01—Abstract
Summary
Summary of the 10-K filed February 19, 2010. Cited figures are marked; the original filing is the authoritative source.
In 2009, General Dynamics (GD) demonstrated resilience by achieving revenue growth, primarily driven by its defense segments (Combat Systems, Marine Systems, and Information Systems and Technology).
This growth was strong enough to offset a decline in the Aerospace segment, which was impacted by the downturn in the business-jet market. The company's defense business benefited from increased U.S. military spending and modernization efforts, as well as international demand for its products.
Acquisitions in 2008 and 2009 bolstered the Information Systems and Technology and Combat Systems groups. Despite a challenging economic environment, GD maintained a solid cash flow, enabling continued investment in product development and strategic acquisitions, while also returning capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- General Dynamics reported a 9.2% increase in revenue for 2009, reaching $31.98 billion, primarily driven by strong performance in its defense segments.
- The Combat Systems segment saw significant revenue growth of 17.7%, boosted by U.S. military vehicle programs and international demand, along with the acquisition of AxleTech International.
- Marine Systems experienced an 14.5% revenue increase, attributed to higher activity on U.S. Navy shipbuilding and repair programs.
- Information Systems and Technology achieved record revenue levels in 2009, showing a 7.6% increase, driven by growth across all its market segments.
- The Aerospace segment's revenue declined by 6.2% due to reduced Gulfstream aircraft deliveries amid the business-jet market downturn, though this was partially offset by the acquisition of Jet Aviation.
- The company generated strong operating earnings of $3.68 billion, with operating margins at 11.5%.
- General Dynamics maintained a healthy cash flow, with net cash provided by operating activities at $2.86 billion, underscoring its financial stability.
- The company's backlog remained substantial at $65.5 billion at the end of 2009, providing visibility into future revenue streams.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, General Dynamics kept $0.07.
- Revenue$31.98B100.0%
- Cost of revenue−$26.35B82.4%
- Gross profit$5.63B17.6%
- Operating costs−$1.95B6.1%
- Operating income$3.67B11.5%
- Interest, other & tax−$1.28B4.0%
- Net income$2.39B7.5%
Where FY2009 revenue went
$31.98B- Cost of revenue: $26.35B, 82% of revenue
- Net income: $2.39B, 7.5% of revenue
- R&D: $925.0M, 2.9% of revenue
- Other operating costs: $1.03B, 3.2% of revenue
- Interest, other & tax: $1.28B, 4.0% of revenue
Kept 7.5% as net incomeNet income $2.39B · 7.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 19, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $31.98B$29.30B | +9.2% |
| Cost of Revenue | $26.35B$23.93B | +10.1% |
| Gross Profit | $5.63B$5.37B | +4.8% |
| R&D Expenses | $925.00M$686.00M | +34.8% |
| Operating Expenses | $28.31B$25.65B | +10.4% |
| Operating Income | $3.67B$3.65B | +0.6% |
| Interest Expense | $171.00M$133.00M | +28.6% |
| Net Income | $2.39B$2.46B | −2.6% |
| EPS (Basic) | $6.21$6.21 | 0.0% |
| EPS (Diluted) | $6.17$6.17 | 0.0% |
| Shares Outstanding (Basic) | 385.48M396.24M | −2.7% |
| Shares Outstanding (Diluted) | 387.92M398.75M | −2.7% |
05—Questions
Frequently Asked Questions
How did the global economic downturn impact General Dynamics in 2009?
The global economic downturn significantly impacted General Dynamics' Aerospace segment, leading to reduced aircraft deliveries and services revenue. However, the company's defense segments, particularly Combat Systems and Marine Systems, experienced strong growth, largely offsetting the decline in Aerospace and resulting in overall revenue growth for the company.
What were the key drivers of revenue growth for General Dynamics in 2009?
The primary drivers of revenue growth were increased demand and production in the defense sector, including U.S. military vehicle programs (Stryker and Abrams), shipbuilding and repair services for the U.S. Navy, and robust performance in information systems and technology. Acquisitions made in late 2008 and 2009 also contributed to revenue growth in the Combat Systems and Information Systems and Technology segments.
How is General Dynamics managing its backlog and future business outlook?
General Dynamics maintained a significant backlog of $65.5 billion at the end of 2009, providing a strong foundation for future revenue. The company expects continued growth in its defense businesses, driven by ongoing U.S. defense spending and international opportunities. For the Aerospace segment, the company anticipates a modest improvement in 2010, with a focus on its large-cabin aircraft and services, while noting the continued challenges in the mid-size aircraft market.
What is the company's financial health and how is it deploying capital?
General Dynamics demonstrated strong financial health by generating $2.86 billion in net cash from operating activities in 2009. The company actively deployed this cash through strategic acquisitions, capital expenditures, dividend payments, and share repurchases, while also reducing its net debt. This financial discipline provides flexibility and supports shareholder returns.
06—Continue