GENERAL DYNAMICS CORP
For the period ended Apr 5, 2026. Filed Apr 29, 2026.
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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.
Apr 5, 2026 · Filed Apr 29, 2026
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 2025-09-28; filed 2025-10-24.
0000040533-25-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-05; filed 2026-04-29.
0000040533-26-000012
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 104 previous paragraphs and 105 current paragraphs.
56 unchanged; 36 reworded; 13 added; 12 removed; 0 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 (13)
Current report
As a global aerospace and defense company, we compete in domestic and international markets, serving both government and commercial customers. Our financial performance is significantly influenced by U.S. government spending levels, administration priorities and the overall economy.
Current report
We entered 2026 with the government operating under a continuing resolution (CR). Full-year appropriations were enacted in early February for all federal departments except for the Department of Homeland Security, which remains partially shutdown. This shutdown has not had a material impact on our business.
Current report
In the federal market, defense spending has been at increased levels, and the administration has publicly stated support for further increases. This is reflected in the significant demand in U.S. Navy shipbuilding, particularly submarines. We have invested significantly in our facilities and workforce to increase production capacity to meet this demand, and expect to continue to do so. The increased demand has placed great pressure on the shipbuilding industrial base, which was already impacted by significant demographic issues coming out of the global pandemic. Together with the Navy customer, we have been working to stabilize and grow the supply chain to meet this heightened demand.
Current report
We have also been investing in the development of the next generation of combat vehicles and artillery. While the U.S. Army is reviewing its funding priorities and begins transitioning to next-generation combat vehicles, we expect short-term combat vehicle production volumes to be down slightly. Demand for our munitions products has been high and is expected to remain at an elevated level given ongoing conflicts and regional threats.
Current report
Internationally, as a result of ongoing regional conflicts and the overall threat environment, we have seen increased demand, particularly in Europe, for our Combat Systems military products and services. This provides opportunities for our European businesses established in local markets as well as exports from our North American businesses. To meet this expected demand, there will be increased pressure on the supply chain and our hiring of skilled workers.
Current report
In our principal commercial market, Aerospace is experiencing strong demand for business jets. We believe our investments in a new family of Gulfstream aircraft will continue to fuel demand. The most recent addition is the G800, which entered into service last year. In addition, we expect the growing installed base of aircraft will continue to lead to increased demand for global aircraft services. The ongoing sanctions on Russia have restricted access to a segment of the market.
Current report
Our ability to produce new aircraft is dependent on our supply chain, and while performance has improved and the overall supply chain has stabilized, we have experienced some delays including at our Israel-based supplier of mid-cabin airframes caused by conflicts in the Middle East.
Current report
Our Aerospace business has been impacted by inflationary pressures and tariffs. On February 20, 2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized. Following the ruling, Customs and Border Protection (CBP) has established a process to refund previously-paid IEEPA tariffs. However, the timing of the collection of previously paid IEEPA tariffs is uncertain. These developments were not material to our results of operations. Non-IEEPA tariffs continue to impact the business, but do not present a significant burden in their current form.
Current report
Our consolidated revenue increased in the first quarter of 2026 across all four operating segments, including over 20% growth in our Marine Systems segment driven by increased material volume. Operating margin increased 10 basis points in the first quarter of 2026.
Current report
2026 Outlook
Current report
We expect our full-year diluted earnings per share (EPS) to be between $16.45 and $16.55.
Current report
The increase in the Aerospace segment’s revenue in the first quarter of 2026 consisted of the following:
Current report
Fixed-rate notes of $500 mature in both June and August 2026. We are evaluating the refinancing of these notes and will continue to monitor market conditions as maturities draw near. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
Removed paragraphs (12)
Previous report
Federal Government
Previous 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.
Previous report
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 report
Business Aviation
Previous report
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 report
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 report
The increase in the Aerospace segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Previous report
We expect the Aerospace segment’s 2025 revenue to be approximately $13.2 billion with operating margin of approximately 13.3%.
Previous report
We expect the Marine Systems segment’s 2025 revenue to be approximately $16 billion with operating margin of approximately 7%.
Previous report
We expect the Combat Systems segment’s 2025 revenue to be approximately $9.2 billion with operating margin of approximately 14.3%.
Previous report
We expect the Technologies segment’s 2025 revenue to be approximately $13.5 billion with operating margin of approximately 9.4%.
Previous report
In May 2025, we issued $750 of fixed-rate notes. The proceeds were used to repay fixed-rate notes of $750 that matured in May 2025. In late March 2025, we repaid fixed-rate notes of $750 prior to their scheduled maturity on April 1, 2025 with cash on hand and commercial paper issuances. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
Reworded paragraphs (36)
Previous wording
General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapons systems and munitions; and technology products and services.
Current wording
General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapon systems and munitions; and technology products and services.
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 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.
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), the intelligence community and other U.S. government agencies. We also have significant business with non-U.S. governments and a diverse base of corporate and individual buyers of business jet aircraft and related services. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, and with the unaudited Consolidated Financial Statements included in this Form 10-Q.
Previous 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.
Current wording
Aircraft manufacturing revenue increased in the first quarter of 2026 due primarily to additional aircraft deliveries. Aircraft services revenue was up in the first quarter of 2026 due primarily to increased customer demand for aircraft maintenance, a larger installed base and customer flight activity.
Previous wording
The increase in the segment’s operating earnings in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in the segment’s operating earnings in the first quarter of 2026 consisted of the following:
Previous 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.
Current wording
Aircraft manufacturing operating earnings increased in the first quarter of 2026 due primarily to increased deliveries and improved performance. Aircraft services operating earnings increased in the first quarter of 2026 due to higher volume and a favorable service mix. In total, the Aerospace segment’s operating margin increased 70 basis points in the first quarter of 2026 compared with the prior-year period resulting from the same factors.
Previous wording
The increase in the Marine Systems segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in the Marine Systems segment’s revenue in the first quarter of 2026 consisted of the following:
Previous 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.
Current wording
Revenue from U.S. Navy ship construction was up in the first quarter of 2026 due primarily to increased material and labor volume on Columbia-class and Virginia-class submarine construction and higher throughput on the John Lewis-class (T-AO-205) fleet replenishment oiler at our NASSCO shipyard. The Marine Systems segment’s operating margin increased 30 basis points in the first quarter of 2026 on improved performance.
Previous wording
The increase in the Combat Systems segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in the Combat Systems segment’s revenue in the first quarter of 2026 consisted of the following:
Previous wording
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 wording
Weapon systems and munitions revenue increased in the first quarter of 2026 due primarily to increased artillery production. International military vehicles increased due to higher volume on several wheeled and tracked vehicle programs in Europe. Revenue from U.S. military vehicles decreased in the first quarter of 2026 due to lower U.S. Army demand as part of their recapitalization efforts and the termination of the M10 Booker program. Overall, the Combat Systems segment’s operating margin increased 20 basis points in the first quarter of 2026 driven by favorable program mix.
Previous wording
The change in the Technologies segment’s revenue in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in the Technologies segment’s revenue in the first quarter of 2026 consisted of the following:
Previous 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.
Current wording
The Technologies segment’s revenue increased in the first quarter of 2026 due primarily to higher volume across several C5ISR programs, most notably in the group's space portfolio and international markets. Overall, the Technologies segment’s operating margin decreased 10 basis points in the first quarter of 2026.
Previous 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.
Current wording
Corporate operating costs totaled $38 in the first quarter of 2026 compared with $33 in the first quarter of 2025 and consisted of equity-based compensation expense and other miscellaneous expenses.
Previous wording
The increase in product revenue in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in product revenue in the first quarter of 2026 consisted of the following:
Previous 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.
Current wording
Ship construction revenue increased due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Aircraft manufacturing revenue increased in the first quarter of 2026 due to additional aircraft deliveries. Weapon systems and munitions revenue increased in the first quarter of 2026 due primarily to increased artillery production. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
Previous wording
The change in service revenue in the third quarter and first nine months of 2025 consisted of the following:
Current wording
The increase in service revenue in the first quarter of 2026 consisted of the following:
Previous 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.
Current wording
Increased C5ISR solutions and IT services volume drove the higher service revenue in the first quarter of 2026. Ship services revenue was up in the first quarter of 2026 due to higher volume of engineering and repair work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Previous 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.
Current wording
As a percentage of revenue, G&A expenses increased to 5.4% in the first three months of 2026 compared with 5.1% in the first three months of 2025.
Previous 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.
Current wording
Net other income was $18 in the first three months of 2026 compared with $21 in the first three months of 2025, and represents primarily the non-service components of pension and other post-retirement benefits.
Previous 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.
Current wording
Net interest expense decreased to $69 in the first three months of 2026 from $89 in the prior-year period, reflecting lower interest expense associated with commercial paper issuances. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates.
Previous 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%.
Current wording
Our effective tax rate was 17.8% in the first three months of 2026 compared with 17.2% in the prior-year period.
Previous 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.
Current wording
Our total backlog, including funded and unfunded portions, was $130.8 billion at the end of the first quarter of 2026 compared with $118 billion on December 31, 2025. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $188.4 billion on April 5, 2026.
Previous 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:
Current wording
The following table details the backlog and estimated potential contract value of each segment at the end of the first quarter of 2026 and fourth quarter of 2025:
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 third quarter of 2025 with backlog of $20.6 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 first quarter of 2026 with backlog of $22.3 billion.
Previous 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.
Current 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 1.2-to-1 in the first quarter of 2026.
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 September 28, 2025, estimated potential contract value in the Aerospace segment was $1.1 billion.
Current wording
Beyond total backlog, estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On April 5, 2026, estimated potential contract value in the Aerospace segment was $1 billion.
Previous wording
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.
Current wording
Total backlog in our defense segments was $108.6 billion on April 5, 2026. The increase was driven by a $15.4 billion award within the Marine Systems segment for continued design and support work on the Columbia-class submarines program. In the first quarter of 2026, the defense segments achieved a book-to-bill ratio of 2.2-to-1. Estimated potential contract value in our defense segments was $56.6 billion on April 5, 2026.
Previous wording
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.
Current wording
We evaluate a variety of capital deployment options based on current market conditions and our long-term outlook, and we believe agility is a key component of our capital deployment strategy as market conditions change over time. Our capital deployment priorities include investments in our business infrastructure, products and services to drive long-term growth, a predictable dividend, strategic acquisitions and opportunistic share repurchases primarily to address dilution.
Previous 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:
Current wording
We ended the first quarter of 2026 with a cash and equivalents balance of $3.7 billion compared with $2.3 billion at the end of 2025. Following is a discussion of our major operating, investing and financing activities in the first three months of 2026 and 2025, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Previous 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.
Current wording
Cash provided by operating activities was $2.2 billion in the first three months of 2026 compared with cash used by operating activities of $148 in the same period in 2025. The primary driver of cash flows in both periods was net earnings. Cash flows in the first quarter of 2026 were affected positively by reductions in operating working capital led by the Combat Systems segment. Cash flows in the first quarter of 2025 were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments.
Previous 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.
Current wording
Cash used by investing activities was $202 in the first three months of 2026 compared with $130 in the same period in 2025. Our investing activities include cash paid for capital expenditures; business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $203 in the first three months of 2026, up 43% compared with $142 in the same period of 2025, and are expected to remain elevated for the remaining quarters of 2026.
Previous 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.
Current wording
Cash used by financing activities was $629 in the first three months of 2026 compared with $175 in the same period in 2025. Financing activities include the use of cash for repurchases of common stock to cover dilution, payment of dividends, and debt and commercial paper repayments. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
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 $1.2 billion in the first nine months of 2025 compared with $1.1 billion in the same period in 2024.
Current wording
On March 9, 2026, our board of directors (Board) declared a quarterly dividend of $1.59 per share, the 29th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.50 per share in March 2025. Cash dividends paid were $405 in the first three months of 2026 compared with $383 in the same period in 2025.
Previous 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.
Current wording
We paid $217 and $600 in the first three months of 2026 and 2025, respectively, to repurchase our outstanding shares to cover dilution. On April 5, 2026, 6.1 million shares remained authorized by our Board for repurchase, representing 2.3% of our total shares outstanding.
Previous 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.
Current wording
On April 5, 2026, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have $4 billion in a committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper 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
We define free cash flow as net cash from operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, 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 following table reconciles free cash flow with net cash from operating activities, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Current wording
We define free cash flow as net cash from operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, paying dividends and repurchasing our common stock to cover dilution. We use free cash flow to assess the quality of our earnings and as a key performance measure in evaluating management. The following table reconciles free cash flow with net cash from operating activities, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
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 $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.
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 changed our operating earnings (and diluted earnings per share) by $54 ($0.16) and $31 ($0.09) for the three-month periods ended April 5, 2026, and March 30, 2025, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three-month periods ended April 5, 2026, or March 30, 2025.