Shareholders | Customers | Employees | Communities

Ethics

General Dynamics is a financially driven company dedicated to consistently delivering superior shareholder returns.  Shareholder value is created through a business strategy that emphasizes excellence and efficiency in program execution, continued organic growth, superior margins, efficient cash flow conversion, disciplined capital deployment and continuous improvement. Performance in 2008 is best summarized in the Chairman’s letter to Shareholder’s dated March 6, 2009, which is the introduction to General Dynamics 2008 Annual Report. Following is an excerpt from that letter.

“In 2008 your company booked record orders, sales, operating earnings and free cash flow. The strong order intake, which reached $57 billion, led to an unprecedented year-end backlog of over $74 billion.

Continued top-line growth at each of our business groups resulted in $29.3 billion in sales in 2008, an 8 percent increase over 2007. Operating earnings grew at more than double the rate of sales, resulting in 19 percent growth in earnings from continuing operations and 22 percent growth in earnings per share. Operating leverage across the four business groups led to an impressive 110-basis-point improvement in combined operating margin. Three of our company’s four business groups reported over $1 billion in operating earnings.

Free cash flow, defined as net cash from continuing operations less capital expenditures, totaled $2.6 billion, which represents 106 percent of earnings from continuing operations. This superb result is consistent with the company’s track record, having converted nearly 115 percent of our earnings from continuing operations into cash over the past five years.

            Capital Deployment

Management took advantage of this strong free cash flow to invest in strengthening the market position of our businesses by completing five acquisitions for a total of $3.2 billion. We also deployed $1.5 billion to repurchase 20 million common shares, approximately 5 percent of our issued and outstanding shares.

Shareholders received $533 million in dividend payments during 2008. Earlier this month, the Board increased the quarterly dividend for the 12th consecutive year to $0.38 per share, further improving what was already a very good yield.

We repaid $670 million of debt in 2008 and issued $1 billion of five-year fixed-rate debt. The proceeds from this issuance provide financial flexibility in the current market environment. Our long-term debt ratings by Standard & Poor’s and Moody’s remain A/A2 while our short-term ratings remain A-1/P-1.

We remain committed to a balanced capital deployment strategy. Our solid balance sheet and strong cash generation provide us the flexibility to continue to deploy capital where it generates the most value for our shareholders.”

The following charts display General Dynamics’ strong performance over the last five years.  

Back to Top