General Dynamics (GD) 8-K General Dynamics Reports Strong Third-Quarter

Exhibit 99.1

2941 Fairview Park Drive Suite 100 Falls Church, VA 22042-4513 www.generaldynamics.com News

October 19, 2005

Contact: Rob Doolittle

Tel: 703 876 3199

Fax: 703 876 3555

rdoolitt@generaldynamics.com

General Dynamics Reports Strong Third-Quarter

Financial Results

• Double-digit revenue and earnings growth

• Strong cash flow

• EPS increases 15 percent

FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported 2005 third-quarter revenues of $5.4 billion, a 16 percent increase over third-quarter 2004 revenues of $4.6 billion. Operating earnings increased in the quarter to $588 million, compared to $493 million in third-quarter 2004. Net earnings were $374 million, or $1.84 per share on a fully diluted basis, compared to net earnings of $322 million, or $1.60 per share fully diluted, for the year-ago period.

Cash flow was very strong with net cash provided by operating activities in the quarter at $600 million, while free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $527 million. Year-to-date, net cash from operating activities climbed to $1.2 billion and free cash flow from operations was nearly $1 billion, $168 million more than was generated in the same nine-month period last year.

Company-wide, total orders in the third quarter were $5.1 billion. Funded backlog at the end of the third quarter was $29.3 billion, and total backlog was $43.4 billion, compared to $25.1 billion and $39.8 billion, respectively, at the end of the third quarter of 2004.

“This was a very strong quarter for General Dynamics,” said company Chairman and Chief Executive Officer Nicholas D. Chabraja. “Revenue, operating earnings and margin rates increased substantially in three of the company’s four major business segments and, despite a charge in the Marine Systems group’s commercial shipbuilding program, net earnings grew a healthy 16 percent overall.

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“We’re very pleased with the level of cash generated by operating activities and free cash flow for the quarter, which puts us ahead of our cash plan for the year,” Chabraja continued.

“While the company’s total backlog remained essentially the same when compared to the second quarter of this year, Information Systems and Technology’s total backlog grew by $800 million in the quarter and is $2.5 billion higher than at this time last year. In the Aerospace sector, despite increased deliveries in the third quarter, funded backlog grew by nearly $180 million from just 90 days ago.

“Our focus on performance continues to generate positive results on behalf of shareholders,” Chabraja said.

General Dynamics, headquartered in Falls Church, Virginia, employs approximately 71,900 people worldwide. The company is a market leader in mission-critical information systems and technologies; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and business aviation.

Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s current expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company’s filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K and our Forms 10-Q.

All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

WEBCAST INFORMATION:  General Dynamics will webcast its third-quarter securities analyst conference call, scheduled for 11 a.m. Eastern Daylight Time on Wednesday, Oct. 19, 2005. Those accessing the webcast will be able to listen to management’s discussion of the third-quarter results, as well as the question-and-answer session with securities analysts.

The webcast will be a listen-only audio broadcast, available atwww.generaldynamics.com. A Real Audio™ player or Windows Media™ player is required to access the webcast;information about downloading those players is available on the company’s website. An on-demand replay of the webcast will be available by 2 p.m. on Oct. 19 and will continue for 12 months.

To hear a recording of the conference call by telephone, please call719-457-0820; passcode 9847131. It will be available from 2 p.m. on Oct. 19 until midnight on Nov. 2, 2005.

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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

	Third Quarter						Variance
	2005			2004			$			%
NET SALES	$	5,380		$	4,647		$	733		15.8	%
OPERATING COSTS AND EXPENSES		4,792			4,154			(638	)
OPERATING EARNINGS		588			493			95		19.3	%
Interest, Net		(30	)		(33	)		3
Other (Expense)/ Income, Net		(2	)		3			(5	)
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		556			463			93		20.1	%
Provision for Income Taxes		182			143			(39	)
EARNINGS FROM CONTINUING OPERATIONS	$	374		$	320		$	54		16.9	%
Discontinued Operations, Net of Tax		—			2			(2	)
NET EARNINGS	$	374		$	322		$	52		16.1	%
EARNINGS PER SHARE—BASIC
Continuing Operations	$	1.86		$	1.60		$	0.26		16.3	%
Discontinued Operations	$	—		$	0.01		$	(0.01	)
Net Earnings	$	1.86		$	1.61		$	0.25		15.5	%
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)		201.1			200.0
EARNINGS PER SHARE—DILUTED
Continuing Operations	$	1.84		$	1.59		$	0.25		15.7	%
Discontinued Operations	$	—		$	0.01		$	(0.01	)
Net Earnings	$	1.84		$	1.60		$	0.24		15.0	%
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)		202.8			201.9

Exhibit A

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CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

	Nine Months						Variance
	2005			2004			$			%
NET SALES	$	15,413		$	13,945		$	1,468		10.5	%
OPERATING COSTS AND EXPENSES		13,828			12,531			(1,297	)
OPERATING EARNINGS		1,585			1,414			171		12.1	%
Interest, Net		(93	)		(111	)		18
Other Expense, Net		(3	)		(9	)		6
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		1,489			1,294			195		15.1	%
Provision for Income Taxes		427			419			(8	)
EARNINGS FROM CONTINUING OPERATIONS	$	1,062		$	875		$	187		21.4	%
Discontinued Operations, Net of Tax		(7	)		16			(23	)
NET EARNINGS	$	1,055		$	891		$	164		18.4	%
EARNINGS PER SHARE—BASIC
Continuing Operations	$	5.29		$	4.39		$	0.90		20.5	%
Discontinued Operations	$	(0.04	)	$	0.08		$	(0.12	)
Net Earnings	$	5.25		$	4.47		$	0.78		17.4	%
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)		200.8			199.2
EARNINGS PER SHARE—DILUTED
Continuing Operations	$	5.25		$	4.35		$	0.90		20.7	%
Discontinued Operations	$	(0.04	)	$	0.08		$	(0.12	)
Net Earnings	$	5.21		$	4.43		$	0.78		17.6	%
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (IN MILLIONS)		202.4			201.1

Exhibit B

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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)

DOLLARS IN MILLIONS

	Third Quarter						Variance
	2005			2004			$			%
NET SALES:
INFORMATION SYSTEMS AND TECHNOLOGY	$	1,985		$	1,590		$	395		24.8	%
COMBAT SYSTEMS		1,240			1,031			209		20.3	%
MARINE SYSTEMS		1,171			1,154			17		1.5	%
AEROSPACE		906			798			108		13.5	%
RESOURCES/CORPORATE		78			74			4		5.4	%
TOTAL	$	5,380		$	4,647		$	733		15.8	%
OPERATING EARNINGS:
INFORMATION SYSTEMS AND TECHNOLOGY	$	228		$	176		$	52		29.5	%
COMBAT SYSTEMS		159			128			31		24.2	%
MARINE SYSTEMS		52			62			(10	)	(16.1	)%
AEROSPACE		146			117			29		24.8	%
RESOURCES/CORPORATE		3			10			(7	)	(70.0	)%
TOTAL	$	588		$	493		$	95		19.3	%
OPERATING MARGINS:
INFORMATION SYSTEMS AND TECHNOLOGY		11.5	%		11.1	%
COMBAT SYSTEMS		12.8	%		12.4	%
MARINE SYSTEMS		4.4	%		5.4	%
AEROSPACE		16.1	%		14.7	%
RESOURCES/CORPORATE		3.8	%		13.5	%
TOTAL		10.9	%		10.6	%

Exhibit C

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NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)

DOLLARS IN MILLIONS

	Nine Months						Variance
	2005			2004			$			%
NET SALES:
INFORMATION SYSTEMS AND TECHNOLOGY	$	5,750		$	4,874		$	876		18.0	%
COMBAT SYSTEMS		3,415			3,099			316		10.2	%
MARINE SYSTEMS		3,559			3,611			(52	)	(1.4	)%
AEROSPACE		2,487			2,175			312		14.3	%
RESOURCES/CORPORATE		202			186			16		8.6	%
TOTAL	$	15,413		$	13,945		$	1,468		10.5	%
OPERATING EARNINGS:
INFORMATION SYSTEMS AND TECHNOLOGY	$	650		$	537		$	113		21.0	%
COMBAT SYSTEMS		386			351			35		10.0	%
MARINE SYSTEMS		166			241			(75	)	(31.1	)%
AEROSPACE		372			277			95		34.3	%
RESOURCES/CORPORATE		11			8			3		37.5	%
TOTAL	$	1,585		$	1,414		$	171		12.1	%
OPERATING MARGINS:
INFORMATION SYSTEMS AND TECHNOLOGY		11.3	%		11.0	%
COMBAT SYSTEMS		11.3	%		11.3	%
MARINE SYSTEMS		4.7	%		6.7	%
AEROSPACE		15.0	%		12.7	%
RESOURCES/CORPORATE		5.4	%		4.3	%
TOTAL		10.3	%		10.1	%

Exhibit D

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PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)

DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS

	Third Quarter 2005						Third Quarter 2004
Cash	$	1,754					$	686
Short-term Debt	$	507					$	391
Long-term Debt		2,790						3,296
Total Debt	$	3,297					$	3,687
Net Debt	$	1,543					$	3,001
Shareholders' Equity	$	7,973					$	6,777
Debt-to-Equity		41.4	%					54.4	%
Debt-to-Capital		29.3	%					35.2	%
Book Value per Share	$	39.62					$	33.86
	Quarter			Year-to-date			Quarter			Year-to-date
Net Cash Provided by Operating Activities	$	599		$	1,156		$	311		$	996
Capital Expenditures		(72	)		(167	)		(58	)		(175	)
Free Cash Flow from Operations (A)	$	527		$	989		$	253		$	821
Total Taxes Paid	$	101					$	58
Depreciation and Depletion	$	60					$	58
Intangible Asset Amortization		25						22
Depreciation, Depletion and Amortization	$	85					$	80
Company Sponsored R&D (B)	$	86					$	65
Employment		71,900						69,300
Sales Per Employee	$	292,583					$	281,309
Shares Outstanding		201,249,724						200,161,655
Weighted Average Shares Outstanding—
Basic		201,060,141						199,964,232
Diluted		202,803,373						201,852,318

(A) The company's management believes free cash flow from operations is a measurement that is useful to investors, because it portrays the company's ability to generate cash from its core businesses for such purposes as repaying maturing debt, funding business acquisitions and paying dividends. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.

(B) Includes independent research and development and bid and proposal costs and Gulfstream product development costs.

Exhibit E

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BACKLOG (UNAUDITED)

DOLLARS IN MILLIONS

	Third Quarter 2005
	Funded		Unfunded		Total Backlog		IDIQ Contract Value (A)		Total Estimated Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY	$	7,310	$	2,748	$	10,058	$	5,196	$	15,254
COMBAT SYSTEMS		7,771		2,416		10,187		861		11,048
MARINE SYSTEMS		8,876		6,660		15,536		—		15,536
AEROSPACE		5,156		2,188		7,344		—		7,344
RESOURCES/CORPORATE		181		58		239		—		239
TOTAL	$	29,294	$	14,070	$	43,364	$	6,057	$	49,421
	Second Quarter 2005
	Funded		Unfunded		Total Backlog		IDIQ Contract Value (A)		Total Estimated Contract Value
INFORMATION SYSTEMS AND TECHNOLOGY	$	7,174	$	2,033	$	9,207	$	5,592	$	14,799
COMBAT SYSTEMS		7,902		2,394		10,296		90		10,386
MARINE SYSTEMS		9,654		6,957		16,611		—		16,611
AEROSPACE		4,977		2,199		7,176		—		7,176
RESOURCES/CORPORATE		202		58		260		—		260
TOTAL	$	29,909	$	13,641	$	43,550	$	5,682	$	49,232

(A) IDIQ contract value represents management's estimate of the future contract value under existing indefinite delivery, indefinite quantity contracts. Because the value in these arrangements is subject to the customer's future exercise of an indeterminate quantity of delivery orders, the company recognizes these contracts in backlog only when they are funded.

Exhibit F

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AIRCRAFT DELIVERIES (UNAUDITED)

	Third Quarter		Nine Months
	2005	2004	2005	2004
GREEN:
LARGE AIRCRAFT	17	14	46	41
MID-SIZE AIRCRAFT	7	6	19	16
TOTAL	24	20	65	57
COMPLETIONS:
LARGE AIRCRAFT	17	14	43	36
MID-SIZE AIRCRAFT	5	7	16	15
TOTAL	22	21	59	51
PRE-OWNED:	3	5	8	12

Exhibit G

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RECONCILIATION OF

YEAR-TO-DATE CASH FLOW TO

CHANGE IN NET DEBT (UNAUDITED)

	2005			2004
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	1,156		$	996
CAPITAL EXPENDITURES		(167	)		(175	)
FREE CASH FLOW FROM OPERATIONS		989			821
BUSINESS ACQUISITIONS		(277	)		(526	)
ASSET SALES		362			23
SHARE REPURCHASES		(200	)		—
DIVIDENDS		(232	)		(206	)
PROCEEDS FROM OPTION EXERCISES		127			114
OTHER		9			(44	)
DECREASE IN NET DEBT	$	778		$	182
NET DEBT, BEGINNING OF PERIOD		(2,321	)		(3,183	)
NET DEBT, END OF PERIOD	$	(1,543	)	$	(3,001	)

Exhibit H

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