General Dynamics Reports Strong Revenue, Earnings Per Share Growth in First Quarter...

General Dynamics Reports Strong Revenue, Earnings Per Share Growth in First
Quarter 2009

- Revenues increase 18 percent
- EPS from continuing operations increases 8.5 percent

FALLS CHURCH, Va., April 29 /PRNewswire-FirstCall/ -- General Dynamics (NYSE:
GD) today reported first-quarter 2009 earnings from continuing operations of
$593 million, or $1.54 per share on a fully diluted basis, compared with 2008
first-quarter earnings from continuing operations of $573 million, or $1.42
per share fully diluted. Revenues grew to $8.3 billion in the quarter, an 18
percent increase over first-quarter 2008 revenues of $7 billion. Net earnings
for the first quarter of 2009 were $590 million, compared to $572 million in
the first quarter of 2008.

"General Dynamics' performance in the first quarter of 2009 was very strong,"
said Nicholas D. Chabraja, chairman and chief executive officer. "Revenues
grew at double-digit rates in all four segments of the company, with
double-digit organic growth in our defense businesses, demonstrating the
continued strength of demand among government customers for the products and
services we deliver. The growth in Aerospace revenues is attributable to the
acquisition late last year of Jet Aviation."

Margins
Company-wide operating margins for the first quarter of 2009 were 11 percent,
compared to 12.3 percent in the year-ago period. Marine Systems, however,
increased operating margins by 90 basis points over the year-ago period to 9.8
percent, based on excellent performance on the Virginia-class, T-AKE,
commercial product carrier, DDG-51 and DDG-1000 programs.

Backlog
Funded backlog at the end of first-quarter 2009 increased 23 percent from one
year ago, to $49.2 billion. The company's total backlog at the end of the
quarter was $71.1 billion, 43 percent higher than the $49.8 billion total
backlog reported at the end of the year-ago period. In addition to the
backlog, the estimated potential contract value, which represents management's
estimate of value under unfunded indefinite delivery, indefinite quantity
(IDIQ) contracts and unexercised options, was $17.9 billion at the end of
first-quarter 2009.

Cash
Net cash provided by operating activities from continuing operations in the
quarter totaled $154 million. Free cash flow from operations, defined as net
cash provided by operating activities from continuing operations less capital
expenditures, was $73 million for the period.

"Cash provided by our defense businesses remained strong in the quarter, while
the Aerospace group was a user of cash. We expect this to correct itself
through the remainder of the year, such that free cash flow should approximate
net income by year's end," Chabraja said.

"Looking ahead, we remain confident that General Dynamics is well-positioned
to maximize the value of our $71 billion backlog as we continue to focus on
excellent program execution and value creation for our shareholders," Chabraja
said.

General Dynamics, headquartered in Falls Church, Virginia, employs
approximately 92,900 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 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 first-quarter
securities analyst conference call, scheduled for 11:30 a.m. Eastern Time on
Wednesday, April 29, 2009. The webcast will be a listen-only audio event,
available at www.generaldynamics.com. An on-demand replay of the webcast will
be available by 1:30 p.m.April 29 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 33671486. The phone replay will be
available from 1:30 p.m.April 29 until midnight May 6, 2009.

Exhibit A

CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

First Quarter Variance
2009 2008 $ %

Revenues $8,264 $7,005 $1,259 18.0%
Operating costs and expenses 7,359 6,144 (1,215)

Operating earnings 905 861 44 5.1%

Interest, net (39) (19) (20)
Other, net 3 3 -

Earnings from continuing operations
before income taxes 869 845 24 2.8%

Provision for income taxes 276 272 (4)

Earnings from continuing operations $593 $573 $20 3.5%

Discontinued operations, net of tax (3) (1) (2)

Net earnings $590 $572 $18 3.1%

Earnings per share - basic
Continuing operations $1.54 $1.43 $0.11 7.7%
Discontinued operations $(0.01) $- $(0.01)
Net earnings $1.53 $1.43 $0.10 7.0%

Basic weighted average
shares outstanding (in millions) 385.8 400.8

Earnings per share - diluted
Continuing operations $1.54 $1.42 $0.12 8.5%
Discontinued operations $(0.01) $- $(0.01)
Net earnings $1.53 $1.42 $0.11 7.7%

Diluted weighted average
shares outstanding (in millions) 386.5 403.9

Exhibit B

REVENUES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

First Quarter Variance
2009 2008 $ %
Revenues:

Aerospace $1,455 $1,279 $176 13.8%

Combat Systems 2,407 1,997 410 20.5%

Marine Systems 1,669 1,378 291 21.1%

Information Systems and
Technology 2,733 2,351 382 16.2%

Total $8,264 $7,005 $1,259 18.0%

Operating earnings:

Aerospace $200 $236 $(36) (15.3)%

Combat Systems 279 259 20 7.7%

Marine Systems 163 122 41 33.6%

Information Systems and
Technology 289 260 29 11.2%

Corporate (26) (16) (10) (62.5)%

Total $905 $861 $44 5.1%

Operating margins:

Aerospace 13.7% 18.5%

Combat Systems 11.6% 13.0%

Marine Systems 9.8% 8.9%

Information Systems and
Technology 10.6% 11.1%

Total 11.0% 12.3%

Exhibit C

PRELIMINARY CONSOLIDATED BALANCE SHEET (UNAUDITED)
DOLLARS IN MILLIONS

April 5, 2009 December 31, 2008
ASSETS
Current assets:
Cash and equivalents $1,126 $1,621
Accounts receivable 3,795 3,469
Contracts in process 4,238 4,341
Inventories 2,083 2,029
Other current assets 588 490
Total current assets 11,830 11,950

Noncurrent assets:
Property, plant and equipment, net 2,840 2,872
Intangible assets, net 1,606 1,617
Goodwill 11,529 11,413
Other assets 474 521
Total noncurrent assets 16,449 16,423
Total assets $28,279 $28,373

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current
portion of long-term debt $770 $911
Accounts payable 2,596 2,443
Customer advances and deposits 3,679 4,154
Other current liabilities 3,035 2,852
Total current liabilities 10,080 10,360

Noncurrent liabilities:
Long-term debt 3,112 3,113
Other liabilities 4,816 4,847
Commitments and contingencies
Total noncurrent liabilities 7,928 7,960

Shareholders' equity:
Common stock 482 482
Surplus 1,383 1,346
Retained earnings 13,730 13,287
Treasury stock (3,439) (3,349)
Accumulated other comprehensive loss (1,885) (1,713)
Total shareholders' equity 10,271 10,053
Total liabilities and shareholders'
equity $28,279 $28,373

Exhibit D

PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
DOLLARS IN MILLIONS

Three Months Ended
Cash flows from operating activities: April 5, 2009 March 30, 2008
Net earnings $590 $572
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 85 69
Amortization 54 33
Stock-based compensation expense 28 23
Excess tax benefit from stock-based
compensation (1) (15)
Deferred income tax provision 40 (1)
Discontinued operations, net of tax 3 1
(Increase) decrease in assets, net
of effects of business acquisitions:
Accounts receivable (292) (97)
Contracts in process 64 (41)
Inventories (64) (42)
Increase (decrease) in liabilities,
net of effects of business acquisitions:
Accounts payable 151 (231)
Customer advances and deposits (512) 52
Income taxes payable 192 230
Other current liabilities (127) (140)
Other, net (57) 18
Net cash provided by operating
activities from continuing operations 154 431
Net cash used by discontinued operations -
operating activities (6) (1)
Net cash provided by operating activities 148 430

Cash flows from investing activities:
Business acquisitions, net of cash acquired (168) (65)
Capital expenditures (81) (85)
Purchases of available-for-sale securities (86) (973)
Sales/maturities of available-for-sale
securities 49 968
Other, net 1 31
Net cash used by investing activities (285) (124)

Cash flows from financing activities:
Repayments of commercial paper, net (139) -
Dividends paid (136) (117)
Purchases of common stock (109) (519)
Proceeds from option exercises 27 30
Other, net (1) 14
Net cash used by financing activities (358) (592)

Net decrease in cash and equivalents (495) (286)
Cash and equivalents at beginning of period 1,621 2,891
Cash and equivalents at end of period $1,126 $2,605

Exhibit E

PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS

First Quarter First Quarter
2009 2008
Non-GAAP Financial Measures:
Free cash flow from operations:
Net cash provided by operating activities
from continuing operations $154 $431
Capital expenditures (81) (85)
Free cash flow from operations (A) $73 $346

Return on invested capital:
Earnings from continuing operations $2,498 $2,213
After-tax interest expense 93 94
After-tax amortization expense 115 95
Net operating profit after taxes 2,706 2,402
Average debt and equity 14,308 13,822
Return on invested capital (B) 18.9% 17.4%

Other Financial Information:
Return on equity (C) 22.1% 20.1%

Debt-to-equity (D) 37.8% 23.7%

Debt-to-capital (E) 27.4% 19.2%

Book value per share (F) $26.68 $29.57

Total taxes paid $41 $41

Company-sponsored research and
development (G) $138 $110

Employment 92,900 84,000

Sales per employee (H) $348,400 $335,900

Shares outstanding 385,018,155 398,321,560

(A) We believe free cash flow from operations is a measurement that is
useful to investors, because it portrays our ability to generate
cash from our core businesses for such purposes as repaying
maturing debt, funding business acquisitions and paying dividends.
We use free cash flow from operations to assess the quality of our
earnings and as a performance measure in evaluating management. The
most directly comparable GAAP measure to free cash flow from
operations is net cash provided by operating activities from
continuing operations.

(B) We believe return on invested capital is a measurement that is
useful to investors, because it reflects our ability to generate
returns from the capital we have deployed in our operations. We use
ROIC to evaluate investment decisions and as a performance measure
in evaluating management. We define ROIC as net operating profit
after taxes for the latest 12-month period divided by the sum of
the average debt and shareholders' equity for the same period.
Net operating profit after taxes is defined as earnings from
continuing operations plus after-tax interest and amortization
expense. The most directly comparable GAAP measure to net
operating profit after taxes is earnings from continuing
operations.

( C ) Return on equity is calculated by dividing earnings from continuing
operations for the latest 12-month period by our average equity
during that period.

(D) Debt-to-equity ratio is calculated as total debt divided by total
equity as of the end of the period.

(E) Debt-to-capital ratio is calculated as total debt divided by the
sum of total debt plus total equity as of the end of the period.

(F) Book value per share is calculated as total equity divided by total
outstanding shares as of the end of the period.

(G) Includes independent research and development and bid and proposal
costs and Gulfstream product development costs.

(H) Sales per employee is calculated by dividing revenues for the
latest 12-month period by our average number of employees
during that period.

Exhibit F

BACKLOG (UNAUDITED)
DOLLARS IN MILLIONS

Estimated Total
Potential Estimated
Total Contract Contract
First Quarter 2009 Funded Unfunded Backlog Value* Value
Aerospace $20,179 $590 $20,769 $2,071 $22,840

Combat Systems 11,746 2,724 14,470 2,112 16,582

Marine Systems 9,431 16,031 25,462 1,208 26,670

Information Systems and
Technology 7,795 2,629 10,424 12,556 22,980

Total $49,151 $21,974 $71,125 $17,947 $89,072

Fourth Quarter 2008
Aerospace $21,861 $618 $22,479 $2,342 $24,821

Combat Systems 12,127 2,831 14,958 2,732 17,690

Marine Systems 10,482 15,963 26,445 1,510 27,955

Information Systems and
Technology 7,242 3,003 10,245 10,263 20,508

Total $51,712 $22,415 $74,127 $16,847 $90,974

First Quarter 2008
Aerospace $11,802 $650 $12,452 $926 $13,378

Combat Systems 11,116 3,171 14,287 2,292 16,579

Marine Systems 9,552 3,056 12,608 2,272 14,880

Information Systems and
Technology 7,582 2,838 10,420 9,142 19,562

Total $40,052 $9,715 $49,767 $14,632 $64,399

* The estimated potential contract value represents management's
estimate of our future contract value under unfunded indefinite
delivery, indefinite quantity (IDIQ) contracts and unexercised
options associated with existing firm contracts, including aircraft
fleet customers' options to purchase new aircraft. Because the value
in the unfunded IDIQ arrangements is subject to the customer's future
exercise of an indeterminate quantity of delivery orders, we
recognize these contracts in backlog only when they are funded.
Unexercised options are recognized in backlog when the customer
exercises the option and establishes a firm order.

Exhibit G

FIRST QUARTER 2009 SIGNIFICANT ORDERS (UNAUDITED)
DOLLARS IN MILLIONS

We received the following significant contract orders during the first quarter
of 2009:

Combat Systems
-- Approximately $220 from the U.S. Army to continue performing
contractor
logistics support for the Stryker wheeled armored vehicle program,
bringing the total contract value to date to more than $1.2 billion.
-- Approximately $200 for the production of Stryker Reactive Armor Tile
sets and Hull Protection kits.
-- Approximately $150 from the Army for the production of Hydra-70
(2.75-inch) rockets. This order brings the total contract value to
date
to more than $900.

-- Combined orders totaling approximately $80 for RG-31 vehicle-related
spares under the Mine Resistant Ambush Protected (MRAP) vehicle
program.

Information Systems and Technology
-- Approximately $250 under the Mobile User Objective System (MUOS)
program
for risk reduction and design development, bringing the total contract
value to date to $1.2 billion. MUOS will provide cell phone-like
services to ground-based warfighters around the globe.
-- Approximately $70 from the Army to field the enhanced Prophet tactical
signals intelligence (SIGINT) system. The contract has a potential
value
of more than $850 if all options are exercised.
-- An initial order worth approximately $40 for the Long Term Support
Contract (LTSC) for the Canadian Army's Land Command Support System
(LCSS). The contract has a potential value of approximately $680 if
all
options are exercised.
-- One of 59 General Services Administration (GSA) Alliant contracts to
provide federal government agencies with integrated information
technology solutions. Alliant is an indefinite delivery, indefinite
quantity (IDIQ) program with a $50 billion potential value among all
awardees over a 10-year period.

-- One of 142 contracts under the second STRI Omnibus Contract (STOC II)
to
provide modeling, simulation and instrumentation solutions in support
of
Army training and testing requirements. STOC II is an IDIQ program
with
a potential value of $17.5 billion among all awardees over a 10-year
period.

Exhibit H

GULFSTREAM AIRCRAFT DELIVERIES (UNAUDITED)

First Quarter
2009 2008
Green (units):

Large aircraft 22 22

Mid-size aircraft 9 15

Total 31 37

Completions (units):

Large aircraft 18 20

Mid-size aircraft 16 16

Total 34 36

Pre-owned:

Units - 1

Revenues (millions) $ - $9

Operating earnings (millions) $(21) $1

Gulfstream margins including pre-owned
activity 15.9% 18.5%

Gulfstream margins excluding pre-owned
activity 17.7% 18.5%

SOURCE General Dynamics

Rob Doolittle of General Dynamics, +1-703-876-3199,
rdoolitt@generaldynamics.com