Revenues Increase 21 Percent; Backlog Rises to $30 Billion
General Dynamics reported 2001 third quarter net earnings of $230 million, or $1.13 per share fully diluted, on sales of $3 billion. This is an 11 percent per share increase over the third quarter of 2000, when net earnings were $204 million, or $1.02 per share, on sales of $2.5 billion, before consideration of a non-recurring tax-related gain of $90 million in the third quarter of 2000. Cash flow from operations from the 2001 third quarter was $330 million. The quarter ended on September 30, 2001.
For the first nine months of 2001, sales were $8.7 billion, compared with $7.7 billion for the first nine months of 2000. Net earnings for the first nine months of 2001 were $669 million, or $3.30 per share fully diluted, compared with net earnings of $592 million, or $2.94 per share, for the first nine months of 2000, excluding tax-related gains in both years. Cash flow from operations through three quarters now totals approximately $700 million.
"This was another very good quarter," said General Dynamics Chairman and CEO Nicholas D. Chabraja. "We had revenue growth of 21 percent - 13 percent of which was organic. Earnings were matched by strong cash flow from operations. We won significant new work in all of our business groups, completed two important acquisitions, and pushed backlog to a record high
of $30 billion – an increase of $6 billion in the quarter."
Chabraja noted that during the quarter the company completed its acquisition of Motorola's Integrated Information Systems business, which is now called General Dynamics Decision Systems. "Decision Systems greatly expands the business base of our Information Systems and Technology group, and boosts our capabilities in C4ISR [command, control, communications, computers, intelligence, surveillance and reconnaissance]," he said. Also in the third quarter, the Information Systems and Technology group signed the $2.4 billion BOWMAN contract from the U.K. Ministry of Defense, and was awarded a $400 million contract for a tactical communications system for the Republic of China (Taiwan) Army.
In July 2001, the company completed its acquisition of Santa Barbara Sistemas, a combat vehicle and munitions business based in Madrid, which increased General Dynamics' backlog by $1.8 billion. Combat Systems' sales increased by 83 percent and earnings increased by 57 percent compared with the third quarter of 2000, reflecting the acquisition of General Dynamics Ordnance and Tactical Systems and work on a $4 billion program to equip the U.S. Army's Brigade Combat Team. In addition, Combat Systems won a $712 million contract from the U.S. Marine Corps for the systems development and demonstration phase of the Advanced Amphibious Assault Vehicle program.
In the Aerospace group, backlog increased by $700 million in the quarter, on the strength of a large order from United Bizjet Holdings, which plans to offer its transportation services to the market under the name "Avolar." Sales for the
Aerospace group increased by 14 percent over the third quarter of 2000, on new aircraft deliveries including Gulfstream's new G200 business jets.
In Marine Systems, NASSCO received an order for a fourth Alaska Class tanker from BP for approximately $200 million. BP had ordered the first three double-hulled oil tankers in September 2000; deliveries will begin in 2003.
"As we look to the end of the year, we expect to meet our targets for sales, earnings and cash generation," said Chabraja. "Our ability to integrate new businesses quickly and seamlessly, along with our record backlog, will continue to build value for our shareholders."