10-KPeriod: FY2011

GENERAL DYNAMICS CORP Annual Report, Year Ended Dec 31, 2011

Filed February 17, 2012For Securities:GD

Summary

General Dynamics Corporation (GD) reported total revenues of $32.68 billion for the fiscal year ending December 31, 2011. The company operates across four main segments: Aerospace, Combat Systems, Marine Systems, and Information Systems and Technology. The U.S. government remains the largest customer, accounting for 69% of revenues, with defense spending significantly influencing the company's performance. Despite some revenue declines in specific segments like Information Systems and Technology due to order delays, the Aerospace segment saw growth driven by Gulfstream aircraft deliveries, including the new G650. The company also successfully integrated six acquisitions in 2011, bolstering its portfolio. GD continues to focus on operational efficiency, program execution, and prudent capital deployment, including a commitment to increasing dividends and repurchasing shares, signaling a stable outlook driven by its core defense and aerospace businesses.

Financial Highlights

57 data points
Beta

Revenue

$32.68B

17.9% Gross Margin

Net Income

$2.53B

7.7% Net Margin

EPS (Diluted)

$6.87

Total Assets

$34.88B

Cash & Equivalents

$2.65B

Free Cash Flow

$2.78B

Financial Statements
Beta
Revenue$32.68B
Cost of Revenue$26.82B
Gross Profit$5.86B
R&D Expenses$1.54B
Operating Expenses$28.85B
Operating Income$3.83B
Interest Expense$155.00M
Net Income$2.53B
EPS (Basic)$6.94
EPS (Diluted)$6.87
Shares Outstanding (Basic)364.15M
Shares Outstanding (Diluted)367.52M

Key Highlights

  • 1Total revenues reached $32.68 billion for the fiscal year ending December 31, 2011, a slight increase from the previous year.
  • 2The U.S. government continues to be the primary customer, representing 69% of total revenues, underscoring the company's reliance on defense spending.
  • 3Aerospace segment revenue grew by 13.2%, driven by increased Gulfstream aircraft deliveries and services, with new models G650 and G280 nearing entry into service.
  • 4Information Systems and Technology segment revenue saw a 3.4% decline, impacted by order delays and a shift in program mix.
  • 5Combat Systems and Marine Systems segments experienced slight revenue declines or stability, with mixed performance across product lines but steady operating earnings.
  • 6The company actively managed its capital through share repurchases and dividend payments, with a board authorization to repurchase up to 10 million shares.
  • 7Six acquisitions were completed in 2011, integrating new capabilities and market reach across various segments, particularly in Information Systems and Technology and Combat Systems.

Frequently Asked Questions

In 2011, General Dynamics reported total revenues of $32.68 billion, a slight increase of 0.6% from $32.47 billion in 2010. This growth was primarily driven by the Aerospace segment, which saw a 13.2% increase in revenue due to higher Gulfstream aircraft deliveries and services. However, the Information Systems and Technology segment experienced a 3.4% revenue decrease, mainly due to order delays and program timing.

General Dynamics' customer base is significantly diversified, although the U.S. government remains its largest customer, accounting for 69% of revenues in 2011. U.S. commercial customers contributed 12%, international defense customers 9%, and international commercial customers 10%. Within the defense sector, the company serves various branches of the U.S. military and intelligence communities, as well as allied nations.

In 2011, General Dynamics focused on several strategic initiatives, including: enhancing its portfolio through six strategic acquisitions across its business groups; driving operational efficiency and cost reductions within its defense segments; investing in R&D and new product development, particularly in its Aerospace segment with the upcoming G650 and G280 aircraft; and prudently managing capital through dividends and share repurchases, underscoring a commitment to shareholder value.

The company completed six acquisitions in 2011, amounting to $1.6 billion in cash, which bolstered its capabilities and market presence, particularly in the Information Systems and Technology and Combat Systems segments. These acquisitions contributed to revenue growth in certain areas and expanded the company's service offerings, although they also incurred transaction-related costs.

A significant risk highlighted is the company's heavy reliance on U.S. government defense spending (69% of revenue). Fluctuations in defense budgets, program reductions, delays, or terminations due to government funding cycles and policy changes pose a considerable risk. Additionally, the company faces risks related to subcontractor performance, international operations, changing customer demand in the aerospace sector, cybersecurity threats, and the successful integration of acquisitions.