January 28, 2009
Fourth-quarter Earnings Per Share from Continuing Operations Increase 14 percent
Total Backlog increases 22.5 percent
FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported that earnings from continuing operations in the fourth quarter of 2008 were $630 million, or $1.62 per share on a fully diluted basis, compared to 2007 fourth-quarter earnings from continuing operations of $578 million, or $1.42 per share fully diluted. Revenue increased to $7.9 billion in the quarter, compared to fourth-quarter 2007 revenue of $7.5 billion.
Full-year 2008 Results
Earnings from continuing operations for the full year of 2008 were $2.48 billion, or $6.22 per share on a fully diluted basis, an increase of 19.1 percent over 2007 full-year earnings from continuing operations of $2.1 billion, or $5.10 per share fully diluted. Revenue for the full year of 2008 was $29.3 billion, compared with $27.2 billion for 2007, an increase of 7.6 percent.
Cash
Net cash provided by operating activities from continuing operations totaled $805 million in the quarter and $3.1 billion for the year. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $629 million in the quarter and $2.6 billion for the year.
Backlog
The company’s total backlog grew by $13.6 billion in the fourth quarter of 2008, to $74.1 billion. Compared to year-end 2007, total backlog increased by $27.3 billion. Funded backlog at year-end 2008 was $51.7 billion, an increase of $14.5 billion over the prior year.
Margins
Operating margins for the fourth quarter of 2008 increased to 11.9 percent from 11.6 percent for fourth-quarter 2007. For the full year, company-wide operating margins increased by 110 basis points over 2007, to 12.5 percent.
Net Earnings
General Dynamics’ net earnings for the fourth quarter of 2008 were $612 million, which includes charges related to the sale of certain assets in Spain, compared to fourth-quarter 2007 net earnings of $579 million. Net earnings for the full year were $2.46 billion in 2008, compared to $2.1 billion in 2007.
“General Dynamics continued to perform well in the fourth quarter of 2008,” said Nicholas D. Chabraja, chairman and chief executive officer. “Sales increased in the Aerospace, Marine Systems and Information Systems and Technology groups when compared to the year-ago period, and company-wide operating margins increased 30 basis points in the quarter. The company’s funded and total backlog grew significantly over the previous quarter, and Marine Systems’ total backlog more than doubled, reflecting an order for eight additional Virginia-class nuclear-powered submarines.
“For the full year of 2008, all four business groups generated increased sales, operating earnings grew significantly faster than revenue and free cash flow from operations totaled 106 percent of net earnings,” Chabraja said. “These results reflect our continued focus on creating shareholder value through the fundamental strengths of the company: maximizing the profitability of a durable and growing backlog through continual performance improvement, and strong cash generation that supports strategic capital-deployment decision-making.
“Given the strength of our performance in 2008 and our record backlog going into the new year, we expect 2009 earnings to be in the range of $6.70 to $6.75 per share, fully diluted,” Chabraja said.
General Dynamics, headquartered in Falls Church, Virginia, employs approximately 92,300 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 made in this press release, including any statements as to future results of operations and financial projections, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s current expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company’s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.
WEBCAST INFORMATION: General Dynamics will webcast its fourth-quarter securities analyst conference call, scheduled for 11:30 a.m. Eastern Time on Wednesday, January 28, 2009. Those accessing the webcast will be able to listen to management’s discussion of the fourth-quarter and full-year results, as well as the question-and-answer session with securities analysts.
The webcast will be available at www.generaldynamics.com. An on-demand replay of the webcast will be available by 3 p.m. on January 28 and will continue for 12 months.
To hear a recording of the conference call by telephone, please call 888-286-8010 (international: 617-801-6888); passcode 37776365. It will be available from 3 p.m. on January 28 until midnight February 4, 2009.
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