97                 95
equipment
Amortization of intangible assets           57                 47
Stock-based compensation expense            35                 31
Excess tax benefit from stock-based         (21)               (12)
compensation
Deferred income tax provision               3                  11
(Increase) decrease in assets, net of
effects of business acquisitions:
Accounts receivable                         (233)              (57)
Contracts in process                        162                (98)
Inventories                                 (114)              (95)
Increase (decrease) in liabilities, net of
effects of business acquisitions:
Accounts payable                            (387)              34
Customer advances and deposits              205                (94)
Income taxes payable                        188                217
Other current liabilities                   (269)              (176)
Other, net                                  127                30
Net cash provided by operating activities   414                504
Cash flows from investing activities:
Capital expenditures                        (90)               (75)
Purchases of available-for-sale securities  (65)               (29)
Purchases of held-to-maturity securities    (126)              -
Other, net                                  17                 28
Net cash used by investing activities       (264)              (76)
Cash flows from financing activities:
Proceeds from option exercises              78                 12
Dividends paid                              (169)              -
Purchases of common stock                   (76)               -
Other, net                                  1                  12
Net cash (used) provided by financing       (166)              24
activities
Net cash used by discontinued operations    (1)                (3)
Net (decrease) increase in cash and         (17)               449
equivalents
Cash and equivalents at beginning of        2,649              3,296
period
Cash and equivalents at end of period       $          $       
                                            2,632                  3,745



EXHIBIT E
PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS
                                    First Quarter          First Quarter
                                    2012                   2013
Other Financial Information:
Debt-to-equity (a)                  28.2%                  33.8%
Debt-to-capital (b)                 22.0%                  25.2%
Book value per share (c)            $             $       
                                      38.44             32.79
Total taxes paid                    $             $        
                                         82             26
Company-sponsored research and      $             $        
development (d)                         152             126
Employment                         92,900                 89,900
Sales per employee (e)              $             $     
                                    351,400               338,000
Shares outstanding                  360,399,149            353,186,716
Non-GAAP Financial Measures:
Free cash flow from operations:
Net cash provided by operating      $             $        
activities                              414             504
Capital expenditures               (90)                   (75)
Free cash flow from operations (f)  $             $        
                                        324             429
(a) Debt-to-equity ratio is calculated as total debt divided by total equity
as of the end of the period.
(b) 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.
(c) Book value per share is calculated as total equity divided by total
outstanding shares as of the end of the
period.
(d) Includes independent research and development and bid and proposal costs
and Gulfstream product-
development costs.
(e) Sales per employee is calculated by dividing revenues for the latest
12-month period by our average number
of employees during that period.
(f) 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.



EXHIBIT F
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS
                                                     Estimated
                                                                   Total
                                         Total       Potential     Potential
First Quarter
2013             Funded    Unfunded    Backlog    Contract      Contract
                                                     Value*        Value
Aerospace        $        $        $          $        $    
                 15,029       197    15,226          -      15,226
Combat Systems   6,677      1,180        7,857       3,038         10,895
Marine Systems   12,551     3,108        15,659      2,324         17,983
Information
Systems and      8,158      1,551        9,709       19,811        29,520

Technology
Total            $         $        $ 48,451    $        $    
                 42,415    6,036                   25,173         73,624
Fourth Quarter
2012
Aerospace        $        $        $          $        $    
                 15,458       209    15,667           -    15,667
Combat Systems   7,442      1,298        8,740       2,794         11,534
Marine Systems   13,495     3,606        17,101      3,047         20,148
Information
Systems and      8,130      1,643        9,773       21,009        30,782

Technology
Total            $         $        $ 51,281    $        $    
                 44,525    6,756                   26,850         78,131
First Quarter
2012
Aerospace        $        $        $          $        $    
                 16,718       266    16,984           -    16,984
Combat Systems   9,623      1,042        10,665      3,473         14,138
Marine Systems   12,261     5,754        18,015      1,199         19,214
Information      
Systems and                 1,913        9,562       22,256        31,818
                 7,649
Technology
Total            $         $        $ 55,226    $        $    
                 46,251    8,975                   26,928         82,154
* 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 options to purchase new aircraft and long-term
agreements with fleet customers, as applicable. Because the value in the
unfunded IDIQ arrangements is subject to the customer's future exercise of an
indeterminate quantity of 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.



EXHIBIT G
FIRST QUARTER 2013 SIGNIFICANT ORDERS - (UNAUDITED)
DOLLARS IN MILLIONS

We received the following significant contract orders during the first quarter
of 2013:

Combat Systems

  o$55 from the U.S. Army for the production of Hydra-70 rockets.

Marine Systems

  oAn indefinite delivery, indefinite quantity (IDIQ) contract from the U.S.
    Navy to perform submarine safety and maintenance work. The program has a
    maximum potential value of $215 over five years.

Information Systems and Technology

  o$160 for commercial wireless network systems and support.
  o$160 for combat and seaframe control systems on two Navy Littoral Combat
    Ships (LCS).
  o$105 for the National Geospatial-Intelligence Agency's New Campus East
    (NCE) infrastructure support and modernization program.
  o$85 from the U.S. Department of Education to assist in the implementation
    and operation of the Federal Student Aid Information Center.
  o$75 to provide advanced communication services to the Canadian Army.
  o$75 from the Army under the Warfighter Information Network-Tactical
    (WIN-T) program for Increment 2 equipment production and training.
  o$70 from the Army for ruggedized computing equipment under the Common
    Hardware Systems-4 (CHS-4) program.
  o$60 from the U.S. Air Force for networking and computing products and
    support under the Network-Centric Solutions (NETCENTS) program.
  o$60 for the United Kingdom's Bowman communications system for long-term
    support and enhancement activities for the program.



EXHIBIT H
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
                                          First Quarter
                                          2012    2013
Gulfstream Green Deliveries (units):
Large aircraft                            26      25
Mid-size aircraft                         2       5
Total                                     28      30
Gulfstream Outfitted Deliveries (units):
Large aircraft                            17      25
Mid-size aircraft                         2       4
Total                                     19      29
Pre-owned Deliveries (units):             -       2



SOURCE General Dynamics

Website: http://www.generaldynamics.com
Contact: Media: Rob Doolittle, General Dynamics, (703) 876-3199, or Investors:
Erin Linnihan, General Dynamics, (703) 876-3583
 
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