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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3671
GENERAL DYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1673581
- -------- ----------
State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
3190 Fairview Park Drive, Falls Church, Virginia 22042-4523
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code (703) 876-3000
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Common Stock, Par Value $1 Per Share New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. _
The aggregate market value of the voting common equity held by
nonaffiliates of the registrant was $6,935,120,447 at March 6, 2000.
201,281,676 shares of the registrant's common stock were outstanding at March
6, 2000.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts I and II incorporate information from certain portions of the
registrant's Annual Report to security holders for the fiscal year ended
December 31, 1999 (the 1999 Annual Report).
Part III incorporates information from certain portions of the
registrant's definitive Proxy Statement for the 2000 annual meeting of
shareholders to be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year.
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Certain sections of this Annual Report on Form 10-K contain
forward-looking statements that are based on management's expectations,
estimates, projections and assumptions. Words such as "expects," "anticipates,"
"plans," "believes," "scheduled," "estimates," variations of these words and
similar expressions are intended to identify forward-looking statements which
include but are not limited to projections of revenues, earnings, segment
performance, aircraft production and deliveries, cash flows, contract awards,
and aircraft backlog stability. Forward-looking statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. 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, including, without
limitation: the company's successful execution of internal performance plans;
performance issues with key suppliers and subcontractors; the status or outcome
of legal and/or regulatory proceedings; the status or outcome of labor
negotiations; changing customer demand or preferences for business aircraft;
changes from the company's expectations with respect to its customers' exercise
of business aircraft options; changing priorities or reductions in the U.S.
government defense budget; termination of government contracts due to
unilateral government action; and the timing and occurrence (or non-occurrence)
of circumstances beyond the company's control.
PART I
ITEM 1. BUSINESS
INTRODUCTION
The primary businesses of General Dynamics Corporation (the company)
focus on business aviation, information systems, shipbuilding, marine systems,
and land and amphibious combat systems. The company is a Delaware corporation
formed in 1952 as successor to the Electric Boat Company. One of the company's
primary operating units, General Dynamics Land Systems Inc. (Land Systems), was
acquired in 1982. During the early 1990's, while the defense industry was
consolidating through mergers and acquisitions, the company divested of its
tactical military aircraft, missile systems and space launch systems
businesses, as well as its Cessna aircraft operations. In the mid 1990's, the
company began a series of acquisitions that primarily focused on defense and
either directly related to its core businesses or provided opportunities within
its core competencies. The company currently operates in the following
business groups: Aerospace, Information Systems and Technology, Marine Systems,
Combat Systems and Other.
The Aerospace business group consists of Gulfstream Aerospace
Corporation (Gulfstream), acquired on July 30, 1999.
Information Systems and Technology includes General Dynamics Defense
Systems, Inc. (Defense Systems), acquired on January 1, 1997, from Lockheed
Martin Corporation; General Dynamics Advanced Technology Systems, Inc. (ATS),
acquired on October 1, 1997, from Lucent Technologies; General Dynamics
Information Systems, Inc. (GDIS), Computing Devices Canada Ltd., and Computing
Devices Company Limited in the United Kingdom, acquired on December 31, 1997,
from Ceridian Corporation; Computer Systems & Communications Corporation
(CSCC), acquired on June 30, 1998; and General Dynamics Government Systems
Corporation consisting of: Communication Systems (CS), Electronic Systems (ES),
and Worldwide Telecommunication Systems (WTS), acquired on September 1, 1999,
from GTE Corporation.
Marine Systems includes Electric Boat Corporation (Electric Boat);
Bath Iron Works Corporation (BIW), acquired on September 13, 1995; American
Overseas Marine Corporation (AMSEA); and National Steel and Shipbuilding
Company (NASSCO), acquired on November 10, 1998.
Combat Systems includes Land Systems and General Dynamics Armament
Systems, Inc. (Armament Systems), acquired on January 1, 1997, from Lockheed
Martin Corporation.
The Other business group includes Freeman Energy Corporation (Freeman
Energy), Material Service Corporation (Material Service), and Patriot I, II and
IV Shipping Corporations (Patriots).
For more information regarding the company's business combinations
during 1999, 1998 and 1997, see Note B to the Consolidated Financial Statements
on pages 43 and 44 of the 1999 Annual Report, filed as Exhibit 13 to this
Annual Report on Form 10-K for the year ended December 31, 1999, and
incorporated herein by reference. Information on revenues, operating profit
and identifiable assets attributable to each of the company's reportable
business groups is included in Note S to the Consolidated
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Financial Statements on page 57 of the 1999 Annual Report, filed as Exhibit 13
to this Annual Report on Form 10-K for the year ended December 31, 1999, and is
incorporated herein by reference. A description of the company's products and
services, competition, and other related information follows.
PRODUCTS AND SERVICES
AEROSPACE
Net Sales (in millions) 1999 1998 1997
--------- -------- ---------
New aircraft $ 2,251 $ 1,909 $ 1,492
Other 658 519 412
--------- -------- ---------
$ 2,909 $ 2,428 $ 1,904
========= ======== =========
Gulfstream is a leading designer, developer, manufacturer and marketer
of technologically advanced intercontinental business jet aircraft. The
company's primary aircraft products are the Gulfstream V, which serves the
ultra-long range market, and the Gulfstream IV-SP, which serves the large-cabin
business jet aircraft market. Gulfstream has received a total of 135 orders
plus 20 options for the Gulfstream V, and has manufactured and delivered 92 of
these aircraft through December 1999. Gulfstream has received a total of 435
orders plus 17 options for the Gulfstream IV/IV-SP, and has manufactured and
delivered 398 of these aircraft through December 1999. See "Backlog" for a
description of Gulfstream options.
The Gulfstream V has a maximum operating speed of Mach .885. It can
accommodate up to 19 passengers and has a range of up to 6,500 nautical miles.
These capabilities permit routine intercontinental travel at cruising speeds
comparable to commercial airline cruising speeds, while operating efficiently
at altitudes as high as 51,000 feet, flying above commercial airline traffic
and most adverse weather. The Gulfstream V is versatile enough to fly
long-range missions, such as New York to Tokyo in approximately 14 hours, as
well as high-speed missions, such as New York to London, in approximately six
hours. To date, the Gulfstream V has set 65 world and national records. As
confirmation of the product's innovative design and outstanding performance,
the Gulfstream V received the 1997 Robert J. Collier Trophy for aeronautical
achievement and was selected by the United States Air Force to provide
intercontinental transportation for senior government officials and
dignitaries.
The Gulfstream IV-SP can accommodate up to 19 passengers, has a range
of up to 4,220 nautical miles and a cruising speed of up to Mach .85. These
capabilities permit routine intercontinental travel at cruising speeds
comparable to commercial airline cruising speeds, while operating efficiently
at altitudes as high as 45,000 feet, flying above commercial airline traffic
and most adverse weather. The company believes that the Gulfstream IV-SP
offers the best combination of large cabin size, long range, fast cruising
speed and technologically advanced avionics of any large business jet aircraft
in its market segment.
In conjunction with Executive Jet (EJ), Gulfstream offers fractional
ownership of Gulfstream IV-SP and Gulfstream V aircraft through its Gulfstream
Shares(R) program. EJ purchases aircraft from the company and then sells
ownership interests generally in one-eighth or one-quarter increments for which
the customer receives 100 or 200 hours respectively of flying time per year.
Through year-end 1999, Gulfstream had contracted to deliver to Executive Jet 56
aircraft plus options for an additional 22 aircraft in connection with its
North American Gulfstream Shares program. Of these 78 aircraft, as of December
31, 1999, 26 were in service, with the remaining 52 aircraft expected to be
delivered through 2008. During 1998, Gulfstream expanded its shares program
into the Middle East, with a 12-aircraft contract with a group of Middle East
investors, of which the first two aircraft are in service.
Gulfstream also provides worldwide aircraft maintenance services and
technical support for both Gulfstream and other business aircraft by
integrating a network of company-owned service centers, three levels of
authorized third-party service providers, worldwide parts depots, worldwide
service representatives and 24 hour-a-day technical/aircraft on the ground
support. There are currently almost 1,000 Gulfstream aircraft in service.
On August 19, 1998, Gulfstream acquired K-C Aviation, Inc., previously
a provider of business aviation services and the largest independent completion
center for business aircraft in North America. This acquisition increased
Gulfstream's capacity to accelerate its completion deliveries and its ability
to provide aftermarket maintenance services, spare parts engine overhaul and
auxiliary power unit service and overhaul for both Gulfstream and other
business jets. As a result of the K-C Aviation acquisition, Gulfstream now
offers services for Challenger, Hawker, Falcon and other aircraft types at
their Appleton, WI; Dallas, TX; and Westfield, MA locations.
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In 1998, Gulfstream announced Gulfstream Lease, a venture between
Gulfstream and GATX Capital. This program provides an important vehicle for
new Gulfstream aircraft sales, by introducing customers with less initial
capital to Gulfstream's product offerings. Gulfstream markets short-term
(generally 3-5 years) operating leases, while GATX Capital provides account
management services. Gulfstream also offers charter and aircraft management
services, training, and through its subsidiary, Gulfstream Financial Services
Corporation, aircraft financing which is provided through private label
relationships with other financing institutions.
INFORMATION SYSTEMS AND TECHNOLOGY
Net sales (in millions) for this segment were $1,422, $933 and $185
for 1999, 1998 and 1997, respectively.
Defense Systems is the lead provider of Trident Fire Control Systems
and also provides complete life cycle management of complex electronic systems
for the U.S. and U.K. Navies. Defense Systems' TechSight business unit provides
automated maintenance and diagnostics systems for the automotive, aircraft and
manufacturing industries, and web-based training and certification in the
medical, financial, legal and educational fields.
ATS provides undersea surveillance systems for the U.S. Navy as well
as command communications, control and intelligence systems and network
architecture solutions for the DD 21 and LPD 17 class of ships. ATS also
designs and builds power feed and terminal transmissions equipment for the
commercial undersea fiber-optic communications market and cable installation
services for those systems through its subsidiary, Caldwell Cable Ventures,
which was acquired in August 1998. ATS also does research and development for
classified U.S. government customers in the area of optical transmission
systems.
GDIS provides information processing systems for airborne, land-based,
seaborne, and space-based platforms, as well as information management services
for the U.S. government.
Computing Devices Canada Ltd. is the systems integrator on the IRIS
program, whose objective is to modernize and fully digitize the tactical
command, control and communications systems of the Canadian land forces. In
addition, it provides advanced systems products in the areas of maritime
surveillance, land based vetronics and display systems.
Computing Devices Company Limited in the United Kingdom provides and
supports electronics technology for airborne, ground and naval systems, and has
the second largest U.K. share of the European Fighter Aircraft avionics
equipment market.
CSCC provides systems integration and communication services for the
U.S. Department of Defense and other NATO countries.
CS provides secure communications, computers and peripherals, and
information solutions that integrate custom developed and commercial
off-the-shelf products for the U.S. military, commercial, and select
international markets. CS designs, integrates, and supports strategic and
tactical battlefield communication systems world-wide, including the U.S.
Army's Mobile Subscriber Equipment and TRI-TAC switching programs.
ES provides systems solutions to the Department of Defense and U.S.
intelligence organizations. With major facilities in California, Maryland, and
Virginia, the unit has broad software and systems engineering expertise, and
proven capabilities in signals intelligence, information operations,
information assurance, imagery dissemination and exploitation, weather analysis
systems, virtual collaboration systems and products, and other intelligence and
support systems. The unit also maintains extensive field operations at
government sites around the world, providing both operational and maintenance
support.
WTS engineers, furnishes and installs communications and data systems
for U.S. and foreign governments and corporations. WTS specializes in
asynchronous transfer mode networks, large digital switches, computer systems,
satellite communications, and cellular and personal communications system
networks. WTS provides worldwide life-cycle support, including operations,
maintenance, logistics, managed network services, and desktop support and is
also installing the Aboveground Telecommunications Backbone, a high-speed
voice, video and data communications network for the Pentagon.
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MARINE SYSTEMS
Net Sales (in millions) 1999 1998 1997
--------- -------- ---------
Nuclear submarines and related $ 1,460 $ 1,381 $ 1,321
services
Naval surface ships and related 1,424 999 839
services
Other 204 149 88
--------- -------- -------
$ 3,088 $ 2,529 $ 2,248
========= ======== =========
Electric Boat designs, builds and supports nuclear submarines for the
U.S. Navy, having contracts for the construction of the final Seawolf-class
attack submarine and for the first four ships of the Virginia-class submarine.
Construction work on the Virginia-class will be shared equally between Electric
Boat as the prime contractor and Newport News Shipbuilding Inc. as
subcontractor. In addition to nuclear submarine design and construction,
Electric Boat performs a broad range of engineering work, including advanced
research and technology development, systems and component design evaluation,
prototype development and logistics support for the operating fleet. Electric
Boat also serves as ship integrator for certain components and subassemblies of
the submarines, such as electronic equipment.
To date, BIW has been awarded contracts for the construction of 27
Arleigh Burke class destroyers (DDG 51) and plays a lead role in providing
design, engineering, and ongoing life cycle support services for these ships.
BIW is a member of a three-contractor team which was awarded a contract in 1996
to design and build the Navy's new class of amphibious assault ships (LPD 17).
In February 2000, a contract was awarded to BIW for the construction of the
third ship, LPD 19. BIW is a member, along with Ingalls Shipbuilding, a
division of Litton Industries, Inc., of the DD 21 Shipbuilder Alliance, which
has been awarded contracts to date for the first two phases of system concept
design work for the next generation surface combatant (DD 21). BIW will serve
as the Alliance prime contractor for the first phases of the DD 21 program, is
leading one of the Alliance's two competing design teams and is expected to
share equally with Ingalls Shipbuilding in the production of the DD 21.
AMSEA provides ship management services for five of the U.S. Navy's
Maritime Prepositioning Ships (MPS) and eleven of the U.S. Maritime
Administration's Ready Reserve Force (RRF) ships. The MPS are under five-year
contracts, which are renewable through the year 2011. The RRF ships are
currently operating under an extension of their original five-year contract.
The MPS vessels operate worldwide and the RRF vessels are normally located on
the east, gulf and west coasts of the United States, with one vessel stationed
in the Persian Gulf.
NASSCO designs, builds and repairs ships for the U.S. Navy and
commercial customers. Existing contracts consist of the design and
construction of five sealift ships for the U.S. Navy and two roll-on/roll-off
ships for a commercial customer.
COMBAT SYSTEMS
Net Sales (in millions) 1999 1998 1997
--------- -------- ---------
Armored combat vehicles and $ 860 $ 809 $ 791
related services
Other 430 463 596
--------- -------- ---------
$ 1,290 $ 1,272 $ 1,387
========= ======== =========
Land Systems designs and manufactures the M1 Series Abrams Main Battle
Tank for the U.S. Army and various foreign governments. Land Systems also
performs engineering and upgrade work, and provides support for existing
armored vehicles. Production of the M1A2 was initiated in 1992 and the M1A2
SEP, the latest version of the M1, in 1999. Land Systems has two remaining
production years on a multiyear contract with the U.S. Army to upgrade
approximately 600 tanks from the M1 to the M1A2 and M1A2 SEP configurations.
Land Systems is also under contract for the development of several
other major armored vehicle systems and components, including wheeled weapons
stations, engines and turret drive systems. The U.S. Marine Corps selected and
awarded Land Systems a development contract for the Advanced Amphibious Assault
Vehicle (AAAV), including prototype design and construction. Three prototypes
are currently under contract. Land Systems also continues work on the Army's
Crusader Self-Propelled Howitzer
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development program of which the company's share of the program approximates 25
percent. In addition to these programs, Land Systems, through existing
capabilities and teaming arrangements, is able to offer a wide array of
vehicles to fill the U.S. Army's emerging requirements for medium armored
vehicles.
Armament Systems designs, develops and produces advanced gun and
ammunition handling systems for applications on various land, sea and air
platforms. Armament Systems is also a leader in the production of ammunition
products. Armament Systems is the sole producer of the Hydra-70 2.75"
air-to-ground rocket, having produced over 600,000 to date. In November 1998,
Armament Systems formed a joint venture with another company that consolidated
two of the U.S. Army's largest ammunition production facilities. Previously a
consolidated subsidiary, the company's Milan Army Ammunition Plant is now part
of the unconsolidated joint venture, American Ordnance L.L.C.
OTHER
Net Sales (in millions) 1999 1998 1997
--------- -------- ---------
Aggregates $ 125 $ 123 $ 110
Coal mining 100 88 107
Other 25 25 25
--------- -------- ---------
$ 250 $ 236 $ 242
========= ======== =========
Material Service is engaged in the mining and sale of aggregates
(stone, sand and gravel) for use in the construction of highways and other
infrastructure projects, and for commercial and residential building
construction primarily in northern and central Illinois as well as Indiana.
This business is cyclical and seasonal in nature.
Freeman Energy mines coal, producing approximately 4-5 million tons in
each of the last three years. Freeman Energy owns or leases rights to over 600
million tons of coal reserves in Illinois.
Patriots are financing subsidiaries that lease liquefied natural gas
tankers to a nonaffiliated company.
COMPETITION
BUSINESS AIRCRAFT
The business aircraft market generally is divided into four segments of
aircraft - light, medium, large and ultra-long range - either designed or
converted for business use. The Gulfstream IV-SP competes in the large cabin
business aircraft market segment with the Bombardier Challenger, the Dassault
Falcon 900EX and 900C, and the recently announced Fairchild Envoy 7. The
Gulfstream V competes in the ultra-long range business aircraft market segment
against the Boeing Business Jet, Bombardier Global Express and the Airbus
A-319CJ. The company believes that it competes favorably in its markets on the
basis of the performance characteristics of its aircraft, the quality and
timeliness of the service it provides as well as its innovative marketing
techniques. In addition, the company was able to certify the Gulfstream V
significantly in advance of its competition and obtain a substantial market
lead. The company believes its aircraft's operating costs are comparable to or
lower than those of its competitors and that its products are competitively
priced.
U.S. GOVERNMENT DEFENSE CONTRACTS
Historically, competition for U.S. government defense contracts was
characterized by a number of major companies competing for a variety of
contracts. The customer's procurement policy generally required competitive
bids based on strict specifications. In addition, the customer often awarded
contracts to more than one company in order to ensure competition on subsequent
contracts.
During the last decade, because of reduced defense spending, the defense
industry consolidated through mergers and acquisitions to maintain critical
mass, resulting in fewer and larger competitors. With fewer but more complex
programs in competition, companies frequently have formed strategic alliances
to pursue these programs. The Department of Defense faces challenges as it
must address industrial base issues while assessing competing needs between and
among the various branches of the service. Finally, Congress continues to be
very influential in its role of determining funding levels and priorities. As
a result, the defense procurement policy is evolving and will be affected by
these various and sometimes conflicting factors.
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A discussion of competition on individual defense programs is included in
Management's Discussion and Analysis of the Results of Operations and Financial
Condition on pages 25 through 37 of the 1999 Annual Report, filed as Exhibit 13
to this Annual Report on Form 10-K for the year ended December 31, 1999, and
incorporated herein by reference.
CUSTOMERS
COMMERCIAL
Thirty-one percent of the company's sales are to commercial customers
and primarily include sales of Gulfstream aircraft to national and
multinational corporations. The aircraft are operated by customers in a wide
spectrum of industries and customer groups including: pharmaceuticals, consumer
goods, high technology, energy, industrial manufacturing, finance, insurance,
real estate, mining, transportation, communications, public utilities, the
retail trade and individuals.
U.S. GOVERNMENT
The company's defense businesses represent the majority of its U.S.
government sales. Net sales to the U.S. government include Foreign Military
Sales (FMS), which are sales to foreign governments through the U.S.
government, whereby the company contracts with and receives payment from the
U.S. government and the U.S. government assumes the risk of collection from the
customer. Historically, the company's largest FMS sales were M1 tanks and
related services, including training in operation and maintenance, and other
logistical support. U.S. government sales were as follows (dollars in
millions):
Year Ended December 31
--------------------------------------
1999 1998 1997
------ ------- ------
Domestic $5,104 $4,121 $3,544
FMS 99 175 166
------ ------ ------
Total U.S. government $5,203 $4,296 $3,710
====== ====== ======
Percent of net sales 58% 58% 62%
All U.S. government contracts related to the company's defense
businesses are terminable at the convenience of the U.S. government, as well
as for default. Under contracts terminable at the convenience of the U.S.
government, a contractor is entitled to receive payments for its allowable
costs and, in general, the proportionate share of fees or earnings for the work
done. Contracts which are terminated for default generally provide that the
U.S. government only pays for the work it has accepted and may require the
contractor to pay for the incremental cost of reprocurement and may hold the
contractor liable for damages.
Companies engaged in supplying goods and services to the U.S.
government are dependent on congressional appropriations and administrative
allotment of funds, and may be affected by changes in U.S. government policies
resulting from various military and political developments. U.S. government
defense contracts typically involve long lead times for design and development,
and are subject to significant changes in contract scheduling. Often the
contracts call for successful design and production of very complex and
technologically advanced items.
INTERNATIONAL
The majority of the company's sales for the past three years were
derived from operations in the United States. At the end of 1997, the company
expanded its geographic presence through the acquisition of Computing Devices
Canada Ltd. and Computing Devices Company Limited in the United Kingdom.
Direct foreign sales, including international operations, were $966 million,
$1,111 million and $633 million in 1999, 1998 and 1997, respectively, and were
primarily related to the export of business aircraft. For the year ended
December 31, 1999, sales and operating earnings from international operations
were 3.2% and 2.8% of consolidated sales and operating earnings, respectively.
Identifiable assets of operations domiciled outside the U.S. were 5.5%, 7.3%
and 7.8% of total identifiable assets at December 31, 1999, 1998 and 1997,
respectively, and consisted primarily of goodwill and intangible assets. For
information regarding sales by geographic region, see Note S to the
Consolidated Financial Statements on page 58 of the 1999 Annual Report, filed
as Exhibit 13 to this Annual Report on Form 10-K for the year ended December
31, 1999, and incorporated herein by reference.
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SUPPLIES
Many items of equipment and components used in the production of the
company's products are purchased from other manufacturers. The company is
dependent upon suppliers and subcontractors for a large number of components
and the ability of its suppliers and subcontractors to meet performance and
quality specifications and delivery schedules. In some cases the company is
dependent on one or a few sources, either because of the specialized nature of
a particular item or because of domestic preference requirements pursuant to
which it operates on a given project.
All of the company's operations are dependent upon adequate supplies
of certain raw materials, such as aluminum and steel, and on adequate supplies
of fuel. Fuel or raw material shortages could also have an adverse effect on
the company's suppliers, thus impairing their ability to honor their
contractual commitments to the company. The company has not experienced
serious shortages in any of the raw materials or fuel supplies that are
necessary for its production programs.
RESEARCH AND DEVELOPMENT
Research and development activities in the Aerospace group are
primarily internally funded product enhancement and product development
programs for Gulfstream aircraft. Research and development activities in the
Information Systems and Technology, Marine Systems and Combat Systems groups
are conducted principally under U.S. government contracts. These research
efforts have been and continue to be concerned with developing products for
large systems development programs or performing work under research and
development technology contracts. Each of the company's defense businesses also
engages in independent research and development, of which a significant portion
is recovered through overhead charges to U.S. government contracts.
Company-sponsored research and development began increasing in 1998 due
primarily to the growth in business through acquisitions in the Information
Systems and Technology group. This group conducts research and development
primarily under classified programs.
Research and development expenditures (in millions) by type follows:
Year Ended December 31
---------------------------------
1999 1998 1997
---- ---- ----
Company-sponsored $ 103 $ 103 $ 66
Customer-sponsored 116 114 58
---- ---- -----
$ 219 $ 217 $ 124
===== ====== ======
BACKLOG
Summary backlog information (in millions) for each business group follows:
1999 Total
December 31 Backlog Not
------------------------------------------------------------------------ Expected to Be
1999 1998 Filled in 2000
--------------------------------- ---------------------------------- ----------------
Firm Firm
Contracts Options Total Contracts Options Total
--------- ------- ----- --------- ------- -----
Aerospace $ 2,574 $ 1,179 $ 3,753 $ 3,302 $ 1,000 $ 4,302 $ 1,961
========= ========= ========= ========= ======== ======== =========
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1999 Total
December 31 Backlog Not
----------------------------------------------------------------------------------- Expected to Be
1999 1998 Filled in 2000
------------------------------------------ ------------------------------------ ---------------
Funded Unfunded Total Funded Unfunded Total
------ -------- ----- ------ -------- -----
Information Systems
and Technology $ 1,952 $ 48 $ 2,000 $ 816 $ 76 $ 892 $ 578
Marine Systems 5,529 6,079 11,608 5,071 6,494 11,565 8,553
Combat Systems 1,116 480 1,596 843 736 1,579 751
Other 494 29 523 533 29 562 494
--------- ----------- ---------- -------- ---------- --------- -----------
Total defense
and other backlog $ 9,091 $ 6,636 $ 15,727 $ 7,263 $ 7,335 $ 14,598 $ 10,376
======== =========== ========== ========= ========= ========== ==========
Total backlog represents the estimated remaining sales value of work
to be performed under firm contracts or aircraft to be delivered, options for
the purchase of additional aircraft and amounts for long-term coal contracts.
Aircraft backlog under firm contracts includes orders for which the company has
entered into a definitive purchase contract with no significant contingencies
and has received a significant non-refundable deposit from the customer.
Aircraft options primarily include agreements with customers in connection with
the company's fractional ownership and operating lease programs to grant them
the option to subsequently purchase additional aircraft upon defined terms and
conditions. Funded backlog for government programs represents the portion of
total backlog that has been appropriated by Congress and funded by the
procuring agency. To the extent backlog has not been funded, there is no
assurance that congressional appropriations or agency allotments will be
forthcoming. For further discussion, see Management's Discussion and Analysis
of the Results of Operations and Financial Condition on pages 25 through 37 of
the 1999 Annual Report, filed as Exhibit 13 to this Annual Report on Form 10-K
for the year ended December 31, 1999, and incorporated herein by reference.
REGULATORY CONTROLS - BUSINESS AIRCRAFT
In order for an aircraft model to be manufactured for sale, the
Federal Aviation Administration (FAA) must issue a Type Certificate and a
Production Certificate for the aircraft model and, in order for an individual
aircraft to be operated, an Airworthiness Certificate. Type Certificates are
issued by the FAA when an aircraft model is determined to meet certain
performance, environmental, safety and other technical criteria. The
Production Certificate ensures that the aircraft is built to specifications
approved under the Type Certificate. An Airworthiness Certificate is issued
for a particular aircraft when it is certified to have been built in accordance
with specifications approved under the Type Certificate for that particular
model aircraft. Gulfstream has never had a Type Certificate or a Production
Certificate suspended, nor had any jet aircraft grounded as the result of
regulatory action.
All of the company's aircraft models comply with all currently
applicable federal laws and regulations pertaining to aircraft noise and engine
emissions. Due to their weight (under 75,000 pounds) all Gulfstream II, III,
IV, and IV-SP aircraft are currently exempt from the FAA Stage 3 (most
stringent) noise requirements. Notwithstanding federal requirements, foreign
and local jurisdictions and airport authorities may establish more stringent
restrictions pertaining to aircraft noise. Such local and foreign regulations
in several locations currently restrict the operation of certain jet aircraft,
including the Gulfstream II, IIB, and III, and certain of their competitors
from landing or taking off during late evening and early morning hours. Each
of the Gulfstream IV, IV-SP, and V aircraft produce noise levels below the
FAA's Stage 3 and International Civil Aviation Organization's most stringent
noise ceilings.
ENVIRONMENTAL CONTROLS
The 1990 Clean Air Act (the Act) had a significant impact on Freeman
Energy. The Act requires, among other things, a phased reduction in sulfur
dioxide emissions by coal burning facilities. Virtually all of the coal in
Freeman Energy's Illinois basin mines has medium or high sulfur content.
Freeman Energy's two long-term contract customers have clean coal technologies
which allow for utilization of Freeman Energy's coal under the new regulations.
Freeman Energy has targeted customers with clean coal technology to mitigate
the impact of regulations in the near term. The long-term impact of the Act is
not known.
Federal, state and local requirements relating to the discharge of
materials into the environment and other factors affecting the environment have
had and will continue to have an impact on the manufacturing operations of the
company. Thus far,
8
10
compliance with the requirements has been accomplished without material effect
on the company's capital expenditures, earnings or competitive position. While
it is expected that this will continue to be the case, the company cannot
assess the possible effect of compliance with future requirements. Additional
information relating to the impact of environmental controls is included under
the caption "Environmental" in Note O to the Consolidated Financial Statements
on page 51 of the 1999 Annual Report, filed as Exhibit 13 to this Annual Report
on Form 10-K for the year ended December 31, 1999, and incorporated herein by
reference.
PATENTS
Numerous patents and patent applications are owned by the company and
utilized in its defense business development activities and manufacturing
operations. In many cases, however, the U.S. government has an irrevocable,
non-exclusive, royalty-free license, pursuant to which the government may use
or authorize others to use the inventions covered by the patents. Pursuant to
similar arrangements, the government may consent to the company's use of
inventions covered by patents owned by other persons. Patents and licenses are
important in the operation of the company's defense businesses, as one of
management's key objectives is developing and providing its customers with
advanced technological solutions.
EMPLOYEES
At December 31, 1999, the company had 43,400 employees (excluding
contract labor), of whom 30 percent were covered by collective bargaining
agreements with various unions, the most significant of which are the
International Association of Machinists and Aerospace Workers, the Marine
Draftsmen's Association, the Metal Trades Council of New London, Connecticut
and the United Auto Workers Union. Several agreements are due to expire during
2000, the most significant of which is the International Association of
Machinists and Aerospace Workers.
ITEM 2. PROPERTIES
PRINCIPAL BUSINESS GROUPS. A summary of floor space at the main
facilities of the Aerospace, Information Systems and Technology, Marine Systems
and Combat Systems business groups follows (square feet in millions):
COMPANY GOVERNMENT
OWNED LEASED FURNISHED
FACILITIES FACILITIES FACILITIES TOTAL
AEROSPACE: ---------- ---------- ---------- -----
Gulfstream
Savannah, GA (Factory/Office) 1.5 1.5
Brunswick, GA (Service/Completion Center) 0.1 0.1
Long Beach, CA (Service/Completion Center) 0.3 0.1 0.4
Dallas, TX (Service/Completion Center) 0.2 0.1 0.3
Appleton, WI (Service/Completion Center) 0.1 0.1
Westfield, MA (Service Center) 0.1 0.1
Oklahoma City, OK (Factory) 0.5 0.5
Mexicali, Mexico (Factory) 0.1 0.1
---------- ---------- ---------- --------
TOTAL AEROSPACE 2.2 0.9 0.0 3.1
========== ========== ========== ========
9
11
COMPANY GOVERNMENT
OWNED LEASED FURNISHED
FACILITIES FACILITIES FACILITIES TOTAL
INFORMATION SYSTEMS AND TECHNOLOGY: ---------- ---------- ---------- -----
Defense Systems
Pittsfield, MA (Labs) 0.9 0.9
Advanced Technology Systems
Greensboro, NC (Factory) 0.1 0.3 0.4
Whippany, NJ (Office/Labs) 0.2 0.2
General Dynamics Information Systems
Bloomington, MN (Office) 0.5 0.5
Computing Devices Canada, Ltd.
Ottawa, Ontario (Office/Plant) 0.2 0.1 0.3
Calgary, Alberta (Office) 0.2 0.2
Communication Systems
Needham Heights, MA (Office) 0.3 0.1 0.4
Taunton, MA (Office/Factory) 0.1 0.3 0.4
Electronic Systems
Mountain View, CA (Office/Factory) 0.2 0.4 0.6
Worldwide Telecommunication Systems
Needham Heights, MA (Office) 0.1 0.1
Chantillly, VA (Office) 0.1 0.1
Colorado Springs, CO (Office/Lab) 0.1 0.1
Ft. Gordon, GA (Office/Lab) 0.2 0.2
---------- ---------- ---------- --------
TOTAL INFORMATION SYSTEMS AND TECHNOLOGY 1.3 2.0 1.1 4.4
========== ========== ========== ========
MARINE SYSTEMS:
Electric Boat
Groton, CT (Shipyard) 2.8 0.1 2.9
Quonset Point, RI (Plant/Warehouse) 0.4 1.1 1.5
Avenel, NJ (Land/Plant) 0.4 0.4
Bath Iron Works
Bath, ME (Shipyard) 1.1 1.1
East Brunswick, ME (Warehouse) 0.6 0.6
Portland, ME (Shipyard) 0.1 0.1
National Steel and Shipbuilding Company
San Diego, CA (Shipyard) 0.2 6.0 6.2
---------- ---------- ---------- --------
TOTAL MARINE SYSTEMS 5.5 7.3 0.0 12.8
========== ========== ========== ========
10
12
COMPANY GOVERNMENT
OWNED LEASED FURNISHED
FACILITIES FACILITIES FACILITIES TOTAL
---------- ---------- ---------- -----
COMBAT SYSTEMS:
Land Systems
Lima, OH (Plant) 1.6 1.6
Muskegon, MI (Plant) 1.0 0.1 1.1
Scranton, PA (Plant) 0.3 0.3
Woodbridge, VA (Office) 0.1 0.1
Tallahassee, FL (Plant/Office) 0.1 0.1
Sterling Heights, MI (Warehouse) 0.6 0.6
Anniston, AL (Plant/Warehouse) 0.1 0.1
Imperial, CA (Plant/Warehouse) 0.1 0.1
Shelby Township, MI (Plant) 0.1 0.1
Armament Systems
Burlington, VT (Plant/Office) 0.6 0.6
---------- ---------- ---------- --------
TOTAL COMBAT SYSTEMS 2.4 0.6 1.7 4.7
========== ========== ========== ========
In 1997, BIW began a project to construct a fifteen acre land level
transfer facility and manufacturing support center, and a 750-foot dry-dock in
Bath, Maine to modernize its facility. The company plans to invest over $200
million through 2000 on this project.
OTHER. Freeman Energy operates two underground coal mines and one
surface coal mine in Illinois. Coal preparation facilities and rail loading
facilities are located at each mine sufficient for its output. Material
Service operates several stone quarries, as well as sand and gravel pits and
yards in the Chicago, Illinois and Indiana areas for its aggregates business.
REAL ESTATE HELD FOR DEVELOPMENT. As part of the divestiture of
certain of the company's businesses during 1992 to 1994, specific properties
were retained by the company. The company developed plans and marketing
efforts which are intended to maximize the market value of these properties. In
1997, two buildings and 55 acres in Rancho Cucamonga, California were sold. In
1998, a 232-acre site in the Kearny Mesa section of San Diego was sold. The
remaining properties include approximately 2,200 acres in Sycamore Canyon, San
Diego, California and 308 acres in Rancho Cucamonga, California. Most of this
property is undeveloped. The company owns approximately 20,000 square feet of
building space at Rancho Cucamonga and approximately 200,000 square feet of
building space at Sycamore Canyon.
GENERAL. The company believes that its main facilities are adequate
for the present needs of the company and its subsidiaries and, as supplemented
by planned improvements and construction, are expected to remain adequate for
the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The information under the captions "Litigation" and "Environmental" in
Note O and the information in Note P to the Consolidated Financial Statements
appearing on pages 50 through 52 of the 1999 Annual Report, included in this
Annual Report on Form 10-K for the year ended December 31, 1999, as Exhibit 13,
is incorporated herein by reference in response to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security holders
during the fourth quarter of the year ended December 31, 1999.
11
13
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age, offices and positions held for the last five years of
the company's executive officers who are not directors are as follows:
AGE AT
DECEMBER 31
NAME, POSITION AND OFFICE 1999
------------------------- ---------------
David D. Baier -- Vice President Taxes since August 1995; Staff Vice President Taxes 45
March 1994 -- August 1995
G. Kent Bankus -- Vice President Government Relations since April 1993 57
W.W. Boisture, Jr. -- Executive Vice President since July 1999; President and Chief Operating 55
Officer, Gulfstream Aerospace Corporation since December 1998, Executive Vice President,
Gulfstream Aerospace Corporation February 1994 -- December 1998
Allan C. Cameron -- Vice President of the company and President of Bath Iron Works since 53
March 1996; Executive Vice President and Chief Operating Officer of Bath Iron Works
July 1994 -- March 1996
Michael E. Chandler -- Vice President of the company and President of General Dynamics Worldwide 55
Telecommunication Systems since February 2000; President, Worldwide Telecommunication
Systems September 1999 -- February 2000; Vice President and General Manager, GTE Government
Systems Worldwide Telecommunication Systems Division November 1997 -- September 1999;
Vice President and General Manager, GTE Government Systems Electronic Systems Division
October 1995 -- November 1997
Chris A. Davis -- Vice President of the company since July 1999; Executive Vice President and 49
Chief Financial and Administrative Officer, Gulfstream Aerospace Corporation since July
1993
Gerard J. DeMuro -- Vice President of the company and President of General Dynamics Communication 44
Systems since February 2000; President of General Dynamics Communication Systems September
1999 -- February 2000; Vice President and General Manager, GTE Government Systems
Communications Systems Division October 1997 -- September 1999; Vice President and General
Manager -- MSE/TRITAC GTE Government Systems--Communication Systems Division October
1994 -- October 1997
Gordon R. England -- Executive Vice President since March 1997; President, Lockheed Martin 62
Corporation Fort Worth March 1993 -- March 1995
James I. Finley -- Vice President of the company and President of General Dynamics Information 53
Systems since January 1998; Vice President, Government Information Systems November 1995 --
December 1997; Vice President Programs and Engineering, Westinghouse/United
Technologies 1990 -- October 1995
David H. Fogg -- Vice President and Treasurer since March 1998; Staff Vice President and 44
Treasurer November 1994 -- March 1998
Charles M. Hall -- Vice President of the company and President of Land Systems since September 48
1999; Vice President, Production and Delivery March 1997 -- September 1999; Vice President
and General Manager, Domestic Operations January 1994 -- March 1997
12
14
AGE AT
DECEMBER 31
NAME, POSITION AND OFFICE 1999
------------------------- ---------------
David K. Heebner -- Vice President Strategic Planning since January 2000; Lieutenant General and 54
and Assistant Vice Chief of Staff, U.S. Army, July 1997 -- November 1999; Director of
Program Analysis and Evaluation, Office of the Chief of Staff, U.S. Army, August 1994 --
July 1997
Kenneth A. Hill -- Vice President Information Technology since April 1997; Staff Vice President 50
Personnel Relations November 1994 -- April 1997
Linda P. Hudson -- Vice President of the company and President of Armament Systems 49
since May 1999; Staff Vice President Business Development August 1997 -- May 1999;
President, Ordnance Systems January 1997 -- August 1997; President Martin Marietta/
Lockheed Martin Ordnance Systems January 1994 -- January 1997
Raymond E. Kozen -- Vice President Special Projects since January 2000: Vice President Planning 58
and Analysis March 1997 -- January 2000; Staff Vice President for Special Projects
December 1987 -- March 1997
Michael J. Mancuso -- Senior Vice President and Chief Financial Officer since March 1997; 57
Vice President and Chief Financial Officer November 1994 - March 1997
Charles E. McQueary -- Vice President of the company and President of Advanced Technology 60
Systems since October 1997; President, Advanced Technology Systems, AT&T/Lucent
Technologies January 1994 -- September 1997
Kendell Pease -- Vice President Communications since May 1998; Rear Admiral and Chief 54
Information Officer, U.S. Navy, August 1992 -- May 1998
David A. Savner -- Senior Vice President and General Counsel, Secretary since May 1999; Senior 55
Vice President - Law and Secretary April 1998 -- May 1999; Senior Partner of Jenner & Block
May 1987 -- April 1998
Daniel P. Schmutte -- Vice President of the company and President of Defense Systems since 49
February 1997; Vice President Operations August 1995 -- February 1997; Staff Vice
President and Assistant to the President/Chief Executive Officer June 1993 -- August 1995
John W. Schwartz -- Vice President and Controller since March 1998; Staff Vice President 43
and Controller November 1994 -- March 1998
David E. Scott -- Vice President of the company and President of Computing Devices 54
Canada since February 1998; President Computing Devices Canada June 1997 --
January 1998; Vice President Communications Division November 1990 -- May 1997
13
15
AGE AT
DECEMBER 31
NAME, POSITION AND OFFICE 1999
------------------------- ---------------
John F. Stewart -- Vice President of the company and President of General Dynamics Electronic 55
Systems since February 2000; President of General Dynamics Electronic Systems September 1999 --
February 2000; Vice President and General Manager, GTE Government Systems, Electronic
Systems Division November 1997 -- September 1999; Vice President and General Manager,
GTE Government Systems, Information Operations December 1995 -- November 1997; Vice
President and General Manager, Battle Command and Intelligence, Cubic Applications Corp.,
December 1994 -- December 1995
Michael W. Toner -- Vice President of the company and President of Electric Boat since January 56
2000, Senior Vice President Electric Boat June 1998 -- January 2000; Vice President- Innovation
October 1995 -- June 1998
James E. Turner, Jr. -- Retired January 2000; President and Chief Operating Officer June 1997 -- 65
January 2000; Executive Vice President of the Marine Group October 1995 -- June 1997;
Executive Vice President of the company and President of Electric Boat April 1993 --
October 1995
Arthur J. Veitch -- Senior Vice President since September 1999; Vice President of the company 53
and President of Land Systems February 1997--September 1999; Vice President of the
company and Senior Operating Officer of Land Systems August 1995 -- February 1997;
Division Vice President and General Manager of the company's Convair Division
August 1992 -- August 1995
Richard H. Vortmann -- Vice President of the company and President of NASSCO since 55
February 1999; President, Chief Executive Officer and Chairman of the Board of NASSCO
April 1989 -- February 1999
John K. Welch -- Senior Vice President since January 2000; Vice President of the company and President 49
of Electric Boat October 1995 - January 2000
W. Peter Wylie -- Vice President Human Resources and Administration since August 1995 60
All executive officers of the company are elected annually. No executive
officer of the company was selected pursuant to any arrangement or
understanding between the officer and any other person.
14
16
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The company's common stock is listed on the New York Stock Exchange,
Chicago Stock Exchange and Pacific Stock Exchange.
On October 25, 1999, the company issued 15,424 shares of common stock
to James D. Caldwell in connection with the company's acquisition of Caldwell's
Diving Company, Inc. and Cable Ventures Inc. (now known as Caldwell Cable
Ventures, Inc.). In connection with this share issuance, the company claims
exemption from registration under Section 4(2) of the Securities Act of 1933,
as amended, based on the fact that the transaction did not involve any public
offering of securities.
The high and low sales price of the company's common stock and the
cash dividends declared with respect to the company's common stock for each
quarterly period during the two most recent fiscal years are included in Note T
to the Consolidated Financial Statements appearing on page 58 of the 1999
Annual Report, included in this Annual Report on Form 10-K for the year ended
December 31, 1999, as Exhibit 13, and are incorporated herein by reference.
There were 19,379 holders of record of the company's common stock at
December 31, 1999.
ITEM 6. SELECTED FINANCIAL DATA
The "Selected Financial Data" appearing on page 60 of the 1999 Annual
Report, included in this Annual Report on Form 10-K for the year ended December
31, 1999, as Exhibit 13, is incorporated herein by reference in response to
this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The "Management's Discussion and Analysis of the Results of Operations
and Financial Condition" appearing on pages 25 through 37 of the 1999 Annual
Report, included in this Annual Report on Form 10-K for the year ended December
31, 1999, as Exhibit 13, is incorporated herein by reference in response to
this item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK
The information appearing under the caption "Market Risk" on page 34
of the 1999 Annual Report, included in this Annual Report on Form 10-K for the
year ended December 31, 1999, as Exhibit 13, is incorporated herein by
reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, Notes to the Consolidated
Financial Statements and Report of Independent Public Accountants appearing on
pages 38 through 60 of the 1999 Annual Report, included in this Annual Report
on Form 10-K for the year ended December 31, 1999, as Exhibit 13, are
incorporated herein by reference in response to this item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
15
17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required to be set forth herein, except for a list of
the executive officers other than directors that is provided in Part I of this
report, is included in the sections entitled "Board of Directors of the
Company" and "Other Information - Section 16(a) Beneficial Ownership Reporting
Compliance" in the company's definitive Proxy Statement, which sections are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required to be set forth herein is included in the
sections entitled "Board of Directors of the Company" and "Executive
Compensation" in the company's definitive Proxy Statement, which sections are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required to be set forth herein is included in the
section entitled "Ownership of Common Stock by the Principal Shareholders and
Management" in the company's definitive Proxy Statement, which section is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be set forth herein is included in the
section entitled "Board of Directors of the Company -Transactions Involving
Directors and the Company" in the company's definitive Proxy Statement, which
section is incorporated herein by reference.
16
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The Report of Independent Public Accountants and Consolidated
Financial Statements appearing in the 1999 Annual Report on the pages listed in
the following index are included in this Annual Report on Form 10-K for the
year ended December 31, 1999, as Exhibit 13, and are incorporated herein by
reference.
Page of
1999
Annual
Report
------------
Report of Independent Public Accountants 59
Consolidated Financial Statements:
Consolidated Statement of Earnings 38
Consolidated Balance Sheet 39
Consolidated Statement of Cash Flows 40
Consolidated Statement of Shareholders' Equity 41
Notes to Consolidated Financial Statements (A to T) 42-58
2. Financial Statement Schedules
No schedules are submitted because they are either not applicable or
not required, or because the required information is included in the
Consolidated Financial Statements or the Notes thereto.
3. Exhibits--See Index on pages 19 through 22 of this Annual
Report on Form 10-K.
(b) Reports on Form 8-K
None.
17
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GENERAL DYNAMICS CORPORATION
By: /s/ John W. Schwartz
--------------------
John W. Schwartz
Vice President and Controller
March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on March 27, 2000, by the following persons
on behalf of the Registrant and in the capacities indicated, including a
majority of the directors.
/s/ Nicholas D. Chabraja Chairman, Chief Executive Officer and Director
- ------------------------
Nicholas D. Chabraja (Principal Executive Officer)
/s/ Michael J. Mancuso Senior Vice President and Chief Financial Officer
- ----------------------
Michael J. Mancuso (Principal Financial Officer)
/s/ John W. Schwartz Vice President and Controller
- --------------------
John W. Schwartz (Principal Accounting Officer)
Julius W. Becton, Jr.* Director
James S. Crown* Director
Lester Crown* Director
Charles H. Goodman* Director
George A. Joulwan* Director
Paul G. Kaminski* Director
James R. Mellor* Director
Carl E. Mundy, Jr.* Director
Carlisle A.H. Trost* Director
*By David A. Savner pursuant to Power of Attorney executed by the directors
listed above, which Power of Attorney has been filed with the Securities and
Exchange Commission.
/s/ David A. Savner
-------------------
David A. Savner
Secretary
18
20
INDEX TO EXHIBITS - GENERAL DYNAMICS CORPORATION
COMMISSION FILE NO. 1-3671
Note Exhibit
Number Number Description
- ------ ------ -----------
(18) 3-1B --Restated Certificate of Incorporation, effective August 2, 1999
(12) 3-2D --Bylaws as amended effective October 1, 1997
(11) 4 --Letter re agreement to furnish copy of indenture
(1) 10-1A --Amendment of Mining Leases between American National Bank and Trust of Chicago, Trustee, and La
Salle National Bank, Trustee, to Freeman Coal Mining Corporation, dated January 1, 1960
(1) 10-1B --Amendatory Agreement between Freeman United Coal Mining Company and American National Bank and Trust
Company, as Trustee, and La Salle National Bank, as Trustee, dated January 1, 1975
Company, as Trustee, and La Salle National Bank, as Trustee, dated January 1, 1975
*(3) 10-6A --General Dynamics Corporation Incentive Compensation Plan adopted February 3, 1988, approved by the
shareholders on May 4, 1988
*(4) 10-6B --General Dynamics Corporation Incentive Compensation Plan (as amended), approved by shareholders on
May 1, 1991
(4) 10-7E --Facilities Contract DAAE07-90-E-A001 dated June 24, 1990, between General Dynamics Land Systems,
Inc. and the United States relating to government-owned facilities and equipment at the Lima Army
Tank Plant, Lima, Ohio
(11) 10-14A --Lease Agreement dated December 20, 1996, between Electric Boat Corporation and the Rhode Island
Economic Development Corporation
(9) 10-25 --Lease Agreement dated January 14, 1982, between Bath Iron Works Corporation and the City of
Portland, Maine, relating to pier facilities in the Portland, Maine harbor
(9) 10-26 --Lease Agreement dated January 14, 1982, between Bath Iron Works Corporation and the State of Maine,
relating to a dry dock facility in the Portland, Maine harbor
(10) 10-28 --Asset Purchase and Sale Agreement, dated November 6, 1996, as amended December 20, 1996, between
the company and Lockheed Martin Corporation
*(11) 10-29 --Employment agreement between the company and Nicholas D. Chabraja dated November 12, 1996
*(11) 10-30 --General Dynamics Corporation Incentive Compensation Plan adopted February 5, 1997, approved by
shareholders on May 7, 1997
*(12) 10-31 --Retirement Benefit Agreement between the company and Gordon R. England dated February 14, 1997
(12) 10-32 --Credit Enhancement Agreement between Bath Iron Works Corporation and the City of Bath, Maine dated
September 19, 1997, relating to the development program of facilities in Bath, Maine
*(12) 10-33 --Retirement Benefit Agreement between the company and Michael J. Mancuso dated March 6, 1998
*(12) 10-34 --Consulting agreement between the company and Paul G. Kaminski dated August 18, 1997
(13) 10-36 --Stock Purchase Agreement dated as of October 8, 1998, between the company and NASSCO Holdings
Incorporated and the stockholders of NASSCO Holdings Incorporated
*(14) 10-37 --Retirement Benefit Agreement between the company and David A. Savner dated March 4, 1998
19
21
INDEX TO EXHIBITS - GENERAL DYNAMICS CORPORATION
COMMISSION FILE NO. 1-3671
Note Exhibit
Number Number Description
- ------ ------ -----------
(14) 10-38 --Lease Agreement dated January 1, 1991, between National Steel and Shipbuilding Company and the San
Diego Unified Port District, relating to facilities in the San Diego, California harbor
(14) 10-38A --Amendment of Lease Agreement between National Steel and Shipbuilding Company and the San Diego
Unified Port District, dated December 6, 1994
(14) 10-39 --Capital Construction Fund Agreement, dated September 13, 1988, between National Steel and
Shipbuilding Company and the United States of America, represented by the Maritime Administrator,
Department of Transportation
(14) 10-39A --Capital Construction Fund Agreement-Addendum No. 1, dated September 13, 1988, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
(14) 10-39B --Capital Construction Fund Agreement-Addendum No. 2, dated October 29, 1992, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
(14) 10-39C --Capital Construction Fund Agreement-Addendum No. 3, dated August 27, 1993, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
(14) 10-39D --Capital Construction Fund Agreement-Addendum No. 4, dated August 28, 1997, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
(14) 10-39E --Capital Construction Fund Agreement-Addendum No. 5, dated October 29, 1997, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
10-39F --Capital Construction Fund Agreement-Addendum No. 6, dated August 16, 1999, between National Steel
and Shipbuilding Company and the United States of America, represented by the Maritime
Administrator, Department of Transportation
(16) 10-40 --Agreement and Plan of Merger dated May 16, 1999, between General Dynamics Corporation, Tara
Acquisition Corporation and Gulfstream Aerospace Corporation
(16) 10-41 --Voting Agreement dated May 16, 1999, between General Dynamics Corporation and certain stockholders
of Gulfstream Aerospace Corporation
(17) 10-42 --Stock Purchase Agreement (without Schedules and Exhibits) dated as of June 21, 1999, between
General Dynamics, Contel Federal Systems, Inc. and GTE Corporation
(18) 10-43 --Registration Agreement dated as of July 30, 1999, between General Dynamics Corporation and certain
stockholders of Gulfstream Aerospace Corporation
* 10-44 --Consulting Agreement between the company and James E. Turner, Jr., dated January 12, 2000
13 --1999 Annual Report (pages 25 through 60)
21 --Subsidiaries
23 --Consent of Arthur Andersen LLP
23-A --Consent of Deloitte & Touche LLP
24 --Power of Attorney of the Board of Directors
27 --Financial Data Schedule
27-A --Restated Financial Data Schedule for the six months ended July 4, 1999
27-B --Restated Financial Data Schedule for the three months ended April 4, 1999
27-C --Restated Financial Data Schedule for the year ended December 31, 1998
27-D --Restated Financial Data Schedule for the nine months ended September 27, 1998
27-E --Restated Financial Data Schedule for the six months ended June 28, 1998
27-F --Restated Financial Data Schedule for the three months ended March 29, 1998
99 --Independent Auditors' Report- Deloitte & Touche LLP
* Indicates a management contract or compensatory plan or arrangement
required to be filed pursuant to Item 14(c) of Form 10-K.
20
22
NOTES TO EXHIBITS - GENERAL DYNAMICS CORPORATION
COMMISSION FILE NO. 1-3671
(1) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1980, and filed with the Commission March
31, 1981, and incorporated herein by reference.
(2) Not used.
(3) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1987, and filed with the Commission March
17, 1988, and incorporated herein by reference.
(4) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1990, and filed with the Commission March
29, 1991, and incorporated herein by reference.
(5) Not used.
(6) Not used.
(7) Not used.
(8) Not used.
(9) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1995, and filed with the Commission March
21, 1996, and incorporated herein by reference.
(10) Filed as an exhibit to the company's current report on Form 8-K filed
with the Commission January 15, 1997, and incorporated herein by
reference.
(11) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1996, and filed with the Commission March
21, 1997, and incorporated herein by reference.
(12) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1997, and filed with the Commission March
18, 1998, and incorporated herein by reference.
(13) Filed as an exhibit to the company's current report on Form 8-K filed
with the Commission November 25, 1998, and incorporated herein by
reference.
(14) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1998, and filed with the Commission March
18, 1999, and incorporated herein by reference.
(15) Not used.
(16) Filed as an exhibit to the company's quarterly report on Form 10-Q for
the quarterly period ended April 4, 1999, and filed with the
Commission May 18, 1999, and incorporated herein by reference.
(17) Filed as an exhibit to the company's current report on Form 8-K filed
with the Commission June 24, 1999, and incorporated herein by
reference.
(18) Filed as an exhibit to the company's current report on Form 8-K filed
with the Commission August 11, 1999, and incorporated herein by
reference.
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INDEX TO EXHIBITS - GULFSTREAM AEROSPACE CORPORATION
COMMISSION FILE NO. 1-8461*
The following exhibits are included in this Annual Report on Form 10-K of
General Dynamics Corporation, but were filed by Gulfsteam Aerospace Corporation
prior to the acquisition of Gulfstream by General Dynamics Corporation.
Note Exhibit
Number Number Description
- ------ ------ -----------
**(1) 10.2 --Gulfstream Aerospace Corporation Supplemental Executive Retirement Plan, effective as of April 1,
1991
**(1) 10.3 --Gulfstream Aerospace Corporation November 1, 1991 Supplemental Executive Retirement Plan
(1) 10.4 --Form of Indemnification Agreement between Gulfstream Aerospace Corporation and its directors and
executive officers
**(1) 10.5 --Form of Gulfstream Aerospace Corporation Outside Director Stock Option Agreement
**(1) 10.6 --Form of Gulfstream Aerospace Corporation Outside Director Stockholder's Agreement
**(2) 10.9 --Form of Gulfstream Aerospace Corporation Employee Stock Option Agreement
**(2) 10.10 --Form of Gulfstream Aerospace Corporation Employee Stockholder's Agreement
**(3) 10.27 --Amended and Restated Gulfstream Aerospace Corporation 1990 Stock Option Plan, as further
amended through July 30, 1997
(4) 10.28 --Agreement of Purchase and Sale, dated as of July 23, 1998, by and between Kimberly-Clark
Corporation and Gulfstream Aerospace
Corporation
(2) 10.29 --Agreement dated December 24, 1997, between Gulfstream Aerospace Corporation and its wholly owned
subsidiaries, Gulfstream Delaware Corporation, Gulfstream Aerospace Corporation, a Georgia
Corporation and the Pension Benefit Guaranty Corporation
**(5) 10.42 --Amendment dated December 2, 1998, to the Amended and Restated Gulfstream Aerospace Corporation 1990
Stock Option Plan
**(5) 10.43 --Form of Gulfstream Aerospace Corporation Stock Option Agreement effective December 1998
**(5) 10.44 --Form of Gulfstream Aerospace Corporation Stock Option Agreement for partners or employees of FLC
Partnership effective December 1998
* The common stock of Gulfstream was traded on the New York Stock
Exchange through the close of business on July 30, 1999.
** Indicates a management contract or compensatory plan or arrangement
required to be filed pursuant to Item 14(c) of Form 10-K.
NOTES
(1) Filed as an exhibit to the company's Registration Statement on Form
S-1, No. 333-09897, and filed with the Commission August 9, 1996, and
incorporated herein by reference.
(2) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1996, and filed with the Commission March
28, 1997, and incorporated herein by reference.
(3) Filed as an exhibit to the company's quarterly report on Form 10-Q for
the quarterly period ended June 30, 1997, and filed with the
Commission August 12, 1997, and incorporated herein by reference.
(4) Filed as an exhibit to the company's quarterly report on Form 10-Q for
the quarterly period ended June 30, 1998, and filed with the
Commission July 24, 1998, and incorporated herein by reference.
(5) Filed as an exhibit to the company's annual report on Form 10-K for
the year ending December 31, 1998, and filed with the Commission March
29, 1999, and incorporated herein by reference.
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