Summary
General Dynamics Corporation (GD) reported a challenging 2012, marked by a significant goodwill impairment charge of $2 billion within its Information Systems and Technology segment, leading to a net loss for the year. Despite a revenue increase in the Aerospace segment driven by the new Gulfstream G650 aircraft, overall revenues declined due to reduced demand in the Combat Systems and Information Systems and Technology groups, primarily influenced by U.S. defense budget uncertainties and sequestration concerns. The company's financial health saw a strengthening of its balance sheet, with a decrease in net debt and a continued commitment to shareholder returns through increased dividends and share repurchases. However, investors should note the ongoing impact of U.S. government spending constraints on its defense-related segments. The company's outlook for 2013 anticipates continued revenue pressure in Information Systems and Technology and a decline in Combat Systems revenue, but projects growth in Aerospace and stable revenues in Marine Systems.
Financial Highlights
56 data points| Revenue | $30.99B |
| Cost of Revenue | $28.40B |
| Gross Profit | $2.59B |
| R&D Expenses | $1.61B |
| Operating Expenses | $30.23B |
| Operating Income | $765.00M |
| Interest Expense | $168.00M |
| Net Income | -$332.00M |
| EPS (Basic) | $-0.94 |
| EPS (Diluted) | $-0.94 |
| Shares Outstanding (Basic) | 353.35M |
| Shares Outstanding (Diluted) | 353.35M |
Key Highlights
- 1A substantial $2 billion goodwill impairment charge in the Information Systems and Technology segment led to a net loss of $(0.94) per diluted share for 2012.
- 2Aerospace segment revenue grew by 15.2% to $6.9 billion, primarily driven by increased deliveries of the new Gulfstream G650 aircraft.
- 3Combat Systems segment revenue decreased by 9.5% to $8.0 billion, impacted by lower volume on U.S. military vehicle programs and the completion of several European vehicle contracts.
- 4Marine Systems segment revenues saw a slight decrease of 0.6% to $6.6 billion, but operating earnings increased due to favorable cost performance on the T-AKE program.
- 5Information Systems and Technology segment revenue declined by 10.7% to $10.0 billion, largely due to reduced demand for mobile communication systems and IT services, compounded by discrete charges.
- 6U.S. government revenue represented 66% of total revenues in 2012, highlighting the company's significant reliance on defense spending.
- 7The company demonstrated financial flexibility by reducing net debt and continuing to return capital to shareholders through dividends and share repurchases.