General Dynamics Reports First-Quarter 2012 Results

  • Management affirms full-year earnings guidance 
  • Aerospace group revenues grow 20 percent 

FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported first-quarter 2012 net earnings of $564 million, or $1.57 per share on a fully diluted basis, compared with 2011 first-quarter net earnings of $618 million, or $1.64 per share fully diluted. First-quarter 2012 revenues were $7.6 billion.

Margins

Company-wide operating margins for the first quarter of 2012 were 11.3 percent, compared to 11.9 percent in first-quarter 2011. Marine Systems margins improved 150 basis points compared to first-quarter 2011 due to improved performance on auxiliary shipbuilding programs. Combat Systems' operating earnings and margins were negatively impacted in the quarter by $67 million in non-cash out-of-period accounting adjustments in its European operations. These adjustments reduced the company's fully diluted earnings per share by $0.13 in the quarter.

Cash

Net cash provided by operating activities in the quarter totaled $414 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $324 million in first-quarter 2012. In comparison, for the first quarter of 2011, net cash provided by operating activities was $328 million, and free cash flow from operations was $267 million.

Backlog

Funded backlog at the end of first-quarter 2012 was $46.3 billion, and total backlog was $55.2 billion. Significant awards received in the quarter include construction contracts for two new surface ships, a DDG 51-class destroyer and a third Mobile Landing Platform (MLP) auxiliary ship. Healthy demand for Gulfstream aircraft continued in the quarter with particularly strong interest among North American customers.

In addition to total backlog, estimated potential contract value was $26.9 billion, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options.

'General Dynamics' first-quarter performance reflects continued growth in our Aerospace segment as well as the challenges presented by today's dynamic U.S. federal procurement environment. We are continuing to see slower-than-anticipated award activity, particularly relating to our IS&T programs with validated requirements and approved funding,' said Jay L. Johnson, chairman and chief executive officer. 'We remain focused on effectively executing existing programs, securing work associated with delayed awards and capturing new opportunities.

'Given our performance in the quarter and our current outlook for the remainder of the year, we expect full-year earnings per share to be in the $7.10 to $7.20 range,' Johnson said.  

General Dynamics, headquartered in Falls Church, Virginia, employs approximately 93,000 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 madein this press release, including any statements as to future results ofoperations and financial projections, may constitute 'forward-lookingstatements' within the meaning of the Private Securities Litigation Reform Actof 1995, as amended. Forward-looking statements are based on management'sexpectations, estimates, projections and assumptions.These statements are not guarantees of futureperformance and involve certain risks and uncertainties, which are difficult topredict.Therefore, actual future resultsand trends may differ materially from what is forecast in forward-lookingstatements due to a variety of factors. Additional information regarding these factors is contained in thecompany's filings with the Securities and Exchange Commission, including,without limitation, its Annual Report on Form 10-K and its Quarterly Reports onForm 10-Q.

All forward-lookingstatements speak only as of the date they were made.The company does not undertake any obligationto update or publicly release any revisions to any forward-looking statementsto reflect events, circumstances or changes in expectations after the date ofthis press release.

WEBCASTINFORMATION:General Dynamics will webcast its first-quartersecurities analyst conference call, scheduled for 9 a.m. EDT on Wednesday,April 25, 2012.The webcast will be alisten-only audio event, available at www.generaldynamics.com. An on-demandreplay of the webcast will be available by 12 p.m. EDT on April 25 and willcontinue for 12 months.  To hear arecording of the conference call by telephone, please call 888-286-8010(international: 617-801-6888); passcode 84872093.The phone replay will be available from 12p.m. April 25 through May 2, 2012.

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