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What changed in General Dynamics's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of General Dynamics's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+269 added−279 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-07)

Top changes in General Dynamics's 2023 10-K

269 paragraphs added · 279 removed · 222 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

96 edited+16 added−14 removed55 unchanged
Biggest changeCapabilities range from enterprise systems to embedded applications required for terrestrial, airborne or space environments. We are working with our Army customer to adapt elements of advanced resilient radio frequency (RF) and 5G technologies to address battlefield realities such as jamming, spoofing, cyberattacks and 14 lack of ground connectivity.
Biggest changeArmy customer to adapt elements of advanced resilient radio frequency (RF) to address battlefield realities such as jamming, spoofing, cyberattacks and lack of ground connectivity. For the Canadian army we were recently selected to provide the Land Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) system. Mission Systems continues to help advance our nation’s position in the space domain.
NASSCO conducts full-service maintenance and surface-ship repair operations in Navy fleet concentration areas in San Diego, California; Norfolk, Virginia; Mayport, Florida; and Bremerton, Washington. Electric Boat provides submarine maintenance and modernization services in a variety of U.S. locations, and Bath Iron Works provides lifecycle support services for Navy surface ships in both U.S. and overseas ports.
NASSCO conducts full-service maintenance and surface-ship repair operations in Navy fleet concentration areas in San Diego, California; Norfolk, Virginia; Bremerton, Washington; and Mayport, Florida. Electric Boat provides submarine maintenance and modernization services in a variety of U.S. locations, and Bath Iron Works provides lifecycle support services for Navy surface ships in both U.S. and overseas ports.
Land Systems is producing 399 new LAVs in eight variants, including ambulances, command posts, maintenance and recovery vehicles, and troop-carrying vehicles, for the Canadian Army, as well as upgrading its existing fleet. Land Systems is also producing the British Army’s Ajax armored fighting vehicle, a next-generation, medium-weight tracked combat vehicle.
Land Systems is producing 399 new LAVs for the Canadian army in eight variants, including ambulances, command posts, maintenance and recovery vehicles, and troop-carrying vehicles, as well as upgrading its existing fleet. Land Systems is also producing the British Army’s Ajax armored fighting vehicle, a next-generation, medium-weight tracked combat vehicle.
U.S. GOVERNMENT Our primary customer is the DoD. We also contract with other U.S. government customers, including the intelligence community and the Departments of Homeland Security and Health and Human Services.
GOVERNMENT Our primary customer is the DoD. We also contract with other U.S. government customers, including the intelligence community and the Departments of Homeland Security and Health and Human Services.
ELS also offers Duro and Eagle tactical vehicles in a range of options and weight classes and is currently producing these vehicles for Denmark, Luxembourg, Switzerland and Germany, while providing a full range of product support for the German armed forces. We are expanding our platform capabilities through continued investment in robotic and autonomous vehicle technology.
ELS also offers Duro and Eagle tactical vehicles in a range of options and weight classes and is currently producing these vehicles for Luxembourg, Switzerland and Germany, while providing a full range of product support for the German armed forces. We are expanding our platform capabilities through continued investment in robotic and autonomous vehicle technology.
The Aerospace segment competes worldwide in the business jet aircraft services market primarily on the basis of quality, price and timeliness. While competition for each type of service varies somewhat, the segment faces a number of competitors of varying sizes for each of its offerings. INTELLECTUAL PROPERTY We develop technology, manufacturing processes and systems-integration practices.
The Aerospace segment competes worldwide in the business jet aircraft services market primarily on the basis of quality, price and timeliness. While competition for each type of service varies somewhat, the segment faces a number of competitors of varying sizes for each of its offerings. 17 INTELLECTUAL PROPERTY We develop technology, manufacturing processes and systems-integration practices.
Based on information currently available and current U.S. government policies relating to cost recovery, we do not expect continued compliance with environmental regulations, including costs associated with changes in environmental and climate change laws or regulations, to have a material impact on our results of operations, financial condition or cash flows.
Based on information currently available and current U.S. government policies relating to cost recovery, we do not expect continued compliance with environmental regulations, including costs associated with changes in environmental and climate change laws or regulations, to have a material impact on our 20 results of operations, financial condition or cash flows.
Our training and development efforts focus on ensuring that our people are appropriately trained on critical job skills as well as on leadership behaviors that are consistent with our Ethos. We conduct rigorous succession planning exercises to ensure that key positions have the appropriate level of bench strength to provide for future key positions and leadership transitions.
Our training and development efforts focus on ensuring that our people are appropriately trained on critical job skills as well as on leadership behaviors that are consistent with our Ethos. We conduct rigorous succession planning exercises to ensure that key positions have the appropriate level of 18 bench strength to provide for future key positions and leadership transitions.
Land Systems is the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the M1A2 Abrams main battle tank and Stryker wheeled combat vehicle. Both of these platforms are core components of the multi-domain, joint war fight envisioned on the battlefield of the future.
Land Systems is the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the Abrams main battle tank and Stryker wheeled combat vehicle. Both of these platforms are core components of the multi-domain, joint war fight envisioned on the battlefield of the future.
For additional information relating to the impact of environmental matters, see Note M to the Consolidated Financial Statements in Item 8. 20 AVAILABLE INFORMATION We file reports and other information with the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
For additional information relating to the impact of environmental matters, see Note M to the Consolidated Financial Statements in Item 8. AVAILABLE INFORMATION We file reports and other information with the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act).
With approximately 50 locations throughout North America, Europe, the Middle East and the Asia-Pacific region, our offerings include maintenance, aircraft management, charter, staffing and fixed-base operator (FBO) services. Jet Aviation manages approximately 300 business aircraft globally on behalf of individuals and corporate owners.
With approximately 50 locations throughout North America, Europe, the Middle East and the Asia-Pacific region, our offerings include maintenance, completion, aircraft management, charter, staffing and fixed-base operator (FBO) services. Jet Aviation manages approximately 300 business aircraft globally on behalf of individuals and corporate owners.
For the Department of Veterans Affairs (VA), GDIT leverages managed services and AI/ML to accelerate veteran benefits claims processing, develops applications and software to improve the veteran user experience, and provides on-demand 24/7/365 IT support to more than 500,000 VA personnel nationwide.
For the Department of Veterans Affairs (VA), GDIT leverages managed services and AI to accelerate veteran benefits claims processing, develops applications and software to improve the veteran user experience, and provides on-demand 24/7/365 IT support to more than 500,000 VA personnel nationwide.
In addition to owning a large portfolio of proprietary intellectual property, we license some intellectual property rights to and from others. The U.S. government holds licenses to many of our patents developed in the 17 performance of U.S. government contracts, and it may use or authorize others to use the inventions covered by these patents.
In addition to owning a large portfolio of proprietary intellectual property, we license some intellectual property rights to and from others. The U.S. government holds licenses to many of our patents developed in the performance of U.S. government contracts, and it may use or authorize others to use the inventions covered by these patents.
With six variants, including a reconnaissance vehicle, an armored personnel carrier, and various support platforms, the Ajax family of vehicles offers advanced electronic architecture and proven technology for an unparalleled balance of survivability, lethality and mobility, along with high reliability for a vehicle in its weight class.
With six variants, including a reconnaissance vehicle, an armored personnel carrier and various support platforms, the Ajax family of vehicles offers advanced electronic architecture and proven technology for a balance of survivability, lethality and mobility, along with high reliability for a vehicle in its weight class.
The result is a significant increase in federal IT modernization and technology spending in recent years and a shift to large-scale, end-to-end, highly engineered solutions that require a broad array of integrated technology services and hardware offerings to meet these customer demands.
The result is a significant increase in federal information technology (IT) modernization and technology spending in recent years and a shift to large-scale, end-to-end, highly engineered solutions that require a broad array of integrated technology services and hardware offerings to meet these customer demands.
NASSCO has also designed and built crude oil and product tankers and container and cargo ships for commercial customers, satisfying Jones Act requirements that ships carrying cargo between U.S. ports be built in U.S. shipyards. 8 On December 31, 2022, backlog for our major ship construction programs and the scheduled final delivery date of ships currently in backlog were as follows: In addition to design and construction activities, our Marine Systems segment provides comprehensive post-delivery services to modernize and extend the service life of these and other Navy ships.
NASSCO has also designed and built crude oil and product tankers and container and cargo ships for commercial customers, satisfying Jones Act requirements that ships carrying cargo between U.S. ports be built in U.S. shipyards. 8 On December 31, 2023, backlog for our major ship construction programs and the scheduled final delivery date of ships currently in backlog were as follows: In addition to design and construction activities, our Marine Systems segment provides comprehensive post-delivery services to modernize and extend the service life of these and other Navy ships.
GDIT delivers a full spectrum of cloud solutions and services to modernize customers’ legacy IT infrastructures and systems. These cloud capabilities advance security and accelerate access to cutting-edge technologies such as high-performance computing and AI/ML.
GDIT delivers a full spectrum of cloud solutions and services to modernize customers’ legacy IT infrastructures and systems. These cloud capabilities advance security and accelerate access to cutting-edge technologies such as high-performance computing and AI.
These clean-sheet (i.e., all-new) aircraft replace the G450 and G550 models, whose combined family has an installed base of more than 4 1,650 aircraft around the world.
These clean-sheet (i.e., all-new) aircraft replace the G450 and G550 models, whose combined family has an installed base of more than 1,650 aircraft around the world.
Our investment included development of a new wing, new avionics, new fuselage and new ergonomically designed larger interiors, as well as systems and technologies to improve the manufacturing process and quality of the platform.
Our investment included development of a new wing, new avionics, 4 new fuselage and new ergonomically designed larger interiors, as well as systems and technologies to improve the manufacturing process and quality of the platform.
While the installed base of aircraft is concentrated in North America, orders from customers outside North America represent a significant portion of our aircraft business with approximately 40% of the Aerospace segment’s aircraft backlog on December 31, 2022. 16 COMPETITION Several factors determine our ability to compete successfully in the defense and business aviation markets.
While the installed base of aircraft is concentrated in North America, orders from 16 customers outside North America represent a significant portion of our aircraft business with approximately 40% of the Aerospace segment’s aircraft backlog on December 31, 2023. COMPETITION Several factors determine our ability to compete successfully in the defense and business aviation markets.
Space Development Agency (SDA) selected Mission Systems to establish the ground operations and integration segment for Tranche 1 of the National Defense Space Architecture by building ground entry points and operations centers, as well as providing network operations and systems integration services for the SDA’s next tranche of proliferated low-earth orbit satellites.
The U.S. Space Development Agency (SDA) selected Mission Systems to establish the ground operations and integration segment for Tranche 1 of the National Defense Space Architecture by building ground entry points and operations centers, as well as providing network operations and systems integration services for the SDA’s next tranche of proliferated low-earth orbit satellites.
Over the past decade, the Department of Defense (DoD), the intelligence community and federal civilian agencies have increasingly prioritized technology solutions as a critical element of their missions, transforming technology resources from back-office support functions to a strategic priority for this customer community.
Over the past decade, the U.S. Department of Defense (DoD), the intelligence community and federal civilian agencies have increasingly prioritized technology solutions as a critical element of their missions, transforming technology resources from back-office support functions to a strategic priority for this customer community.
Additionally, OTS maintains a leading position providing missile subsystems in support of U.S. tactical and strategic missiles, provisioning both legacy and next-generation missiles with critical aerostructures, control actuators, high-performance warheads and cutting-edge hypersonic rocket cases. 12 Revenue for the Combat Systems segment was 18% of our consolidated revenue in 2022 and 19% in 2021 and 2020.
Additionally, OTS maintains a leading position providing 12 missile subsystems in support of U.S. tactical and strategic missiles, provisioning both legacy and next-generation missiles with critical aerostructures, control actuators, high-performance warheads, and cutting-edge hypersonic rocket cases. Revenue for the Combat Systems segment was 20% of our consolidated revenue in 2023, 18% in 2022 and 19% in 2021.
Accordingly, the program has received the highest possible rating from the government’s Defense Priorities and Allocations System. These submarines will provide strategic deterrent capabilities for decades, with the first boat delivering in 2027 to begin replacement of the current Ohio-class ballistic-missile submarine fleet as it reaches the end of its service life.
Accordingly, the program has received the highest possible rating from the government’s Defense Priorities and Allocations System. These submarines will provide strategic deterrent capabilities for decades, with the first boat scheduled for delivery in 2027 to begin replacement of the current Ohio-class ballistic-missile submarine fleet as it reaches the end of its service life.
Over the past 10 years, we have invested in our business to create, renew or expand our portfolio of products and services across our businesses. This includes product development investments in Aerospace to bring to market an all-new lineup of business jet aircraft, capital investments in Marine Systems to support significant growth in U.S.
Over the past decade, we have invested in our business to create, renew or expand our portfolio of products and services across our businesses. This includes product development investments in Aerospace to bring to market an all-new lineup of business jet aircraft, capital investments in Marine Systems to support significant growth in U.S.
Along with an industry partner, we are currently working on Blocks IV and V in the program, with 17 Virginia-class submarines in our backlog scheduled for delivery through 2032.
Along with an industry partner, we are currently working on Blocks IV and V in the program, with 16 Virginia-class submarines in our backlog scheduled for delivery through 2032.
We have the Multi-Utility Tactical Transport (MUTT), a semi-autonomous robotic platform that can be equipped with an array of modular mission payloads for use alongside dismounted soldiers. This platform was selected as the Army’s first robotic vehicle program of record and is officially designated as the Small Multipurpose Equipment Transport (SMET).
We have developed the Multi-Utility Tactical Transport (MUTT), a semi-autonomous robotic platform that can be equipped with an array of modular mission payloads for use alongside dismounted soldiers. This platform was selected as the Army’s first robotic vehicle program of record and is officially designated as the Small Multipurpose Equipment Transport (S-MET).
As a result, the G500 and G600 are faster, more fuel efficient, and have greater cabin volume, reduced emissions, more range and improved flight controls compared with the aircraft they are replacing. These aircraft hold more than 90 city-pair speed records, and at year-end 2022, cumulative deliveries for the aircraft totaled over 200.
As a result, the G500 and G600 are faster, more fuel efficient, and have greater cabin volume, reduced emissions, more range and improved flight controls compared with the aircraft they are replacing. These aircraft hold more than 90 city-pair speed records, and at year-end 2023, cumulative deliveries for the aircraft totaled over 250.
For information on the advantages and disadvantages of each of these contract types, see Note B to the Consolidated Financial Statements in Item 8. U.S. COMMERCIAL Our U.S. commercial revenue was $5.7 billion in 2022, $4.8 billion in 2021 and $4.9 billion in 2020, which represented 15%, 12% and 13% of our consolidated revenue in each of the respective years.
For information on the advantages and disadvantages of each of these contract types, see Note B to the Consolidated Financial Statements in Item 8. U.S. COMMERCIAL Our U.S. commercial revenue was $5.8 billion in 2023, $5.7 billion in 2022 and $4.8 billion in 2021, which represented 14%, 15% and 12% of our consolidated revenue in each of the respective years.
In support of allied navies, we offer program management, planning, engineering and design support for submarine construction programs. Revenue for the Marine Systems segment was 28% of our consolidated revenue in 2022, 27% in 2021 and 26% in 2020.
In support of allied navies, we offer program management, planning, engineering and design support for submarine construction programs. Revenue for the Marine Systems segment was 29% of our consolidated revenue in 2023, 28% in 2022 and 27% in 2021.
ITEM 1. BUSINESS (Dollars in millions, except per-share amounts or unless otherwise noted) BUSINESS OVERVIEW General Dynamics is a global aerospace and defense company that specializes in high-end design, engineering and manufacturing to deliver state-of-the-art solutions to our customers.
ITEM 1. BUSINESS (Dollars in millions, unless otherwise noted) BUSINESS OVERVIEW General Dynamics is a global aerospace and defense company that specializes in high-end design, engineering and manufacturing to deliver state-of-the-art solutions to our customers.
Our revenue from non-U.S. government and commercial customers was $6 billion in 2022, $6.8 billion in 2021 and $6.7 billion in 2020, which represented 15% of our consolidated revenue in 2022 and 18% in 2021 and 2020. We conduct business with customers around the world.
Our revenue from non-U.S. government and commercial customers was $6.1 billion in 2023, $6 billion in 2022 and $6.8 billion in 2021, which represented 14% of our consolidated revenue in 2023, 15% in 2022 and 18% in 2021. We conduct business with customers around the world.
Due to the highly specialized nature of our business, we must hire and train skilled and qualified people to design and build the products and perform the services required by our customers. The health, welfare and safety of our employees is paramount throughout our workplaces.
Due to the highly specialized nature of our business, we must hire and train skilled and qualified people to design and build the products and perform the services required by our customers. This includes upskilling employees to advance within the workplace. The health, welfare and safety of our employees is paramount throughout our workplaces.
In addition to Navy ships, we design and build ocean-going Jones Act ships for commercial customers. Marine Systems consists of three business units — Electric Boat, Bath Iron Works and NASSCO.
In addition to Navy ships, we have designed and built ocean-going Jones Act ships for commercial customers. Marine Systems consists of three business units — Electric Boat, Bath Iron Works and NASSCO.
Additionally, we have the Tracked Robot 10-ton (TRX) prototype, a medium-sized, semi-autonomous combat vehicle that enables critical battlefield roles, such as direct and indirect fire, autonomous resupply, reconnaissance and other battlefield missions. 11 On December 31, 2022, the installed base for our major vehicle programs, as well as the quantity and scheduled final delivery date of vehicles and vehicle upgrades in backlog were as follows: Complementing these military-vehicle offerings, OTS designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces, including the M2/M2-A1 heavy machine guns and MK19/MK47 grenade launchers.
Additionally, we have developed the Tracked Robot 10-ton (TRX) prototype, a medium-sized, semi-autonomous combat vehicle that enables critical battlefield roles, such as direct and indirect fire, autonomous resupply, reconnaissance and other battlefield missions. 11 On December 31, 2023, the installed base for our major vehicle programs, as well as the quantity and scheduled final delivery date of vehicles and vehicle upgrades in backlog were as follows: Complementing these military-vehicle offerings, OTS designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces.
Revenue by major products and services was as follows: Year Ended December 31 2022 2021 2020 Aircraft manufacturing $ 5,876 $ 5,864 $ 6,115 Aircraft services 2,691 2,271 1,960 Total Aerospace $ 8,567 $ 8,135 $ 8,075 MARINE SYSTEMS Our Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S.
Revenue by major products and services was as follows: Year Ended December 31 2023 2022 2021 Aircraft manufacturing $ 5,710 $ 5,876 $ 5,864 Aircraft services 2,911 2,691 2,271 Total Aerospace $ 8,621 $ 8,567 $ 8,135 MARINE SYSTEMS Our Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S.
HUMAN CAPITAL MANAGEMENT Our company is a global community of approximately 106,500 employees dedicated to our Ethos of transparency, trust, honesty and alignment.
HUMAN CAPITAL MANAGEMENT Our company is a global community of approximately 111,600 employees dedicated to our Ethos of transparency, trust, honesty and alignment.
As we emerge from this period of significant investment, we expect to realize an attractive return from these investments in each of our segments and continue to evaluate our capital deployment opportunities to deliver long-term growth and enduring value to our shareholders. Following is additional information on each of our operating segments.
We expect to realize an attractive return from these investments in each of our segments and we will continue to evaluate our capital deployment opportunities to deliver long-term growth and enduring value to our shareholders. Following is additional information on each of our operating segments.
Our Marine Systems segment has one primary competitor with which it also partners on the Virginia-class submarine program, and to which it subcontracts on the Columbia-class submarine program. Our Combat Systems segment competes with a large number of U.S. and non-U.S. businesses.
Our Marine Systems segment has one primary competitor with which it also partners on the Virginia-class submarine program, and to which it subcontracts on the Columbia-class submarine program. For commercial and repair work, the Marine Systems segment competes with several additional U.S. shipyards. Our Combat Systems segment competes with a large number of U.S. and non-U.S. businesses.
Revenue by major products and services was as follows: Year Ended December 31 2022 2021 2020 Military vehicles $ 4,581 $ 4,699 $ 4,687 Weapons systems, armament and munitions 2,024 2,006 1,991 Engineering and other services 703 646 545 Total Combat Systems $ 7,308 $ 7,351 $ 7,223 TECHNOLOGIES Our Technologies segment provides a full spectrum of services, technologies and products to an expanding market that increasingly seeks solutions combining leading-edge electronic hardware with specialized software.
Revenue by major products and services was as follows: Year Ended December 31 2023 2022 2021 Military vehicles $ 5,036 $ 4,581 $ 4,699 Weapons systems, armament and munitions 2,442 2,024 2,006 Engineering and other services 790 703 646 Total Combat Systems $ 8,268 $ 7,308 $ 7,351 TECHNOLOGIES Our Technologies segment provides a full spectrum of services, technologies and products to an expanding market that increasingly seeks solutions combining leading-edge electronic hardware with specialized software.
Revenue by major products and services was as follows: Year Ended December 31 2022 2021 2020 Nuclear-powered submarines $ 7,310 $ 7,117 $ 6,938 Surface ships 2,561 2,328 2,055 Repair and other services 1,169 1,081 986 Total Marine Systems $ 11,040 $ 10,526 $ 9,979 9 COMBAT SYSTEMS Our Combat Systems segment is a premier manufacturer and integrator of land combat solutions worldwide, including wheeled and tracked combat vehicles, weapons systems and munitions.
Revenue by major products and services was as follows: Year Ended December 31 2023 2022 2021 Nuclear-powered submarines $ 8,631 $ 7,310 $ 7,117 Surface ships 2,698 2,561 2,328 Repair and other services 1,132 1,169 1,081 Total Marine Systems $ 12,461 $ 11,040 $ 10,526 9 COMBAT SYSTEMS Our Combat Systems segment is a premier manufacturer and integrator of land combat solutions worldwide, including wheeled and tracked combat vehicles, weapons systems and munitions.
We listen to our people to assess areas of concern and levels of engagement. 18 2022 WORKFORCE STATISTICS • Approximately 84% of our employees are based in the United States, of which roughly 71% are white, 29% are people of color, 19% are veterans of the U.S. armed forces and 7% have self-reported having a disability.
We listen to our people to assess areas of concern and levels of engagement. 2023 WORKFORCE STATISTICS • Approximately 84% of our employees are based in the United States, of which roughly 70% are white, 30% are people of color, 19% are veterans of the U.S. armed forces and 8% have self-reported having a disability.
The coronavirus (COVID-19) pandemic, the cyber threat landscape and demand for advanced warfighter connectivity have accelerated these trends, adding urgency to required technology investments.
The coronavirus (COVID-19) pandemic, expanded cyberthreats and demand for advanced warfighter connectivity have accelerated these trends, adding urgency to required technology investments.
Of our U.S. government revenue, fixed-price contracts accounted for 56% in 2022, 57% in 2021 and 59% in 2020; cost-reimbursement contracts accounted for 38% in 2022, 36% in 2021 and 35% in 2020; and time-and-materials contracts accounted for 6% in 2022, 7% in 2021 and 6% in 2020.
Of our U.S. government revenue, fixed-price contracts accounted for 53% in 2023, 56% in 2022 and 57% in 2021; cost-reimbursement contracts accounted for 41% in 2023, 38% in 2022 and 36% in 2021; and time-and-materials contracts accounted for 6% in 2023 and 2022, and 7% in 2021.
Expected to enter service in 2025, pending FAA certification, the G400 will join a market segment in which Gulfstream has not participated for several decades. The ultra-long-range, ultra-large-cabin G650 and G650ER continue to generate significant customer interest, with more than 500 aircraft of this family currently operating in more than 50 countries.
The G400 will join a market segment in which Gulfstream has not participated for several decades. Both aircraft will enter service following FAA certification. The ultra-long-range, ultra-large-cabin G650 and G650ER continue to generate significant customer interest, with approximately 550 aircraft of this family currently operating in 55 countries.
Revenue by major products and services was as follows: Year Ended December 31 2022 2021 2020 IT services $ 8,195 $ 8,069 $ 7,892 C5ISR solutions 4,297 4,388 4,756 Total Technologies $ 12,492 $ 12,457 $ 12,648 CUSTOMERS In 2022, 70% of our consolidated revenue was from the U.S. government, 15% was from U.S. commercial customers, 9% was from non-U.S. government customers and the remaining 6% was from non-U.S. commercial customers.
Revenue by major products and services was as follows: Year Ended December 31 2023 2022 2021 IT services $ 8,459 $ 8,195 $ 8,069 C5ISR solutions 4,463 4,297 4,388 Total Technologies $ 12,922 $ 12,492 $ 12,457 CUSTOMERS In 2023, 72% of our consolidated revenue was from the U.S. government, 14% was from U.S. commercial customers, 8% was from non-U.S. government customers and the remaining 6% was from non-U.S. commercial customers. 15 U.S.
Together they serve a wide range of military, intelligence, federal civilian and state customers with a diverse portfolio that includes: • information technology (IT) solutions and mission-support services; • mobile communication, computers, command-and-control and cyber (C5) mission systems; and • intelligence, surveillance and reconnaissance (ISR) solutions.
The segment is organized into two business units — Information Technology (GDIT) and Mission Systems. Together they serve a wide range of military, intelligence, federal civilian and state customers with a diverse portfolio that includes: • consulting, technology solutions and mission-support services; • mobile communication, computers, command-and-control and cyber (C5) mission systems; and • intelligence, surveillance and reconnaissance (ISR) solutions.
In addition, coordination continues with the Army for next-generation upgrades to the platform and new uses for the vehicle. Leveraging our rapid prototyping expertise and customer intimacy, we continue to expand the mission capabilities of this platform, including an air defense mission package (M-SHORAD), a state-of-the-art electronic warfare suite, a high-energy laser, a high-power microwave, and several command post options.
Leveraging our rapid prototyping expertise and customer intimacy, we continue to expand the mission capabilities of this platform, including an air defense mission package (M-SHORAD), a state-of-the-art electronic warfare suite, a high-energy laser, a high-power microwave, and several command post options.
Our revenue from the U.S. government was as follows: 15 Year Ended December 31 2022 2021 2020 DoD $ 22,250 $ 21,386 $ 20,840 Non-DoD 4,808 4,862 4,726 Foreign military sales (FMS)* 633 598 737 Total U.S. government $ 27,691 $ 26,846 $ 26,303 % of total revenue 70 % 70 % 69 % * In addition to our direct non-U.S. sales, we sell to non-U.S. governments through the FMS program.
Our revenue from the U.S. government was as follows: Year Ended December 31 2023 2022 2021 DoD $ 24,720 $ 22,250 $ 21,386 Non-DoD 4,711 4,808 4,862 Foreign military sales (FMS)* 896 633 598 Total U.S. government $ 30,327 $ 27,691 $ 26,846 % of total revenue 72 % 70 % 70 % * In addition to our direct non-U.S. sales, we sell to non-U.S. governments through the FMS program.
We are also working with our network of approximately 3,000 suppliers — mostly small businesses — to support concurrent production of the two submarine programs. Bath Iron Works builds the Arleigh Burke-class (DDG-51) guided-missile destroyers and manages modernization and lifecycle support for the class. We have a total of 10 ships in backlog scheduled for delivery through 2029.
We are also working with our growing network of approximately 3,000 suppliers — mostly small businesses — to support concurrent production of the two submarine programs. Bath Iron Works builds the Arleigh Burke-class (DDG-51) guided-missile destroyer and manages modernization and lifecycle support for all Navy destroyers.
We proudly support a work environment that respects diverse opinions, values individual skills, celebrates unique experiences and cultivates teamwork. These efforts are a demonstration of our dedication to equal employment opportunities that foster and support a principled, productive and inclusive work environment. We stand for basic universal human rights, including that employment must be voluntary.
These efforts are a demonstration of our dedication to equal employment opportunities that foster and support a principled, productive and inclusive work environment. We stand for basic universal human rights, including that employment must be voluntary.
During 2022, the diversity profile of our workforce continued to improve across our businesses, as we hired approximately 24,000 individuals of which 71% were male and 29% were female. For our approximately 19,800 U.S.-based hires in 2022, 60% were white and 40% were people of color.
During 2023, the diversity profile of our workforce continued to improve across our businesses, as we hired more than 23,400 individuals of which 73% were male and 27% were female. For our approximately 19,400 U.S.-based hires in 2023, 60% were white and 40% were people of color.
BUSINESS JET AIRCRAFT The Aerospace segment is subject to FAA regulation in the United States and other similar aviation regulatory authorities internationally, including the Civil Aviation Administration of Israel (CAAI), the European Aviation Safety Agency (EASA) and the Civil Aviation Administration of China (CAAC).
We are also subject to regulations governing investments, exchange controls, repatriation of earnings and import-export control. BUSINESS JET AIRCRAFT The Aerospace segment is subject to FAA regulation in the United States and other similar aviation regulatory authorities internationally, including the Civil Aviation Administration of Israel (CAAI), the European Aviation Safety Agency (EASA) and the Civil Aviation Administration of China (CAAC).
The segment’s highly skilled workforce is one of its key differentiators and comprises approximately 40,000 employees, including technologists, engineers, mission experts and cleared personnel dedicated to solving the toughest security and technology challenges facing the United States and its allies.
The segment’s highly skilled workforce is one of its key differentiators and comprises approximately 40,000 employees, including technologists, engineers, mission experts and cleared personnel dedicated to solving the toughest security and technology challenges facing the United States and its allies. GDIT develops tailorable digital solutions and services developed specifically to meet mission needs in our customers’ operating environments.
As a result, since we acquired Gulfstream more than 20 years ago, we have made significant investments in research and development (R&D), state-of-the-art manufacturing facilities, and maintenance and support through a combination of product development efforts, capital expansion and the acquisition of Jet Aviation’s global support network.
Since acquiring Gulfstream more than 20 years ago, we have made significant investments in research and development (R&D), state-of-the-art manufacturing facilities, and maintenance and support through a combination of product development efforts, capital expansion and Jet Aviation’s global support network. We are also the industry leader in the use of sustainable aviation fuel (SAF) and energy efficient engines.
Nine of the boats in Block V include the Virginia Payload Module, an 84-foot Electric Boat-designed-and-built hull section that adds four additional payload tubes, more than tripling the strike capacity of these submarines and providing unique capabilities to support special missions. The Columbia-class ballistic-missile submarine is a 12-boat program that the Navy considers its top acquisition priority.
Ten of the boats in Block V will include the Virginia Payload Module, an 84-foot Electric Boat-designed-and-built hull section that adds four additional payload tubes, more than tripling the strike capacity of these submarines and providing unique capabilities to support special missions.
Electric Boat is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. The business is responsible for all aspects of design and engineering and leads the construction of both Virginia-class attack submarines and Columbia-class ballistic-missile submarines. The Navy procures Virginia-class submarines in multi-boat blocks at a two-per-year rate.
Electric Boat is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. The business is responsible for all aspects of design and engineering and leads the construction of both Columbia-class ballistic-missile submarines and Virginia-class attack submarines. The Columbia-class ballistic-missile submarine is a 12-boat program that the Navy considers its top acquisition priority.
Operating thousands of complex digital modernization 13 programs across the federal government, GDIT’s expansive portfolio includes cloud services, cybersecurity, network modernization, AI/ML, application development, high-performance computing, and 5G and next-generation wireless communications. Mission Systems offers solutions across all domains and produces a unique combination of products and capabilities that are purpose-built for essential C5ISR applications.
Operating thousands of complex digital modernization programs across the federal government, GDIT’s expansive portfolio includes cloud services, cybersecurity, network modernization, AI, application development, high-performance computing, and 5G and next-generation wireless communications. Mission Systems is a defense electronics manufacturer and integrator for C5ISR applications in all domains.
Mission Systems also continues to invest in autonomous capabilities, including through its Unmanned Undersea Vehicle (UUV) Manufacturing and Assembly Center of Excellence in Taunton, Massachusetts. The facility provides manufacturing, assembly, integration and testing capabilities for Mission Systems’ Knifefish and Bluefin Robotics UUVs, as well as the recently awarded Hammerhead program for the Navy.
Our Unmanned Undersea Vehicle (UUV) Manufacturing and Assembly Center of Excellence provides manufacturing, assembly, integration and testing capabilities for Mission Systems’ Knifefish and Bluefin Robotics UUVs, as well as the Hammerhead program for the Navy.
This enterprise network, one of the largest in the DoD, provides soldiers with access to the internet; allows them to connect securely with other databases and networks; and provides leaders with tools for training, mission planning and execution.
This work includes supporting the U.S. Army National Guard’s Department of Defense Information Network’s IT infrastructure, cybersecurity, application hosting and associated services. This enterprise network, one of the largest in the DoD, provides soldiers with access to the internet; allows them to connect securely with other databases and networks; and provides leaders with tools for training, mission planning and execution.
The result is the unprecedented development of an all-new lineup of the most technologically advanced business jet aircraft in the world. The Gulfstream family of aircraft offer industry-leading cabin, cockpit and safety technologies and the longest ranges at the fastest speeds in their respective classes.
The Gulfstream family of aircraft offer industry-leading cabin, cockpit and safety technologies and the longest ranges at the fastest speeds in their respective classes.
We encourage investors to visit our website, as we frequently update and post new information about our company, and it is possible that this information could be deemed material information.
Our Investor Relations website contains a significant amount of information about the company, including financial information, our corporate governance principles and practices, and other information for investors. We encourage investors to visit our website, as we frequently update and post new information about our company, and it is possible that this information could be deemed material information.
In addition, the FAR addresses the allowability of our costs, while the CAS addresses the allocation of those costs to contracts. The FAR and CAS subject us to audits and other government reviews covering issues such as cost, performance, internal controls and accounting practices relating to our contracts. 19 NON-U.S.
The FAR and CAS subject us to audits and other government reviews covering issues such as cost, performance, internal controls and accounting practices relating to our contracts. NON-U.S. REGULATORY Our non-U.S. operations are subject to the applicable government regulations and procurement policies and practices, as well as U.S. policies and regulations.
In addition to the information contained in this Form 10-K, information about the company can be found on our website and our Investor Relations website (investorrelations.gd.com). Our Investor Relations website contains a significant amount of information about the company, including financial information, our corporate governance principles and practices, and other information for investors.
The SEC maintains a website (sec.gov) that contains reports, proxy and information statements, and other information. In addition to the information contained in this Form 10-K, information about the company can be found on our website and our Investor Relations website (investorrelations.gd.com).
We continue to invest in these maintenance, repair and overhaul (MRO) facilities and inventory to accommodate fleet growth. We also operate a 24/7 year-round customer support center and offer on-call Gulfstream aircraft technicians 5 ready to deploy around the world for customer service requirements under our Field and Airborne Support Team (FAST) rapid-response unit.
We also operate a 24/7 year-round customer support center and offer on-call Gulfstream aircraft technicians ready to deploy around the world for customer service requirements under our Field and Airborne Support Team (FAST) rapid-response unit. 5 In addition to expanding the reach of Gulfstream’s aircraft maintenance network outside the United States, Jet Aviation provides a comprehensive suite of innovative aircraft services for aircraft owners and operators around the world.
Work on the three ESBs in backlog will continue into 2026, while the seven T-AO-205 ships currently in backlog have deliveries planned into 2027.
Marines and special operations forces, and the John Lewis-class (T-AO-205) fleet replenishment oiler. Work on the two ESBs in backlog will continue into 2026, while the seven T-AO-205 ships currently in backlog have deliveries planned into 2028.
For example, the DoD implements the FAR through the Defense Federal Acquisition Regulation Supplement (DFARS). For all federal government entities, the FAR regulates the phases of any product or service acquisition, including: • acquisition planning; • competition requirements; • contractor qualifications; • protection of source selection and supplier information; and • acquisition procedures.
For all federal government entities, the FAR regulates the phases of any product or service acquisition, including: • acquisition planning; • competition requirements; • contractor qualifications; • protection of source selection and supplier information; and • acquisition procedures. 19 In addition, the FAR addresses the allowability of our costs, while the CAS addresses the allocation of those costs to contracts.
We recognize that our success as a company depends on our ability to attract, develop and retain qualified people. Our commitment to promoting diversity of thought, experience, perspectives, backgrounds and capabilities to drive innovation strengthens the solutions we deliver to our customers. General Dynamics works hard to promote an environment that values and supports all employees.
Our commitment to promoting diversity of thought, experience, perspectives, backgrounds and capabilities to drive innovation strengthens the solutions we deliver to our customers. General Dynamics works hard to promote an environment that values and supports all employees. We proudly support a work environment that respects diverse opinions, values individual skills, celebrates unique experiences and cultivates teamwork.
Gulfstream’s current product line holds more than 325 city-pair speed records, more than any other business jet manufacturer, led by the G650ER, which holds the National Aeronautic Association’s polar and westbound around-the-world speed records.
Since the first G650 entered service in 2012, its capabilities and reliability have led to significant sales and expansion of our installed base around the globe. Gulfstream’s current product line holds more than 355 city-pair speed records, more than any other business jet manufacturer, led by the G650ER, which holds the National Aeronautic Association’s polar and westbound around-the-world speed records.
In addition to actively expanding the availability of SAF at its FBO locations, 6 Jet Aviation allows customers to purchase SAF at locations where it is not available through a book-and-claim system. Since 2019, Jet Aviation has uploaded more than 10 million gallons of blended SAF to its customers.
Gulfstream also offers operators the ability to achieve carbon-neutral travel by facilitating the 6 purchase of carbon-offset credits. In addition to actively expanding the availability of SAF at its FBO locations, Jet Aviation allows customers to purchase SAF at locations where it is not available through a book-and-claim system.
The G800 is Gulfstream’s longest-range aircraft, with an 8,000 nautical mile range at Mach 0.85, and it is expected to enter service approximately six months after the G700, pending FAA certification. The G400 is a clean-sheet design developed in concert with the G500 and G600, thus expanding the commonality across the Gulfstream family of aircraft.
Both aircraft combine our industry-leading high-speed range and efficiency, safety enhancements, and our advanced Symmetry Flight Deck. The G800 is Gulfstream’s longest-range aircraft, with an 8,000 nautical mile range at Mach 0.85. The G400 is a clean-sheet design developed in concert with the G500 and G600, thus expanding the commonality across the Gulfstream family of aircraft.
Gulfstream’s service and test aircraft have flown more than 2 million nautical miles on SAF since 2016, and in 2019 Gulfstream became the first business jet manufacturer to make SAF available to customers. Gulfstream also offers operators the ability to achieve carbon-neutral travel by facilitating the purchase of carbon-offset credits.
Gulfstream’s service and test aircraft have flown more than two million nautical miles on SAF since 2016, and in 2019 Gulfstream became the first business jet manufacturer to make SAF available to customers. In November 2023, Gulfstream conducted the world’s first transatlantic flight using 100% SAF.
Construction is scheduled to continue for two decades, and the value of the Navy’s program of record is in excess of $110 billion.
Construction is scheduled to continue for two decades, and the value of the Navy’s program of record is in excess of $115 billion. The Navy procures Virginia-class submarines in multi-boat blocks at a two-per-year rate.
The remaining 16% of our workforce is based internationally in over 65 countries with the primary concentrations being in North America and Europe. • Our global workforce is 76% male and 24% female, and our senior leadership teams across the business are represented by 74% males and 26% females.
The remaining 16% of our workforce is based internationally in over 65 countries with the primary concentrations being in North America and Europe. Approximately 22% of our workforce is represented by collective bargaining agreements.
Across our businesses, we take measures to prevent workplace hazards, encourage safe behaviors and enforce a culture of continuous improvement to ensure our processes help reduce safety incidents and illnesses and comply with applicable health and safety laws. These efforts continue to be of the utmost importance as we address ongoing challenges, including those presented by the COVID-19 pandemic.
Across our businesses, we take measures to prevent workplace hazards, encourage healthy and safe behaviors and enforce a culture of continuous improvement to ensure that our processes help reduce safety incidents and illnesses and comply with applicable health and safety laws. We recognize that our success as a company depends on our ability to attract, develop and retain qualified people.
We are also the industry leader in the use of sustainable aviation fuel (SAF) and energy efficient engines. We are committed to continual investment in R&D to create new aircraft that consistently broaden customer offerings while raising the bar for safety and performance.
We are committed to continual investment in R&D to create new aircraft that consistently broaden customer offerings while raising the bar for safety and performance. The result is the unprecedented development of an all-new lineup of the most technologically advanced business jet aircraft in the world.
Equal to the commitment of capital is our commitment to developing our Electric Boat workforce. While the steepest portion of our personnel ramp is behind us, we still expect the Electric Boat workforce to grow another 25% by the end of the decade, particularly in support of Columbia-class production.
Equal to the commitment of capital is our commitment to developing our Electric Boat workforce. While the steepest portion of our personnel ramp is behind us, we still expect the Electric Boat workforce to continue to grow to enable sustained production of one Columbia-class submarine plus two Virginia-class submarines per year and have the capacity to support additional AUKUS-related demand.
OTS also produces next-generation weapon systems for shipboard and aircraft applications, including high-speed Gatling guns for all U.S. fighter aircraft, including the F-35 Joint Strike Fighter. OTS’s munitions portfolio covers the full breadth of naval, air and ground forces applications across all calibers and weapon platforms for the U.S. government and its non-U.S. partners.
OTS produces next-generation weapon and defense systems for shipboard, aircraft and ground applications, including high-speed Gatling guns for all U.S. fighter aircraft (such as the F-35 Joint Strike Fighter) and combat vehicle active protection systems.
We are maximizing the effectiveness and lethality of the Army’s tank fleet with next-generation Abrams upgrades, providing technological advancements in communications, power generation, fuel efficiency, optics and armor.
We are maximizing the effectiveness and lethality of the Army’s M1A2 Abrams tank fleet with next-generation upgrades through continued delivery of the system enhancement package version 3 (SEPv3) configuration. This package provides technological advancements in communications, power generation, fuel efficiency, optics and armor. We also continue to upgrade Abrams tanks for several non-U.S. partners.
The Stryker is an eight-wheeled, medium-weight combat vehicle that combines lethality, mobility and survivability. Land Systems continues to develop upgrades and enhancements to this highly versatile and combat-proven platform to address the Army’s evolving operational needs.
Land Systems continues to develop upgrades and enhancements to this highly versatile and combat-proven platform to address the Army’s evolving operational needs. We are currently fielding an enhanced Stryker platform that includes the double-V-hull for survivability, increased power, improved cross-country mobility and an advanced digital, in-vehicle network.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEarnings and margin depend on our ability to perform on our contracts. When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events. The accounting for our contracts requires assumptions and estimates about these conditions and events.
Biggest changeIn addition, if customers default on existing contracts and the contracts are not replaced, the segment’s anticipated revenue and profitability could be reduced materially. Earnings and margin depend on our ability to perform on our contracts. When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events.
In addition, reputational harm could result if allegations of impropriety were made. In some cases, audits may result in disputes with the respective government agency that can result in negotiated settlements, arbitration or litigation. Moreover, new laws, regulations or standards, or changes to existing ones, can increase our performance and compliance costs and reduce our revenue and earnings.
In addition, reputational harm could result if allegations of impropriety were made. In some cases, audits may result in disputes with the respective government agency that can result in negotiated settlements, arbitration or litigation. Moreover, new laws, regulations or standards, or 22 changes to existing ones, can increase our performance and compliance costs and reduce our revenue and earnings.
Whether we realize the anticipated benefits from these transactions depends on multiple factors, including our integration of the businesses involved; the performance of the underlying products, capabilities, or technologies; market conditions following the acquisition; and acquired 24 liabilities, including some that may not have been identified prior to the acquisition. These factors could materially adversely affect our financial results.
Whether we realize the anticipated benefits from these transactions depends on multiple factors, including our integration of the businesses involved; the performance of the underlying products, capabilities, or technologies; market conditions following the acquisition; and acquired liabilities, including some that may not have been identified prior to the acquisition. These factors could materially adversely affect our financial results.
We believe our estimates and judgments are reasonable 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 26 Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.
We believe our estimates and judgments are reasonable 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 risks and uncertainties that are difficult to predict.
Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including the risk factors discussed in this Form 10-K. 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.
Therefore, actual future results and trends 26 may differ materially from what is forecast in forward-looking statements due to a variety of factors, including the risk factors discussed in this Form 10-K. 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.
For additional information relating to U.S. budget matters, see the Business Environment section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7. 21 U.S. government contracts are not always fully funded at inception, and any funding is subject to disruption or delay.
For additional information relating to U.S. government budget and funding matters, see the Business Environment section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7. U.S. government contracts are not always fully funded at inception, and any funding is subject to disruption or delay.
Our success depends in part on our ability to develop new products and technologies and maintain a qualified workforce to meet the needs of our customers. Many of the products and services we provide involve sophisticated technologies and engineering, with related complex manufacturing and system-integration processes. Our customers’ requirements change and evolve regularly.
Our success depends in part on our ability to develop new products and technologies and maintain a qualified workforce to meet the needs of our customers. Many of the products and services we provide involve sophisticated technologies and engineering, with related complex manufacturing and system-integration processes. Our customers’ requirements change and evolve 23 regularly.
If we were unable 23 to develop new products that meet customers’ changing needs and satisfy regulatory requirements in a timely manner or successfully attract and retain qualified personnel, our future revenue and earnings may be materially adversely affected.
If we were unable to develop new products that meet customers’ changing needs and satisfy regulatory requirements in a timely manner or successfully attract and retain qualified personnel, our future revenue and earnings may be materially adversely affected.
Our business may continue to be negatively impacted by the coronavirus (COVID-19) pandemic and could be negatively impacted by other pandemics and outbreaks. The COVID-19 pandemic has had, and could continue to have, a negative effect on our business, results of operations 25 and financial condition.
Our business may continue to be negatively impacted by the coronavirus (COVID-19) pandemic and could be negatively impacted by other pandemics and outbreaks. The COVID-19 pandemic has had, and could continue to have, a negative effect on our business, results of operations and financial condition.
Decreases in U.S. government defense and other spending or changes in spending allocation or priorities could result in one or more of our programs being reduced, delayed or terminated, which could impact our financial performance.
Decreases in U.S. government defense and other spending or 21 changes in spending allocation or priorities could result in one or more of our programs being reduced, delayed or terminated, which could impact our financial performance.
We also design and manage IT systems and products for various customers. We generally face the same security threats for these systems and products as for our own internal systems. In addition, we face cyber threats from entities and persons that may seek to target us through our customers, suppliers and other third parties with whom we do business.
We also design and manage IT systems and products for various customers. We generally face the same security threats for these systems and products as for our own internal systems. In addition, we face cybersecurity threats from entities and persons that may seek to target us through our customers, suppliers and other third parties with whom we do business.
In 2022, 70% of our consolidated revenue was from the U.S. government. Levels of U.S. defense spending may be impacted by numerous factors, such as the domestic political environment, changes in national and international priorities, and threats to national security. Competing demands for federal funds can pressure various areas of spending.
In 2023, approximately 70% of our consolidated revenue was from the U.S. government. Levels of U.S. defense spending may be impacted by numerous factors, such as the domestic political environment, changes in national and international priorities, and threats to national security. Competing demands for federal funds can pressure various areas of spending.
However, future threats could have a materially adverse impact on our company by, among other things, causing harm to our business, results of operations or reputation; disrupting our operations; exposing us to potential liability, regulatory actions and loss of business; and challenging our eligibility for future work on sensitive or classified systems for government customers.
However, future threats could have a materially adverse impact on our company by, among other things, causing harm to our business, financial condition, results of operations or 25 reputation; disrupting our operations; exposing us to potential liability, regulatory actions and loss of business; and challenging our eligibility for future work on sensitive or classified systems for government customers.
Other outbreaks of contagious diseases, or other adverse public health developments in countries where we operate or our customers are located, could similarly adversely affect our business, results of operations and financial condition in the future. Global climate change could negatively affect our business.
Other outbreaks of contagious diseases, including new variants of COVID-19, or other adverse public health developments in countries where we operate or our customers are located, could similarly adversely affect our business, results of operations and financial condition in the future. Global climate change could negatively affect our business.
These projections and estimates assess, among other things: • the productivity and availability of labor; • the complexity of the work to be performed; • the cost and availability of materials and components; and • schedule requirements.
The accounting for our contracts requires assumptions and estimates about these conditions and events. These projections and estimates assess, among other things: • the productivity and availability of labor; • the complexity of the work to be performed; • the cost and availability of materials and components; and • schedule requirements.
Further, while we continuously evaluate the evolving landscape of environmental-related legislation and seek opportunities for continuous improvement of our existing climate-related measures, as well as new ways to minimize our impact on the planet, there can be no assurance that changes in customer demand patterns and competition driven by climate change, as well as potential climate-related reputational risks will not adversely affect our business, results of operations and financial condition.
Further, while we continuously evaluate and seek opportunities to improve our climate-related measures, there can be no assurance that changes in customer demand patterns and competition, as well as potential reputational risks, related to climate change will not adversely affect our business, results of operations and financial condition.
Offset requirements may extend over several years and could require us to team with local companies to fulfill these commitments. If we do not satisfy these financial or offset requirements, our future revenue and earnings may be materially adversely affected.
Offset requirements may extend over several years and could require us to team with local companies to fulfill these commitments.
Risks Relating to Our Acquisitions and Similar Investment Activities We have made and expect to continue to make investments, including acquisitions and joint ventures, that involve risks and uncertainties.
If we do not satisfy these financial or offset requirements, our future revenue and earnings may be materially adversely affected. 24 Risks Relating to Our Acquisitions and Similar Investment Activities We have made and expect to continue to make investments, including acquisitions and joint ventures, that involve risks and uncertainties.
In addition, the U.S. government’s federal contractor vaccine mandate, if enforced, could adversely affect our ability, and our subcontractors’ ability, to hire and retain highly skilled employees to work on U.S. government programs. Any cost increases that result from these effects may not be fully recoverable on our contracts or adequately covered by insurance.
Any such effects could materially adversely affect our ability to perform on our contracts. Any cost increases that result from these effects may not be fully recoverable on our contracts or adequately covered by insurance.
This includes disruptions or restrictions on our employees’ ability to work effectively, temporary closures of our facilities and the facilities of our customers, and supply-chain disruptions. Any such effects could materially adversely affect our ability to perform on our contracts.
This includes disruptions or restrictions on our employees’ ability to work effectively, temporary closures of our facilities and the facilities of our customers, and the imposition of quarantine and travel restrictions that have and may in the future negatively affect demand for our products and services and result in supply-chain disruptions.
The Aerospace segment’s results also depend on other factors, including general economic conditions, the availability 22 and cost of credit, pricing pressures and trends in capital goods markets. In addition, if customers default on existing contracts and the contracts are not replaced, the segment’s anticipated revenue and profitability could be reduced materially.
Customer demand can be affected by a number of factors, including changes in general economic conditions, the availability and cost of credit, pricing pressures and trends in capital goods markets. An adverse change in customer demand for our business-aviation products and services could materially affect our future revenue and earnings.
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In addition, the COVID-19 pandemic has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries, which could result in a prolonged economic downturn that may negatively affect demand for our products and services.
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The imposition of quarantine and travel restrictions has negatively affected and, if reimposed, may continue to negatively affect portions of our business. The extent to which COVID-19 continues to impact our business, results of operations and financial condition is highly uncertain and will depend on future developments.
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Such developments may include the geographic spread and duration of the virus, including the emergence of new variants, the severity of the disease, vaccination rates and the actions that may be taken by various governmental authorities and other third parties in response to the pandemic.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLeonards, United Kingdom. 27 A summary of floor space by segment on December 31, 2022, follows: (Square feet in millions) Company-owned Facilities Leased Facilities Government-owned Facilities Total Aerospace 5.9 9.4 0.5 15.8 Marine Systems 8.7 4.5 — 13.2 Combat Systems 6.5 4.7 4.9 16.1 Technologies 3.1 7.9 0.9 11.9 Total square feet 24.2 26.5 6.3 57.0 ITEM 3.
Biggest changeLeonards, United Kingdom. A summary of floor space by segment on December 31, 2023, follows: (Square feet in millions) Company-owned Facilities Leased Facilities Government-owned Facilities Total Aerospace 5.7 10.1 0.5 16.3 Marine Systems 8.8 4.8 — 13.6 Combat Systems 6.7 5.6 4.9 17.2 Technologies 3.1 7.3 0.9 11.3 Total square feet 24.3 27.8 6.3 58.4
Petersburg and Tallahassee, Florida; Marion, Illinois; Saco, Maine; Sterling Heights, Michigan; Lima, Ohio; Eynon, Scranton and Wilkes-Barre, Pennsylvania; Garland, Texas; Joint Base Lewis-McChord, Washington; Vienna, Austria; Le Gardeur, London and Valleyfield, Canada; Kaiserslautern, Germany; Madrid, Sevilla and Trubia, Spain; Kreuzlingen and Tägerwilen, Switzerland; Merthyr Tydfil, United Kingdom. • Technologies – Daleville, Alabama; Scottsdale, Arizona; Orlando, Florida; Bossier City, Louisiana; Annapolis Junction, Maryland; Dedham, Pittsfield and Taunton, Massachusetts; Bloomington, Minnesota; Rensselaer, New York; Greensboro, North Carolina; Chesapeake and Marion, Virginia; multiple locations in Northern Virginia; Ottawa, Canada; Oakdale and St.
Petersburg and Tallahassee, Florida; Marion, Illinois; Saco, Maine; Sterling Heights, Michigan; Lima, Ohio; Eynon, Scranton and Wilkes-Barre, Pennsylvania; Garland and Mesquite, Texas; Joint Base Lewis-McChord, Washington; Vienna, Austria; Le Gardeur, London and Valleyfield, Canada; Kaiserslautern, Germany; Madrid, Sevilla and Trubia, Spain; Bürglen, Kreuzlingen, and Tägerwilen, Switzerland; Merthyr Tydfil, United Kingdom. • Technologies – Daleville, Alabama; Scottsdale, Arizona; Orlando, Florida; Bossier City, Louisiana; Annapolis Junction, Maryland; Dedham, Pittsfield and Taunton, Massachusetts; Bloomington, Minnesota; Rensselaer, New York; Greensboro, North Carolina; Chesapeake and Marion, Virginia; multiple locations in Northern Virginia; Ottawa, Canada; Oakdale and St.
On December 31, 2022, our segments had material operations at the following locations: • Aerospace – Mesa, Arizona; Van Nuys, California; West Palm Beach, Florida; Brunswick and Savannah, Georgia; Cahokia, Illinois; Westfield, Massachusetts; Teterboro, New Jersey; New York, New York; Tulsa, Oklahoma; Dallas and Fort Worth, Texas; Dulles, Virginia; Appleton, Wisconsin; Sydney, Australia; Beijing, China; Mexicali, Mexico; Singapore; Basel, Switzerland; Farnborough, United Kingdom. • Marine Systems – San Diego, California; Groton and New London, Connecticut; Jacksonville, Florida; Honolulu, Hawaii; Bath and Brunswick, Maine; Middletown and North Kingstown, Rhode Island; Norfolk and Portsmouth, Virginia; Bremerton, Washington; Mexicali, Mexico. • Combat Systems – Anniston, Alabama; East Camden, Arkansas; Healdsburg, California; Crawfordsville, St.
On December 31, 2023, our segments had material operations at the following locations: • Aerospace – Mesa and Scottsdale, Arizona; Van Nuys, California; West Palm Beach, Florida; Brunswick and Savannah, Georgia; Cahokia, Illinois; Westfield, Massachusetts; Teterboro, New Jersey; New York, New York; Tulsa, Oklahoma; Dallas and Fort Worth, Texas; Appleton, Wisconsin; Sydney, Australia; Beijing, China; Mexicali, Mexico; Singapore; Basel, Switzerland; Farnborough, United Kingdom. • Marine Systems – San Diego, California; Groton and New London, Connecticut; Jacksonville, Florida; Honolulu, Hawaii; Bath and Brunswick, Maine; Middletown and North Kingstown, Rhode Island; Norfolk and Portsmouth, Virginia; Bremerton, Washington; Mexicali, Mexico. • Combat Systems – Anniston, Alabama; East Camden, Arkansas; Healdsburg, California; Crawfordsville, St.
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LEGAL PROCEEDINGS For information relating to legal proceedings, see Note M to the Consolidated Financial Statements in Item 8.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeBurns – Vice President of the company and President of Gulfstream Aerospace Corporation since July 2015; Vice President of the company since February 2014; President, Product Support of Gulfstream Aerospace Corporation, June 2008 - June 2015 63 Danny Deep – Vice President of the company and President of General Dynamics Land Systems since April 2020; Chief Operating Officer of General Dynamics Land Systems, September 2018 - April 2020; Vice President of General Dynamics Land Systems – Canada, January 2011 - September 2018 53 28 Gregory S.
Biggest changeBurns – Vice President of the company and President of Gulfstream Aerospace Corporation since July 2015; Vice President of the company since February 2014; President, Product Support of Gulfstream Aerospace Corporation, June 2008 - June 2015 64 Danny Deep – Vice President of the company and President of General Dynamics Land Systems since April 2020; Chief Operating Officer of General Dynamics Land Systems, September 2018 - April 2020; Vice President of General Dynamics Land Systems – Canada, January 2011 - September 2018 54 Gregory S.
Amy Gilliland – Senior Vice President of the company since April 2015; President of General Dynamics Information Technology since September 2017; Deputy for Operations of General Dynamics Information Technology, April 2017 - September 2017; Senior Vice President, Human Resources and Administration, April 2015 - March 2017; Vice President, Human Resources, February 2014 - March 2015; Staff Vice President, Strategic Planning, January 2013 - February 2014; Staff Vice President, Investor Relations, June 2008 - January 2013 48 Kevin M.
Amy Gilliland – Senior Vice President of the company since April 2015; President of General Dynamics Information Technology since September 2017; Deputy for Operations of General Dynamics Information Technology, April 2017 - September 2017; Senior Vice President, Human Resources and Administration, April 2015 - March 2017; Vice President, Human Resources, February 2014 - March 2015; Staff Vice President, Strategic Planning, January 2013 - February 2014; Staff Vice President, Investor Relations, June 2008 - January 2013 49 Kevin M.
Aiken – Executive Vice President, Technologies and Chief Financial Officer since January 2023; Senior Vice President and Chief Financial Officer, January 2014 - December 2022; Vice President of the company and Chief Financial Officer of Gulfstream Aerospace Corporation, September 2011 - December 2013; Vice President and Controller, April 2010 - August 2011; Staff Vice President, Accounting, July 2006 - March 2010 50 Christopher J.
Aiken – Executive Vice President, Technologies and Chief Financial Officer since January 2023; Senior Vice President and Chief Financial Officer, January 2014 - December 2022; Vice President of the company and Chief Financial Officer of Gulfstream Aerospace Corporation, September 2011 - December 2013; Vice President and Controller, April 2010 - August 2011; Staff Vice President, Accounting, July 2006 - March 2010 51 Christopher J.
Brady – Vice President of the company and President of General Dynamics Mission Systems since January 2019; Vice President, Engineering of General Dynamics Mission Systems, January 2015 - December 2018; Vice President, Engineering of General Dynamics C4 Systems, May 2013 - December 2014; Vice President, Assured Communications Systems of General Dynamics C4 Systems, August 2004 - May 2013 60 Mark L.
Brady – Vice President of the company and President of General Dynamics Mission Systems since January 2019; Vice President, Engineering of General Dynamics Mission Systems, January 2015 - December 2018; Vice President, Engineering of General Dynamics C4 Systems, May 2013 - December 2014; Vice President, Assured Communications Systems of General Dynamics C4 Systems, August 2004 - May 2013 61 Mark L.
Novakovic – Chairman and Chief Executive Officer since January 2013; President and Chief Operating Officer, May 2012 - December 2012; Executive Vice President, Marine Systems, May 2010 - May 2012; Senior Vice President, Planning and Development, July 2005 - May 2010; Vice President, Strategic Planning, October 2002 - July 2005 65 Mark C.
Novakovic – Chairman and Chief Executive Officer since January 2013; President and Chief Operating Officer, May 2012 - December 2012; Executive Vice President, Marine Systems, May 2010 - May 2012; Senior Vice President, Planning and Development, July 2005 - May 2010; Vice President, Strategic Planning, October 2002 - July 2005 66 Mark C.
Roualet – Executive Vice President, Combat Systems, since March 2013; Vice President of the company and President of General Dynamics Land Systems, October 2008 - March 2013; Senior Vice President and Chief Operating Officer of General Dynamics Land Systems, July 2007 - October 2008 64 Robert E.
Roualet – Executive Vice President, Combat Systems, since March 2013; Vice President of the company and President of General Dynamics Land Systems, October 2008 - March 2013; Senior Vice President and Chief Operating Officer of General Dynamics Land Systems, July 2007 - October 2008 65 Robert E.
Gallopoulos – Senior Vice President, General Counsel and Secretary since January 2010; Vice President and Deputy General Counsel, July 2008 - January 2010; Managing Partner of Jenner & Block LLP, January 2005 - June 2008 63 M.
Gallopoulos – Senior Vice President, General Counsel and Secretary since January 2010; Vice President and Deputy General Counsel, July 2008 - January 2010; Managing Partner of Jenner & Block LLP, January 2005 - June 2008 64 M.
Smith – Executive Vice President, Marine Systems, since July 2019; Vice President of the company and President of Jet Aviation, January 2014 - July 2019; Vice President and Chief Financial Officer of Jet Aviation, July 2012 - January 2014 55 PART II
Smith – Executive Vice President, Marine Systems, since July 2019; Vice President of the company and President of Jet Aviation, January 2014 - July 2019; Vice President and Chief Financial Officer of Jet Aviation, July 2012 - January 2014 56 PART II
Kuryea – Senior Vice President, Human Resources and Administration since April 2017; Vice President and Controller, September 2011 - March 2017; Chief Financial Officer of General Dynamics Advanced Information Systems, November 2007 - August 2011; Staff Vice President, Internal Audit, March 2004 - October 2007 55 William A.
Kuryea – Senior Vice President, Human Resources and Administration since April 2017; Vice President and Controller, September 2011 - March 2017; Chief Financial Officer of General Dynamics Advanced Information Systems, November 2007 - August 2011; Staff Vice President, Internal Audit, March 2004 - October 2007 56 29 William A.
Graney – Vice President of the company and President of Electric Boat Corporation since October 2019; Vice President of the company and President of NASSCO, January 2017 - October 2019; Vice President and General Manager of NASSCO, November 2013 - January 2017 59 Kimberly A.
Graney – Vice President of the company and President of Electric Boat Corporation since October 2019; Vice President of the company and President of NASSCO, January 2017 - October 2019; Vice President and General Manager of NASSCO, November 2013 - January 2017 60 Kimberly A.
Moss – Vice President and Controller since April 2017; Staff Vice President, Internal Audit, May 2015 - March 2017; Staff Vice President, Accounting, August 2010 - May 2015 59 Phebe N.
Moss – Vice President and Controller since April 2017; Staff Vice President, Internal Audit, May 2015 - March 2017; Staff Vice President, Accounting, August 2010 - May 2015 60 Phebe N.
Set forth below is information regarding our executive officers as of February 7, 2023 (references are to positions with General Dynamics Corporation, unless otherwise noted): Name, Position and Office Age Jason W.
Set forth below is information regarding our executive officers as of February 8, 2024 (references are to positions with General Dynamics Corporation, unless otherwise noted): Name, Position and Office Age Jason W.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed1 unchanged
Biggest changeWe did not make any unregistered sales of equity securities in 2022. 29 The following table provides information about our fourth-quarter purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares That May Yet Be Purchased Under the Program Period Total Number of Shares Average Price per Share Shares Purchased Pursuant to Share Buyback Program 10/3/22-10/30/22 — $ — — 7,150,564 10/31/22-11/27/22 441,286 249.14 441,286 6,709,278 11/28/22-12/31/22 — — — 6,709,278 Shares Delivered or Withheld Pursuant to Restricted Stock Vesting* 10/3/22-10/30/22 776 213.77 10/31/22-11/27/22 498 249.13 11/28/22-12/31/22 728 253.72 443,288 $ 249.09 * 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.
Biggest changeWe did not make any unregistered sales of equity securities in 2023. 30 The following table provides information about our fourth-quarter purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares That May Yet Be Purchased Under the Program Period Total Number of Shares Average Price per Share Shares Purchased Pursuant to Share Buyback Program 10/2/23-10/29/23 — $ — — — 10/30/23-11/26/23 — — — — 11/27/23-12/31/23 — — — — Shares Delivered or Withheld Pursuant to Restricted Stock Vesting* 10/2/23-10/29/23 — — 10/30/23-11/26/23 480 239.65 11/27/23-12/31/23 139 248.25 619 241.58 * 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.
For additional information relating to our purchases of common stock during the past three years, see Note N to the Consolidated Financial Statements in Item 8. 30 The following performance graph compares the cumulative total return to shareholders on our common stock, assuming reinvestment of dividends, with similar returns for the Standard & Poor’s 500 Index and the Standard & Poor’s Aerospace & Defense Index, both of which include General Dynamics.
For additional information relating to our purchases of common stock during the past three years, see Note N to the Consolidated Financial Statements in Item 8. 31 The following performance graph compares the cumulative total return to shareholders on our common stock, assuming reinvestment of dividends, with similar returns for the Standard & Poor’s 500 Index and the Standard & Poor’s Aerospace & Defense Index, both of which include General Dynamics.
ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the trading symbol “GD.” On January 29, 2023, there were approximately 9,000 holders of record of our common stock.
ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the trading symbol “GD.” On January 28, 2024, there were approximately 9,000 holders of record of our common stock.
Cumulative Total Return Based on Investments of $100 Beginning December 31, 2017 (Assumes Reinvestment of Dividends) (in per-share amounts) ITEM 6. [RESERVED] 31
Cumulative Total Return Based on Investments of $100 Beginning December 31, 2018 (Assumes Reinvestment of Dividends) (in per-share amounts) ITEM 6. [RESERVED] 32
On December 31, 2022, 6.7 million shares remained authorized by our board of directors for repurchase.
On December 31, 2023, 4.7 million shares remained authorized by our board of directors for repurchase.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+31 added−39 removed45 unchanged
Biggest changeThe contract has a maximum potential value of $1.1 billion. • A contract worth up to $1.1 billion to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Poland. • $770 from the Army for Abrams main battle tank upgrades, engineering and logistics support services, and system and sustainment technical support services. • $760 from the Army for Stryker vehicle upgrades, spare parts, and inventory management and support services. • $440 from the Army to produce Stryker M-SHORAD vehicles. • $355 to produce Abrams main battle tanks in the SEPv3 configuration for Australia. • $320 to upgrade Ulan tracked vehicles for Austria. 43 • $230 to produce Piranha armored combat vehicles for Switzerland. • $60 to produce M3 amphibious bridge systems for an international customer.
Biggest changeThe award including options has a maximum potential value of $770. • $755 from the Army to upgrade Abrams main battle tanks to the system enhancement package version 3 (SEPv3) configuration and provide system and sustainment technical support services for the Abrams program. 44 • $305 to produce light armored vehicles (LAVs) and provide the associated spares and logistics support services for Colombia. • $260 from the Army for the second phase of low-rate initial production (LRIP) of the M10 Booker Combat Vehicle. • $230 to provide maintenance and modernization for the Leopard fleet of vehicles for the Spanish Ministry of Defence. • $205 to produce Abrams main battle tanks in the SEPv3 configuration for Poland, bringing the total firm backlog for the program to $1.1 billion.
In our Aerospace segment, we expect our investment in the development of new aircraft products and technologies to support the segment’s long-term growth. Similarly, we believe the aircraft services business will be a source of steady revenue growth as the global business jet fleet continues to grow.
In our Aerospace segment, we expect our investment in the development of new aircraft products and technologies to support the segment’s long-term growth. Similarly, we believe our aircraft services business will be a source of steady revenue growth as the global business jet fleet continues to grow.
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
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 difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
We employ judgment in making our estimates, but they are 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.
We employ judgment in making our estimates, but they are 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 50 believe our judgment is applied consistently and produces financial information that fairly depicts our results of operations for all periods presented.
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 33 completion to measure progress toward satisfying our performance obligations.
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.
Average debt and average shareholders’ equity excluding accumulated other comprehensive loss are calculated using the respective balances at the end of the preceding year and the respective balances at the end of each of the four quarters of the year presented. ROIC excludes goodwill impairments and non-economic accounting changes as they are not reflective of company performance.
Average debt and average shareholders’ equity excluding accumulated other comprehensive loss are calculated using the 49 respective balances at the end of the preceding year and the respective balances at the end of each of the four quarters of the year presented. ROIC excludes goodwill impairments and non-economic accounting changes as they are not reflective of company performance.
We have elected to defer recognition of the benefit costs until such costs can be 51 allocated to contracts. Therefore, the impact of annual changes in financial reporting assumptions on the retirement benefit cost for these plans does not immediately affect our operating results.
We have elected to defer recognition of the benefit costs until such costs can be allocated to contracts. Therefore, the impact of annual changes in financial reporting assumptions on the retirement benefit cost for these plans does not immediately affect our operating results.
The key assumption is the interest rates used to discount estimated future pension benefits. We base the discount rates on a current yield curve developed from a portfolio of high-quality, fixed-income investments with maturities consistent with the projected benefit payout period.
The key assumption is the interest rates used to discount estimated future pension benefits. We base the discount rates on a current yield curve developed from a portfolio of high-quality, 52 fixed-income investments with maturities consistent with the projected benefit payout period.
The following discussion of our financial condition and results of operations for 2022 compared with 2021 should be read in conjunction with our Consolidated Financial Statements included in Item 8, while a discussion of 2021 compared with 2020 can be found in Item 7 of our annual report on Form 10-K for the year ended December 31, 2021.
The following discussion of our financial condition and results of operations for 2023 compared with 2022 should be read in conjunction with our Consolidated Financial Statements included in Item 8, while a discussion of 2022 compared with 2021 can be found in Item 7 of our annual report on Form 10-K for the year ended December 31, 2022.
On December 31, 2022, 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.
On December 31, 2023, 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.
In the fourth quarter of 2022, we completed qualitative assessments for our Aerospace, Marine Systems and Combat Systems reporting units as the estimated fair values of each of the reporting units significantly exceeded the respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018.
In the fourth quarter of 2023, we completed qualitative assessments for our Aerospace, Marine Systems and Combat Systems reporting units as the estimated fair values of each of the reporting units significantly exceeded the respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018.
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 funded portion of total backlog includes items that have been authorized and appropriated by the Congress and funded by customers, as well as commitments by international customers that are approved and funded similarly by their governments.
On December 31, 2022, estimated potential contract value in the Aerospace segment was $685. Demand for Gulfstream aircraft remains strong across customer types and geographic regions, generating orders from public and privately held companies, individuals, and governments around the world.
On December 31, 2023, estimated potential contract value in the Aerospace segment was $451. Demand for Gulfstream aircraft remains strong across customer types and geographic regions, generating orders from public and privately held companies, individuals, and governments around the world.
Orders in 2022 reflected strong demand across our product and services portfolio, including orders for all models of Gulfstream aircraft. The segment’s book-to-bill ratio (orders divided by revenue) was 1.5-to-1 in 2022. 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.
Orders in 2023 reflected strong demand across our portfolio of products and services, including orders for all models of Gulfstream aircraft. The segment’s book-to-bill ratio (orders divided by revenue) was 1.2-to-1 in 2023. 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.
Geographically, U.S. customers represented 70% of the segment’s orders in 2022 and 59% of the segment’s backlog on December 31, 2022, demonstrating continued strong domestic demand. 40 The following represents Gulfstream aircraft (in units) in backlog by region on December 31, 2022: DEFENSE SEGMENTS The total backlog in our defense segments represents the estimated remaining sales value of work to be performed under firm contracts.
Geographically, U.S. customers represented 68% of the segment’s orders in 2023 and 59% of the segment’s backlog on December 31, 2023, demonstrating continued strong domestic demand. 41 The following represents Gulfstream aircraft (in units) in backlog by region on December 31, 2023: DEFENSE SEGMENTS The total backlog in our defense segments represents the estimated remaining sales value of work to be performed under firm contracts.
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 2022 with backlog of $19.5 billion, up 19.8% from $16.3 billion at year-end 2021.
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 2023 with backlog of $20.5 billion, up 4.8% from $19.5 billion at year-end 2022.
Estimating liabilities and costs associated with these matters requires the use of judgment. We record a charge against earnings when a liability associated with claims or pending or threatened litigation is probable and when our exposure is reasonably estimable. The ultimate resolution of our exposure related to these matters may change as further facts and circumstances become known. Retirement Plans.
We record a charge against earnings when a liability associated with claims or pending or threatened litigation is probable and when our exposure is reasonably estimable. The ultimate resolution of our exposure related to these matters may change as further facts and circumstances become known. Retirement Plans.
The effect of a 25-basis-point increase or decrease in the discount rate assumption on the December 31, 2022, pension benefit obligation is ($319) and $334, respectively. As described in Note S to the Consolidated Financial Statements in Item 8, our contractual arrangements with the U.S. government provide for the recovery of benefit costs for our government retirement plans.
The effect of a 25-basis-point increase or decrease in the discount rate assumption on the December 31, 2023, pension benefit obligation is ($317) or $332, respectively. As described in Note S to the Consolidated Financial Statements in Item 8, our contractual arrangements with the U.S. government provide for the recovery of benefit costs for our government retirement plans.
Estimated potential contract value in our defense segments was $35.9 billion on December 31, 2022, compared with $38.2 billion at year-end 2021. 41 MARINE SYSTEMS The Marine Systems segment’s backlog consists of very long-term submarine and surface ship construction programs, as well as numerous engineering and repair contracts.
Estimated potential contract value in our defense segments was $37.9 billion on December 31, 2023, compared with $35.9 billion at year-end 2022. 42 MARINE SYSTEMS The Marine Systems segment’s backlog consists of very long-term submarine and surface ship construction programs, as well as numerous engineering and repair contracts.
The vehicle programs are generally long-term franchise programs, while the weapons systems and munitions programs tend to be shorter-term in nature. The segment’s backlog was up from year-end 2021 to $13.3 billion. The segment’s estimated potential contract value was $5.4 billion on December 31, 2022, compared with $6.9 billion at year-end 2021.
The vehicle programs are generally long-term franchise programs, while the weapons systems and munitions programs tend to be shorter-term in nature. The segment’s backlog was up 9.7% from year-end 2022 to $14.5 billion. The segment’s estimated potential contract value was $6.2 billion on December 31, 2023, compared with $5.4 billion at year-end 2022.
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 $71.6 billion on December 31, 2022, compared with $71.3 billion at year-end 2021. In 2022, the total book-to-bill ratio in our defense segments was 1-to-1.
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 $73.2 billion on December 31, 2023, compared with $71.6 billion at year-end 2022. In 2023, the total book-to-bill ratio in our defense segments was slightly above 1-to-1.
ROIC is calculated as follows: Year Ended December 31 2022 2021 2020 Net earnings $ 3,390 $ 3,257 $ 3,167 After-tax interest expense 309 340 386 After-tax amortization expense 235 254 280 Net operating profit after taxes $ 3,934 $ 3,851 $ 3,833 Average invested capital $ 31,260 $ 32,270 $ 32,431 Return on invested capital 12.6 % 11.9 % 11.8 % CASH REQUIREMENTS The following is a discussion of how we expect to meet the future cash requirements from known contractual and other obligations.
ROIC is calculated as follows: Year Ended December 31 2023 2022 2021 Net earnings $ 3,315 $ 3,390 $ 3,257 After-tax interest expense 315 309 340 After-tax amortization expense 201 235 254 Net operating profit after taxes $ 3,831 $ 3,934 $ 3,851 Average invested capital $ 31,258 $ 31,260 $ 32,270 Return on invested capital 12.3 % 12.6 % 11.9 % CASH REQUIREMENTS The following is a discussion of how we expect to meet the future cash requirements from known contractual and other obligations.
BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE Our total backlog, including funded and unfunded portions, was $91.1 billion on December 31, 2022, up 4% from $87.6 billion at the end of 2021. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the Consolidated Financial Statements in Item 8.
BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE Our total backlog, including funded and unfunded portions, was $93.6 billion on December 31, 2023, compared to $91.1 billion at the end of 2022. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the Consolidated Financial 40 Statements in Item 8.
The following is a discussion of our major operating, investing and financing activities in 2022 and 2021, as classified on the Consolidated Statement of Cash Flows in Item 8: Year Ended December 31 2022 2021 Net cash provided by operating activities $ 4,579 $ 4,271 Net cash used by investing activities (1,489) (882) Net cash used by financing activities (3,471) (4,590) OPERATING ACTIVITIES Cash provided by operating activities was $4.6 billion in 2022 compared with $4.3 billion in 2021 .
The following is a discussion of our major operating, investing and financing activities in 2023 and 2022, as classified on the Consolidated Statement of Cash Flows in Item 8: Year Ended December 31 2023 2022 Net cash provided by operating activities $ 4,710 $ 4,579 Net cash used by investing activities (941) (1,489) Net cash used by financing activities (3,094) (3,471) OPERATING ACTIVITIES Cash provided by operating activities was $4.7 billion in 2023 compared with $4.6 billion in 2022 .
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. Most of our revenue recognized at a point in time is for the manufacture of business jet aircraft in our Aerospace segment.
Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Most of our revenue recognized at a point in time is for the manufacture of business jet aircraft in our Aerospace segment.
INVESTING ACTIVITIES Cash used by investing activities was $1.5 billion in 2022 and $882 in 2021. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. Capital Expenditures. The primary use of cash for investing activities in both years was capital expenditures.
Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. Capital Expenditures. The primary use of cash for investing activities in both years was capital expenditures. Capital expenditures were $904 in 2023 and $1.1 billion in 2022.
The conflict and these sanctions have caused some disruptions to global economies and some global businesses, including heightened cybersecurity risks, increased energy costs and foreign currency exchange rate fluctuations, as well as exacerbated existing supply chain challenges and inflationary pressures.
The conflict and these sanctions have caused some disruptions to global economies and some global businesses, including heightened cybersecurity risks, increased energy costs and foreign currency exchange rate fluctuations, as well as exacerbated existing supply chain challenges and inflationary pressures. Lastly, the impact of the war between Israel and Hamas continues to evolve.
We use both qualitative and quantitative approaches when testing goodwill for impairment. When determining the approach to be used, we consider the current facts and circumstances of each reporting unit as well as the excess of each reporting unit’s estimated fair value over its carrying value based on our most recent quantitative assessments.
When determining the approach to be used, we consider the current facts and circumstances of each 51 reporting unit as well as the excess of each reporting unit’s estimated fair value over its carrying value based on our most recent quantitative assessments.
The following represents the Technologies segment’s total estimated contract value by customer on December 31, 2022: 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.
The contract including options has a maximum potential value of $450. 46 The following represents the Technologies segment’s total estimated contract value by customer on December 31, 2023: 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.
The following table reconciles the free cash flow with net cash provided by operating activities, as classified on the Consolidated Statement of Cash Flows in Item 8: Year Ended December 31 2022 2021 2020 Net cash provided by operating activities $ 4,579 $ 4,271 $ 3,858 Capital expenditures (1,114) (887) (967) Free cash flow $ 3,465 $ 3,384 $ 2,891 Cash flows as a percentage of net earnings: Net cash provided by operating activities 135 % 131 % 122 % Free cash flow 102 % 104 % 91 % 47 Return on Invested Capital.
The following table reconciles the free cash flow with net cash provided by operating activities, as classified on the Consolidated Statement of Cash Flows in Item 8: Year Ended December 31 2023 2022 2021 Net cash provided by operating activities $ 4,710 $ 4,579 $ 4,271 Capital expenditures (904) (1,114) (887) Free cash flow $ 3,806 $ 3,465 $ 3,384 Cash flows as a percentage of net earnings: Net cash provided by operating activities 142 % 135 % 131 % Free cash flow 115 % 102 % 104 % Return on Invested Capital.
CONSOLIDATED OVERVIEW 2022 IN REVIEW • Strong operating performance: ◦ Record-high revenue of $39.4 billion, an increase of 2.4% from 2021 ◦ Operating earnings of $4.2 billion with sequential growth throughout the year ◦ Record-high diluted earnings per share of $12.19, up 5.5% from 2021 ◦ Record-high cash provided by operating activities of $4.6 billion, or 135% of net earnings • Record-high backlog of $91.1 billion increased $3.5 billion, or 4%, from 2021, driven by significant order activity during the year supporting our long-term growth expectations: ◦ Outstanding Gulfstream aircraft order activity, including orders across all aircraft models ◦ Several significant contract awards received in our defense segments, including $5.4 billion of combined awards from the U.S.
CONSOLIDATED OVERVIEW 2023 IN REVIEW • Strong operating performance: ◦ Record-high revenue of $42.3 billion, an increase of 7.3% from 2022 ◦ Operating earnings of $4.2 billion with sequential growth throughout the year ◦ Record-high cash provided by operating activities of $4.7 billion, or 142% of net earnings • Record-high year-end backlog of $93.6 billion increased $2.5 billion, or 2.7%, from 2022, driven by significant order activity during the year supporting our long-term growth expectations: ◦ Strong Gulfstream aircraft order activity, including orders across all aircraft models ◦ Several significant contract awards received in our defense segments, including $3 billion of combined awards from the U.S.
See Notes J and K to the Consolidated Financial Statements in Item 8 for additional information. 48 ADDITIONAL FINANCIAL INFORMATION APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the Consolidated Financial Statements, which have been prepared in accordance with GAAP.
ADDITIONAL FINANCIAL INFORMATION APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Our qualitative assessments did not present indicators of impairment for the reporting units. In the fourth quarter of 2022, we completed a quantitative assessment for our Technologies reporting unit, and the results indicated that no impairment existed. The Technologies reporting unit’s estimated fair value exceeded its carrying value by approximately 25%.
Our qualitative assessments did not present indicators of impairment for the reporting units. In the fourth quarter of 2023, we also completed a qualitative assessment for our Technologies reporting unit as its estimated fair value exceeded its carrying value by approximately 25% at the time of our last quantitative assessment in the fourth quarter of 2022.
Other obligations, such as scheduled principal and interest payments on our fixed-rate notes, and scheduled payments in accordance with our lease agreements are expected to be satisfied using cash generated from operations.
Other obligations, such as scheduled principal and interest payments on our fixed-rate notes, and scheduled payments in accordance with our lease agreements are expected to be satisfied using cash generated from operations. See Notes J and K to the Consolidated Financial Statements in Item 8 for additional information.
Our board of directors from time to time authorizes management to repurchase outstanding shares of our common stock on the open market. We paid $1.2 billion and $1.8 billion in 2022 and 2021, respectively, to repurchase our outstanding shares.
Cash dividends paid were $1.4 billion in 2023 and 2022. Share Repurchases. Our Board from time to time authorizes management to repurchase outstanding shares of our common stock on the open market. We paid $434 and $1.2 billion in 2023 and 2022, respectively, to repurchase our outstanding shares.
Our calculation of these metrics 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 these metrics should not be considered in isolation from, or as a substitute for, GAAP measures. Free Cash Flow.
Our calculation of these metrics may not be completely comparable to similarly titled measures of other companies. As a result, the use of these metrics should not be considered in isolation from, or as a substitute for, GAAP measures. Free Cash Flow. We define free cash flow as net cash provided by operating activities less capital expenditures.
However, if a quantitative assessment is determined to be necessary, we compare the fair value of a reporting unit to its carrying value and, if necessary, recognize an impairment loss for the amount by which the carrying value exceeds the reporting unit’s fair value. 50 Our estimate of fair value is based primarily on the discounted cash flows of the underlying operations and requires the use of judgment by management.
However, if a quantitative assessment is determined to be necessary, we compare the fair value of a reporting unit to its carrying value and, if necessary, recognize an impairment loss for the amount by which the carrying value exceeds the reporting unit’s fair value.
STATEMENT OF EARNINGS INFORMATION Year Ended December 31 2022 Revenue $ 14,246 Operating costs and expenses, excluding G&A (12,310) Net earnings 840 52 BALANCE SHEET INFORMATION December 31, 2022 December 31, 2021 Cash and equivalents $ 540 $ 925 Other current assets 4,279 3,149 Noncurrent assets 4,164 3,597 Total assets $ 8,983 $ 7,671 Short-term debt and current portion of long-term debt $ 1,250 $ 999 Other current liabilities 3,392 3,190 Long-term debt 9,189 10,424 Other noncurrent liabilities 3,814 3,844 Total liabilities $ 17,645 $ 18,457 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.
STATEMENT OF EARNINGS INFORMATION Year Ended December 31 2023 Revenue $ 16,276 Operating costs and expenses, excluding G&A (14,316) Net earnings 773 53 BALANCE SHEET INFORMATION December 31, 2023 December 31, 2022 Cash and equivalents $ 986 $ 540 Other current assets 5,012 4,279 Noncurrent assets 4,506 4,164 Total assets $ 10,504 $ 8,983 Short-term debt and current portion of long-term debt $ 503 $ 1,250 Other current liabilities 2,890 3,392 Long-term debt 8,700 9,189 Other noncurrent liabilities 3,281 3,814 Total liabilities $ 15,374 $ 17,645 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.
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.
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. 34 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.
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.
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 products and services to drive long-term growth, a predictable dividend, strategic acquisitions and opportunistic share repurchases.
We define free cash flow as net cash provided by 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, repurchasing our common stock and paying dividends.
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, repurchasing our common stock and paying dividends. We use free cash flow to assess the quality of our earnings and as a key performance measure in evaluating management.
The contract has a maximum potential value of $210. The following represents the Combat Systems segment’s total estimated contract value by market on December 31, 2022: TECHNOLOGIES The Technologies segment’s backlog consists of thousands of contracts and task orders across a mix of U.S. and non-U.S. government and commercial customers.
The following represents the Combat Systems segment’s total estimated contract value by market on December 31, 2023: TECHNOLOGIES The Technologies segment’s backlog consists of thousands of contracts and task orders across a mix of U.S. and non-U.S. government and commercial customers. These contracts can be shorter-cycle or span multiple years, but commonly include a small, initially funded order.
See Note K to the Consolidated Financial Statements in Item 8 for additional information regarding our debt obligations, including interest rates. We expect 2023 net interest expense to be consistent with 2022. PROVISION FOR INCOME TAX, NET Our effective tax rate was 16% in 2022 and 15.9% in 2021.
In 2024, we expect net other income to be approximately $50. INTEREST, NET Net interest expense was $343 in 2023 and $364 in 2022, reflecting the repayment of our scheduled debt maturities in 2023 and 2022. See Note K to the Consolidated Financial Statements in Item 8 for additional information regarding our debt obligations, including interest rates.
MARINE SYSTEMS Year Ended December 31 2022 2021 Variance Revenue $ 11,040 $ 10,526 $ 514 4.9 % Operating earnings 897 874 23 2.6 % Operating margin 8.1 % 8.3 % Operating Results The increase in the Marine Systems segment’s revenue in 2022 consisted of the following: U.S. Navy ship construction $ 577 U.S.
We expect the segment’s operating margin to be approximately 15%. MARINE SYSTEMS Year Ended December 31 2023 2022 Variance Revenue $ 12,461 $ 11,040 $ 1,421 12.9 % Operating earnings 874 897 (23) (2.6) % Operating margin 7.0 % 8.1 % Operating Results The increase in the Marine Systems segment’s revenue in 2023 consisted of the following: U.S.
An additional potential source of capital is the issuance of long-term debt in capital market transactions. We ended 2022 with a cash and equivalents balance of $1.2 billion compared with $1.6 billion at the end of 2021.
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. 47 We ended 2023 with a cash and equivalents balance of $1.9 billion compared with $1.2 billion at the end of 2022.
The primary driver of cash inflows in both years was net earnings. Cash flows in both years were affected positively by an increase in customer deposits driven by Gulfstream aircraft orders.
The primary driver of cash inflows in both years was net earnings. Cash flows in both periods were affected positively by an increase in customer deposits driven by Gulfstream aircraft orders, offset partially by an increase in inventory due primarily to new aircraft models awaiting certification from the U.S. Federal Aviation Administration (FAA).
The decrease in pension income is driven primarily by higher interest rates and a change in investment mix in one of our plans due to its improved funded status. INTEREST, NET Net interest expense was $364 in 2022 and $424 in 2021, reflecting repayment of our scheduled debt maturities in 2021.
OTHER, NET Net other income was $82 in 2023 and $189 in 2022 and represents primarily the non-service components of pension and other post-retirement benefits. The decrease in pension income was driven primarily by higher interest rates and a change in investment mix in one of our plans due to its improved funded status.
In total, the Aerospace segment’s operating margin increased 50 basis points in 2022 to 13.2%. 35 2023 Outlook We expect the Aerospace segment’s 2023 revenue to increase to approximately $10.4 billion due to an increase in new aircraft deliveries to 145. We expect the segment’s operating margin to be approximately 14.6%.
In total, the Aerospace segment’s operating margin increased 50 basis points in 2023 to 13.7%. 2024 Outlook We expect the Aerospace segment’s 2024 revenue to increase to approximately $12 billion due to an increase in new aircraft deliveries to approximately 160, including the entry into service of the new G700 aircraft.
These contracts can be shorter-cycle or span multiple years, but commonly include a small, initially funded order. Therefore, our estimated potential contract value of $26.9 billion is an important indicator of future orders and revenue. In 2022, approximately 75% of the segment’s orders were from additional work on IDIQ contracts or the exercise of options.
Therefore, our estimated potential contract value of $28 billion is an important indicator of future orders and revenue. In 2023, approximately 80% of the segment’s orders were from additional work on IDIQ contracts or the exercise of options.
As a result, we have seen signals of additional demand for our products and services. Any longer-term impact of these global events to our business is currently unknown due to the uncertainty around duration and their broader impact. For additional information, see the Risk Factors in Part I, Item 1A.
Any longer-term impact of these global events to our business is currently unknown due to the uncertainty around duration and their broader impact. For additional information, see the Risk Factors in Part I, Item 1A. OUR MARKETS With approximately 70% of our revenue from the U.S. government, government spending levels — particularly defense spending — influence our financial performance.
REVIEW OF OPERATING SEGMENTS Following is a discussion of operating results and outlook 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 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.
For further discussion, including a reconciliation of our effective tax rate from the statutory federal rate, see Note D to the Consolidated Financial Statements in Item 8. For 2023, we anticipate a slightly higher full-year effective tax rate of approximately 17% due to higher taxes on foreign earnings.
We expect 2024 net interest expense to be approximately $320. PROVISION FOR INCOME TAX, NET Our effective tax rate increased to 16.8% in 2023 from 16% in 2022. For further discussion, including a reconciliation of our effective tax rate from the statutory federal rate, see Note D to the Consolidated Financial Statements in Item 8.
Our total estimated contract value, which combines total backlog with estimated potential contract value, was $127.7 billion on December 31, 2022. 39 The following table details the backlog and estimated potential contract value of each segment at the end of 2022 and 2021: Funded Unfunded Total Backlog Estimated Potential Contract Value Total Estimated Contract Value December 31, 2022 Aerospace $ 19,077 $ 439 $ 19,516 $ 685 $ 20,201 Marine Systems 26,246 19,453 45,699 3,672 49,371 Combat Systems 12,726 525 13,251 5,364 18,615 Technologies 9,100 3,571 12,671 26,889 39,560 Total $ 67,149 $ 23,988 $ 91,137 $ 36,610 $ 127,747 December 31, 2021 Aerospace $ 15,878 $ 415 $ 16,293 $ 1,657 $ 17,950 Marine Systems 23,678 21,177 44,855 4,271 49,126 Combat Systems 12,584 509 13,093 6,936 20,029 Technologies 9,005 4,348 13,353 26,997 40,350 Total $ 61,145 $ 26,449 $ 87,594 $ 39,861 $ 127,455 For additional information about our major products and services in backlog see the Business discussion contained in Item 1.
The following table details the backlog and estimated potential contract value of each segment at the end of 2023 and 2022: Funded Unfunded Total Backlog Estimated Potential Contract Value Total Estimated Contract Value December 31, 2023 Aerospace $ 19,557 $ 897 $ 20,454 $ 451 $ 20,905 Marine Systems 30,141 15,755 45,896 3,647 49,543 Combat Systems 13,816 721 14,537 6,236 20,773 Technologies 8,961 3,779 12,740 28,011 40,751 Total $ 72,475 $ 21,152 $ 93,627 $ 38,345 $ 131,972 December 31, 2022 Aerospace $ 19,077 $ 439 $ 19,516 $ 685 $ 20,201 Marine Systems 26,246 19,453 45,699 3,672 49,371 Combat Systems 12,726 525 13,251 5,364 18,615 Technologies 9,100 3,571 12,671 26,889 39,560 Total $ 67,149 $ 23,988 $ 91,137 $ 36,610 $ 127,747 For additional information about our major products and services in backlog see the Business discussion contained in Item 1.
These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. Long-lived Assets and Goodwill. We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. We assess the recoverability of the carrying value of assets held for use based on a review of undiscounted projected cash flows.
Navy for advance procurement and other work for the Columbia-class submarine program Year Ended December 31 2022 2021 Variance Revenue $ 39,407 $ 38,469 $ 938 2.4 % Operating costs and expenses (35,196) (34,306) (890) 2.6 % Operating earnings 4,211 4,163 48 1.2 % Operating margin 10.7 % 10.8 % Our consolidated revenue increased in 2022 from growth in U.S.
Navy for advance procurement and other work for the Virginia-class submarine program 35 Year Ended December 31 2023 2022 Variance Revenue $ 42,272 $ 39,407 $ 2,865 7.3 % Operating costs and expenses (38,027) (35,196) (2,831) 8.0 % Operating earnings 4,245 4,211 34 0.8 % Operating margin 10.0 % 10.7 % Our consolidated revenue increased in 2023 driven by growth in each of our defense segments, particularly submarine construction and engineering in our Marine Systems segment.
AEROSPACE Year Ended December 31 2022 2021 Variance Revenue $ 8,567 $ 8,135 $ 432 5.3 % Operating earnings 1,130 1,031 99 9.6 % Operating margin 13.2 % 12.7 % Gulfstream aircraft deliveries (in units) 120 119 1 0.8 % Operating Results The increase in the Aerospace segment’s revenue in 2022 consisted of the following: Aircraft services $ 420 Aircraft manufacturing 12 Total increase $ 432 Revenue was up in our Aerospace segment driven by an increase in demand for aircraft services, particularly maintenance work, and increased activity at our fixed-base operator (FBO) facilities due to growing global air travel.
AEROSPACE Year Ended December 31 2023 2022 Variance Revenue $ 8,621 $ 8,567 $ 54 0.6 % Operating earnings 1,182 1,130 52 4.6 % Operating margin 13.7 % 13.2 % Gulfstream aircraft deliveries (in units) 111 120 (9) (7.5) % Operating Results The increase in the Aerospace segment’s revenue in 2023 consisted of the following: Aircraft services $ 220 Aircraft manufacturing (166) Total increase $ 54 Aircraft services revenue was higher in 2023 due to an increase in demand for maintenance work based on established maintenance cycles, a larger installed base of aircraft, and strong customer flight activity.
OTHER INFORMATION PRODUCT AND SERVICE REVENUE AND OPERATING COSTS Year Ended December 31 2022 2021 Variance Revenue: Products $ 23,022 $ 22,428 $ 594 2.6 % Services 16,385 16,041 344 2.1 % Operating Costs: Products $ (18,981) $ (18,524) $ (457) 2.5 % Services (13,804) (13,537) (267) 2.0 % The increase in product revenue in 2022 consisted of the following: Ship construction $ 577 Other, net 17 Total increase $ 594 Ship construction revenue increased due to higher volume on the Columbia-class submarine, T-AO-205 oiler and DDG-51 destroyer programs.
OTHER INFORMATION PRODUCT AND SERVICE REVENUE AND OPERATING COSTS Year Ended December 31 2023 2022 Variance Revenue: Products $ 24,595 $ 23,022 $ 1,573 6.8 % Services 17,677 16,385 1,292 7.9 % Operating Costs: Products $ (20,591) $ (18,981) $ (1,610) 8.5 % Services (15,009) (13,804) (1,205) 8.7 % The increase in product revenue in 2023 consisted of the following: Ship construction $ 637 Military vehicle production 503 Weapons systems and munitions 430 Other, net 3 Total increase $ 1,573 Ship construction revenue increased due primarily to higher volume on the Columbia-class submarine program.
Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. We review goodwill for impairment annually at each of our reporting units or when circumstances indicate that the likelihood of an impairment is greater than 50%.
We review goodwill for impairment annually at each of our reporting units or when circumstances indicate that the likelihood of an impairment is greater than 50%. Such circumstances include a significant adverse change in the business climate for one of our reporting units or a decision to dispose of a reporting unit or a significant portion of a reporting unit.
These increases were offset partially by higher G&A/other expenses due primarily to increased R&D expenses associated with ongoing product development efforts.
G&A expenses decreased in 2023, offset partially by increased R&D expenses associated with ongoing product development efforts, particularly those related to the G700 certification.
In 2022, the primary driver of the increase in service operating costs was the change in volume described above. G&A EXPENSES As a percentage of revenue, G&A expenses were 6.1% in 2022 and 5.8% in 2021, reflecting an increase in equity-based compensation expense.
In 2023, the primary driver of the increase in service operating costs was the change in volume described above. G&A EXPENSES As a percentage of revenue, G&A expenses decreased to 5.7% in 2023 compared with 6.1% in 2022 due to growth in revenue. We expect G&A expenses as a percentage of revenue in 2024 to be generally consistent with 2023.
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. 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.
For discussion of our contract estimates, the assumptions used, and the impact of changes in estimates, see Footnote B to the Consolidated Financial Statements in Item 8. 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.
We assess the recoverability of the carrying value of assets held for use based on a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived assets over the estimated fair value as determined by discounted cash flows.
Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived assets over the estimated fair value as determined by discounted cash flows. Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination.
TECHNOLOGIES Year Ended December 31 2022 2021 Variance Revenue $ 12,492 $ 12,457 $ 35 0.3 % Operating earnings 1,227 1,275 (48) (3.8) % Operating margin 9.8 % 10.2 % Operating Results The increase in the Technologies segment’s revenue in 2022 consisted of the following: IT services $ 126 C5ISR* solutions (91) Total increase $ 35 * Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance The group’s revenue was up despite continued delays in customer order activity as revenue from IT services increased on several programs, particularly with the group’s federal civilian customers.
TECHNOLOGIES Year Ended December 31 2023 2022 Variance Revenue $ 12,922 $ 12,492 $ 430 3.4 % Operating earnings 1,202 1,227 (25) (2.0) % Operating margin 9.3 % 9.8 % 38 Operating Results The increase in the Technologies segment’s revenue in 2023 consisted of the following: Information technology (IT) services $ 264 C5ISR* solutions 166 Total increase $ 430 * Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance The Technologies segment’s revenue was up due primarily to strong demand for IT services and the acquisition of a C5ISR solutions business in 2022.
The increase in the segment’s operating earnings in 2022 consisted of the following: Aircraft manufacturing $ 123 Aircraft services 89 G&A/other expenses (113) Total increase $ 99 Aircraft manufacturing operating earnings were up in 2022 due to a favorable mix of aircraft deliveries and ongoing improvements in manufacturing efficiency.
Aircraft manufacturing revenue decreased in 2023 due primarily to fewer deliveries of our large-cabin aircraft resulting from supply chain constraints. 36 The increase in the segment’s operating earnings in 2023 consisted of the following: Aircraft services $ 36 Aircraft manufacturing 7 G&A/other expenses 9 Total increase $ 52 Aircraft services operating earnings were up in 2023 due to higher volume and a favorable mix of services.
On December 31, 2022, 6.7 million shares remained authorized by our board of directors for repurchase, representing 2.4% of our total shares outstanding. Debt Issuances and Repayments. In November 2022, we repaid fixed-rate notes of $1 billion at the scheduled maturity using cash on hand. Fixed-rate notes of $750 and $500 mature in May 2023 and August 2023, respectively.
On December 31, 2023, 4.7 million shares remained authorized by our Board for repurchase, representing 1.7% of our total shares outstanding. 48 Debt Issuances and Repayments.
We believe the projections and assumptions we used in estimating fair value are reasonable, but it is possible actual experience could differ. Commitments and Contingencies. We are subject to litigation and other legal proceedings arising either from the normal course of business or under provisions relating to the protection of the environment.
We are subject to litigation and other legal proceedings arising either from the normal course of business or under provisions relating to the protection of the environment. Estimating liabilities and costs associated with these matters requires the use of judgment.
Navy ship engineering, repair and other services (63) Total increase $ 514 Revenue from U.S. Navy ship construction was up across our shipyards in 2022 due to increased volume on the Columbia-class submarine program, the John Lewis-class (T-AO-205) fleet replenishment oiler program and the Arleigh Burke-class (DDG-51) destroyer program. These increases were offset partially by lower submarine engineering volume.
Navy ship engineering, repair and other services $ 784 U.S. Navy ship construction 637 Total increase $ 1,421 Revenue from U.S. Navy ship construction and engineering was up in 2023 due primarily to increased volume on the Columbia-class submarine program.
In response, the United States and several other countries imposed economic and trade sanctions, export controls and other restrictions (collectively, global sanctions) targeting Russia and Belarus.
BUSINESS ENVIRONMENT GLOBAL EVENTS The coronavirus (COVID-19) pandemic caused significant disruptions to national and global economies and government activities, including supply chain and staffing challenges. Additionally, in response to the Russian invasion of Ukraine, the United States and several other countries imposed economic and trade sanctions, export controls and other restrictions (collectively, global sanctions) targeting Russia and Belarus.
On March 2, 2022, our board of directors declared an increased quarterly dividend of $1.26 per share, the 25th consecutive annual increase. Previously, the board had increased the quarterly 46 dividend to $1.19 per share in March 2021. Cash dividends paid were $1.4 billion in 2022 and $1.3 billion in 2021. Share Repurchases.
Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises. Dividends. On March 8, 2023, our board of directors (Board) declared an increased quarterly dividend of $1.32 per share, the 26th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.26 per share in March 2022.
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 O to the Consolidated Financial Statements in Item 8.
Additional information regarding our segments can be found in Note O to the Consolidated Financial Statements in Item 8.
The awards also include options totaling $320 of additional potential contract value. • $235 from the Navy to provide engineering, technical, design and planning yard support services for operational strategic and attack submarines. • $170 from the Navy for advanced nuclear plant studies (ANPS) in support of the Columbia-class submarine program. • $145 from the Navy to provide ongoing planning and lead yard services for the DDG-51 destroyer program. 42 The following represents the Marine Systems segment’s total estimated contract value by major program on December 31, 2022: COMBAT SYSTEMS The Combat Systems segment’s backlog consists of a mix of U.S. and international combat vehicles, weapons systems and munitions programs.
The contract including options has a maximum potential value of $420. • $220 from the Navy to provide in-service support of systems and components on the USS Jimmy Carter (SSN 23). • A contract from the Navy for the construction of three Flight III DDG-51 destroyers. 43 The following represents the Marine Systems segment’s total estimated contract value by major program on December 31, 2023: COMBAT SYSTEMS The Combat Systems segment’s backlog consists of a mix of U.S. and international combat vehicles, weapons systems and munitions programs.
The Combat Systems segment’s operating margin increased 20 basis points compared with 2021 driven by favorable contract mix and strong operating performance. 2023 Outlook We expect the Combat Systems segment’s 2023 revenue to be approximately $7.3 billion with operating margin of approximately 14.7%.
The Combat Systems segment’s operating margin decreased 80 basis points compared with 2022 driven primarily by lower-margin artillery facilities expansion work. 2024 Outlook We expect the Combat Systems segment’s 2024 revenue to increase to approximately $8.5 billion with operating margin of approximately 14.4%.
The Technologies segment’s operating margin decreased 40 basis points compared with 2021 due primarily to the mix of service activity and product volume. 37 2023 Outlook We expect the Technologies segment’s 2023 revenue to be between $12.5 and $12.6 billion with operating margin of around 9.5% driven by a shift in the mix of IT service activity and hardware volume.
Overall, the segment’s margin decreased 50 basis points compared with 2022 due to program mix. 2024 Outlook We expect the Technologies segment’s 2024 revenue to increase to $13 billion with operating margin of around 9.5%. CORPORATE Corporate operating costs totaled $160 in 2023 and $118 in 2022 and consisted primarily of equity-based compensation expense.
Significant contract awards in the Combat Systems segment during 2022 include: • $1 billion for various munitions and ordnance with additional option value of $465. • $410 from the U.S. Army to begin low-rate initial production (LRIP) of the Mobile Protected Firepower (MPF) vehicle.
Significant contract awards in the Combat Systems segment during 2023 include: • $1.7 billion for various munitions and ordnance. The awards have a maximum potential value of $3.2 billion. • $1 billion from the U.S. Army to establish additional capacity for 155mm projectile metal parts and M795 load, assemble and pack (LAP) production and artillery propellant.
Such circumstances include a significant adverse change in the business climate for one of our reporting units or a decision to dispose of a reporting unit or a significant portion of a reporting unit. Our reporting units are consistent with our operating segments in Note O to the Consolidated Financial Statements in Item 8.
Our reporting units are consistent with our operating segments in Note O to the Consolidated Financial Statements in Item 8. We use both qualitative and quantitative approaches when testing goodwill for impairment.
The segment’s total estimated contract value remained steady compared with year-end 2021. Significant contract awards in the Technologies segment during 2022 include: • An IDIQ contract from the National Geospatial-Intelligence Agency (NGA) to provide hybrid cloud services and IT design, engineering, and operations and sustainment services.
The segment’s backlog and estimated potential contract value remained steady compared with year-end 2022. Significant contract awards in the Marine Systems segment during 2023 include: • $1.7 billion from the U.S.
Earnings in 2022 were somewhat impacted by customer accommodations associated with a G500/G600 airworthiness directive while 2021 earnings included mark-to-market adjustments related to aircraft that were in the G500 test program. In 2022, operating earnings from aircraft services were up due to higher volume and favorable cost performance.
While aircraft manufacturing operating earnings in 2023 reflected the impact of higher production costs resulting from supply chain challenges, 2022 earnings were impacted to a greater extent by customer accommodation costs associated with a G500/G600 airworthiness directive.
Financing activities include the use of cash for repurchases of common stock, 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. Dividends.
Capital expenditures include equipment and facility enhancements to support new and existing programs across our businesses. FINANCING ACTIVITIES Cash used by financing activities was $3.1 billion in 2023 and $3.5 billion in 2022. Financing activities include the use of cash for repurchases of common stock, payment of dividends, and debt and commercial paper repayments.
In 2022, the primary driver of the increase in product operating costs was the change in volume described above. The increase in service revenue in 2022 consisted of the following: Aircraft services $ 420 Other, net (76) Total increase $ 344 Aircraft services revenue increased due to additional maintenance work and FBO activity.
The increase in service revenue in 2023 consisted of the following: Ship services $ 784 IT services 264 Aircraft services 220 Other, net 24 Total increase $ 1,292 Services revenue increased in 2023 due to a higher volume of engineering work on the Columbia-class submarine program, increased demand for IT services and additional aircraft maintenance work.
The awards also include a $715 option for an additional T-AO-205 oiler. • $1.2 billion from the Navy to provide maintenance, modernization and repair services for the DDG-51 destroyer, Wasp-class amphibious assault ship and Los Angeles-class submarine programs. • $580 from the Navy for lead yard services, development studies and design efforts for Virginia-class submarines.
The contracts, including options, have a maximum potential value of $1.5 billion. • $1.3 billion from the Navy for long-lead materials and advance construction for Block V and long-lead materials for Block VI Virginia-class submarines. • $720 from the Navy to provide maintenance and modernization services for the DDG-51 destroyer, San Antonio-class amphibious transport dock and Wasp-class amphibious assault ship programs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 10% unfavorable rate movement in our portfolio of forward exchange contracts would have resulted in the following hypothetical, incremental pretax losses: (Dollars in millions) 2022 2021 Recognized $ (133) $ (1) Unrecognized (90) (196) These losses would be offset by corresponding gains in the remeasurement of the underlying transactions being hedged.
Biggest changeA 10% unfavorable rate movement in our portfolio of forward exchange contracts would have resulted in the following hypothetical, incremental pretax losses: (Dollars in millions) 2023 2022 Recognized $ (107) $ (133) Unrecognized (74) (90) These losses would be offset by corresponding gains in the remeasurement of the underlying transactions being hedged.
A 10% unfavorable interest rate movement would not have a material impact on the fair value of our fixed-rate debt. Commodity Price and Investment Risk. See Note Q to the Consolidated Financial Statements in Item 8 for a discussion of commodity price and investment risk. 53
A 10% unfavorable interest rate movement would not have a material impact on the fair value of our fixed-rate debt. Commodity Price and Investment Risk. See Note Q to the Consolidated Financial Statements in Item 8 for a discussion of commodity price and investment risk. 54
We believe these foreign currency forward exchange contracts and the offsetting underlying commitments, when taken together, do not create material market risk. Interest Rate Risk. On December 31, 2022, we had $10.5 billion principal amount of fixed-rate debt. Our fixed-rate debt obligations are not putable, and we do not trade these securities in the market.
We believe these foreign currency forward exchange contracts and the offsetting underlying commitments, when taken together, do not create material market risk. Interest Rate Risk. On December 31, 2023, we had $9.3 billion principal amount of fixed-rate debt. Our fixed-rate debt obligations are not putable, and we do not trade these securities in the market.
We had notional forward exchange contracts outstanding of $6.9 billion and $6.8 billion on December 31, 2022 and 2021, respectively.
We had notional forward exchange contracts outstanding of $5.7 billion and $6.9 billion on December 31, 2023 and 2022, respectively.

Other GD 10-K year-over-year comparisons