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) |
¨ | 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 |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits (furnished only) |
99.1 | General Dynamics press release dated April 29, 2015, with respect to the company’s financial results for the quarter ended April 5, 2015. |
GENERAL DYNAMICS CORPORATION | |||
by | /s/ Kimberly A. Kuryea | ||
Kimberly A. Kuryea Vice President and Controller (Authorized Officer and Chief Accounting Officer) | |||
Dated: April 29, 2015 |
2941 Fairview Park Drive | ||
Suite 100 | ||
Falls Church, VA 22042-4513 www.generaldynamics.com | News |
• | Revenues up 7.1% to $7.8 billion |
• | Operating earnings up 17.5% to $1.03 billion |
• | Earnings from continuing operations up 20.1% to $716 million |
• | Earnings per fully diluted share up 25.1% to $2.14 |
First Quarter | Variance | |||||||||||||
2015 | 2014 | $ | % | |||||||||||
Revenues | $ | 7,784 | $ | 7,265 | $ | 519 | 7.1 | % | ||||||
Operating costs and expenses | 6,757 | 6,391 | (366 | ) | ||||||||||
Operating earnings | 1,027 | 874 | 153 | 17.5 | % | |||||||||
Interest, net | (21 | ) | (22 | ) | 1 | |||||||||
Other, net | 3 | 1 | 2 | |||||||||||
Earnings before income tax | 1,009 | 853 | $ | 156 | 18.3 | % | ||||||||
Provision for income tax, net | 293 | 257 | (36 | ) | ||||||||||
Earnings from continuing operations | $ | 716 | $ | 596 | $ | 120 | 20.1 | % | ||||||
Discontinued operations, net of tax | — | (1 | ) | 1 | ||||||||||
Net earnings | $ | 716 | $ | 595 | 121 | 20.3 | % | |||||||
Earnings per share—basic | ||||||||||||||
Continuing operations | $ | 2.18 | $ | 1.74 | $ | 0.44 | 25.3 | % | ||||||
Discontinued operations | $ | — | $ | — | $ | — | ||||||||
Net earnings | $ | 2.18 | $ | 1.74 | $ | 0.44 | 25.3 | % | ||||||
Basic weighted average shares outstanding | 329.2 | 342.2 | ||||||||||||
Earnings per share—diluted | ||||||||||||||
Continuing operations | $ | 2.14 | $ | 1.71 | $ | 0.43 | 25.1 | % | ||||||
Discontinued operations | $ | — | $ | — | $ | — | ||||||||
Net earnings | $ | 2.14 | $ | 1.71 | $ | 0.43 | 25.1 | % | ||||||
Diluted weighted average shares outstanding | 334.7 | 347.2 |
First Quarter | Variance | |||||||||||||
2015 | 2014 | $ | % | |||||||||||
Revenues: | ||||||||||||||
Aerospace | $ | 2,108 | $ | 2,125 | $ | (17 | ) | (0.8 | )% | |||||
Combat Systems | 1,363 | 1,258 | 105 | 8.3 | % | |||||||||
Information Systems and Technology | 2,370 | 2,281 | 89 | 3.9 | % | |||||||||
Marine Systems | 1,943 | 1,601 | 342 | 21.4 | % | |||||||||
Total | $ | 7,784 | $ | 7,265 | $ | 519 | 7.1 | % | ||||||
Operating earnings: | ||||||||||||||
Aerospace | $ | 431 | $ | 404 | $ | 27 | 6.7 | % | ||||||
Combat Systems | 204 | 139 | 65 | 46.8 | % | |||||||||
Information Systems and Technology | 217 | 183 | 34 | 18.6 | % | |||||||||
Marine Systems | 188 | 166 | 22 | 13.3 | % | |||||||||
Corporate | (13 | ) | (18 | ) | 5 | 27.8 | % | |||||||
Total | $ | 1,027 | $ | 874 | $ | 153 | 17.5 | % | ||||||
Operating margins: | ||||||||||||||
Aerospace | 20.4 | % | 19.0 | % | ||||||||||
Combat Systems | 15.0 | % | 11.0 | % | ||||||||||
Information Systems and Technology | 9.2 | % | 8.0 | % | ||||||||||
Marine Systems | 9.7 | % | 10.4 | % | ||||||||||
Total | 13.2 | % | 12.0 | % |
First Quarter | Compound Annual Growth Rate | |||||||||||||
2013 | 2014 | 2015 | ||||||||||||
Revenues | $ | 7,314 | $ | 7,265 | $ | 7,784 | 3.2 | % | ||||||
Operating earnings | 843 | 874 | 1,027 | 10.4 | % | |||||||||
Operating margins | 11.5 | % | 12.0 | % | 13.2 | % | +170 bps | |||||||
Diluted earnings per share - continuing operations | $ | 1.62 | $ | 1.71 | $ | 2.14 | 14.9 | % |
(Unaudited) | |||||||
April 5, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 4,412 | $ | 4,388 | |||
Accounts receivable | 3,661 | 4,050 | |||||
Contracts in process | 4,444 | 4,591 | |||||
Inventories | 3,397 | 3,221 | |||||
Other current assets | 438 | 1,157 | |||||
Total current assets | 16,352 | 17,407 | |||||
Noncurrent assets: | |||||||
Property, plant and equipment, net | 3,323 | 3,329 | |||||
Intangible assets, net | 893 | 912 | |||||
Goodwill | 11,699 | 11,731 | |||||
Other assets | 2,118 | 1,976 | |||||
Total noncurrent assets | 18,033 | 17,948 | |||||
Total assets | $ | 34,385 | $ | 35,355 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt and current portion of long-term debt | $ | 1 | $ | 501 | |||
Accounts payable | 2,266 | 2,057 | |||||
Customer advances and deposits | 6,487 | 7,335 | |||||
Other current liabilities | 4,358 | 3,858 | |||||
Total current liabilities | 13,112 | 13,751 | |||||
Noncurrent liabilities: | |||||||
Long-term debt | 3,410 | 3,410 | |||||
Other liabilities | 6,343 | 6,365 | |||||
Total noncurrent liabilities | 9,753 | 9,775 | |||||
Shareholders' equity: | |||||||
Common stock | 482 | 482 | |||||
Surplus | 2,588 | 2,548 | |||||
Retained earnings | 21,615 | 21,127 | |||||
Treasury stock | (9,949 | ) | (9,396 | ) | |||
Accumulated other comprehensive loss | (3,216 | ) | (2,932 | ) | |||
Total shareholders' equity | 11,520 | 11,829 | |||||
Total liabilities and shareholders' equity | $ | 34,385 | $ | 35,355 |
Three Months Ended | ||||||||
April 5, 2015 | March 30, 2014 | |||||||
Cash flows from operating activities—continuing operations: | ||||||||
Net earnings | $ | 716 | $ | 595 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation of property, plant and equipment | 94 | 95 | ||||||
Amortization of intangible assets | 30 | 30 | ||||||
Stock-based compensation expense | 40 | 27 | ||||||
Excess tax benefit from stock-based compensation | (30 | ) | (32 | ) | ||||
Deferred income tax provision | (8 | ) | 36 | |||||
Discontinued operations, net of tax | — | 1 | ||||||
(Increase) decrease in assets, net of effects of business acquisitions: | ||||||||
Accounts receivable | 388 | 119 | ||||||
Contracts in process | 152 | (94 | ) | |||||
Inventories | (183 | ) | (21 | ) | ||||
Increase (decrease) in liabilities, net of effects of business acquisitions: | ||||||||
Accounts payable | 210 | (29 | ) | |||||
Customer advances and deposits | (871 | ) | (165 | ) | ||||
Income taxes payable | 251 | 150 | ||||||
Other current liabilities | (38 | ) | (173 | ) | ||||
Other, net | (6 | ) | (117 | ) | ||||
Net cash provided by operating activities | 745 | 422 | ||||||
Cash flows from investing activities—continuing operations: | ||||||||
Maturities of held-to-maturity securities | 500 | — | ||||||
Capital expenditures | (98 | ) | (87 | ) | ||||
Other, net | 94 | 10 | ||||||
Net cash provided (used) by investing activities | 496 | (77 | ) | |||||
Cash flows from financing activities—continuing operations: | ||||||||
Purchases of common stock | (620 | ) | (1,430 | ) | ||||
Repayment of fixed-rate notes | (500 | ) | — | |||||
Dividends paid | (206 | ) | (198 | ) | ||||
Proceeds from option exercises | 87 | 249 | ||||||
Other, net | 30 | 32 | ||||||
Net cash used by financing activities | (1,209 | ) | (1,347 | ) | ||||
Net cash used by discontinued operations | (8 | ) | (3 | ) | ||||
Net increase (decrease) in cash and equivalents | 24 | (1,005 | ) | |||||
Cash and equivalents at beginning of period | 4,388 | 5,301 | ||||||
Cash and equivalents at end of period | $ | 4,412 | $ | 4,296 |
First Quarter 2015 | First Quarter 2014 | |||||||
Other Financial Information(a): | ||||||||
Debt-to-equity (b) | 29.6 | % | 28.6 | % | ||||
Debt-to-capital (c) | 22.8 | % | 22.2 | % | ||||
Book value per share (d) | $ | 35.04 | $ | 39.93 | ||||
Total taxes paid | $ | 53 | $ | 67 | ||||
Company-sponsored research and development (e) | $ | 96 | $ | 86 | ||||
Shares outstanding | 328,732,777 | 342,860,725 | ||||||
Non-GAAP Financial Measures(a): | ||||||||
Free cash flow from operations: | ||||||||
Net cash provided by operating activities | $ | 745 | $ | 422 | ||||
Capital expenditures | (98 | ) | (87 | ) | ||||
Free cash flow from operations (f) | $ | 647 | $ | 335 |
(a) | Prior period information has been restated to reflect our axle business in discontinued operations. |
(b) | Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period. |
(c) | 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. |
(d) | Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period. |
(e) | Includes independent research and development and Gulfstream product-development costs. |
(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. |
Funded | Unfunded | Total Backlog | Estimated Potential Contract Value* | Total Potential Contract Value | ||||||||||||||||
First Quarter 2015 | ||||||||||||||||||||
Aerospace | $ | 12,947 | $ | 147 | $ | 13,094 | $ | 2,699 | $ | 15,793 | ||||||||||
Combat Systems | 18,942 | 462 | 19,404 | 5,459 | 24,863 | |||||||||||||||
Information Systems and Technology | 6,842 | 1,815 | 8,657 | 15,296 | 23,953 | |||||||||||||||
Marine Systems | 17,248 | 12,138 | 29,386 | 2,143 | 31,529 | |||||||||||||||
Total | $ | 55,979 | $ | 14,562 | $ | 70,541 | $ | 25,597 | $ | 96,138 | ||||||||||
Fourth Quarter 2014 | ||||||||||||||||||||
Aerospace | $ | 13,115 | $ | 117 | $ | 13,232 | $ | 2,734 | $ | 15,966 | ||||||||||
Combat Systems | 19,292 | 506 | 19,798 | 5,522 | 25,320 | |||||||||||||||
Information Systems and Technology | 7,070 | 1,539 | 8,609 | 16,115 | 24,724 | |||||||||||||||
Marine Systems | 13,452 | 17,319 | 30,771 | 2,311 | 33,082 | |||||||||||||||
Total | $ | 52,929 | $ | 19,481 | $ | 72,410 | $ | 26,682 | $ | 99,092 | ||||||||||
First Quarter 2014 | ||||||||||||||||||||
Aerospace | $ | 12,747 | $ | 199 | $ | 12,946 | $ | 2,000 | $ | 14,946 | ||||||||||
Combat Systems | 15,870 | 885 | 16,755 | 8,143 | 24,898 | |||||||||||||||
Information Systems and Technology | 7,134 | 1,343 | 8,477 | 16,494 | 24,971 | |||||||||||||||
Marine Systems | 12,447 | 5,248 | 17,695 | 2,046 | 19,741 | |||||||||||||||
Total | $ | 48,198 | $ | 7,675 | $ | 55,873 | $ | 28,683 | $ | 84,556 |
* | 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. |
• | $410 from the U.S. Army under the Stryker wheeled armored vehicle program for production of 107 double-V-hulled vehicles and contractor logistics support. |
• | $220 from the Government of Canada for the integration of an enhanced surveillance suite onto Canadian LAV III vehicles. |
• | An IDIQ contract from the Army to supply 155mm ammunition. The program has a maximum potential value of $300 over five years. |
• | $175 from the National Geospatial-Intelligence Agency (NGA) to consolidate NGA's operations from six locations to one stand-alone location at New Campus East (NCE). |
• | $155 for combat and seaframe control systems on two U.S. Navy Littoral Combat Ships (LCS). |
• | $70 from the Army for ruggedized computing equipment under the Common Hardware Systems-4 (CHS-4) program. |
• | $70 from the U.S. Department of State to provide supply chain management services. |
• | An IDIQ contract to manage the Army's Live Training Transformation (LT2) live training systems, including nearly 300 training ranges worldwide. The program has a maximum potential value of $415 over five years. |
• | $180 from the U.S. Navy to provide engineering and technical support for nuclear submarines. |
• | $55 from the Navy for the design and development of moored training ship components. |
First Quarter | |||||
2015 | 2014 | ||||
Gulfstream Green Deliveries (units): | |||||
Large-cabin aircraft | 27 | 29 | |||
Mid-cabin aircraft | 7 | 6 | |||
Total | 34 | 35 | |||
Gulfstream Outfitted Deliveries (units): | |||||
Large-cabin aircraft | 25 | 33 | |||
Mid-cabin aircraft | 7 | 6 | |||
Total | 32 | 39 | |||
Pre-owned Deliveries (units): | 1 | — |