01—Abstract
Summary
Summary of the 10-K filed February 17, 2012. Cited figures are marked; the original filing is the authoritative source.
General Dynamics Corporation (GD) reported total revenues of $32.68 billiona 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%b 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.
02—Key points
Key Highlights
- Total revenues reached $32.68 billion for the fiscal year ending December 31, 2011, a slight increase from the previous year.
- The U.S. government continues to be the primary customer, representing 69% of total revenues, underscoring the company's reliance on defense spending.
- Aerospace segment revenue grew by 13.2%, driven by increased Gulfstream aircraft deliveries and services, with new models G650 and G280 nearing entry into service.
- Information Systems and Technology segment revenue saw a 3.4% decline, impacted by order delays and a shift in program mix.
- Combat Systems and Marine Systems segments experienced slight revenue declines or stability, with mixed performance across product lines but steady operating earnings.
- The company actively managed its capital through share repurchases and dividend payments, with a board authorization to repurchase up to 10 million shares.
- Six acquisitions were completed in 2011, integrating new capabilities and market reach across various segments, particularly in Information Systems and Technology and Combat Systems.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, General Dynamics kept $0.08.
- Revenue$32.68B100.0%
- Cost of revenue−$26.82B82.1%
- Gross profit$5.86B17.9%
- Operating costs−$2.03B6.2%
- Operating income$3.83B11.7%
- Interest, other & tax−$1.30B4.0%
- Net income$2.53B7.7%
Where FY2011 revenue went
$32.68B- Cost of revenue: $26.82B, 82% of revenue
- Net income: $2.53B, 7.7% of revenue
- R&D: $1.54B, 4.7% of revenue
- Other operating costs: $491.0M, 1.5% of revenue
- Interest, other & tax: $1.30B, 4.0% of revenue
Kept 7.7% as net incomeNet income $2.53B · 7.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 17, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $32.68B$32.47B | +0.6% |
| Cost of Revenue | $26.82B$26.56B | +1.0% |
| Gross Profit | $5.86B$5.91B | −0.9% |
| R&D Expenses | $1.54B$1.20B | +27.8% |
| Operating Expenses | $28.85B$28.52B | +1.2% |
| Operating Income | $3.83B$3.94B | −3.0% |
| Interest Expense | $155.00M$167.00M | −7.2% |
| Net Income | $2.53B$2.62B | −3.7% |
| EPS (Basic) | $6.94$6.88 | +0.9% |
| EPS (Diluted) | $6.87$6.81 | +0.9% |
| Shares Outstanding (Basic) | 364.15M381.24M | −4.5% |
| Shares Outstanding (Diluted) | 367.52M385.24M | −4.6% |
05—Questions
Frequently Asked Questions
What was General Dynamics' revenue performance in 2011?
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.
How diversified is General Dynamics' customer base?
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.
What were the key strategic initiatives undertaken by General Dynamics in 2011?
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.
How did the company's acquisition strategy impact its financial results?
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.
What are the primary risks facing General Dynamics, as highlighted in the filing?
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.
06—Continue