GENERAL DYNAMICS CORP
For the period ended Sep 28, 2025. Filed Oct 24, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2025 · Filed Oct 24, 2025
GD$354.06-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-29; filed 2025-07-23.
0000040533-25-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-28; filed 2025-10-24.
0000040533-25-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 104 current paragraphs.
62 unchanged; 38 reworded; 4 added; 4 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
With approximately 70% of our revenue from the U.S. government, government spending levels influence our financial performance. Although the government's new fiscal year (FY) began on October 1, 2025, the Congress has not passed a continuing resolution (CR) nor a FY funding bill, resulting in a government shutdown. The impact on our 2025 results of operations, financial condition and cash flows is uncertain and depends on the duration and government management of the shutdown. In response to the shutdown, we issued commercial paper subsequent to quarter end to support liquidity in the event of slow or non-payment by our customers impacted by the shutdown. In the Results of Operations section that follows, we have included our current outlook for each operating segment. This outlook reflects management's judgment in light of the uncertainties due to the government shutdown.
Current report
The increase in the Aerospace segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Current report
Weapons systems and munitions revenue increased in the third quarter and first nine months of 2025 due primarily to increased ammunition and ordnance work and higher volume on missile subsystems programs. Revenue from U.S. military vehicles decreased in the third quarter and first nine months of 2025 due primarily to lower volume on Stryker programs as well as the termination of the M10 Booker program. Overall, the Combat Systems segment’s operating margin increased 20 basis points in the third quarter and 30 basis points in the first nine months of 2025 on improved performance.
Current report
Total backlog in our defense segments was $89.3 billion on September 28, 2025. In the third quarter and first nine months of 2025, the defense segments achieved a book-to-bill ratio of 1.6-to-1. Estimated potential contract value in our defense segments was $56.7 billion on September 28, 2025.
Removed paragraphs (4)
Previous report
On July 4, 2025, the president signed the fiscal year (FY) 2025 reconciliation (the bill). Among its provisions, the bill adds funding for shipbuilding and other programs we support. The amounts ultimately allocated to specific programs are subject to the federal budgeting process. The bill also enacts changes to U.S. federal tax law, including a provision to allow for the immediate deduction of domestic research and development (R&D) expenditures beginning January 1, 2025. This provision further permits the accelerated deduction of amounts capitalized under prior law. This change in tax law will have a favorable impact on our cash taxes which we are in the process of estimating the timing and amount.
Previous report
The increase in the Aerospace segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Previous report
Weapons systems and munitions revenue increased in the first six months of 2025 due primarily to heightened demand for artillery products. Overall, the Combat Systems segment’s operating margin increased 50 basis points in the second quarter and 20 basis points in the first six months of 2025 on improved performance.
Previous report
Total backlog in our defense segments was $83.8 billion on June 29, 2025, up 20% from the first quarter. This increase was driven by significant awards within the Marine Systems segment for continued construction of Virginia-class and Columbia-class submarines. Estimated potential contract value in our defense segments was $56.3 billion on June 29, 2025.
Reworded paragraphs (38)
Previous wording
Our company is organized into four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We refer to the latter three collectively as our defense segments. Our primary customer is the U.S. government, including the Department of Defense (DoD), the intelligence community and other U.S. government agencies. We also have significant business with non-U.S. governments and a diverse base of corporate and individual buyers of business jet aircraft and related services. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, and with the unaudited Consolidated Financial Statements included in this Form 10-Q.
Current wording
Our company is organized into four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We refer to the latter three collectively as our defense segments. Our primary customer is the U.S. government, including the Department of War (DoW) (previously referred to as Department of Defense), the intelligence community and other U.S. government agencies. We also have significant business with non-U.S. governments and a diverse base of corporate and individual buyers of business jet aircraft and related services. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, and with the unaudited Consolidated Financial Statements included in this Form 10-Q.
Previous wording
The administration has taken steps to address federal spending, including forming the Department of Government Efficiency (DOGE) to assist in this process. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions, hiring freezes, contract modifications and terminations, and delays in contract awards. We have experienced some award delays and contract terminations as a result of these actions as well as changes in agency priorities, largely within our IT services business. In addition, the administration has implemented new tariffs as part of U.S. trade policy. The duration and extent of the tariffs and any reciprocal tariffs, as well as any available opportunities to lessen the impact, continue to evolve. To date, these actions have not had a material impact on our results of operations, financial condition or cash flows.
Current wording
In 2025, the administration has taken steps to address federal spending, including forming the Department of Government Efficiency (DOGE) to assist in this process. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions, hiring freezes, contract modifications and terminations, and delays in contract awards. We have experienced some award delays and contract terminations as a result of these actions as well as changes in agency priorities, largely within our IT services business. In addition, the administration has implemented new tariffs as part of U.S. trade policy. The duration and extent of the tariffs and any reciprocal tariffs, as well as any available opportunities to lessen the impact, continue to evolve. To date, these actions have not had a material impact on our results of operations, financial condition or cash flows.
Previous wording
In April 2025, our new ultra-large-cabin G800, the world's longest-range business aircraft, received type certification from the U.S. Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA). We expect G800 deliveries to commence in the third quarter of 2025. The G800 is the replacement aircraft for the G650, which had its final delivery in the second quarter of 2025.
Current wording
During the third quarter, we began deliveries of our new ultra-large-cabin G800, the world's longest-range business aircraft. The G800 is the replacement aircraft for the G650, which had its final delivery in the second quarter of 2025. In September 2025, we announced our all-new super-midsize G300 aircraft, which will replace the G280 aircraft.
Previous wording
Our consolidated revenue increased in the second quarter and first six months of 2025 due primarily to growth in our Aerospace and Marine Systems segments. Operating margin increased 30 basis points in the second quarter and 50 basis points in the first six months of 2025 due primarily to strong operating performance in our Aerospace segment.
Current wording
Our consolidated revenue increased in the third quarter and first nine months of 2025 due primarily to double digit percentage growth in our Aerospace and Marine Systems segments. Operating margin increased 20 basis points in the third quarter and 40 basis points in the first nine months of 2025 due primarily to strong operating performance in our Aerospace segment.
Previous wording
Aircraft manufacturing revenue increased in the second quarter and first six months of 2025 due primarily to additional G700 deliveries following its introduction in the second quarter of 2024. Aircraft services revenue was up in the second quarter and first six months of 2025 due primarily to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
Current wording
Aircraft manufacturing revenue increased in the third quarter and first nine months of 2025 due primarily to additional G700 aircraft deliveries. Aircraft services revenue was up in the third quarter and first nine months of 2025 due primarily to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
Previous wording
The increase in the segment’s operating earnings in the second quarter and first six months of 2025 consisted of the following:
Current wording
The increase in the segment’s operating earnings in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
Aircraft manufacturing operating earnings increased in the second quarter and first six months of 2025 due primarily to the number and mix of aircraft deliveries, as well as productivity improvements on the G700 aircraft since its introduction. G&A/other expenses decreased in the second quarter and first six months of 2025 due primarily to reduced R&D efforts after the completion of new aircraft certification processes. In total, the Aerospace segment’s operating margin increased 230 basis points in the second quarter and first six months of 2025 compared with the prior-year periods.
Current wording
Aircraft manufacturing operating earnings increased in the third quarter and first nine months of 2025 due primarily to the number and mix of aircraft deliveries, as well as productivity improvements stemming from increased stabilization of the supply chain. G&A/other expenses decreased in the third quarter and first nine months of 2025 due primarily to reduced R&D expenditures after the completion of G800 certification processes. In total, the Aerospace segment’s operating margin increased 100 basis points in the third quarter and 190 basis points in the first nine months of 2025 compared with the prior-year periods.
Previous wording
We expect the Aerospace segment’s 2025 revenue to be approximately $12.9 billion with operating margin of approximately 13.5%.
Current wording
We expect the Aerospace segment’s 2025 revenue to be approximately $13.2 billion with operating margin of approximately 13.3%.
Previous wording
The increase in the Marine Systems segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Current wording
The increase in the Marine Systems segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
Revenue from U.S. Navy ship construction was up in the second quarter and first six months of 2025 due primarily to increased volume on Virginia-class and Columbia-class submarine construction. The Marine Systems segment’s operating margin continues to reflect the impact of supply chain challenges.
Current wording
Revenue from U.S. Navy ship construction was up in the third quarter and first nine months of 2025 due primarily to increased volume on Virginia-class and Columbia-class submarine construction. The Marine Systems segment’s operating margin continues to reflect the impact of a relatively new workforce in some disciplines and supply chain challenges.
Previous wording
We expect the Marine Systems segment’s 2025 revenue to be approximately $15.6 billion with operating margin of approximately 7.0%
Current wording
We expect the Marine Systems segment’s 2025 revenue to be approximately $16 billion with operating margin of approximately 7%.
Previous wording
The change in the Combat Systems segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Current wording
The increase in the Combat Systems segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
We expect the Combat Systems segment’s 2025 revenue to be approximately $9.2 billion with operating margin of approximately 14.5%.
Current wording
We expect the Combat Systems segment’s 2025 revenue to be approximately $9.2 billion with operating margin of approximately 14.3%.
Previous wording
The increase in the Technologies segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Current wording
The change in the Technologies segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
The Technologies segment’s revenue was up in the second quarter and first six months of 2025 due primarily to higher volume of IT services. Overall, the Technologies segment’s operating margin increased 20 basis points in the first six months of 2025.
Current wording
The Technologies segment’s revenue decreased as expected in the third quarter due primarily to program timing and ramp-down of legacy programs, and increased in the first nine months of 2025 due primarily to higher volume of IT services. Overall, the Technologies segment’s operating margin increased 10 basis points in the third quarter and first nine months of 2025.
Previous wording
We expect the Technologies segment’s 2025 revenue to be approximately $13.5 billion with operating margin of approximately 9.2%.
Current wording
We expect the Technologies segment’s 2025 revenue to be approximately $13.5 billion with operating margin of approximately 9.4%.
Previous wording
Corporate operating costs totaled $45 in the second quarter and $78 in the first six months of 2025 compared with $41 in the second quarter and $69 in the first six months of 2024 and consisted primarily of equity-based compensation expense. Corporate operating costs are expected to be approximately $160 in 2025.
Current wording
Corporate operating costs totaled $52 in the third quarter and $130 in the first nine months of 2025 compared with $33 in the third quarter and $102 in the first nine months of 2024 and consisted primarily of equity-based compensation expense. Corporate operating costs are expected to be around $160 in 2025.
Previous wording
The increase in product revenue in the second quarter and first six months of 2025 consisted of the following:
Current wording
The increase in product revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
Aircraft manufacturing revenue increased in the second quarter and first six months of 2025 due to additional G700 deliveries. Ship construction revenue increased due primarily to higher volume on the Virginia-class and Columbia-class submarine programs. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
Current wording
Aircraft manufacturing revenue increased in the third quarter and first nine months of 2025 due to additional aircraft deliveries. Ship construction revenue increased due primarily to higher volume on the Virginia-class and Columbia-class submarine programs. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
Previous wording
The increase in service revenue in the second quarter and first six months of 2025 consisted of the following:
Current wording
The change in service revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous wording
Increased IT services volume drove the higher service revenue in the second quarter and first six months of 2025. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Current wording
Increased IT services volume drove the higher service revenue in the first nine months of 2025. Aircraft services revenue was up in 2025 due to additional maintenance work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Previous wording
As a percentage of revenue, G&A expenses decreased to 5.0% in the first six months of 2025 compared with 5.6% in the first six months of 2024. We expect G&A expenses as a percentage of revenue in 2025 to be generally consistent with 2024.
Current wording
As a percentage of revenue, G&A expenses decreased to 5% in the first nine months of 2025 compared with 5.5% in the first nine months of 2024.
Previous wording
Net other income was $36 in the first six months of 2025 compared with $32 in the first six months of 2024, and represents primarily the non-service components of pension and other post-retirement benefits. In 2025, we expect other income, net to be approximately $70.
Current wording
Net other income was $51 in the first nine months of 2025 compared with $47 in the first nine months of 2024, and represents primarily the non-service components of pension and other post-retirement benefits. In 2025, we expect net other income to be approximately $70.
Previous wording
Net interest expense was $177 in the first six months of 2025 compared with $166 in the prior-year period. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates. In 2025, we expect net interest expense to be approximately $330.
Current wording
Net interest expense was $251 in the first nine months of 2025 compared with $248 in the prior-year period. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates. In 2025, we expect net interest expense to be approximately $330.
Previous wording
Our effective tax rate was 17.4% in the first six months of 2025 compared with 17.2% in the prior-year period. For 2025, we anticipate a full-year effective tax rate of approximately 17.5%.
Current wording
Our effective tax rate was 17.2% in the first nine months of 2025 compared with 17.0% in the prior-year period. For 2025, we anticipate a full-year effective tax rate of approximately 17.5%.
Previous wording
Our total backlog, including funded and unfunded portions, was $103.7 billion at the end of the second quarter of 2025 compared with $88.7 billion at the end of the first quarter. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $161.2 billion on June 29, 2025.
Current wording
Our total backlog, including funded and unfunded portions, was $109.9 billion at the end of the third quarter of 2025 compared with $103.7 billion at the end of the second quarter. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $167.7 billion on September 28, 2025.
Previous wording
The following table details the backlog and estimated potential contract value of each segment at the end of the second and first quarters of 2025:
Current wording
The following table details the backlog and estimated potential contract value of each segment at the end of the third and second quarters of 2025:
Previous wording
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the second quarter of 2025 with backlog of $19.9 billion.
Current wording
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the third quarter of 2025 with backlog of $20.6 billion.
Previous wording
Orders for new Gulfstream aircraft reflected strong demand across our portfolio of products and services. The segment achieved a book-to-bill ratio (orders divided by revenue) of 1-to-1 for the first six months of 2025, even as revenue grew more than 20% year over year.
Current wording
Orders for new Gulfstream aircraft reflected strong demand across our portfolio of products and services, including orders for our recently announced G300 aircraft. The segment achieved a book-to-bill ratio (orders divided by revenue) of 1.3-to-1 in the third quarter of 2025, even as revenue grew more than 30% over the year-ago quarter.
Previous wording
Estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On June 29, 2025, estimated potential contract value in the Aerospace segment was $1.2 billion.
Current wording
Estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On September 28, 2025, estimated potential contract value in the Aerospace segment was $1.1 billion.
Previous wording
We ended the second quarter of 2025 with a cash and equivalents balance of $1.5 billion compared with $1.7 billion at the end of 2024. Following is a discussion of our major operating, investing and financing activities in the first six months of 2025 and 2024, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Current wording
We ended the third quarter of 2025 with a cash and equivalents balance of $2.5 billion compared with $1.7 billion at the end of 2024. Following is a discussion of our major operating, investing and financing activities in the first nine months of 2025 and 2024, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Previous wording
Cash provided by operating activities was $1.5 billion in the first six months of 2025 compared with $536 in the same period in 2024. The primary driver of cash flows in both periods was net earnings. Cash flows in both periods were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments. These timing items were anticipated and are expected to reverse, resulting in higher cash flows from operating activities in the second half of the year.
Current wording
Cash provided by operating activities was $3.6 billion in the first nine months of 2025 compared with $2 billion in the same period in 2024. The primary driver of cash flows in both periods was net earnings. Cash flows in 2024 were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments.
Previous wording
Cash used by investing activities was $216 in the first six months of 2025 compared with $307 in the same period in 2024. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $340 in the first six months of 2025 compared with $360 in the same period in 2024.
Current wording
Cash used by investing activities was $422 in the first nine months of 2025 compared with $588 in the same period in 2024. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $552 in the first nine months of 2025 compared with $561 in the same period in 2024.
Previous wording
Cash used by financing activities was $1.4 billion in the first six months of 2025 compared with $778 in the same period in 2024. 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.
Current wording
Cash used by financing activities was $2.3 billion in the first nine months of 2025 compared with $1.2 billion in the same period in 2024. 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.
Previous wording
On March 5, 2025, our board of directors (Board) declared an increased quarterly dividend of $1.50 per share, the 28th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.42 per share in March 2024. Cash dividends paid were $785 in the first six months of 2025 compared with $750 in the same period in 2024.
Current wording
On March 5, 2025, our board of directors (Board) declared an increased quarterly dividend of $1.50 per share, the 28th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.42 per share in March 2024. Cash dividends paid were $1.2 billion in the first nine months of 2025 compared with $1.1 billion in the same period in 2024.
Previous wording
We paid $600 and $139 in the first six months of 2025 and 2024, respectively, to repurchase our outstanding shares. On June 29, 2025, 6.9 million shares remained authorized by our Board for repurchase, representing 2.6% of our total shares outstanding.
Current wording
We paid $600 and $183 in the first nine months of 2025 and 2024, respectively, to repurchase our outstanding shares. On September 28, 2025, 6.9 million shares remained authorized by our Board for repurchase, representing 2.5% of our total shares outstanding.
Previous wording
In the first six months of 2025, we received net proceeds of $700 from the issuance of commercial paper, which remained outstanding on June 29, 2025. Separately, we have $5 billion in committed bank credit facilities for general corporate purposes and working capital needs and to support our commercial paper issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Current wording
On September 28, 2025, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have $5 billion in committed bank credit facilities for general corporate purposes and working capital needs and to support our commercial paper issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Previous wording
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates increased our operating earnings (and diluted earnings per share) by $31 ($0.09) and $62 ($0.18) for the three- and six-month periods ended June 29, 2025, and $77 ($0.22) and $113 ($0.32)
Current wording
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates increased our operating earnings (and diluted earnings per share) by $57 ($0.17) and $119 ($0.35) for the three- and nine-month periods ended September 28, 2025, and $101 ($0.29) for the nine-month period ended September 29, 2024, and decreased our operating earnings (and diluted earnings per share) by $12 ($0.03) for the three-month period ended September 29, 2024. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three- and nine-month periods ended September 28, 2025, or September 29, 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
for the three- and six-month periods ended June 30, 2024, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three- and six-month periods ended June 29, 2025, or June 30, 2024.