EX-99.1 2 w67745exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1

     
2941 Fairview Park Drive
Suite 100
Falls Church, VA 22042-4513
www.generaldynamics.com
  News
October 20, 2004
Contact: Rob Doolittle
Tel: 703 876 3199
Fax: 703 876 3555
rdoolitt@generaldynamics.com

General Dynamics Reports Continued Strength
in Third Quarter

    •    EPS grows 21 percent
•    Solid cash flow
•    Stable backlog

FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported $4.8 billion in revenues for the third quarter of 2004, compared to 2003 third-quarter revenues of $4.4 billion. Net earnings were $322 million in the quarter, or $1.60 per share on a fully diluted basis, compared with 2003 third-quarter net earnings of $262 million, or $1.32 per share fully diluted. Net cash provided by operating activities was $309 million for the quarter. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $249 million.

Funded backlog at the end of the third quarter was $25.3 billion, and total backlog was $40.3 billion, compared with $26.4 billion and $41.1 billion, respectively, at the end of the second quarter of 2004.

“General Dynamics generated strong results for the quarter in both absolute and relative terms,” said Nicholas D. Chabraja, General Dynamics chairman and chief executive officer. “Operating earnings increased over the year-ago period in all of our segments. Further, our operating earnings rate improved this quarter as it has in each of the last four quarters. In the Aerospace group, earnings more than doubled over the third quarter of 2003, based on improving market conditions, continuing cost improvement and tighter control of pre-owned activity. Combat Systems improved margins on a modest increase in revenue, and the Information Systems and Technology group continued to generate positive returns. Compared to the same period last year, Marine Systems also improved. However, the group’s margin rate declined relative to earlier quarters this year as a result of cost growth in our commercial tanker program during the period,” Chabraja said.

“Our backlog – both funded and unfunded – remained strong, and net cash continues to approximate net earnings,” Chabraja said.

– more –

 

 

 

General Dynamics, headquartered in Falls Church, Virginia, employs approximately 71,600 people worldwide and anticipates 2004 revenue in excess of $19 billion. The company is a market leader in mission-critical information systems and technologies; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and business aviation.

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, our Annual Report on Form 10-K and our Forms 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 third-quarter security analyst conference call, scheduled for 11 a.m. Eastern Time on Wednesday, October 20, 2004. Those accessing the webcast will be able to listen to management’s discussion of the third quarter, as well as the question-and-answer session with security analysts.

The webcast will be a listen-only audio broadcast, available at www.generaldynamics.com. A Real Audio player or Windows Media™ player is required to access the webcast; information about downloading those players is available on the company’s website. An on-demand replay of the webcast will be available by 2 p.m. on October 20 and will continue for 12 months.

To hear a recording of the conference call by telephone, please call 719-457-0820; passcode 980791. It will be available from 2 p.m. on October 20 until midnight on November 2, 2004.

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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

                                 
    Third Quarter   Variance
    2004   2003   $   %
NET SALES
   $ 4,754     $ 4,422     $ 332       7.5 %
OPERATING COSTS AND EXPENSES
     4,255       4,064       (191 )        
 
    
 		      
 		      
 		          
 
                                
OPERATING EARNINGS
     499       358       141       39.4 %
 
                                
Interest, Net
     (33 )     (29 )     (4 )        
Other Income (Expense), Net
     3       (3 )     6          
 
    
 		      
 		      
 		          
 
                                
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     469       326       143       43.9 %
 
                                
Provision for Income Taxes
     146       71       (75 )        
 
    
 		      
 		      
 		          
 
                                
EARNINGS FROM CONTINUING OPERATIONS
   $ 323     $ 255     $ 68       26.7 %
 
    
 		      
 		      
 		          
 
                                
Discontinued Operations, Net of Tax
     (1 )     7       (8 )        
 
    
 		      
 		      
 		          
 
                                
NET EARNINGS
   $ 322     $ 262     $ 60       22.9 %
 
    
 		      
 		      
 		          
 
                                
EARNINGS PER SHARE — BASIC
                                
Continuing Operations
   $ 1.62     $ 1.29     $ 0.33       25.6 %
Discontinued Operations
   $ (0.01 )   $ 0.04     $ (0.05 )        
 
    
 		      
 		      
 		          
Net Earnings
   $ 1.61     $ 1.33     $ 0.28       21.1 %
 
    
 		      
 		      
 		          
 
                                
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)
     200.0       197.3                  
 
    
 		      
 		                  
 
                                
EARNINGS PER SHARE — DILUTED
                                
Continuing Operations
   $ 1.60     $ 1.28     $ 0.32       25.0 %
Discontinued Operations
   $ —     $ 0.04     $ (0.04 )        
 
    
 		      
 		      
 		          
Net Earnings
   $ 1.60     $ 1.32     $ 0.28       21.2 %
 
    
 		      
 		      
 		          
 
                                
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)
     201.9       199.0                  
 
    
 		      
 		                  

Exhibit A
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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

                                 
    Nine Months   Variance
    2004   2003   $   %
NET SALES
   $ 14,266     $ 11,768     $ 2,498       21.2 %
OPERATING COSTS AND EXPENSES
     12,831       10,713       (2,118 )        
 
    
 		      
 		      
 		          
 
                                
OPERATING EARNINGS
     1,435       1,055       380       36.0 %
 
                                
Interest, Net
     (111 )     (59 )     (52 )        
Other (Expense) Income, Net
     (9 )     3       (12 )        
 
    
 		      
 		      
 		          
 
                                
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
     1,315       999       316       31.6 %
 
                                
Provision for Income Taxes
     427       280       (147 )        
 
    
 		      
 		      
 		          
 
                                
EARNINGS FROM CONTINUING OPERATIONS
   $ 888     $ 719     $ 169       23.5 %
 
    
 		      
 		      
 		          
 
                                
Discontinued Operations, Net of Tax
     3       6       (3 )        
 
    
 		      
 		      
 		          
 
                                
NET EARNINGS
   $ 891     $ 725     $ 166       22.9 %
 
    
 		      
 		      
 		          
 
                                
EARNINGS PER SHARE — BASIC
                                
Continuing Operations
   $ 4.46     $ 3.64     $ 0.82       22.5 %
Discontinued Operations
   $ 0.01     $ 0.03     $ (0.02 )        
 
    
 		      
 		      
 		          
Net Earnings
   $ 4.47     $ 3.67     $ 0.80       21.8 %
 
    
 		      
 		      
 		          
 
                                
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING (IN MILLIONS)
     199.2       197.8                  
 
    
 		      
 		                  
 
                                
EARNINGS PER SHARE — DILUTED
                                
Continuing Operations
   $ 4.42     $ 3.61     $ 0.81       22.4 %
Discontinued Operations
   $ 0.01     $ 0.03     $ (0.02 )        
 
    
 		      
 		      
 		          
Net Earnings
   $ 4.43     $ 3.64     $ 0.79       21.7 %
 
    
 		      
 		      
 		          
 
                                
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)
     201.1       199.4                  
 
    
 		      
 		                  

Exhibit B
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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

                                 
    Third Quarter   Variance
    2004   2003   $   %
NET SALES:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 1,657     $ 1,301     $ 356       27.4 %
 
                                
COMBAT SYSTEMS
     1,071       1,045       26       2.5 %
 
                                
MARINE SYSTEMS
     1,154       1,190       (36 )     (3.0 )%
 
                                
AEROSPACE
     798       808       (10 )     (1.2 )%
 
                                
RESOURCES
     74       78       (4 )     (5.1 )%
 
    
 		      
 		      
 		          
 
                                
TOTAL
   $ 4,754     $ 4,422     $ 332       7.5 %
 
    
 		      
 		      
 		          
 
                                
OPERATING EARNINGS:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 176     $ 148     $ 28       18.9 %
 
                                
COMBAT SYSTEMS
     134       116       18       15.5 %
 
                                
MARINE SYSTEMS
     62       36       26       72.2 %
 
                                
AEROSPACE
     117       50       67       134.0 %
 
                                
RESOURCES
     10       8       2       25.0 %
 
    
 		      
 		      
 		          
 
                                
TOTAL
   $ 499     $ 358     $ 141       39.4 %
 
    
 		      
 		      
 		          
 
                                
OPERATING MARGINS:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
     10.6 %     11.4 %                
 
                                
COMBAT SYSTEMS
     12.5 %     11.1 %                
 
                                
MARINE SYSTEMS
     5.4 %     3.0 %                
 
                                
AEROSPACE
     14.7 %     6.2 %                
 
                                
RESOURCES
     13.5 %     10.3 %                
 
                                
TOTAL
     10.5 %     8.1 %                

Exhibit C
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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

                                 
    Nine Months   Variance
    2004   2003   $   %
NET SALES:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 5,084     $ 3,444     $ 1,640       47.6 %
 
                                
COMBAT SYSTEMS
     3,210       2,870       340       11.8 %
 
                                
MARINE SYSTEMS
     3,611       3,149       462       14.7 %
 
                                
AEROSPACE
     2,175       2,117       58       2.7 %
 
                                
RESOURCES
     186       188       (2 )     (1.1 )%
 
    
 		      
 		      
 		          
 
                                
TOTAL
   $ 14,266     $ 11,768     $ 2,498       21.2 %
 
    
 		      
 		      
 		          
 
                                
OPERATING EARNINGS:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 542     $ 401     $ 141       35.2 %
 
                                
COMBAT SYSTEMS
     367       327       40       12.2 %
 
                                
MARINE SYSTEMS
     241       165       76       46.1 %
 
                                
AEROSPACE
     277       135       142       105.2 %
 
                                
RESOURCES
     8       27       (19 )     (70.4 )%
 
    
 		      
 		      
 		          
 
                                
TOTAL
   $ 1,435     $ 1,055     $ 380       36.0 %
 
    
 		      
 		      
 		          
 
                                
OPERATING MARGINS:
                                
 
                                
INFORMATION SYSTEMS AND TECHNOLOGY
     10.7 %     11.6 %                
 
                                
 COMBAT SYSTEMS
     11.4 %     11.4 %                
 
                                
MARINE SYSTEMS
     6.7 %     5.2 %                
 
                                
AEROSPACE
     12.7 %     6.4 %                
 
                                
RESOURCES
     4.3 %     14.4 %                
 
                                
TOTAL
     10.1 %     9.0 %                

Exhibit D
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PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS

                                 
    Third Quarter   Third Quarter
    2004   2003
Cash
   $ 686             $ 697          
 
                                
Short-term Debt
   $ 391             $ 1,234          
Long-term Debt
     3,296               3,310          
 
    
 		              
 		          
Total Debt
   $ 3,687             $ 4,544          
 
    
 		              
 		          
 
                                
Net Debt
   $ 3,001             $ 3,847          
 
                                
Shareholders’ Equity
   $ 6,777             $ 5,586          
 
                                
Debt-to-Equity
     54.4 %             81.3 %        
 
                                
Debt-to-Capital
     35.2 %             44.9 %        
 
                                
Book Value per Share
   $ 33.86             $ 28.27          
 
                                
 
   Quarter   Year-to-date   Quarter   Year-to-date
Net Cash Provided by Operating Activities
   $ 309     $ 999     $ 368     $ 826  
Capital Expenditures
     (60 )     (178 )     (48 )     (115 )
 
    
 		      
 		      
 		      
 		  
Free Cash Flow From Operations (A)
   $ 249     $ 821     $ 320     $ 711  
 
    
 		      
 		      
 		      
 		  
 
                                
Total Taxes Paid
   $ 58             $ 47          
 
                                
Depreciation and Depletion
   $ 61             $ 52          
Intangible Asset Amortization
     24               27          
 
    
 		              
 		          
Depreciation, Depletion and Amortization
   $ 85             $ 79          
 
    
 		              
 		          
 
                                
Company Sponsored R&D (B)
   $ 70             $ 74          
 
                                
Employment
     71,600               66,800          
 
                                
Sales Per Employee
   $ 278,500             $ 275,700          
 
                                
Shares Outstanding
     200,161,655               197,561,240          
 
                                
Weighted Average Shares Outstanding -
                                
Basic
     199,964,232               197,310,727          
Diluted
     201,852,318               199,022,170          

(A)   The company’s management believes free cash flow from operations is a measurement that is useful to investors, because it portrays the company’s ability to generate cash from its core businesses for such purposes as repaying maturing debt, funding business acquisitions and paying dividends. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.
 
(B)   Includes independent research and development and bid and proposal costs and Gulfstream product development costs.

Exhibit E
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BACKLOG (UNAUDITED)
DOLLARS IN MILLIONS

                                         
    Third Quarter 2004
                    Total   IDIQ   Total Estimated
    Funded   Unfunded   Backlog   Contract Value (A)   Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 6,257     $ 1,543     $ 7,800     $ 6,402     $ 14,202  
 
                                        
COMBAT SYSTEMS
     6,351       2,438       8,789       142       8,931  
 
                                        
MARINE SYSTEMS
     8,446       8,688       17,134       —       17,134  
 
                                        
AEROSPACE
     4,066       2,201       6,267       —       6,267  
 
                                        
RESOURCES
     216       57       273       —       273  
 
    
 		      
 		      
 		      
 		      
 		  
 
                                        
TOTAL
   $ 25,336     $ 14,927     $ 40,263     $ 6,544     $ 46,807  
 
    
 		      
 		      
 		      
 		      
 		  
                                         
    Second Quarter 2004
                    Total   IDIQ   Total Estimated
    Funded   Unfunded   Backlog   Contract Value (A)   Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY
   $ 6,172     $ 1,406     $ 7,578     $ 5,826     $ 13,404  
 
                                        
COMBAT SYSTEMS
     6,643       2,497       9,140       152       9,292  
 
                                        
MARINE SYSTEMS
     9,387       8,512       17,899       —       17,899  
 
                                        
AEROSPACE
     3,970       2,257       6,227       —       6,227  
 
                                        
RESOURCES
     235       57       292       —       292  
 
    
 		      
 		      
 		      
 		      
 		  
 
                                        
TOTAL
   $ 26,407     $ 14,729     $ 41,136     $ 5,978     $ 47,114  
 
    
 		      
 		      
 		      
 		      
 		  

(A)   IDIQ contract value represents management’s estimate of the future contract value under existing indefinite delivery, indefinite quantity contracts. Because the value in these arrangements is subject to the customer’s future exercise of an indeterminate quantity of delivery orders, the company recognizes these contracts in backlog only when they are funded.

Exhibit F
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AIRCRAFT DELIVERIES (UNAUDITED)

                                 
    Third Quarter   Nine Months
    2004   2003   2004   2003
GREEN:
                                
 
                                
LARGE AIRCRAFT
     14       14       41       37  
 
                                
MID-SIZE AIRCRAFT
     6       5       16       16  
 
    
 		      
 		      
 		      
 		  
 
                                
TOTAL
     20       19       57       53  
 
    
 		      
 		      
 		      
 		  
 
                                
COMPLETIONS:
                                
 
                                
LARGE AIRCRAFT
     14       12       36       37  
 
                                
MID-SIZE AIRCRAFT
     7       8       15       13  
 
    
 		      
 		      
 		      
 		  
 
                                
TOTAL
     21       20       51       50  
 
    
 		      
 		      
 		      
 		  
 
                                
PRE-OWNED:
     5       9       12       24  
 
    
 		      
 		      
 		      
 		  

Exhibit G

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