General Dynamics Corp 10-Q for FY2026 Q1
General Dynamics Corp (GD)
10-Q
2026-04-29
For: 2026-04-05
View Original
Added on
April 29, 2026
About this 10-Q
General Dynamics Corp filed this 10-Q on April 29, 2026, covering the quarter ended April 5, 2026 (FY2026 Q1).
Headline figures
Quarter ended April 5, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.48B
- up 10.3% from $12.22B a year earlier
- Net income
- $1.13B
- up 13.2% from net income of $994M a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[☑ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 5, 2026
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
(Exact name of registrant as specified in its charter)
| State or other jurisdiction of incorporation or organization | I.R.S. Employer Identification No. | ||||||||||||||||
| Address of principal executive offices | Zip code | ||||||||||||||||
(703 ) 876-3000
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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 ü No ___
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ü No ___
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Smaller reporting company___☐ Emerging growth company___☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes___☐ No ü
INDEX
| PART I - | PAGE | |||||||
| Item 1 - | ||||||||
Item 2 - | ||||||||
| Item 3 - | ||||||||
| Item 4 - | ||||||||
| PART II - | ||||||||
| Item 1 - | ||||||||
| Item 1A - | ||||||||
| Item 2 - | ||||||||
| Item 5 - | ||||||||
| Item 6 - | ||||||||
2
PART I – FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
| Three Months Ended | |||||||||||
| (Dollars in millions, except per-share amounts) | April 5, 2026 | March 30, 2025 | |||||||||
| Revenue: | |||||||||||
| Products | $ | $ | |||||||||
| Services | |||||||||||
| Operating costs and expenses: | |||||||||||
| Products | ( | ( | |||||||||
| Services | ( | ( | |||||||||
| General and administrative (G&A) | ( | ( | |||||||||
| ( | ( | ||||||||||
| Operating earnings | |||||||||||
| Other, net | |||||||||||
| Interest, net | ( | ( | |||||||||
| Earnings before income tax | |||||||||||
| Provision for income tax, net | ( | ( | |||||||||
| Net earnings | $ | $ | |||||||||
| Earnings per share | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended | ||||||||||||||||||||
| (Dollars in millions) | April 5, 2026 | March 30, 2025 | ||||||||||||||||||
| Net earnings | $ | $ | ||||||||||||||||||
| Changes in unrealized cash flow hedges | ( | |||||||||||||||||||
| Foreign currency translation adjustments | ( | |||||||||||||||||||
| Changes in retirement plans’ funded status | ||||||||||||||||||||
| Other comprehensive (loss) income, pretax | ( | |||||||||||||||||||
| Provision for income tax, net | ( | ( | ||||||||||||||||||
| Other comprehensive (loss) income, net of tax | ( | |||||||||||||||||||
| Comprehensive income | $ | $ | ||||||||||||||||||
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these financial statements.
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CONSOLIDATED BALANCE SHEET
| (Unaudited) | |||||||||||
| (Dollars in millions) | April 5, 2026 | December 31, 2025 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and equivalents | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Unbilled receivables | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Noncurrent assets: | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Total noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt and current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Customer advances and deposits | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Noncurrent liabilities: | |||||||||||
| Long-term debt | |||||||||||
| Other liabilities | |||||||||||
| Commitments and contingencies (see Note J) | |||||||||||
| Total noncurrent liabilities | |||||||||||
| Shareholders’ equity: | |||||||||||
| Common stock | |||||||||||
| Surplus | |||||||||||
| Retained earnings | |||||||||||
| Treasury stock | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
5
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| Three Months Ended | |||||||||||
| (Dollars in millions) | April 5, 2026 | March 30, 2025 | |||||||||
| Cash flows from operating activities – continuing operations: | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
| Depreciation of property, plant and equipment | |||||||||||
| Amortization of intangible and finance lease right-of-use assets | |||||||||||
| Equity-based compensation expense | |||||||||||
| Deferred income tax provision (benefit) | ( | ||||||||||
| (Increase) decrease in assets, net of effects of business acquisitions: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Unbilled receivables | ( | ( | |||||||||
| Inventories | ( | ||||||||||
| Increase (decrease) in liabilities, net of effects of business acquisitions: | |||||||||||
| Accounts payable | |||||||||||
| Customer advances and deposits | |||||||||||
| Other, net | ( | ( | |||||||||
| Net cash provided (used) by operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other, net | |||||||||||
| Net cash used by investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Dividends paid | ( | ( | |||||||||
| Purchases of common stock | ( | ( | |||||||||
| Proceeds from commercial paper, net | |||||||||||
| Repayment of fixed-rate notes | ( | ||||||||||
| Other, net | ( | ( | |||||||||
| Net cash used by financing activities | ( | ( | |||||||||
| Net cash used by discontinued operations | ( | ( | |||||||||
| Net increase (decrease) in cash and equivalents | ( | ||||||||||
| Cash and equivalents at beginning of period | |||||||||||
| Cash and equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Income tax payments, net | $ | ( | $ | ( | |||||||
| Interest payments | $ | ( | $ | ( | |||||||
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these financial statements.
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CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| Common Stock | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||||||||||||||||
| (Dollars in millions) | Par | Surplus | Earnings | Stock | Loss | Equity | |||||||||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Cash dividends declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Equity-based awards | — | — | — | ||||||||||||||||||||||||||||||||
| Shares purchased | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| April 5, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Cash dividends declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Equity-based awards | — | — | — | ||||||||||||||||||||||||||||||||
| Shares purchased | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| March 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these financial statements.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except share and per-share amounts or unless otherwise noted)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapon systems and munitions; and technology products and services.
The following is a discussion of certain significant accounting policies, and further discussion is contained in other notes to these financial statements.
Basis of Consolidation and Classification. The unaudited Consolidated Financial Statements include the accounts of General Dynamics Corporation and our wholly owned and majority-owned subsidiaries. We eliminate all intercompany balances and transactions in the unaudited Consolidated Financial Statements.
Consistent with industry practice, we classify assets and liabilities related to long-term contracts as current, even though some of these amounts may not be realized within one year.
Interim Financial Statements. The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) to be condensed or omitted.
Our fiscal quarters are typically 13 weeks in length. Because our fiscal year ends on December 31, the number of days in our first and fourth quarters varies slightly from year to year.
The unaudited Consolidated Financial Statements contain all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations and financial condition for the three-month periods ended April 5, 2026, and March 30, 2025. Operating results for the three-month period ended April 5, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Property, Plant and Equipment, Net. Property, plant and equipment (PP&E) is carried at historical cost, net of accumulated depreciation. Net PP&E consisted of the following:
| April 5, 2026 | December 31, 2025 | ||||||||||
| PP&E | $ | $ | |||||||||
| Accumulated depreciation | ( | ( | |||||||||
| PP&E, net | $ | $ | |||||||||
Recent Accounting Pronouncements. For a discussion of accounting standards that have been issued by the Financial Accounting Standards Board (FASB) but are not yet effective, refer to the Recent Accounting Pronouncements section in our Annual Report on Form 10-K for the year ended
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B. REVENUE
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (development, production, maintenance and support). For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service. We classify revenue as products or services based on the predominant attributes of the associated performance obligation.
Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in customer specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract.
Revenue from goods and services transferred to customers at a point in time accounted for 24 % and 25 % of our revenue for the three-month periods ended April 5, 2026 and March 30, 2025, respectively. Most of our revenue recognized at a point in time is for the manufacture of business jet aircraft in our Aerospace segment. Revenue on these contracts is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft.
On April 5, 2026, we had $130.8 billion of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately 55 % of our remaining performance obligations as revenue by year-end 2027, an additional 25 % by year-end 2029 and the balance thereafter.
Contract Estimates. The majority of our revenue is derived from long-term contracts and programs that can span several years. Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. We estimate the profit on a contract as the
9
difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
The nature of our contracts gives rise to several types of variable consideration, including claims, award fees and incentive fees. We include in our contract estimates additional revenue for contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. We include award fees or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best informed judgment at the time.
As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified.
| Three Months Ended | April 5, 2026 | March 30, 2025 | ||||||||||||||||||
| Revenue | $ | $ | ||||||||||||||||||
| Operating earnings | ||||||||||||||||||||
| Diluted earnings per share | $ | $ | ||||||||||||||||||
No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three-month periods ended April 5, 2026, or March 30, 2025.
We have a large, long-term contract with an international customer for tracked vehicles in which our estimates for contract revenue include variable consideration. It is reasonably possible that the actual amount of variable consideration realized could be less than our estimate, which could have a material unfavorable impact on our results of operations.
10
Revenue by Category. Our portfolio of products and services consists of more than 8,000 active contracts. The following series of tables presents our revenue disaggregated by several categories.
Revenue by major products and services was as follows:
| Three Months Ended | April 5, 2026 | March 30, 2025 | ||||||||||||||||||
| Aircraft manufacturing | $ | $ | ||||||||||||||||||
| Aircraft services | ||||||||||||||||||||
| Total Aerospace | ||||||||||||||||||||
| Nuclear-powered submarines | ||||||||||||||||||||
| Surface ships | ||||||||||||||||||||
| Repair and other services | ||||||||||||||||||||
| Total Marine Systems | ||||||||||||||||||||
| Military vehicles | ||||||||||||||||||||
| Weapon systems and munitions | ||||||||||||||||||||
| Engineering and other services | ||||||||||||||||||||
| Total Combat Systems | ||||||||||||||||||||
| Information technology (IT) services | ||||||||||||||||||||
| C5ISR* solutions | ||||||||||||||||||||
| Total Technologies | ||||||||||||||||||||
| Total revenue | $ | $ | ||||||||||||||||||
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance
Revenue by contract type was as follows:
| Three Months Ended April 5, 2026 | Aerospace | Marine Systems | Combat Systems | Technologies | Total Revenue | ||||||||||||||||||||||||
| Fixed-price | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost-reimbursement | |||||||||||||||||||||||||||||
| Time-and-materials | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended March 30, 2025 | |||||||||||||||||||||||||||||
| Fixed-price | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost-reimbursement | |||||||||||||||||||||||||||||
| Time-and-materials | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Our segments operate under fixed-price, cost-reimbursement and time-and-materials contracts. Our production contracts are primarily fixed-price. Under these contracts, we agree to perform a specific scope of work for a fixed amount. Contracts for research, engineering, repair and maintenance, and other services are typically cost-reimbursement or time-and-materials. Under cost-reimbursement contracts, the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee. 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. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials.
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Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Cost-reimbursement contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under time-and-materials contracts, our profit may vary if actual labor-hour rates vary significantly from the negotiated rates. Also, because these contracts may provide little or no fee for managing material costs, the content mix can impact profitability.
Revenue by customer was as follows:
| Three Months Ended April 5, 2026 | Aerospace | Marine Systems | Combat Systems | Technologies | Total Revenue | ||||||||||||||||||||||||
| U.S. government: | |||||||||||||||||||||||||||||
| Department of War (DoW) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non-DoW | |||||||||||||||||||||||||||||
| Foreign military sales (FMS) | |||||||||||||||||||||||||||||
| Total U.S. government | |||||||||||||||||||||||||||||
| U.S. commercial | |||||||||||||||||||||||||||||
| Non-U.S. government | |||||||||||||||||||||||||||||
| Non-U.S. commercial | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended March 30, 2025 | |||||||||||||||||||||||||||||
| U.S. government: | |||||||||||||||||||||||||||||
| DoW | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non-DoW | |||||||||||||||||||||||||||||
| FMS | |||||||||||||||||||||||||||||
| Total U.S. government | |||||||||||||||||||||||||||||
| U.S. commercial | |||||||||||||||||||||||||||||
| Non-U.S. government | |||||||||||||||||||||||||||||
| Non-U.S. commercial | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In our defense segments, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. In our Aerospace segment, we generally receive deposits from customers upon contract execution and upon achievement of contractual milestones. These deposits are liquidated when revenue is recognized. Changes in the contract asset and liability balances during the three-month period ended April 5, 2026, were not materially impacted by any other factors.
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Revenue recognized for the three-month periods ended April 5, 2026, and March 30, 2025, that was included in the contract liability balance at the beginning of each year was $2.8 billion and $2.6 billion, respectively. This revenue represented primarily the sale of business jet aircraft.
C. EARNINGS PER SHARE
Basic and diluted weighted average shares outstanding were as follows (in thousands):
| Three Months Ended | April 5, 2026 | March 30, 2025 | ||||||||||||||||||
| Basic weighted average shares outstanding | ||||||||||||||||||||
| Dilutive effect of stock options and restricted stock/RSUs* | ||||||||||||||||||||
| Diluted weighted average shares outstanding | ||||||||||||||||||||
* Excludes unvested stock options, and vested stock options that had exercise prices in excess of the average market price of our common stock during the period and, therefore, the effect of including these options would be antidilutive. These options totaled 394 and 1,667 for the three-month periods ended April 5, 2026 and March 30, 2025, respectively.
D. INCOME TAXES
Net Deferred Tax Liability. Our deferred tax assets and liabilities are included in other noncurrent assets and liabilities on the Consolidated Balance Sheet. Our net deferred tax liability consisted of the following:
| April 5, 2026 | December 31, 2025 | ||||||||||
| Deferred tax asset | $ | $ | |||||||||
| Deferred tax liability | ( | ( | |||||||||
| Net deferred tax liability | $ | ( | $ | ( | |||||||
Tax Uncertainties. We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time review of our consolidated federal corporate income tax return. The IRS has examined our consolidated federal income tax returns through 2024. We are currently in a CAP phase (Bridge Plus) in which the IRS considers certain tax return information in advance to expedite their risk assessment and review of our return.
For all periods open to examination by tax authorities, we periodically assess our liabilities and contingencies based on the latest available information. Where we believe there is more than a 50% chance that our tax position will not be sustained, we record our best estimate of the resulting tax liability, including interest, in the Consolidated Financial Statements. We include any interest or penalties incurred in connection with income taxes as part of income tax expense.
Based on all known facts and circumstances and applicable tax law, we believe the total amount of any unrecognized tax benefits on April 5, 2026, was not material to our results of operations, financial condition or cash flows. In addition, there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months, producing, individually or in the aggregate, a material effect on our results of operations, financial condition or cash flows.
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The Organization for Economic Co-operation and Development has issued “Pillar Two” model rules introducing a new global minimum tax of 15% on a country-by-country basis, with certain aspects intended to be effective on January 1, 2024, and other aspects on January 1, 2025. Because we generally do not have material operations in jurisdictions with tax rates lower than the proposed Pillar Two minimum, any legislation enacted consistent with the Pillar Two model rules is not expected to have a material effect on our results of operations, financial condition or cash flows.
E. UNBILLED RECEIVABLES
| April 5, 2026 | December 31, 2025 | ||||||||||
| Unbilled revenue | $ | $ | |||||||||
| Advances and progress billings | ( | ( | |||||||||
| Net unbilled receivables | $ | $ | |||||||||
On April 5, 2026, and December 31, 2025, net unbilled receivables included $1.3
F. INVENTORIES
The majority of our inventories are for business jet aircraft. Our inventories are stated at the lower of cost or net realizable value. Work in process represents largely labor, material and overhead costs associated with aircraft in the manufacturing process and is based primarily on the estimated average unit cost in a production lot. Substantially all of our raw materials are valued on either the average cost or the first-in, first-out method. We record pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value.
Inventories consisted of the following:
| April 5, 2026 | December 31, 2025 | ||||||||||
| Work in process | $ | $ | |||||||||
| Raw materials | |||||||||||
| Finished goods | |||||||||||
| Pre-owned aircraft | |||||||||||
| Total inventories | $ | $ | |||||||||
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G. GOODWILL AND INTANGIBLE ASSETS
Goodwill. The changes in the carrying amount of goodwill by reporting unit were as follows:
| Aerospace | Marine Systems | Combat Systems | Technologies | Total Goodwill | |||||||||||||||||||||||||
December 31, 2025 (a) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Acquisitions (b) | ( | ( | |||||||||||||||||||||||||||
| Other (c) | ( | ( | ( | ( | |||||||||||||||||||||||||
April 5, 2026 (a) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(a)Goodwill in the Technologies reporting unit was net of $1.8 billion of accumulated impairment losses.
(b)Included adjustments during the purchase price allocation period.
(c)Consisted primarily of adjustments for foreign currency translation.
Intangible Assets. Intangible assets consisted of the following:
| Gross Carrying Amount (a) | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount (a) | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| April 5, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Contract and program intangible assets (b) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Trade names and trademarks | ( | ( | |||||||||||||||||||||
| Technology and software | ( | ( | |||||||||||||||||||||
| Other intangible assets | ( | ( | |||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
(a)Changes in gross carrying amounts consisted primarily of foreign currency translation and adjustments for acquired and divested intangible assets.
Amortization expense is included in operating costs and expenses in the Consolidated Statement of Earnings. Amortization expense for intangible assets was $44
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H. DEBT
Debt consisted of the following:
| April 5, 2026 | December 31, 2025 | ||||||||||||||||
| Fixed-rate notes due: | Interest rate: | ||||||||||||||||
| June 2026 | |||||||||||||||||
| August 2026 | |||||||||||||||||
| April 2027 | |||||||||||||||||
| November 2027 | |||||||||||||||||
| May 2028 | |||||||||||||||||
| April 2030 | |||||||||||||||||
| June 2031 | |||||||||||||||||
| August 2035 | |||||||||||||||||
| April 2040 | |||||||||||||||||
| June 2041 | |||||||||||||||||
| November 2042 | |||||||||||||||||
| April 2050 | |||||||||||||||||
| Other | |||||||||||||||||
| Total debt principal | |||||||||||||||||
| Less unamortized debt issuance costs and discounts | |||||||||||||||||
| Total debt | |||||||||||||||||
| Less current portion | |||||||||||||||||
| Long-term debt | $ | $ | |||||||||||||||
On April 5, 2026, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have a $4 billion committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper issuances. This credit facility expires in March 2027. We may renew or replace this credit facility in whole or in part at or prior to the expiration date. We also have an effective shelf registration on file with the SEC that allows us to access the debt markets.
Our financing arrangements contain a number of customary covenants and restrictions. We were in compliance with all covenants and restrictions on April 5, 2026.
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I. OTHER LIABILITIES
A summary of significant other liabilities by balance sheet caption follows:
| April 5, 2026 | December 31, 2025 | ||||||||||
| Salaries and wages | $ | $ | |||||||||
| Dividends payable | |||||||||||
| Lease liabilities | |||||||||||
| Workers’ compensation | |||||||||||
| Other | |||||||||||
| Total other current liabilities | $ | $ | |||||||||
| Customer deposits on commercial contracts | $ | $ | |||||||||
| Lease liabilities | |||||||||||
| Retirement benefits | |||||||||||
| Other | |||||||||||
| Total other liabilities | $ | $ | |||||||||
J. COMMITMENTS AND CONTINGENCIES
Litigation
On October 6, 2023, a putative class action lawsuit was filed in the United States District Court for the Eastern District of Virginia against General Dynamics Corporation, certain of its subsidiaries and various other companies alleging that they conspired, in violation of the Sherman Act, not to solicit naval architects and marine engineers from each other. The named plaintiffs purport to represent a class of individuals consisting of all naval architects and marine engineers employed by the shipyard and consultancy defendants, their predecessors, their subsidiaries and/or their related entities in the United States at any time since January 1, 2000. The plaintiffs allege that the conspiracy suppressed compensation paid to the putative class members, and the plaintiffs seek trebled monetary damages, attorneys’ fees, injunctive and other equitable relief. On May 9, 2025, the U.S. Court of Appeals for the Fourth Circuit reversed an earlier decision of the District Court dismissing the plaintiffs’ complaint and remanded the case for further proceedings. On September 11, 2025, the defendants filed a petition for a writ of certiorari with the U.S. Supreme Court. Given the current status of this matter, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss. Depending on the outcome of this matter, there could be a material impact on our results of operations, financial condition and cash flows.
Additionally, various other claims and legal proceedings incidental to the normal course of business are pending or threatened against us. These other matters relate to such issues as government investigations and claims, the protection of the environment, asbestos-related claims and employee-related matters. The nature of litigation is such that we cannot predict the outcome of these other matters. However, based on information currently available, we believe any potential liabilities in these other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows.
Environmental
We are subject to and affected by a variety of federal, state, local and foreign environmental laws and regulations. We are directly or indirectly involved in environmental investigations or remediation at some of our current and former facilities and third-party sites that we do not own but where we have
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been designated a potentially responsible party (PRP) by the U.S. Environmental Protection Agency or a state environmental agency. Based on historical experience, we expect that a significant percentage of the total remediation and compliance costs associated with these facilities will continue to be allowable contract costs and, therefore, recoverable under U.S. government contracts.
As required, we provide financial assurance for certain sites undergoing or subject to investigation or remediation. We accrue environmental costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. Where applicable, we seek insurance recovery for costs related to environmental liabilities. We do not record insurance recoveries before collection is considered probable. Based on all known facts and analyses, we do not believe that our liability at any individual site, or in the aggregate, arising from such environmental conditions will be material to our results of operations, financial condition or cash flows. We also do not believe that the range of reasonably possible additional loss beyond what has been recorded would be material to our results of operations, financial condition or cash flows.
Other
Government Contracts. As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and treble damages. We believe the outcome of such ongoing government audits and investigations will not have a material impact on our results of operations, financial condition or cash flows.
In the performance of our contracts, we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (REAs) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows.
Letters of Credit and Guarantees. In the ordinary course of business, we have entered into letters of credit, bank guarantees, surety bonds and other similar arrangements with financial institutions and insurance carriers totaling approximately $2.1 billion on April 5, 2026. In addition, from time to time and in the ordinary course of business, we contractually guarantee the payment or performance of our subsidiaries arising under certain contracts.
Product Warranties. We provide warranties to our customers associated with certain product sales. We record estimated warranty costs in the period in which the related products are delivered. The warranty liability recorded at each balance sheet date is based generally on the number of months of
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warranty coverage remaining for the products delivered and the average historical monthly warranty payments. Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion. Our other warranty obligations, primarily for business jet aircraft, are included in other current and noncurrent liabilities on the Consolidated Balance Sheet.
The changes in the carrying amount of warranty liabilities for the three-month periods ended April 5, 2026, and March 30, 2025, were as follows:
| Three Months Ended | April 5, 2026 | March 30, 2025 | |||||||||
| Beginning balance | $ | $ | |||||||||
| Warranty expense | |||||||||||
| Payments | ( | ( | |||||||||
| Adjustments | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
K. SHAREHOLDERS ’ EQUITY
Share Repurchases. In the three-month period ended April 5, 2026, we repurchased 0.6 million of our outstanding shares for $217 to cover dilution. On April 5, 2026, 6.1 million shares remained authorized by our board of directors (Board) for repurchase, representing 2.3 % of our total shares outstanding. We repurchased 2.4 million shares for $600 in the three-month period ended March 30, 2025.
Dividends per Share. Our Board declared dividends per share of $1.59 and $1.50 for the three-month periods ended April 5, 2026 and March 30, 2025, respectively. We paid cash dividends of $405 and $383 for the three-month periods ended April 5, 2026 and March 30, 2025, respectively.
Accumulated Other Comprehensive Loss. The changes, pretax and net of tax, in each component of accumulated other comprehensive loss (AOCL) consisted of the following:
| Changes in Unrealized Cash Flow Hedges | Foreign Currency Translation Adjustments | Changes in Retirement Plans’ Funded Status | AOCL | ||||||||||||||
| December 31, 2025 | $ | $ | $ | ( | $ | ( | |||||||||||
| Other comprehensive loss, pretax | ( | ( | ( | ||||||||||||||
| Provision for income tax, net | ( | ( | |||||||||||||||
| Other comprehensive loss, net of tax | ( | ( | ( | ||||||||||||||
| April 5, 2026 | $ | $ | $ | ( | $ | ( | |||||||||||
| December 31, 2024 | $ | ( | $ | $ | ( | $ | ( | ||||||||||
| Other comprehensive income, pretax | |||||||||||||||||
| Provision for income tax, net | ( | ( | ( | ||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||
| March 30, 2025 | $ | ( | $ | $ | ( | $ | ( | ||||||||||
Amounts reclassified out of AOCL related primarily to changes in our retirement plans’ funded status and included pretax recognized net actuarial losses and amortization of prior service credit. See
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Note O for these amounts, which are included in our net periodic pension and other post-retirement benefit cost (credit).
L. SEGMENT INFORMATION
We have four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We organize our segments in accordance with the nature of products and services offered. Our chief operating decision maker is our Chairman and Chief Executive Officer (CEO).
We measure each segment’s profitability based on operating earnings. Segment operating earnings exclude net interest and other income and expense items. The Chairman and CEO uses segment operating earnings as an input when assessing segment performance and when making decisions to allocate financial resources between segments. The Chairman and CEO uses operating earnings in assessing segment performance by comparing operating earnings to prior period results and plan-to-actual variances. The Chairman and CEO also uses forecasted expense information for each segment to manage operations.
Summary financial information for each of our segments follows:
| Revenue (a) | Other Segment Items (b) | Operating Earnings | ||||||||||||||||||||||||
| Three Months Ended | April 5, 2026 | March 30, 2025 | April 5, 2026 | March 30, 2025 | April 5, 2026 | March 30, 2025 | ||||||||||||||||||||
| Aerospace | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||
| Marine Systems | ( | ( | ||||||||||||||||||||||||
| Combat Systems | ( | ( | ||||||||||||||||||||||||
| Technologies | ( | ( | ||||||||||||||||||||||||
| Corporate (c) | ( | ( | ||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||
(a)See Note B for additional revenue information by segment.
(b)Other segment items consist of material and labor costs, depreciation and amortization, and other overhead and G&A expenses.
(c)Corporate operating costs consisted of equity-based compensation expense and other miscellaneous expenses.
The following is additional summary financial information for each of our segments:
| Capital Expenditures | Depreciation and Amortization* | Identifiable Assets | ||||||||||||||||||||||||
| Three Months Ended | April 5, 2026 | March 30, 2025 | April 5, 2026 | March 30, 2025 | April 5, 2026 | December 31, 2025 | ||||||||||||||||||||
| Aerospace | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Marine Systems | ||||||||||||||||||||||||||
| Combat Systems | ||||||||||||||||||||||||||
| Technologies | ||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
* Depreciation and amortization by reportable segment is included within the other segment items expense caption.
M. FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants.
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Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:
•Level 1 – quoted prices in active markets for identical assets or liabilities.
•Level 2 – inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly.
•Level 3 – unobservable inputs significant to the fair value measurement.
We did not have any significant non-financial assets or liabilities measured at fair value on April 5, 2026, or December 31, 2025.
| Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
| Financial Assets (Liabilities) | April 5, 2026 | ||||||||||||||||||||||||||||
| Measured at fair value: | |||||||||||||||||||||||||||||
| Marketable securities held in trust: | |||||||||||||||||||||||||||||
| Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||
| Commingled equity funds | |||||||||||||||||||||||||||||
| Commingled fixed-income funds | |||||||||||||||||||||||||||||
| Other investments | |||||||||||||||||||||||||||||
| Cash flow hedge assets | |||||||||||||||||||||||||||||
| Cash flow hedge liabilities | ( | ( | ( | ||||||||||||||||||||||||||
| Measured at amortized cost: | |||||||||||||||||||||||||||||
| Short- and long-term debt principal | ( | ( | ( | ||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Measured at fair value: | |||||||||||||||||||||||||||||
| Marketable securities held in trust: | |||||||||||||||||||||||||||||
| Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||
| Commingled equity funds | |||||||||||||||||||||||||||||
| Commingled fixed-income funds | |||||||||||||||||||||||||||||
| Other investments | |||||||||||||||||||||||||||||
| Cash flow hedge assets | |||||||||||||||||||||||||||||
| Cash flow hedge liabilities | ( | ( | ( | ||||||||||||||||||||||||||
| Measured at amortized cost: | |||||||||||||||||||||||||||||
| Short- and long-term debt principal | ( | ( | ( | ||||||||||||||||||||||||||
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Our Level 1 assets include commingled equity and fixed-income funds that are valued using a unit price or net asset value (NAV). These funds are actively traded and valued using quoted prices for identical securities from the market exchanges. The fair value of our Level 2 assets and liabilities, which consist primarily of fixed-income securities, cash flow hedges and our fixed-rate notes, is determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. Our Level 3 assets include direct private equity investments that are measured using inputs unobservable to a marketplace participant.
N. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risk, primarily from foreign currency exchange rates, commodity prices and investments. We may use derivative financial instruments to hedge some of these risks as described below. We do not use derivative financial instruments for trading or speculative purposes.
Foreign Currency Risk. Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies. To the extent possible, we include in our contracts terms that are designed to protect us from this risk. Otherwise, we enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk. The dollar-weighted two-year average maturity of these instruments generally matches the duration of the activities that are at risk.
Commodity Price Risk. We are subject to commodity price risk, primarily on long-term, fixed-price contracts. To the extent possible, we include in our contracts terms that are designed to protect us from these risks. Some of the protective terms included in our contracts are considered derivative financial instruments but are not accounted for separately, because they are clearly and closely related to the host contract. We have not entered into any material commodity hedging contracts but may do so as circumstances warrant. We do not believe that changes in commodity prices will have a material impact on our results of operations or cash flows.
Investment Risk. Our investment policy allows for purchases of fixed-income securities with an investment-grade rating and a maximum maturity of up to five years . On April 5, 2026, and December 31, 2025, we held $3.7 billion and $2.3 billion in cash and equivalents, respectively, but held no material marketable securities other than those held in trust to meet some of our obligations under workers’ compensation and non-qualified pension plans. On April 5, 2026, and December 31, 2025, we held marketable securities in trust of $207 and $216 , respectively. These marketable securities are reflected at fair value on the Consolidated Balance Sheet in other current and noncurrent assets. See Note M for additional details.
Hedging Activities. We had notional forward exchange contracts outstanding of $8.2 billion and $8.5 billion on April 5, 2026, and December 31, 2025, respectively. These derivative financial instruments are cash flow hedges, and are reflected at fair value on the Consolidated Balance Sheet in other current assets and liabilities. See Note M for additional details.
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Net gains and losses recognized in earnings on derivative financial instruments that do not qualify for hedge accounting were not material to our results of operations for the three-month periods ended April 5, 2026, and March 30, 2025. Net gains and losses reclassified to earnings from AOCL related to qualified hedges were also not material to our results of operations for the three-month periods ended April 5, 2026, and March 30, 2025, and we do not expect the amount of these gains and losses that will be reclassified to earnings during the next 12 months to be material.
We had no material derivative financial instruments designated as fair value or net investment hedges on April 5, 2026, and December 31, 2025.
Foreign Currency Financial Statement Translation. We translate foreign currency balance sheets from our international businesses’ functional currency (generally the respective local currency) to U.S. dollars at the end-of-period exchange rates, and statements of earnings at the average exchange rates for each period. The resulting foreign currency translation adjustments are a component of AOCL.
The impact of translating our non-U.S. operations’ revenue and earnings into U.S. dollars was not material to our results of operations for the three-month periods ended April 5, 2026, and March 30, 2025. In addition, the effect of changes in foreign exchange rates on non-U.S. cash balances was not material for the three-month periods ended April 5, 2026, and March 30, 2025.
O. RETIREMENT PLANS
We provide retirement benefits to eligible employees through a variety of plans:
•Defined contribution
•Defined benefit
◦Pension (qualified and non-qualified)
◦Other post-retirement benefit
For our defined benefit plans, net periodic benefit cost (credit) for the three-month periods ended April 5, 2026, and March 30, 2025, consisted of the following:
| Pension Benefits | Other Post-retirement Benefits | |||||||||||||||||||
| Three Months Ended | April 5, 2026 | March 30, 2025 | April 5, 2026 | March 30, 2025 | ||||||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||||||
| Interest cost | ||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||
| Net actuarial loss (gain) | ( | ( | ||||||||||||||||||
| Prior service (credit) cost | ( | ( | ||||||||||||||||||
| Net periodic benefit cost (credit) | $ | $ | $ | ( | $ | ( | ||||||||||||||
Our contractual arrangements with the U.S. government provide for the recovery of pension and other post-retirement benefit costs related to employees working on government contracts. The amount allocated to U.S. government contracts is determined in accordance with the Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS), which may result in a timing difference with the amount determined under GAAP. We defer this difference on the Consolidated Balance Sheet. At this time, the amount allocated to contracts exceeds cumulative benefit costs, resulting in a deferred credit that is reported in other noncurrent liabilities. To the extent there is a non-service component of
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net periodic benefit cost (credit) for our defined benefit plans, it is reported in other income (expense) in the Consolidated Statement of Earnings.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollars in millions, except per-share amounts or unless otherwise noted)
BUSINESS OVERVIEW
General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapon systems and munitions; and technology products and services.
Our company is organized into four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We refer to the latter three collectively as our defense segments. Our primary customer is the U.S. government, including the Department of War (DoW), the intelligence community and other U.S. government agencies. We also have significant business with non-U.S. governments and a diverse base of corporate and individual buyers of business jet aircraft and related services. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, and with the unaudited Consolidated Financial Statements included in this Form 10-Q.
BUSINESS ENVIRONMENT
As a global aerospace and defense company, we compete in domestic and international markets, serving both government and commercial customers. Our financial performance is significantly influenced by U.S. government spending levels, administration priorities and the overall economy.
We entered 2026 with the government operating under a continuing resolution (CR). Full-year appropriations were enacted in early February for all federal departments except for the Department of Homeland Security, which remains partially shutdown. This shutdown has not had a material impact on our business.
In the federal market, defense spending has been at increased levels, and the administration has publicly stated support for further increases. This is reflected in the significant demand in U.S. Navy shipbuilding, particularly submarines. We have invested significantly in our facilities and workforce to increase production capacity to meet this demand, and expect to continue to do so. The increased demand has placed great pressure on the shipbuilding industrial base, which was already impacted by significant demographic issues coming out of the global pandemic. Together with the Navy customer, we have been working to stabilize and grow the supply chain to meet this heightened demand.
We have also been investing in the development of the next generation of combat vehicles and artillery. While the U.S. Army is reviewing its funding priorities and begins transitioning to next-generation combat vehicles, we expect short-term combat vehicle production volumes to be down slightly. Demand for our munitions products has been high and is expected to remain at an elevated level given ongoing conflicts and regional threats.
Internationally, as a result of ongoing regional conflicts and the overall threat environment, we have seen increased demand, particularly in Europe, for our Combat Systems military products and services. This provides opportunities for our European businesses established in local markets as well as exports from our North American businesses. To meet this expected demand, there will be increased pressure on the supply chain and our hiring of skilled workers.
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In our principal commercial market, Aerospace is experiencing strong demand for business jets. We believe our investments in a new family of Gulfstream aircraft will continue to fuel demand. The most recent addition is the G800, which entered into service last year. In addition, we expect the growing installed base of aircraft will continue to lead to increased demand for global aircraft services. The ongoing sanctions on Russia have restricted access to a segment of the market.
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.
Our Aerospace business has been impacted by inflationary pressures and tariffs. On February 20, 2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized. Following the ruling, Customs and Border Protection (CBP) has established a process to refund previously-paid IEEPA tariffs. However, the timing of the collection of previously paid IEEPA tariffs is uncertain. These developments were not material to our results of operations. Non-IEEPA tariffs continue to impact the business, but do not present a significant burden in their current form.
RESULTS OF OPERATIONS
INTRODUCTION
The following paragraphs explain how we recognize revenue and operating costs in our operating segments and the terminology we use to describe our operating results.
In the Aerospace segment, we record revenue on contracts for new aircraft when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft. Revenue associated with the segment’s services businesses is recognized as work progresses or upon delivery of services. Fluctuations in revenue from period to period result from the number and mix of new aircraft deliveries, and the level and type of aircraft services performed during the period.
The majority of the Aerospace segment’s operating costs relates to new aircraft production on firm orders and consists of labor, material, subcontractor and overhead costs. The costs are accumulated in production lots, recorded in inventory and recognized as operating costs at aircraft delivery based on the estimated average unit cost in a production lot. While changes in the estimated average unit cost for a production lot impact the level of operating costs, the amount of operating costs reported in a given period is based largely on the number and type of aircraft delivered. Operating costs in the Aerospace segment’s services businesses are recognized generally as incurred.
For new aircraft, operating earnings and margin are a function of the prices of our aircraft, our operational efficiency in manufacturing and outfitting the aircraft, and the mix of ultra-large-cabin, large-cabin and mid-cabin aircraft deliveries. Aircraft mix can also refer to the stage of program maturity for our aircraft models. A new aircraft model typically has lower margins in its initial production lots, and then margins generally increase as we realize efficiencies in the production process. Additional factors affecting the segment’s earnings and margin include the volume, mix and profitability of services work performed, the market for pre-owned aircraft, and the level of general and administrative (G&A) and net research and development (R&D) costs incurred by the segment.
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In the defense segments, revenue on long-term government contracts is recognized generally over time as the work progresses, either as products are produced or as services are rendered. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, G&A expenses. Variances in costs recognized from period to period reflect primarily increases and decreases in production or activity levels on individual contracts. Because costs are used as a measure of progress, year-over-year variances in costs result in corresponding variances in revenue, which we generally refer to as volume.
Operating earnings and margin in the defense segments are driven by changes in volume, performance or contract mix. Performance refers to changes in profitability based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract or both. Therefore, changes in costs incurred in the period compared with prior periods do not necessarily impact profitability. It is only when total estimated costs at completion on a given contract change without a corresponding change in the contract value (or vice versa) that the profitability of that contract may be impacted. Contract mix refers to changes in the volume of higher- versus lower-margin work. Higher or lower margins can result from a number of factors, including contract type (e.g., fixed-price/cost-reimbursable) and type of work (e.g., development/production). Contract mix can also refer to the stage of program maturity for our long-term production contracts. New long-term production contracts typically have lower margins initially, and then margins generally increase as we achieve learning curve improvements or realize other cost reductions.
CONSOLIDATED OVERVIEW
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 13,481 | $ | 12,223 | $ | 1,258 | 10.3 | % | |||||||||||||||
| Operating costs and expenses | (12,061) | (10,955) | (1,106) | 10.1 | % | ||||||||||||||||||
| Operating earnings | 1,420 | 1,268 | 152 | 12.0 | % | ||||||||||||||||||
| Operating margin | 10.5 | % | 10.4 | % | |||||||||||||||||||
Our consolidated revenue increased in the first quarter of 2026 across all four operating segments, including over 20% growth in our Marine Systems segment driven by increased material volume. Operating margin increased 10 basis points in the first quarter of 2026.
2026 Outlook
We expect our full-year diluted earnings per share (EPS) to be between $16.45 and $16.55.
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REVIEW OF OPERATING SEGMENTS
Following is a discussion of operating results for each of our operating segments. For the Aerospace segment, results are analyzed by specific types of products and services, consistent with how the segment is managed. For the defense segments, the discussion is based on markets and the lines of products and services offered with a supplemental discussion of specific contracts and programs when significant to the results. Additional information regarding our segments can be found in Note L to the unaudited Consolidated Financial Statements in Part I, Item 1.
AEROSPACE
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 3,279 | $ | 3,026 | $ | 253 | 8.4 | % | |||||||||||||||
| Operating earnings | 493 | 432 | 61 | 14.1 | % | ||||||||||||||||||
| Operating margin | 15.0 | % | 14.3 | % | |||||||||||||||||||
| Gulfstream aircraft deliveries (in units) | 38 | 36 | 2 | 5.6 | % | ||||||||||||||||||
Operating Results
The increase in the Aerospace segment’s revenue in the first quarter of 2026 consisted of the following:
| Aircraft manufacturing | $ | 143 | |||||||||
| Aircraft services | 110 | ||||||||||
| Total increase | $ | 253 | |||||||||
Aircraft manufacturing revenue increased in the first quarter of 2026 due primarily to additional aircraft deliveries. Aircraft services revenue was up in the first quarter of 2026 due primarily to increased customer demand for aircraft maintenance, a larger installed base and customer flight activity.
The increase in the segment’s operating earnings in the first quarter of 2026 consisted of the following:
| Aircraft manufacturing | $ | 49 | |||||||||
| Aircraft services | 28 | ||||||||||
| G&A/other expenses | (16) | ||||||||||
| Total increase | $ | 61 | |||||||||
Aircraft manufacturing operating earnings increased in the first quarter of 2026 due primarily to increased deliveries and improved performance. Aircraft services operating earnings increased in the first quarter of 2026 due to higher volume and a favorable service mix. In total, the Aerospace segment’s operating margin increased 70 basis points in the first quarter of 2026 compared with the prior-year period resulting from the same factors.
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MARINE SYSTEMS
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 4,343 | $ | 3,589 | $ | 754 | 21.0 | % | |||||||||||||||
| Operating earnings | 316 | 250 | 66 | 26.4 | % | ||||||||||||||||||
| Operating margin | 7.3 | % | 7.0 | % | |||||||||||||||||||
Operating Results
The increase in the Marine Systems segment’s revenue in the first quarter of 2026 consisted of the following:
| U.S. Navy ship construction | $ | 631 | |||||||||
| U.S. Navy ship engineering, repair and other services | 123 | ||||||||||
| Total increase | $ | 754 | |||||||||
Revenue from U.S. Navy ship construction was up in the first quarter of 2026 due primarily to increased material and labor volume on Columbia-class and Virginia-class submarine construction and higher throughput on the John Lewis-class (T-AO-205) fleet replenishment oiler at our NASSCO shipyard. The Marine Systems segment’s operating margin increased 30 basis points in the first quarter of 2026 on improved performance.
COMBAT SYSTEMS
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 2,283 | $ | 2,176 | $ | 107 | 4.9 | % | |||||||||||||||
| Operating earnings | 310 | 291 | 19 | 6.5 | % | ||||||||||||||||||
| Operating margin | 13.6 | % | 13.4 | % | |||||||||||||||||||
Operating Results
The increase in the Combat Systems segment’s revenue in the first quarter of 2026 consisted of the following:
| Weapon systems and munitions | $ | 114 | |||||||||
| International military vehicles | 84 | ||||||||||
| U.S. military vehicles | (91) | ||||||||||
| Total increase | $ | 107 | |||||||||
Weapon systems and munitions revenue increased in the first quarter of 2026 due primarily to increased artillery production. International military vehicles increased due to higher volume on several wheeled and tracked vehicle programs in Europe. Revenue from U.S. military vehicles decreased in the first quarter of 2026 due to lower U.S. Army demand as part of their recapitalization efforts and the termination of the M10 Booker program. Overall, the Combat Systems segment’s operating margin increased 20 basis points in the first quarter of 2026 driven by favorable program mix.
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TECHNOLOGIES
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 3,576 | $ | 3,432 | $ | 144 | 4.2 | % | |||||||||||||||
| Operating earnings | 339 | 328 | 11 | 3.4 | % | ||||||||||||||||||
| Operating margin | 9.5 | % | 9.6 | % | |||||||||||||||||||
Operating Results
The increase in the Technologies segment’s revenue in the first quarter of 2026 consisted of the following:
| C5ISR* solutions | $ | 125 | |||||||||
| Information technology (IT) services | 19 | ||||||||||
| Total increase | $ | 144 | |||||||||
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance
The Technologies segment’s revenue increased in the first quarter of 2026 due primarily to higher volume across several C5ISR programs, most notably in the group's space portfolio and international markets. Overall, the Technologies segment’s operating margin decreased 10 basis points in the first quarter of 2026.
CORPORATE
Corporate operating costs totaled $38 in the first quarter of 2026 compared with $33 in the first quarter of 2025 and consisted of equity-based compensation expense and other miscellaneous expenses.
OTHER INFORMATION
PRODUCT REVENUE AND OPERATING COSTS
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 8,285 | $ | 7,334 | $ | 951 | 13.0 | % | |||||||||||||||
| Operating costs | (6,943) | (6,141) | (802) | 13.1 | % | ||||||||||||||||||
The increase in product revenue in the first quarter of 2026 consisted of the following:
| Ship construction | $ | 631 | |||||||||
| Aircraft manufacturing | 143 | ||||||||||
| Weapon systems and munitions | 114 | ||||||||||
| Other, net | 63 | ||||||||||
| Total increase | $ | 951 | |||||||||
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Ship construction revenue increased due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Aircraft manufacturing revenue increased in the first quarter of 2026 due to additional aircraft deliveries. Weapon systems and munitions revenue increased in the first quarter of 2026 due primarily to increased artillery production. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
SERVICE REVENUE AND OPERATING COSTS
| Three Months Ended | April 5, 2026 | March 30, 2025 | Variance | ||||||||||||||||||||
| Revenue | $ | 5,196 | $ | 4,889 | $ | 307 | 6.3 | % | |||||||||||||||
| Operating costs | (4,395) | (4,189) | (206) | 4.9 | % | ||||||||||||||||||
The increase in service revenue in the first quarter of 2026 consisted of the following:
| First Quarter | |||||||||||
| C5ISR solutions/IT services | $ | 138 | |||||||||
| Ship services | 123 | ||||||||||
| Other, net | 46 | ||||||||||
| Total change | $ | 307 | |||||||||
Increased C5ISR solutions and IT services volume drove the higher service revenue in the first quarter of 2026. Ship services revenue was up in the first quarter of 2026 due to higher volume of engineering and repair work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
G&A EXPENSES
As a percentage of revenue, G&A expenses increased to 5.4% in the first three months of 2026 compared with 5.1% in the first three months of 2025.
OTHER, NET
Net other income was $18 in the first three months of 2026 compared with $21 in the first three months of 2025, and represents primarily the non-service components of pension and other post-retirement benefits.
INTEREST, NET
Net interest expense decreased to $69 in the first three months of 2026 from $89 in the prior-year period, reflecting lower interest expense associated with commercial paper issuances. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates.
PROVISION FOR INCOME TAX, NET
Our effective tax rate was 17.8% in the first three months of 2026 compared with 17.2% in the prior-year period.
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BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE
Our total backlog, including funded and unfunded portions, was $130.8 billion at the end of the first quarter of 2026 compared with $118 billion on December 31, 2025. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $188.4 billion on April 5, 2026.
The following table details the backlog and estimated potential contract value of each segment at the end of the first quarter of 2026 and fourth quarter of 2025:
| Funded | Unfunded | Total Backlog | Estimated Potential Contract Value | Total Estimated Contract Value | |||||||||||||||||||||||||
| April 5, 2026 | |||||||||||||||||||||||||||||
| Aerospace | $ | 21,172 | $ | 1,095 | $ | 22,267 | $ | 1,040 | $ | 23,307 | |||||||||||||||||||
| Marine Systems | 40,598 | 23,373 | 63,971 | 12,519 | 76,490 | ||||||||||||||||||||||||
| Combat Systems | 25,532 | 1,383 | 26,915 | 11,770 | 38,685 | ||||||||||||||||||||||||
| Technologies | 10,818 | 6,869 | 17,687 | 32,272 | 49,959 | ||||||||||||||||||||||||
| Total | $ | 98,120 | $ | 32,720 | $ | 130,840 | $ | 57,601 | $ | 188,441 | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Aerospace | $ | 20,804 | $ | 1,024 | $ | 21,828 | $ | 1,120 | $ | 22,948 | |||||||||||||||||||
| Marine Systems | 36,808 | 15,532 | 52,340 | 11,823 | 64,163 | ||||||||||||||||||||||||
| Combat Systems | 26,064 | 1,154 | 27,218 | 14,670 | 41,888 | ||||||||||||||||||||||||
| Technologies | 9,865 | 6,795 | 16,660 | 33,280 | 49,940 | ||||||||||||||||||||||||
| Total | $ | 93,541 | $ | 24,505 | $ | 118,046 | $ | 60,893 | $ | 178,939 | |||||||||||||||||||
AEROSPACE
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the first quarter of 2026 with backlog of $22.3 billion.
Orders for new Gulfstream aircraft reflected strong demand across our portfolio of products and services. The segment achieved a book-to-bill ratio (orders divided by revenue) of 1.2-to-1 in the first quarter of 2026.
Beyond total backlog, estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On April 5, 2026, estimated potential contract value in the Aerospace segment was $1 billion.
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DEFENSE SEGMENTS
The total backlog in our defense segments represents the estimated remaining sales value of work to be performed under firm contracts. The funded portion of total backlog includes items that have been authorized and appropriated by the U.S. Congress and funded by customers, as well as commitments by international customers that are approved and funded similarly by their governments. 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.
Estimated potential contract value in our defense segments includes unexercised options associated with existing firm contracts and unfunded work on indefinite delivery, indefinite quantity (IDIQ) contracts. Contract options represent agreements to perform additional work under existing contracts at the election of the customer. We recognize options in backlog when the customer exercises the option and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. This amount is often less than the total IDIQ contract value, particularly when the contract has multiple awardees. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.
Total backlog in our defense segments was $108.6 billion on April 5, 2026. The increase was driven by a $15.4 billion award within the Marine Systems segment for continued design and support work on the Columbia-class submarines program. In the first quarter of 2026, the defense segments achieved a book-to-bill ratio of 2.2-to-1. Estimated potential contract value in our defense segments was $56.6 billion on April 5, 2026.
LIQUIDITY AND CAPITAL RESOURCES
We place a strong emphasis on cash flow generation, which is underpinned by an operating discipline focused on cost control and working capital management. This emphasis gives us the flexibility for prudent capital deployment, while allowing us to maintain an appropriate debt level, and preserves a strong balance sheet for future opportunities.
We evaluate a variety of capital deployment options based on current market conditions and our long-term outlook, and we believe agility is a key component of our capital deployment strategy as market conditions change over time. Our capital deployment priorities include investments in our business infrastructure, products and services to drive long-term growth, a predictable dividend, strategic acquisitions and opportunistic share repurchases primarily to address dilution.
We believe cash generated by operating activities, supplemented by commercial paper issuances, is sufficient to satisfy our short- and long-term liquidity needs. An additional potential source of capital is the issuance of long-term debt in capital market transactions.
We ended the first quarter of 2026 with a cash and equivalents balance of $3.7 billion compared with $2.3 billion at the end of 2025. Following is a discussion of our major operating, investing and financing activities in the first three months of 2026 and 2025, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
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| Three Months Ended | April 5, 2026 | March 30, 2025 | |||||||||
| Net cash provided/(used) by operating activities | $ | 2,155 | $ | (148) | |||||||
| Net cash used by investing activities | (202) | (130) | |||||||||
| Net cash used by financing activities | (629) | (175) | |||||||||
OPERATING ACTIVITIES
Cash provided by operating activities was $2.2 billion in the first three months of 2026 compared with cash used by operating activities of $148 in the same period in 2025. The primary driver of cash flows in both periods was net earnings. Cash flows in the first quarter of 2026 were affected positively by reductions in operating working capital led by the Combat Systems segment. Cash flows in the first quarter of 2025 were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments.
INVESTING ACTIVITIES
Cash used by investing activities was $202 in the first three months of 2026 compared with $130 in the same period in 2025. Our investing activities include cash paid for capital expenditures; business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $203 in the first three months of 2026, up 43% compared with $142 in the same period of 2025, and are expected to remain elevated for the remaining quarters of 2026.
FINANCING ACTIVITIES
Cash used by financing activities was $629 in the first three months of 2026 compared with $175 in the same period in 2025. Financing activities include the use of cash for repurchases of common stock to cover dilution, payment of dividends, and debt and commercial paper repayments. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
On March 9, 2026, our board of directors (Board) declared a quarterly dividend of $1.59 per share, the 29th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.50 per share in March 2025. Cash dividends paid were $405 in the first three months of 2026 compared with $383 in the same period in 2025.
We paid $217 and $600 in the first three months of 2026 and 2025, respectively, to repurchase our outstanding shares to cover dilution. On April 5, 2026, 6.1 million shares remained authorized by our Board for repurchase, representing 2.3% of our total shares outstanding.
Fixed-rate notes of $500 mature in both June and August 2026. We are evaluating the refinancing of these notes and will continue to monitor market conditions as maturities draw near. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
On April 5, 2026, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have $4 billion in a committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper
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issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
NON-GAAP FINANCIAL MEASURE - FREE CASH FLOW
We emphasize the efficient conversion of net earnings into cash and the deployment of that cash to maximize shareholder returns. As described below, we use free cash flow to measure our performance in these areas. While we believe this metric provides useful information, it is not a defined operating measure under U.S. generally accepted accounting principles (GAAP), and there are limitations associated with its use. Our calculation of this metric may not be completely comparable to similarly titled measures of other companies due to potential differences in the method of calculation. As a result, the use of this metric should not be considered in isolation from, or as a substitute for, GAAP measures.
We define free cash flow as net cash from operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, paying dividends and repurchasing our common stock to cover dilution. We use free cash flow to assess the quality of our earnings and as a key performance measure in evaluating management. The following table reconciles free cash flow with net cash from operating activities, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
| Three Months Ended | April 5, 2026 | March 30, 2025 | |||||||||
| Net cash provided (used) by operating activities | $ | 2,155 | $ | (148) | |||||||
| Capital expenditures | (203) | (142) | |||||||||
| Free cash flow | $ | 1,952 | $ | (290) | |||||||
| Cash flows as a percentage of net earnings: | |||||||||||
| Net cash provided (used) by operating activities | 192 | % | (15 | %) | |||||||
| Free cash flow | 174 | % | (29 | %) | |||||||
ADDITIONAL FINANCIAL INFORMATION
ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES
For a discussion of environmental matters and other contingencies, see Note J to the unaudited Consolidated Financial Statements in Part I, Item 1. Except as otherwise noted in Note J, we do not expect our aggregate liability with respect to these matters to have a material impact on our results of operations, financial condition or cash flows.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the unaudited Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. We employ judgment in making our estimates, but they are
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based on historical experience, currently available information and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We believe our judgment is applied consistently and produces financial information that fairly depicts our results of operations for all periods presented.
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates changed our operating earnings (and diluted earnings per share) by $54 ($0.16) and $31 ($0.09) for the three-month periods ended April 5, 2026, and March 30, 2025, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three-month periods ended April 5, 2026, or March 30, 2025.
Other critical accounting policies and estimates include long-lived assets and goodwill, commitments and contingencies, and retirement plans. For a full discussion of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the year ended December 31, 2025.
GUARANTOR FINANCIAL INFORMATION
The outstanding notes described in Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, issued by General Dynamics Corporation (the parent), are fully and unconditionally guaranteed on an unsecured, joint and several basis by several of the parent’s 100%-owned subsidiaries (the guarantors). The guarantee of each guarantor ranks equally in right of payment with all other existing and future senior unsecured indebtedness of such guarantor. A listing of the guarantors is included in an exhibit to this Form 10-Q.
Because the parent is a holding company, its cash flow and ability to service its debt, including the outstanding notes, depends on the performance of its subsidiaries and the ability of those subsidiaries to distribute cash to the parent, whether by dividends, loans or otherwise. Holders of the outstanding notes have a direct claim only against the parent and the guarantors.
Under the relevant indenture, the guarantee of each guarantor is limited to the maximum amount that can be guaranteed without rendering the guarantee voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each indenture also provides that, in the event (1) of a merger, consolidation or sale or disposition of all or substantially all of the assets of a guarantor (other than a transaction with the parent or any of its subsidiaries) or (2) there occurs a transfer, sale or other disposition of the voting stock of a guarantor so that the guarantor is no longer a subsidiary of the parent, then the guarantor or the entity acquiring the assets (in the event of a sale or other disposition of all or substantially all of the assets of a guarantor) will be released and relieved of any obligations under the guarantee.
The following summarized financial information presents the parent and guarantors (collectively, the combined obligor group) on a combined basis. The summarized financial information of the combined obligor group excludes net investment in and earnings of subsidiaries related to interests held by the combined obligor group in subsidiaries that are not guarantors of the notes.
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STATEMENT OF EARNINGS INFORMATION - COMBINED OBLIGOR GROUP
| Three Months Ended April 5, 2026 | Year Ended December 31, 2025 | ||||||||||
| Revenue | $ | 5,368 | $ | 20,716 | |||||||
| Operating costs and expenses, excluding G&A | (4,734) | (18,476) | |||||||||
| Net earnings | 301 | 839 | |||||||||
BALANCE SHEET INFORMATION - COMBINED OBLIGOR GROUP
| April 5, 2026 | December 31, 2025 | ||||||||||
| Cash and equivalents | $ | 1,321 | $ | 482 | |||||||
| Other current assets | 5,922 | 5,405 | |||||||||
| Noncurrent assets | 5,478 | 5,403 | |||||||||
| Total assets | $ | 12,721 | $ | 11,290 | |||||||
| Short-term debt and current portion of long-term debt | $ | 1,752 | $ | 1,003 | |||||||
| Other current liabilities | 3,088 | 3,029 | |||||||||
| Long-term debt | 6,209 | 6,955 | |||||||||
| Other noncurrent liabilities | 3,143 | 2,835 | |||||||||
| Total liabilities | $ | 14,192 | $ | 13,822 | |||||||
The summarized balance sheet information presented above includes the funded status of the company’s primary qualified U.S. government pension plans as the parent has the ultimate obligation for the plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Our management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of April 5, 2026. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, on April 5, 2026, our disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting that occurred during the quarter ended April 5, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The certifications of the company’s Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.
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FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements, which are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “forecasts,” “scheduled,” “outlook,” “estimates,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements. Examples include projections of revenue, earnings, operating margin, segment performance, cash flows, contract awards, aircraft production, deliveries and backlog. In making these statements, we rely on assumptions and analyses based on our experience and perception of historical trends; current conditions and expected future developments; and other factors, estimates and judgments we consider reasonable and appropriate based on information available to us at the time. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve factors, risks and uncertainties that are difficult to predict. Actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025. These factors include, among others:
•general U.S. and international political and economic conditions;
•decreases in U.S. government defense spending or changing priorities within the defense budget;
•termination of government contracts due to unilateral government action;
•differences in anticipated and actual program performance, including the ability to perform within estimated costs, and performance issues with key suppliers;
•expected recovery on contract claims and requests for equitable adjustment;
•changing customer demand for business aircraft, including the effects of economic conditions on the business-aircraft market;
•changing prices for energy and raw materials;
•the negative impact of the COVID-19 pandemic, or other pandemics or outbreaks;
•the status or outcome of legal and/or regulatory proceedings;
•potential effects of audits and reviews by government agencies of our government contract performance, compliance and internal control systems and policies;
•cybersecurity events and other disruptions;
•risks and uncertainties relating to our acquisitions and joint ventures; and
•potential for increased regulation related to global climate change.
All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to General Dynamics or any person acting on our behalf are qualified by the cautionary statements in this section. We do not undertake any obligation to update or publicly release revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report. These factors may be revised or supplemented in future SEC filings.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information relating to legal proceedings, see Note J to the unaudited Consolidated Financial Statements in Part I, Item 1.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about our first-quarter purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:
| Period | Total Number of Shares | Average Price per Share* | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares That May Yet Be Purchased Under the Program | ||||||||||||||||||||||
| Shares Purchased Pursuant to Share Buyback Program | ||||||||||||||||||||||||||
| 1/1/26-2/1/26 | — | $ | — | — | 6,751,311 | |||||||||||||||||||||
| 2/2/26-3/1/26 | 131,068 | 346.46 | 131,068 | 6,620,243 | ||||||||||||||||||||||
| 3/2/26-4/5/26 | 490,920 | 349.91 | 490,920 | 6,129,323 | ||||||||||||||||||||||
| Shares Delivered or Withheld Pursuant to Restricted Stock Vesting** | ||||||||||||||||||||||||||
| 1/1/26-2/1/26 | 384 | 338.88 | ||||||||||||||||||||||||
| 2/2/26-3/1/26 | 1,092 | 348.51 | ||||||||||||||||||||||||
| 3/2/26-4/5/26 | 164,181 | 361.84 | ||||||||||||||||||||||||
| 787,645 | $ | 351.82 | ||||||||||||||||||||||||
* Average price per share excludes excise tax.
** Represents shares withheld by, or delivered to, us pursuant to provisions in agreements with recipients of restricted stock granted under our equity compensation plans that allow us to withhold, or the recipient to deliver to us, the number of shares with a fair value equal to the statutory tax withholding due upon vesting of the restricted shares.
We did not make any unregistered sales of equity securities in the first quarter of 2026.
ITEM 5. OTHER INFORMATION
During the quarter ended April 5, 2026, none of our directors or officers adopted terminated
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ITEM 6. EXHIBITS
101.INS Inline eXtensible Business Reporting Language (XBRL) Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document*
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
* Filed or furnished electronically herewith.
40
SIGNATURES
Pursuant to the requirements 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/ Dana O. Maisano | |||||||
| Dana O. Maisano | ||||||||
| Vice President and Controller | ||||||||
| (Authorized Officer and Chief Accounting Officer) | ||||||||
Dated: April 29, 2026 | ||||||||
41
Exhibit 31.1
CERTIFICATION BY CEO PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Phebe N. Novakovic, certify that:
1.I have reviewed this quarterly report on Form 10-Q of General Dynamics Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | April 29, 2026 | /s/ Phebe N. Novakovic | ||||||
| Phebe N. Novakovic | ||||||||
| Chairman and Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION BY CFO PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Kimberly A. Kuryea, certify that:
1.I have reviewed this quarterly report on Form 10-Q of General Dynamics Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | April 29, 2026 | /s/ Kimberly A. Kuryea | ||||||
| Kimberly A. Kuryea | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
Exhibit 32.1
CERTIFICATION BY CEO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of General Dynamics Corporation (the Company) on Form 10-Q for the quarter ended April 5, 2026, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Phebe N. Novakovic, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | April 29, 2026 | /s/ Phebe N. Novakovic | ||||||
| Phebe N. Novakovic | ||||||||
| Chairman and Chief Executive Officer | ||||||||
Exhibit 32.2
CERTIFICATION BY CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of General Dynamics Corporation (the Company) on Form 10-Q for the quarter ended April 5, 2026, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Kimberly A. Kuryea, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | April 29, 2026 | /s/ Kimberly A. Kuryea | ||||||
| Kimberly A. Kuryea | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||