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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 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED 31 DECEMBER 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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
- ------------------------------------------------ ----------
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
- ------------------- -------------------
Common Stock, $1.00 Par Value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
9.95% Debentures Due 2018 New York 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
---- ----
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 stock held by nonaffiliates
of the Registrant was $2,492,779,308 at 11 March 1994, calculated in accordance
with the Securities and Exchange Commission rules as to beneficial ownership.
63,340,390 shares of the Registrant's Common Stock were outstanding at
11 March 1994 (adjusted for two-for-one stock split effected in the form of a
100% stock dividend declared 4 March 1994 and payable 11 April 1994 to
shareholders of record 21 March 1994).
DOCUMENTS INCORPORATED BY REFERENCE:
Parts I, II and IV incorporate information from certain portions of
the Registrant's 1993 Shareholder Report.
Part III incorporates information from certain portions of the
Registrant's definitive Proxy Statement to be filed with the Securities and
Exchange Commission within 120 days after the close of the fiscal year.
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PART I
ITEM 1. BUSINESS
INTRODUCTION
General Dynamics Corporation (the Company) is a Delaware corporation
formed in 1952 as successor to the Electric Boat Company, now the Company's
Nuclear Submarines business. Consolidated Vultee Aircraft Corporation was
merged into the Company in 1954 and from it emerged the Company's former
Tactical Military Aircraft and Missile Systems businesses and the Space Launch
Systems business. The Material Service Resources Company is the successor to
the Material Service Corporation which was merged into the Company in 1959.
Chrysler Defense, Inc., now the Company's Armored Vehicles business, was
acquired in 1982. The Cessna Aircraft Company, formerly the Company's General
Aviation business, was acquired in 1985. In addition, the Company operates
other smaller businesses.
Prior to 1992, the businesses of the Company included the following:
Tactical Military Aircraft, Nuclear Submarines, Armored Vehicles, Space Launch
Systems, Missile Systems and General Aviation. Over the past two years, the
Company has sold its Tactical Military Aircraft, Missile Systems and General
Aviation businesses, as well as certain other smaller businesses, and the sale
of its Space Launch Systems business is expected to close by April 1994. The
Company's remaining continuing business segments are Nuclear Submarines,
Armored Vehicles and Other. The Other business segment is composed of Freeman
Energy Corporation (Freeman), American Overseas Marine Corporation (AMSEA) and
Patriot I, II and IV Shipping Corporations (Patriots). A general description
of these businesses including products, properties and other related
information follows. For financial information and further discussion of
the business segments, as well as an overall discussion of the Company's
business environment, reference is made to Management's Discussion and Analysis
of the Results of Operations and Financial Condition, appearing on pages 12
through 17 in the Company's 1993 Shareholder Report, included in this Form
10-K-Annual Report as Exhibit 13 and incorporated herein by reference.
NUCLEAR SUBMARINES
The Company's Electric Boat Division (Electric Boat) is a designer and
builder of nuclear submarines for the U.S. Navy. Electric Boat also performs
overhaul and repair work on submarines as well as a broad range of engineering
work including advanced research and technology development, systems and
component design evaluation, prototype development and logistics support to the
operating fleet. Certain components and subassemblies of the submarines, such
as electronic equipment, are produced by other firms.
Electric Boat has contracts for SSN 688-class attack submarines (SSN
688), Trident ballistic missile submarines (Trident) and Seawolf class attack
submarines, all of which are currently under construction at its 96 acre
shipyard on the Thames River at Groton, Connecticut. The shipyard, which
contains a covered area in excess of 2.6 million square feet, is owned by the
Company. Electric Boat also produces modular submarine hull sections,
components and subassemblies in leased facilities at Quonset Point, Rhode
Island, and in Company-owned facilities at Avenel, New Jersey and Charleston,
South Carolina. Due to the winding down of the SSN 688 and Trident programs,
the Company has announced that it plans to close the Charleston facility in
early 1994. Approximately 45% of Electric Boat's property, plant and equipment
was fully depreciated at 31 December 1993.
Electric Boat competed with Newport News Shipbuilding and Drydock
Company (Newport News) for construction of the SSN 688 and Seawolf submarines.
Electric Boat is currently the sole-source producer of Trident and Seawolf
submarines. For most engineering work, Electric Boat competes in a highly
competitive environment with several smaller specialized firms in addition to
Newport News.
ARMORED VEHICLES
The Company's Land Systems Division (Land Systems) is the sole-source
producer of main battle tanks for the U.S. Government. Land Systems designs
and manufactures the M1 Series Abrams Main Battle Tank for the U.S. Army and
the U.S. Marine Corps. Land Systems also performs engineering and upgrade work
as well as provides support for existing armored vehicles. Production of the
M1A1, a version of the M1 that incorporates increased firepower, additional
crew protection features, and improved armor, was initiated in 1985.
Production of the M1A2, the latest version of the M1 which incorporates
battlefield management systems aimed at providing improved fightability, as
well as improved survivability of the tank's four crew members, was initiated
in 1992. In addition to domestic sales, M1 tanks are being sold through the
U.S. Government to various foreign governments. Land Systems provides
training in operation and maintenance and other logistical support on
international sales.
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Certain components of the M1 series tank, such as the engine and the
transmission and final drive, are produced by other firms. Land Systems has
bid and is currently bidding on other armored vehicle and related programs for
the U.S. Government in competition primarily with FMC Corporation. The
current international market is characterized by intense competition for a
limited number of business opportunities. The Company has been successful in
competitive bids for production contracts and related logistic support with
Egypt, Saudi Arabia and Kuwait, but was unsuccessful on similar bids with the
United Arab Emirates and Sweden.
Tank production is performed at the 1.6 million square foot plant on
370 acres in Lima, Ohio, and machining operations are performed at the 1.2
million square foot plant on 145 acres in Warren (Detroit), Michigan. Each is
owned by the U.S. Government and operated by Land Systems under a facilities
contract. In support of these plants, Land Systems leases property in
Scranton, Pennsylvania, and owns or leases property in various locations in
Michigan.
The Company, teamed with Tadiran Ltd. of Israel, was selected during
1988 as the second-source producer of the Single Channel Ground and Airborne
Radio System (SINCGARS). The Company is currently participating in its first
competitive bid under the SINCGARS program with ITT Corporation. A decision on
the competition is expected during the first half of 1994. The Company leases
space in Tallahassee, Florida to support SINCGARS production.
OTHER
Freeman mines coal, the majority of which is sold in the spot market
or under short-term contracts to a variety of customers. Freeman's remaining
coal production (approximately 45%) is sold under long-term contracts to
utilities and industrial users located principally in the Midwest. Several of
these long-term contracts have price adjustment clauses to reflect changes in
certain costs of production. Freeman operates three underground mines and one
surface mine in Illinois, along with one surface mine in Kentucky. Coal
preparation facilities and rail loading facilities are located at each mine
sufficient for its output. Total production from Freeman's mines was
approximately 5 million tons in 1993, 4.5 million tons in 1992 and 3.6 million
tons in 1991. In addition, Freeman owns or leases rights to over 600
million tons of coal reserves in Illinois and Kentucky. Due to the commodity
nature of the Company's coal operations, the primary factors affecting
competition are price and geographic service area. Freeman's operations are
not significantly affected by seasonal variations.
The 1990 Clean Air Act requires, among other things, a phased
reduction in sulfur dioxide emissions by coal burning facilities over the next
few years. Virtually all of the coal in Freeman's Illinois basin mines has
medium or high sulfur content. The impact of compliance with the Clean Air Act
will be mitigated in the near-term by Freeman's long-term contracts and through
installation of pollution control devices by certain of Freeman's major
customers. The long-term impact of the Clean Air Act is not known.
AMSEA provides ship management services for five of the U.S. Navy's
Maritime Prepositioning Ships (MPS) and twelve of the U.S. Maritime
Administration's Ready Reserve Force (RRF) ships. The MPS are under five year
contracts which expire in 1995 and 1996 but are renewable through the year
2011. The RRF ships are in the first year of five year contracts for which the
Company competed with various other ship management providers. The MPS vessels
operate worldwide and the RRF vessels are located on the east, gulf and west
coasts of the United States. AMSEA's home office is in Quincy, Massachusetts.
Patriots are financing subsidiaries which lease liquefied natural gas
tankers constructed by the Company to unrelated third parties.
DISCONTINUED OPERATIONS
The Company has sold or intends to sell certain businesses that are
reported as discontinued operations in the Company's financial statements. The
remaining businesses are as follows:
The Company's Convair Division is the sole-source producer of fuselages
for the McDonnell Douglas Corporation (McDonnell Douglas) MD-11 wide body
tri-jet aircraft. Production work is performed in San Diego, California in
facilities owned by the Company which are on land leased from the San Diego
Port Authority.
Material Service Corporation (Material Service) is engaged in the
quarrying and direct sale of aggregates (e.g. stone, sand and gravel), and the
production and direct sale of ready mix concrete and other concrete products.
Material Service's aggregate and concrete facilities and operations are located
primarily in Illinois.
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REAL ESTATE HELD FOR DEVELOPMENT
As part of the sale of businesses, certain related properties were
retained by the Company. These properties have been segregated on the
Consolidated Balance Sheet as real estate held for development. The Company
has retained outside experts to support the development of plans which will
maximize the market value of these properties. These properties include: 232
acres in Kearny Mesa and 2,420 acres in Sycamore Canyon, both of which are in
the vicinity of San Diego, California; 375 acres in Rancho Cucamonga,
California; and 53 acres in Camden, Arkansas. Most of this property is
undeveloped. The Company owns 3.7 million square feet of building space on the
aforementioned properties, as well as .6 million square feet of building space
on land leased from the San Diego Port Authority. Certain of these facilities
are currently being leased by the purchasers of the related sold businesses for
what is expected to be a short transition period.
GENERAL INFORMATION
Backlog
- -------
The following table shows the approximate backlog of the Company
(excluding discontinued operations) as calculated at 31 December 1993 and 1992
and the portion of the 31 December 1993 backlog not reasonably expected to be
filled during 1994 (dollars in millions):
Portion of 1993
backlog not
31 December expected to
--------------------- be filled
1993 1992 during 1994
---- ---- -----------
Nuclear Submarines $ 3,787 $ 5,154 $ 2,177
Armored Vehicles 1,197 1,243 313
Other 2,031 2,091 1,911
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Total Backlog $ 7,015 $ 8,488 $ 4,401
========= ========= =========
Total Funded Backlog $ 5,487 $ 6,780
========= =========
Total Unfunded Backlog $ 1,528 $ 1,708
========= =========
Backlog represents the total estimated remaining sales value of
authorized work. Backlog excludes announced orders for which definitive
contracts have not been executed, except for amounts funded prior to
definitization. Funded backlog includes amounts that have been appropriated by
the U.S. Congress, and authorized and funded by the procuring agency. Funded
backlog also includes amounts which have been authorized on Foreign Military
Sales and long-term coal contracts. Unfunded backlog includes amounts for
which there is no assurance that congressional appropriations or agency
allotments will be forthcoming. Insofar as the backlog represents orders from
the U.S. Government, it is subject to cancellation and other risks associated
with government contracts (see "U.S. Government Contracts").
U. S. Government Contracts
- --------------------------
The Company's net sales to the U.S. Government include Foreign
Military Sales (FMS). FMS 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. U.S. Government sales were as follows (excluding discontinued
operations; dollars in millions):
Year Ended 31 December
------------------------------------
1993 1992 1991
---- ---- ----
Domestic $ 2,202 $ 2,706 $ 2,792
FMS 801 276 149
--------- --------- ---------
Total U.S. Government $ 3,003 $ 2,982 $ 2,941
========= ========= =========
Percent of net sales 94% 92% 93%
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All U.S. Government contracts 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. In 1991, the
U.S. Navy terminated the Company's A-12 aircraft contract for default. For
further discussion, see Item 3 of this report.
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
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.
Foreign Sales and Operations
- ----------------------------
The major portion of sales and operating earnings of the Company for
the past three years was derived from operations in the United States.
Although the Company purchases supplies from and subcontracts with foreign
companies, it has no substantial operations in foreign countries. The majority
of foreign sales are made as FMS through the U.S. Government, but certain
direct foreign sales are made of components and support services. Direct
foreign sales were $35 million, $42 million and $50 million in 1993, 1992 and
1991, respectively.
The Company has indirect offset commitments relating to foreign
contracts, whereby the Company provides economic benefits to the buying country
through marketing assistance, technology transfers, direct procurement of
products not related to the primary contract, and direct investments.
Research and Development
- ------------------------
Research and development activities in the Nuclear Submarines and
Armored Vehicles segments are conducted principally under U.S. Government
contracts. These research efforts are generally either concerned with
developing products for large systems development programs or performing work
under research and development technology contracts. In addition, the defense
businesses engage in independent research and development, of which a
significant portion is recovered through overhead charges to U.S. Government
contracts.
The table below details expenditures (excluding discontinued
operations) for research and development (dollars in millions):
Year Ended 31 December
-------------------------------------
1993 1992 1991
----- ---- -----
Company-sponsored $ 33 $ 32 $ 32
Customer-sponsored 142 122 81
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$ 175 $ 154 $ 113
======== ========= =========
Supplies
- --------
Many items of equipment and components used in the production of the
Company's products are purchased from other manufacturers. Although the
Company has a broad base of suppliers and subcontractors, it is dependent upon
the ability of its suppliers and subcontractors to meet performance and quality
specifications and delivery schedules. In some cases it 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.
- 4 -
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Environmental Controls
- ----------------------
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, 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.
Patents
- -------
Numerous patents and patent applications are owned by the Company and
utilized in its development activities and manufacturing operations. It is
also licensed under patents owned by others. While in the aggregate its
patents and licenses are considered important in the operation of the Company's
business, they are not considered of such importance that their loss or
termination would materially affect its business. Engineering, production
skills and experience are more important to the Company than its patents or
licenses.
Employees
- ---------
From the end of 1991 to the end of 1993, the Company's total employees
decreased from about 80,600 to about 30,500. Approximately 70% of this
decrease is due to the disposition of businesses in which the employees of the
disposed businesses were transferred to the acquiring companies.
At the end of 1993, approximately 40% of the Company's employees were
covered by collective bargaining agreements with various unions, the most
significant of which are the International Association of Machinists and
Aerospace Workers, the Metal Trades Council of New London, Connecticut, the
United Auto Workers Union (UAW), the Office and Professional Employees
International Union and the United Mine Workers of America. During 1994, three
collective bargaining agreements, which cover approximately 20% of the union
represented work force, are scheduled to expire and are subject to negotiations
with the respective unions, the most significant of which is the UAW at Land
Systems.
ITEM 2. PROPERTIES
The information required for this item is included in Item 1 of this
report.
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is a defendant in U.S. vs. Davis
et al, a civil action in the Federal District Court for the Southern District
of New York in which the U.S. Government alleges claims under the Civil False
Claims Act. A judgment in favor of the Company was entered on 2 October 1992.
On 4 January 1993, the U.S. Government appealed the District Court's judgment
in favor of the Company. This appeal is now pending.
On 7 January 1991, the U.S. Navy terminated for default a contract
with the Company and McDonnell Douglas for the full-scale development of the
U.S. Navy's A-12 aircraft. The U.S. Navy has demanded repayment of
unliquidated progress payments, but agreed to defer collection pending
resolution of the termination dispute. The Company and McDonnell Douglas filed
a complaint in the U.S. Court of Federal Claims to contest the default
termination. A trial on Count XVII of the complaint, which relates to the
propriety of the termination for default, was concluded in October 1993. In
December 1993, the Court issued preliminary findings of fact which appear
favorable to the Company and McDonnell Douglas. The Court will not issue a
decision before 21 July 1994, during which time other counts in the complaint
will be prepared for decision. For further discussion, see Note P to the
Consolidated Financial Statements appearing on page 29 in the Company's 1993
Shareholder Report, included in this Form 10-K-Annual Report as Exhibit 13 and
incorporated herein by reference. The Company believes that ultimately it will
be found not to have been in default of the contract.
The Company is a defendant in a shareholders' derivative action filed
in the California Superior Court for San Diego County on 17 January 1991. The
suit was dismissed by the court on 10 May 1993, because the plaintiffs failed
to make a demand on the Board of Directors of the Company prior to bringing
action. The period to amend the complaint has expired.
- 5 -
7
On 8 March 1993, a class action lawsuit, Berchin et al vs. General
Dynamics Corporation and William A. Anders, was filed in the Federal District
Court for the Southern District of New York. The suit alleges violations of
various provisions of federal securities laws, fraud, negligent
misrepresentation, and breach of fiduciary duty by the defendants with regard
to disclosures made, or omitted, in the Company's tender offer completed in
July 1992 and the subsequent divestiture of core businesses. The Company
believes there is no liability in connection with this matter and intends to
vigorously defend itself.
The Company is directly or indirectly involved in seventeen Superfund
sites in which the Company, along with other major U.S. corporations, has been
designated a potentially responsible party (PRP) by the U.S. Environmental
Protection Agency (EPA) or a state environmental agency with respect to past
shipments of hazardous waste to sites now requiring environmental cleanup.
Chatham Brothers Barrel Yard is a hazardous waste disposal site
located near Escondido, California. The California Department of Toxic
Substances Control is overseeing a cleanup of the site pursuant to California
state laws and is seeking to recover its costs from a variety of PRPs,
including the Company and several other major corporations in the aerospace and
petroleum industries. To date, California has incurred about $8.7 million in
costs, and estimates an additional $40 million to $60 million in investigation
and remediation costs. Under the California equivalent of the federal
Superfund law, all of the PRPs are jointly and severally liable to the State of
California for these costs.
The Casmalia Resources site is a former industrial waste disposal
facility located near Santa Maria, California. Since March 1993, the Company
and a large number of other PRPs have been negotiating with the EPA to fund and
perform an environmental cleanup of this site. Site investigation studies are
now just beginning, but estimates of total remediation costs have ranged from
$30 million to $150 million.
The Company is also involved in the cleanup and remediation of various
conditions at sites it currently or formerly owned or operated, many of which
were sites used in the conduct of the Company's government contracting
business. The Company believes that a portion of these costs are recoverable
under government contracts. The Company has defenses to liability in some
cases, and in other cases the Company is acting to mitigate and minimize its
potential liability. The Company is participating in steering committees and
taking other actions to establish its percentage liability on an allocated and
sharing basis with other PRPs. Although the Company's involvement and the
extent of the remediation varies from site to site, the Company believes, based
upon an analysis of each site, that its liability at the sites will not be
deemed material to the financial condition or results of operations of the
Company.
Under the Federal Black Lung Benefits Act (the Act), a disabled coal
miner with coal worker's pneumoconiosis may be entitled to monthly compensation
for life. Approximately 50 claims for benefits under the Act by former
employees of Freeman are pending and are in various stages of procedure,
including a substantial number which are being contested by the Company. The
claims are reviewed by Administrative Law Judges of the U.S. Department of
Labor for determination of questions of disability and compensation. Freeman
has outstanding approximately 40 claims which have been filed under the
Illinois Occupational Disease Act. Many of the claims are disputed. The
Company has established liabilities, on an actuarial basis, to pay for the
estimated costs of any benefits that are ultimately awarded.
The Company is also a defendant in other lawsuits and claims and in
other investigations of varying nature. The Company believes these
proceedings, in the aggregate, are not material to the Company's financial
condition or results of operations.
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 31 December 1993.
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SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE COMPANY
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
31 DECEMBER
NAME, POSITION AND OFFICE 1993
------------------------- ----
Kent G. Bankus -- Vice President of the Company since April 1993; Staff Vice President
of the Company July 1991 -- April 1993; Corporate Director in Government Relations
July 1989 -- July 1991 51
Edward C. Bruntrager -- Vice President and General Counsel of the Company since March
1994; Assistant General Counsel of the Company January 1987 -- March 1994 46
Paul A. Hesse -- Vice President of the Company since May 1991; President and Chief
Operating Officer of Dix & Eaton 1988 -- 1991 52
J. Steven Keate -- Vice President and Controller of the Company since March 1993; Controller
of the Company December 1991 -- March 1993; Director in Corporate Finance of the
Company 1990 -- 1991; Manager at the Company's Convair Division 1987 -- 1990 37
Ralph W. Kiger -- Vice President of the Company since May 1993; Staff Vice President of
the Company March 1992 -- May 1993; Vice President of General Dynamics Services
Company July 1991 -- March 1992; Vice President of the Company's Data Systems
Division November 1988 -- July 1991 48
E. Alan Klobasa -- Staff Vice President and Secretary of the Company since March 1992;
Secretary of the Company September 1987 -- March 1992 46
Molly R. Salky -- Vice President of the Company since August 1992; Director of
Investor Relations March 1991 -- August 1992; Manager of Investor Relations
November 1986 -- March 1991 36
D. Blaine Scheideman -- Senior Vice President of the Company since February
1991; Vice President of the Company August 1989 -- February 1991; Vice
President of the Company's Fort Worth Division April 1975 -- August 1989 62
Henry J. Sechler -- Vice President of the Company since August 1991; Staff Vice
President of the Company 1985 -- August 1991 61
Roger E. Tetrault -- Vice President of the Company and President of the
Company's Land Systems Division since March 1993; Vice President of the
Company and President of the Company's Electric Boat Division August
1992--March 1993; Vice President of the Company and General Manager of the
Company's Electric Boat Division August 1991 -- August 1992; Vice President
and Group Executive of Babcock and Wilcox 1990 -- 1991; Vice President and
General Manager of Babcock and Wilcox's Naval Nuclear Fuel Division 1985 --
1990 52
James E. Turner, Jr. -- President of the Company's Electric Boat Division since
March 1993; Executive Vice President of the Company since February 1991;
Vice President of the Company and General Manager of the Company's Electric
Boat Division September 1988 -- February 1991 59
Charles D. Walbrandt -- Vice President and Treasurer of the Company since July
1993; Vice President of the Company September 1991 -- July 1993; Staff
Vice President of the Company 1983 -- 1991 55
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AGE AT
31 DECEMBER
NAME, POSITION AND OFFICE 1993
------------------------- ----
Mark S. Woolley -- Vice President of the Company since August 1992; Staff Vice
President March 1991 -- August 1992; Director of Business Development and
Analysis of the Company August 1990 -- March 1991; Director of
Acquisitions and Dispositions Analysis at Textron, Inc. 1989 -- 1990 38
Michael W. Wynne -- Vice President of the Company and President of the
Company's Space Systems Division since August 1992; Vice President of
the Company and General Manager of the Company's Space Systems Division
February 1991 -- August 1992; Vice President of the Company's Land
Systems Division 1982 -- 1991 49
All executive officers of the Company are elected annually. There are no family
relationships, as defined, between any of the above executive officers. No
executive officer of the Company was selected pursuant to any arrangement or
understanding between the officer and any other person.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
General Dynamics Corporation common stock is listed on the New York
Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange.
The high and low market price of General Dynamics Corporation common
stock and the cash dividends declared for each quarterly period within the two
most recent fiscal years is included in Note T to the Consolidated Financial
Statements appearing on page 32 in the Company's 1993 Shareholder Report,
included in this Form 10-K - Annual Report as Exhibit 13 and incorporated
herein by reference.
There were 24,496 common shareholders of record of General Dynamics
Corporation common stock at 31 December 1993.
10
ITEM 6. SELECTED FINANCIAL DATA
The information on pages 12 through 17 and 34 of the 1993 Shareholder
Report, included in this Form 10-K -- Annual Report 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 OPERATION
The information on pages 12 through 17 of the 1993 Shareholder Report,
included in this Form 10-K -- Annual Report as Exhibit 13, is incorporated
herein by reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information on pages 18 through 34 of the 1993 Shareholder Report,
included in this Form 10-K -- Annual Report as Exhibit 13, is incorporated
herein by reference in response to this item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
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11
PART III
The information required to be set forth herein, Item 10, "Directors
and Executive Officers of the Registrant," Item 11, "Executive Compensation,"
Item 12, "Security Ownership of Certain Beneficial Owners and Management," and
Item 13, "Certain Relationships and Related Transactions," except for a list of
the Executive Officers which is provided in Part I of this report, is included
in the Company's definitive Proxy Statement pursuant to Regulation 14A, which
is incorporated herein by reference, to be filed with the Securities and
Exchange Commission no later than 120 days after the close of the fiscal year
ended 31 December 1993.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements--See Index on page 11.
2. Financial Statement Schedules--See Index on page 11.
3. Exhibits--See Index on pages 17 through 19.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the 4th Quarter
of 1993.
- 9 -
12
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/ J. Steven Keate
---------------------------------
J. Steven Keate
Vice President and Controller
29 March 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW ON 29 MARCH 1994 BY THE FOLLOWING PERSONS ON
BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED, INCLUDING A MAJORITY
OF THE DIRECTORS.
William A. Anders Chairman and Director
Thomas G. Ayers Director
Frank C. Carlucci Director
Nicholas D. Chabraja Director
William J. Crowe, Jr. Director
James S. Crown Director
Lester Crown Director
Charles H. Goodman Director
Harvey Kapnick Vice Chairman and Director
David S. Lewis Director
James R. Mellor Chief Executive Officer and Director
(Principal Executive Officer)
Stanley C. Pace Director
Allen E. Puckett Director
Bernard W. Rogers Director
Elliot H. Stein Director
J. Steven Keate Vice President and Controller (Principal
Financial and Accounting Officer)
By: /S/ E. Alan Klobasa
-----------------------------------
E. Alan Klobasa
Attorney-in-Fact
- 10 -
13
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
ITEM 14(a) 1. AND 2.
PAGE
----
FORM SHAREHOLDER
10-K REPORT
---- ------
Report of Independent Public Accountants 12 33
Consolidated Financial Statements:
Consolidated Statement of Earnings 18
Consolidated Balance Sheet 19
Consolidated Statement of Cash Flows 20
Consolidated Statement of Shareholders' Equity 21
Notes to Consolidated Financial Statements (A to T) 22 - 32
Financial Statement Schedules:
I -- Marketable Securities 13
VII -- Guarantees of Securities of Other Issuers 14
IX -- Short-term Borrowings 15
X -- Supplementary Income Statement Information 16
All other schedules are not submitted because they are not applicable or not
required, or because the required information is included in the financial
statements or the notes thereto.
The Report of Independent Public Accountants and Consolidated Financial
Statements listed in the above Index under Shareholder Report, are included in
this Form 10-K -- Annual Report as Exhibit 13 and are incorporated herein by
reference.
- 11 -
14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of General Dynamics Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in General Dynamics
Corporation's 1993 Shareholder Report incorporated by reference in this Form
10-K, and have issued our report thereon dated 25 January 1994 (except with
respect to the stock split discussed in Note K, as to which the date is 4 March
1994). Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in the accompanying index
are the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Washington, D.C.,
25 January 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference into this
Form 10-K for the year ended 31 December 1993 into the Company's previously
filed registration statements on Form S-8 file numbers 33-23448, 2-23904,
2-23032, 2-28952, 2-50980, 2-24270 and 2-88053.
ARTHUR ANDERSEN & CO.
Washington, D.C.,
29 March 1994
- 12 -
15
SCHEDULE I -- MARKETABLE SECURITIES
31 DECEMBER 1993
(DOLLARS IN MILLIONS)
Amount at
Which Each
Portfolio of
Equity
Number of Security
Shares or Issues and
Units-- Each Other
Principal Market Value Security
Amount of Of Each Issue Issue Carried
Bonds and Cost of Each at Balance in the
Name of Issuer and Title of Each Issue Notes Issue Sheet Date Balance Sheet
- -------------------------------------- --------- ------------ ------------- --------------
Marketable Securities
- ---------------------
Tax-Exempt Municipal Obligations $ 396 $ 396 $ 396 $ 396
Money Market Preferred Stock 452 shares 81 81 81
Preferred Stock 311,075 shares 14 14 14
-------- -------- --------
Total $ 491 $ 491 $ 491
======== ======== ========
Other Investments (a)
- ------------------
Preferred Stock 1,729,530 shares $ 50 $ 50 $ 50
======== ======== ========
(a) Included in Other Assets on the Consolidated Balance Sheet in the
Company's 1993 Shareholder Report.
- 13 -
16
SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS
31 DECEMBER 1993
(DOLLARS IN MILLIONS)
Nature
of Any Default
by Issuer of
Securities
Guaranteed
Name of Issuer Amount in Principal,
of Securities Owned Interest,
Guaranteed Total by Person Amount in Sinking Fund
by Person Title of Issue Amount or Persons Treasury of or Redemption
for Which of Each Class Guaranteed for Which Issuer of Provisions,
Statement of Securities and Statement Securities Nature of or Payment
is Filed Guaranteed Outstanding is Filed Guaranteed Guarantee of Dividends
-------- ---------- ----------- -------- ---------- --------- ------------
AMSC Subsidiary
Corporation Note Payable $30 None None Principal None
and interest
Continental Cement
Company Notes payable $13 None None Principal None
and interest
Carbon River
Coal Company Note payable $7 None None Principal None
and interest
- 14 -
17
SCHEDULE IX--SHORT-TERM BORROWINGS
(DOLLARS IN MILLIONS)
Weighted
Average
Weighted Outstanding Interest
Average During the Year Rate
---------------
Category of Aggregate Balance at Interest Daily During the
Short-term Borrowings(a) 31 December Rate Maximum Average(b) Year(b)
- ------------------------ ----------- ---- ------- ---------- ------
1991
- ----
Commercial paper $ - -% $ 77 $ 4 6.5%
1992
- ----
None
1993
- ----
None
Notes:
(a) Maturity ranges from overnight to six months from date of issue. No
borrowings have provisions for extensions of maturity.
(b) Based on the amounts outstanding at the end of each day.
- 15 -
18
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT
INFORMATION--YEARS ENDED 31 DECEMBER
(DOLLARS IN MILLIONS)
Charged to Costs and Expenses(a)
---------------------------------------------------
Item 1993 1992 1991
---- ---- ---- ----
Maintenance and repairs $66 $57 $71
(a) Continuing operations only.
- 16 -
19
INDEX TO EXHIBITS
Note Exhibit
Number Number Description
- ------ ------ -----------
(14) 2 --Asset Purchase Agreement, dated 8 December 1992, between the Company and Lockheed
Corporation
(13) 3-1A --Restated Certificate of Incorporation, effective 21 May 1991
(9) 3-1B --Rights Agreement, dated as of 1 February 1989, between the Company and
Bankers Trust Company
(15) 3-1C --Amendment, dated 1 August 1992, to Rights Agreement between the Company and Bankers
Trust Company appointing First Chicago Trust Company of New York Successor Rights Agent
(13) 3-2 --Bylaws as amended and restated 11 March 1992
3-2A --Bylaws as amended effective 5 May 1993
(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 1 January 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 1 January 1975
(7) 10-3 --Facilities Contract N-00024-87-E-5409 between the United States and the Company as
amended, relating to facilities at Pomona, California, dated 13 March 1987
(10) 10-3A --Modifications #A0013, A0014, P00001 to Facilities Contract N00024-87-E-5409
(1) 10-4A --Facilities Contract F33657-83-E-2119 between the United States and the Company, as
amended, relating to Air Force Plant 19, San Diego, California, dated 1 July 1983
(12) 10-4B --Modification #P00014 to Facilities Contract F33657-83-E-2119
(1) 10-4C --Lease between San Diego Unified Port District and the Company relating
to facilities at Lindbergh Field, San Diego, California, dated 9 October 1979
(1) 10-4D --Lease Amendment between San Diego Unified Port District and the Company relating to
facilities at Lindbergh Field, San Diego, California, dated 2 August 1983
(3) 10-5A --General Dynamics Corporation Stock Option Plan adopted effective 1 January 1971
(8) 10-6A --General Dynamics Corporation Incentive Compensation Plan adopted 3 February 1988,
approved by the shareholders on 4 May 1988
(12) 10-6B --General Dynamics Corporation Incentive Compensation Plan (as amended),
approved by shareholders on 1 May 1991
(13) 10-6E --General Dynamics Corporation Gain/Sharing Plan as terminated 3 December 1991.
(13) 10-6F --Stock Purchase Agreement, dated 1 November 1991, by and between the Company and CSC Domestic
Enterprises, Inc.
(13) 10-6G --Stock Purchase Agreement, dated 20 January 1992, between the Company and Textron, Inc.
(2) 10-7A --Facilities Contract DAA307-79-C-0143 dated 19 June 1979 between the Company's General
Dynamics Land Systems Inc. subsidiary and the United States relating to the Company's
facilities at the Detroit Arsenal Tank Plant, Warren, Michigan
(4) 10-7A-1 --1984 modifications to Facilities Contract DAAE07-79-C-0143
(8) 10-7A-2 --Modifications #A00018, P00071, P00072, P00075, P00077, P00078,
P00081, P00083-P00088 to Facilities Contract DAAE07-79-C-0143
(12) 10-7A-3 --1990 Modifications to Facilities Contract DAAE07-79-C-0143
Modifications #A00040 - 00047, P00117-00131
(3) 10-7B --Facilities Contract DAAE07-82-E-0006, dated 23 April 1982 between the Company's
General Dynamics Land Systems Inc. subsidiary and the United States relating to
Government-owned facilities at the Lima Army Tank Plant, Lima, Ohio and the Detroit
Arsenal Tank Plant, Warren, Michigan, pertaining to the M-1 tank
(4) 10-7B-1 --1984 modifications to Facilities Contract DAAE07-82-E-0006
(5) 10-7B-2 --1985 modifications to Facilities Contract DAAE07-82-E-0006
(8) 10-7B-3 --Modifications A00026-A00033, P00041, P00048-P00058 to Facilities
Contract DAAE07-82-E-0006
- 17 -
20
Note Exhibit
Number Number Description
- ------ ------ -----------
(12) 10-7B-4 --1990 Modifications to Facilities Contract DAAE07-82-E-0006
Modifications #A00041 - 00043, P00081-00087
(4) 10-7C-2 --Facilities Contract DAAE07-83-E-A001 dated 29 August 1983 and
1984 modifications between the Company's General Dynamics Land
Systems Inc. subsidiary and the United States relating to Government
owned facilities and equipment located at the Company's facility at
Sterling Heights, Michigan
(12) 10-7C-3 --1990 Modifications to Facilities Contract DAAE07-83-E-A0001, Modification P0010
(3) 10-7D --Facilities Contract DAAE07-83-E-A007 dated 29 January 1983 between
the Company's General Dynamics Land Systems Inc. subsidiary and the
United States relating to Government-owned facilities at the Scranton
Defense Plant, Eynon, Pennsylvania
(4) 10-7D-1 --1984 modifications to Facilities Contract DAAE07-83-E-A007
(5) 10-7D-2 --1985 modifications to Facilities Contract DAAE07-83-E-A007
(8) 10-7D-3 --Modifications #A00003, A00008, A00009, A00010, P00023-P00031
to Facilities Contract DAAE07-83-E-A007
(12) 10-7D-4 --1990 Modifications to Facilities Contract DAAE07-83-E-A007, Modifications P0051-P0062
(12) 10-7E --Facilities Contract DAAE07-90-E-A001 dated 24 June 1990 between the Company's General
Dynamics Land Systems Inc. subsidiary and the United States relating to the Company's
facilities at the Lima Army Tank Plant, Lima, Ohio
(12) 10-7E-1 --1990 Modifications to Facilities Contract DAAE07-90-E-A001
Modifications #A00001-00004, P00001, P00002
(12) 10-7F --Facilities Contract DAAE07-91-E-A002 dated 21 December 1990 between the Company's
General Dynamics Land Systems Inc. subsidiary and the United States relating to the
Company's facilities at the Detroit Arsenal Tank Plant, Warren, Michigan
(5) 10-8A --General Dynamics Corporation Retirement Plan for Directors adopted 6 March 1986
(6) 10-8E --Employment Agreement between the Company and David S. Lewis dated 21 October
1982, as last amended on 6 June 1985
(10) 10-9 --Facilities Contract N00024-87-E-5417 between the United States and the Company
relating to facilities at Rancho Cucamonga, California
(11) 10-12 --Employment Agreement dated as of 22 September 1989 between the Company
and William A. Anders
(11) 10-13 --Indenture of Lease dated 1 January 1986 by and between State of Rhode Island and
Providence Plantations and Rhode Island Port Authority and Economic Development
Corporation and the Company
(11) 10-14 --Lease Agreement dated 28 November 1978 as amended 15 January 1989 between
Rhode Island Port Authority and Economic Development Corporation and the Company
(15) 10-15 --Asset Purchase Agreement, dated 8 May 1992, between the Company and
Hughes Aircraft Company
(15) 10-16 --Separation Agreement between the Company and William A. Anders dated as of
17 March 1993
(15) 10-17 --Separation Agreement between the Company and Harvey Kapnick dated as of
17 March 1993
(15) 10-18 --Employment Agreement between the Company and James R. Mellor dated as of
17 March 1993
(15) 10-19 --Separation Agreement between the Company and Lester Crown dated as of
15 March 1993
(15) 10-20 --Agreement between the Company and James J. Cunnane dated as of 16 March 1993
(15) 10-21 --Form of Agreement entered into between the Company and Corporate Officers who are
retiring or being released from employment with the Company
(15) 10-22 --Form of Agreement entered into between the Company and Corporate Officers who are
being retained in employment with the Company
10-23 --Employment agreement between the Company and Nicholas D. Chabraja, dated
3 February 1993 as amended 22 December 1993
- 18 -
21
Note Exhibit
Number Number Description
- ------ ------ -----------
11 --Statement re computation of per share earnings
13 --1993 Shareholder Report (pages 12-34)
21 --Subsidiaries
23 --Consent of Arthur Andersen & Co. (See Item 14 of this Report)
24-A --Powers of Attorney of the Board of Directors
24-B --Power of Attorney of J. Steven Keate, Principal Financial and Accounting Officer
NOTES
(1) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1980, and filed
with the Commission 31 March 1981 (File Reference No. 1-3671), and incorporated herein by reference.
(2) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1981, and filed
with the Commission 31 March 1982, and incorporated herein by reference.
(3) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1982, and filed
with the Commission 30 March 1983 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1984, and filed
with the Commission 1 April 1985 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1985, and filed
with the Commission 31 March 1986, and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Registration Statement No. 33-6287 on Form S-1 filed with the Commission
and incorporated herein by reference.
(7) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1986 and filed
with the Commission 31 March 1987 and incorporated herein by reference.
(8) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1987 and filed
with the Commission 17 March 1988 and incorporated herein by reference.
(9) Filed as an exhibit to the Company's current report on Form 8-K filed with the Commission on 8 February 1989
and incorporated herein by reference.
(10) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1988 and filed
with the Commission 23 March 1989 and incorporated herein by reference.
(11) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1989 and filed
with the Commission 30 March 1990 and incorporated herein by reference.
(12) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1990 and filed
with the Commission 29 March 1991 and incorporated herein by reference.
(13) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1991 and filed
with the Commission 26 March 1992 and incorporated herein by reference.
(14) Filed as an exhibit to the Company's current report on Form 8-K filed with the Commission on 16 March 1993 and
incorporated herein by reference.
(15) Filed as an exhibit to the Company's annual report on Form 10-K for the year ending 31 December 1992 and filed
with the Commission on 30 March 1993 and incorporated herein by reference.
- 19 -