AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Established submarine design and construction leadership, alongside one primary Marine Systems competitor that also participates in production, supports strong specialized-entry barriers. Evidence is concentrated in naval shipbuilding and does not establish comparable protection across all segments.
durability · 3/4 · Submarine leadership persists across annual disclosures, and additional destroyer awards support continued participation through a long construction cycle. Planned two-decade Columbia construction strengthens the outlook, but funding dependence and the revised delivery expectation prevent an exceptional grade.
customer dependency · 3/4 · Design responsibility, lifecycle support and follow-on naval awards demonstrate embedded customer relationships. Maintenance demand supplies additional indirect evidence of recurring consumption. These do not imply customer inability to terminate contracts or exclusive maintenance retention.
erosion resilience · 2/4 · Continued awards and growing Aerospace orders coexist with industrial-base pressure, a later Columbia delivery expectation, supplier delays and a realized combat-vehicle program termination. The core naval position remains supported, but resilience is mixed across the portfolio.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Revenue and earnings increased, but disclosed drivers emphasize delivery volume, aircraft mix and operating performance. The passages do not isolate realized price increases, concessions or price retention sufficiently to assess this criterion.
retention · 3/4 · Follow-on naval awards, continuing lifecycle support and increased maintenance demand demonstrate repeat demand and embedded relationships. Aerospace orders backed by contracts and deposits reinforce demand continuity. This uses indirect operating evidence and establishes no customer-level retention rate.
margin resilience · 3/4 · Company operating margin improved modestly in 2025 despite disclosed cost pressures, and Aerospace margin expanded further in the first half of 2026. Technologies' decline and prior supply-chain cost increases temper the conclusion. Results support operating resilience, not proof that higher prices caused it.
contractual freedom · 1/4 · Production contracts generally fix scope and price; other contracts reimburse costs with specified or performance-dependent fees and fixed hourly rates. These terms provide some cost protection but limited unilateral pricing freedom. Government termination rights further strengthen customer bargaining power.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.86
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.90
Financial strength80
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 85.37
- netDebtEbitGrade
- 78.79
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 55.49
- Debt / FCF (x)
- 2.02
- Net debt / operating income (x)
- 1.06
- Current ratio (x)
- 1.44
- cashInterestPaid
- 376.00
- cashInterestCoverage
- 13.62
Capital allocation91
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 16.45
- 3-year average dilution (%)
- -0.76
- 3-year average SBC / revenue (%)
- 0.39
- cashConversionGrade
- 96.94
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · Actual cash generation funded investment, dividends, repurchases and net note repayment in 2025. First-half 2026 results show further investment and debt repayment with increased cash. Reported ROIC improved over 2023–2025. Customer advances contributed to interim cash flow, and future returns on capacity investments remain unproven.
incentive alignment · 3/4 · The actual annual incentive structure combines earnings, cash flow, margin and operational measures. Certified three-year PSU performance, share holding restrictions and disclosed officer ownership demonstrate implemented alignment beyond proposed awards. Aggregate ownership does not establish each executive's individual exposure.
execution · 3/4 · Higher aircraft deliveries and operating earnings, repeat naval awards and artillery output exceeding contract requirements provide demonstrated execution evidence. The Columbia schedule change, supplier delays and prior cost increases show material weaknesses. Some achievements are reported in compensation evaluations, and attribution to individual managers is indirect.
governance · 2/4 · Independent committees, documented Lead Director actions and an effective year-end 2025 internal-control audit support oversight. The later disclosure of approximately 300,000 employee-plan shares sold without registration is a realized compliance lapse. Subsequent registration addresses future sales but does not erase the lapse; the earlier audit opinion does not establish later compliance.
Evidence
Electric Boat is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs.
Business / Marine Systems / Electric Boat program role · Filed 30/01/2026
The business is responsible for all aspects of design and engineering and leads the construction of both Columbia-class ballistic-missile submarines and Virginia-class attack submarines.
Business / Marine Systems / submarine design and construction · Filed 30/01/2026
Our Marine Systems segment has one primary competitor with which it also partners on the Virginia-class submarine program, and to which it subcontracts on the Columbia-class submarine program.
Business / competition / Marine Systems · Filed 30/01/2026
Electric Boat is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs.
2023 Business / Electric Boat program role · Filed 08/02/2024
Construction is scheduled to span two decades, and the value of the Navy’s program of record is in excess of $125 billion.
Business / Columbia-class planned construction duration · Filed 30/01/2026
The increased demand has placed pressure on the shipbuilding industrial base, which was already impacted by significant demographic issues coming out of the global pandemic.
MD&A / shipbuilding industrial-base pressure · Filed 29/07/2026
These submarines will provide strategic deterrent capabilities for decades, with the first boat scheduled for delivery in 2027 to begin replacement of the current Ohio-class ballistic-missile submarine fleet as it reaches the end of its service life.
2023 Business / Columbia-class delivery schedule · Filed 08/02/2024
These submarines will provide strategic deterrent capabilities for decades, with the first boat expected to deliver in 2028 to begin replacement of the current Ohio-class ballistic-missile submarine fleet as it reaches the end of its service life.
2025 Business / Columbia-class delivery expectation · Filed 30/01/2026
government contracts, and it may use or authorize others to use the inventions covered by these patents.
Business / intellectual property / government use rights · Filed 30/01/2026
In 2025, we were competitively awarded construction of an additional DDG-51 destroyer (DDG-148), bringing our total backlog to 11 ships with scheduled deliveries through 2032.
Business / Marine Systems / competitive destroyer award and backlog · Filed 30/01/2026
BIW also manages modernization and lifecycle support for both Arleigh Burke-class and Zumwalt-class (DDG-1000) destroyers.
Business / Marine Systems / modernization and lifecycle support · Filed 30/01/2026
In 2025, NASSCO received an award for the eleventh and twelfth T-AO-205 ships.
Business / Marine Systems / additional replenishment-oiler award · Filed 30/01/2026
U.S. government contracts generally permit the government to terminate a contract, in whole or in part, for convenience.
Risk factors / government termination for convenience · Filed 30/01/2026
The unfunded portion of total backlog includes the amounts we believe are likely to be funded, but there is no guarantee that future budgets and appropriations will provide the same funding level currently anticipated for a given program.
MD&A / defense backlog / unfunded commitments · Filed 29/07/2026
Revenue from U.S. military vehicles decreased in 2025 due primarily to the termination of the M10 Booker program and lower volume on Stryker programs, partially offset by higher volume on the XM30 program.
MD&A / Combat Systems / realized program termination and lower volume · Filed 30/01/2026
The Aerospace segment competes worldwide in the business jet aircraft services market primarily on the basis of quality, price and timeliness.
Business / Aerospace services competition · Filed 30/01/2026
Aircraft services revenue was higher in 2025 due to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
MD&A / Aerospace / maintenance demand and installed base · Filed 30/01/2026
Aircraft services revenue was up in the second quarter and first six months of 2026 due primarily to higher fixed-base operator (FBO) activity and increased customer demand for aircraft maintenance.
MD&A / Aerospace / realized maintenance and FBO demand · Filed 29/07/2026
The segment achieved a book-to-bill ratio (orders divided by revenue) of 1.5-to-1 in the second quarter of 2026 and 1.3-to-1 in the first six months, even as revenue grew more than 10% in each period.
MD&A / Aerospace / 2026 book-to-bill results · Filed 29/07/2026
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers.
MD&A / Aerospace / definitive purchase contracts and deposits · Filed 29/07/2026
AEROSPACE Three Months Ended July 5, 2026 June 29, 2025 Variance Revenue $ 3,525 $ 3,062 $ 463 15.1 % Operating earnings 510 403 107 26.6 % Operating margin 14.5 % 13.2 % Gulfstream aircraft deliveries (in units) 41 38 3 7.9 % Six Months Ended July 5, 2026 June 29, 2025 Variance Revenue $ 6,804 $ 6,088 $ 716 11.8 % Operating earnings 1,003 835 168 20.1 % Operating margin 14.7 % 13.7 % Gulfstream aircraft deliveries (in units) 79 74 5 6.8 % Operating Results The increase in the Aerospace segment’s revenue in the second quarter and first six months of 2026 consisted of the following: Second Quarter Six Months Aircraft manufacturing $ 338 $ 481 Aircraft services 125 235 Total increase $ 463 $ 716 Aircraft manufacturing revenue increased in the second quarter and first six months of 2026 due primarily to the number and mix of aircraft deliveries.
MD&A / Aerospace / revenue, deliveries, earnings and margin results · Filed 29/07/2026
The increase in the segment’s operating earnings in the second quarter and first six months of 2026 consisted of the following: Second Quarter Six Months Aircraft manufacturing $ 99 $ 148 Aircraft services 32 60 G&A/other expenses (24) (40) Total increase $ 107 $ 168 Aircraft manufacturing operating earnings increased in the second quarter and first six months of 2026 due primarily to increased deliveries and aircraft mix.
MD&A / Aerospace / earnings drivers · Filed 29/07/2026
OPERATING MARGIN Operating margin of 10.2% was up 10 basis points over 2024.
Compensation discussion / 2025 company operating-margin result · Filed 27/03/2026
Eight of our 10 business units achieved improved operating performance versus 2024 despite tariff and inflationary cost pressures, underscoring effective cost management and disciplined execution across the portfolio.
Compensation discussion / business-unit performance under cost pressure · Filed 27/03/2026
Overall, the segment’s margin decreased 10 basis points compared with 2024.
MD&A / Technologies / realized margin decline · Filed 30/01/2026
Most of our production contracts are fixed-price.
Financial statement notes / production contract pricing · Filed 29/07/2026
Under these contracts, we agree to perform a specific scope of work for a fixed amount.
Financial statement notes / fixed-price scope and amount · Filed 29/07/2026
Under cost-reimbursement contracts, the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee.
Financial statement notes / cost reimbursement and fees · Filed 29/07/2026
The amount for an incentive or award fee is determined by our ability to achieve targets set in the contract, such as cost, quality, schedule and performance.
Financial statement notes / performance-dependent fees · Filed 29/07/2026
Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials.
Financial statement notes / fixed hourly rates and materials reimbursement · Filed 29/07/2026
54 CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31 (Dollars in millions) 2025 2024 2023 Cash flows from operating activities – continuing operations: Net earnings $ 4,210 $ 3,782 $ 3,315 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation of property, plant and equipment 680 644 608 Amortization of intangible and finance lease right-of-use assets 244 242 255 Equity-based compensation expense 196 183 181 Deferred income tax provision (benefit) 256 (86) (177) (Increase) decrease in assets, net of effects of business acquisitions: Accounts receivable 556 16 38 Unbilled receivables (146) (261) 913 Inventories 450 (1,195) (2,219) Increase (decrease) in liabilities, net of effects of business acquisitions: Accounts payable (664) 247 (303) Customer advances and deposits (4) 343 2,415 Other, net (658) 197 (316) Net cash provided by operating activities 5,120 4,112 4,710 Cash flows from investing activities: Capital expenditures (1,161) (916) (904) Other, net (123) (37) (37) Net cash used by investing activities (1,284) (953) (941) Cash flows from financing activities: Dividends paid (1,593) (1,529) (1,428) Repayment of fixed-rate notes (1,500) (500) (1,250) Proceeds from fixed-rate notes 747 — — Purchases of common stock (637) (1,501) (434) Other, net (207) 161 18 Net cash used by financing activities (3,190) (3,369) (3,094) Net cash used by discontinued operations (10) (6) (4) Net increase (decrease) in cash and equivalents 636 (216) 671 Cash and equivalents at beginning of year 1,697 1,913 1,242 Cash and equivalents at end of year $ 2,333 $ 1,697 $ 1,913 The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.
Consolidated statement of cash flows / 2023–2025 · Filed 30/01/2026
6 CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Six Months Ended (Dollars in millions) July 5, 2026 June 29, 2025 Cash flows from operating activities – continuing operations: Net earnings $ 2,285 $ 2,008 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation of property, plant and equipment 348 325 Amortization of intangible and finance lease right-of-use assets 115 121 Equity-based compensation expense 107 89 Deferred income tax provision (benefit) 365 (98) (Increase) decrease in assets, net of effects of business acquisitions: Accounts receivable 8 (612) Unbilled receivables (846) (200) Inventories 135 (207) Increase (decrease) in liabilities, net of effects of business acquisitions: Accounts payable 196 (261) Customer advances and deposits 1,168 106 Other, net 154 179 Net cash provided by operating activities 4,035 1,450 Cash flows from investing activities: Capital expenditures (437) (340) Other, net 13 124 Net cash used by investing activities (424) (216) Cash flows from financing activities: Dividends paid (834) (785) Repayment of fixed-rate notes (500) (1,500) Purchases of common stock (319) (600) Proceeds from commercial paper, net — 696 Proceeds from fixed-rate notes — 747 Other, net 48 39 Net cash used by financing activities (1,605) (1,403) Net cash used by discontinued operations (6) (5) Net increase (decrease) in cash and equivalents 2,000 (174) Cash and equivalents at beginning of period 2,333 1,697 Cash and equivalents at end of period $ 4,333 $ 1,523 Supplemental cash flow information: Income tax payments, net $ (273) $ (236) Interest payments $ (149) $ (203) The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these financial statements.
Unaudited consolidated statement of cash flows / first half 2026 · Filed 29/07/2026
In June 2026, we repaid fixed-rate notes of $500 at the scheduled maturity using cash on hand.
MD&A / financing / completed debt repayment · Filed 29/07/2026
ROIC is calculated as follows: (dollars in millions, except percentages) Year Ended December 31 2025 2024 2023 Net earnings $ 4,210 $ 3,782 $ 3,315 After-tax interest expense 318 310 315 After-tax amortization expense 193 191 201 Net operating profit after taxes 4,721 4,283 3,831 Average invested capital 33,212 32,451 31,258 ROIC 14.2% 13.2% 12.3% GENERAL DYNAMICS / 2026 PROXY STATEMENT 97 Table of Contents Table of Contents Table of Contents
Appendix A / reported ROIC calculation and historical results · Filed 27/03/2026
● The annual incentive was formulaic and based on three financial metrics of EPS (25%), FCF (25%) and operating margin (20%), as well as overall and individual strategic and operational performance (30%).
Compensation discussion / actual 2025 annual incentive structure · Filed 27/03/2026
PSU GRANT PERFORMANCE AND PAYOUT 2023 – 2025 PSU Performance ROIC – In March 2026, the Committee certified the three-year ROIC achievement of 13.2% for PSUs granted in 2023, against the target of 12.6% established for the 2023 – 2025 performance period.
Compensation discussion / certified 2023–2025 PSU performance · Filed 27/03/2026
For the year ended December 31, 2025, the total number of shares owned by our CEO and other officers represented 27.7 times their combined annual salaries.
Compensation discussion / actual executive share ownership · Filed 27/03/2026
Similarly, net shares received upon vesting of PSUs and restricted stock (after withholding taxes) may not be sold until the stock ownership guidelines are met.
Compensation discussion / share holding requirements · Filed 27/03/2026
All of our Board committees are chaired by independent directors and are 100% independent.
Proxy summary / independent Board committees · Filed 27/03/2026
Schumacher, among other things: ● Approved in advance the full agenda for each Board meeting and each Board committee meeting, and proposed topics of discussion; ● Oversaw performance assessments, including the Board self-assessment and CEO compensation review; ● Attended all Board meetings and all meetings of Board committees on which she served; ● Chaired meetings of non-management directors; ● Regularly met with the chairman regarding topics relevant to the Board; ● Facilitated regular communication among the directors and the chairman; and ● Participated and assisted in the identification and assessment of potential director candidates.
Governance / Lead Director activities · Filed 27/03/2026
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Independent auditor report / internal control opinion · Filed 30/01/2026
We recently determined that up to approximately 300,000 shares of the company’s common stock were offered and sold to participants in the General Dynamics Corporation 401(k) Plan 3.0 (the “3.0 Plan”), the General Dynamics Corporation 401(k) Plan 6.0 (the “6.0 Plan”), and the General Dynamics Corporation 401(k) Plan for Represented Employees (the “Represented Employees Plan” and, together with the 3.0 Plan, and the 6.0 Plan, collectively, the “Plans”), without being registered under the Securities Act of 1933.
Other information / unregistered employee-plan share sales · Filed 29/07/2026
On July 1, 2026, we filed a Registration Statement on Form S-8 registering future sales of shares under the Plans and the General Dynamics Corporation 401(k) QACA Plan.
Other information / registration of future employee-plan share sales · Filed 29/07/2026
The target was set 60 basis points lower than the 2024 target due to the supply chain schedule and cost increases that materialized throughout 2024 mentioned above.
Compensation discussion / lowered target following realized supply-chain cost and schedule increases · Filed 27/03/2026
Our ability to produce new aircraft is dependent on our supply chain, and while performance has improved and the overall supply chain has stabilized, we have experienced some delays including at our Israel-based supplier of mid-cabin airframes caused by conflicts in the Middle East.
MD&A / Aerospace / realized supplier delays · Filed 29/07/2026
Supported the ramp up and attainment of 36,000 155mm artillery rounds per month of projectiles in our Northeast Pennsylvania facility, exceeding contract requirements.
Compensation discussion / artillery production achievement · Filed 27/03/2026
and non-U.S. businesses. Our Technologies segment competes with many companies, from large government contracting and commercial technology companies to small niche competitors with specialized technologies or expertise.
Business / Combat Systems and Technologies competition · Filed 30/01/2026
