Accumulated Other Comprehensive Loss.The changes, pretax and net of tax, in each component of accumulated other comprehensive loss (AOCL) consisted of the following:
Changes in Unrealized Cash Flow Hedges
Foreign Currency Translation Adjustments
Changes in Retirement Plans’ Funded Status
AOCL
December 31, 2023
$
11
$
673
$
(1,843)
$
(1,159)
Other comprehensive income, pretax
(31)
(16)
125
78
Provision for income tax, net
7
—
(25)
(18)
Other comprehensive income, net of tax
(24)
(16)
100
60
September 29, 2024
$
(13)
$
657
$
(1,743)
$
(1,099)
December 31, 2022
$
4
$
260
$
(2,416)
$
(2,152)
Other comprehensive income, pretax
(33)
63
526
556
Provision for income tax, net
8
—
(110)
(102)
Other comprehensive income, net of tax
(25)
63
416
454
October 1, 2023
$
(21)
$
323
$
(2,000)
$
(1,698)
Amounts reclassified out of AOCL related primarily to changes in our retirement plans’ funded status and included pretax recognized net actuarial losses and amortization of prior service credit. See Note O for these amounts, which are included in our net periodic pension and other post-retirement benefit cost (credit).
L. SEGMENT INFORMATION
We have four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We organize our segments in accordance with the nature of products and services offered. We measure each segment’s profitability based on operating earnings. As a result, we do not allocate net interest, other income and expense items, and income taxes to our segments.
23
Summary financial information for each of our segments follows:
Revenue (a)
Operating Earnings
Three Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
Aerospace
$
2,482
$
2,032
$
305
$
268
Marine Systems
3,599
3,002
258
211
Combat Systems
2,212
2,224
325
300
Technologies
3,378
3,313
326
315
Corporate (b)
—
—
(33)
(37)
Total
$
11,671
$
10,571
$
1,181
$
1,057
Nine Months Ended
Aerospace
$
7,506
$
5,877
$
879
$
733
Marine Systems
10,383
9,053
735
657
Combat Systems
6,602
5,904
920
796
Technologies
9,887
9,770
941
897
Corporate (b)
—
—
(102)
(126)
Total
$
34,378
$
30,604
$
3,373
$
2,957
(a)See Note B for additional revenue information by segment.
(b)Corporate operating costs consisted primarily of equity-based compensation expense.
M. FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:
•Level 1 – quoted prices in active markets for identical assets or liabilities.
•Level 2 – inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly.
•Level 3 – unobservable inputs significant to the fair value measurement.
We did not have any significant non-financial assets or liabilities measured at fair value on September 29, 2024, or December 31, 2023.
Our financial instruments include cash and equivalents, accounts receivable and payable, marketable securities held in trust and other investments, short- and long-term debt, and derivative financial instruments. The carrying values of cash and equivalents and accounts receivable and payable on the Consolidated Balance Sheet approximate their fair value.The following tables present the fair values of our other financial assets and liabilities on September 29, 2024, and December 31, 2023, and the basis for determining their fair values:
24
Carrying Value
Fair Value
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Financial Assets (Liabilities)
September 29, 2024
Measured at fair value:
Marketable securities held in trust:
Cash and equivalents
$
3
$
3
$
—
$
3
$
—
Available-for-sale debt securities
132
132
—
132
—
Commingled equity funds
50
50
50
—
—
Commingled fixed-income funds
6
6
6
—
—
Other investments
45
45
28
—
17
Cash flow hedge assets
64
64
—
64
—
Cash flow hedge liabilities
(65)
(65)
—
(65)
—
Measured at amortized cost:
Short- and long-term debt principal
(9,335)
(8,876)
—
(8,876)
—
December 31, 2023
Measured at fair value:
Marketable securities held in trust:
Cash and equivalents
$
21
$
21
$
—
$
21
$
—
Available-for-sale debt securities
115
115
—
115
—
Commingled equity funds
49
49
49
—
—
Commingled fixed-income funds
6
6
6
—
—
Other investments
40
40
23
—
17
Cash flow hedge assets
109
109
—
109
—
Cash flow hedge liabilities
(61)
(61)
—
(61)
—
Measured at amortized cost:
Short- and long-term debt principal
(9,340)
(8,764)
—
(8,764)
—
Our Level 1 assets include commingled equity and fixed-income funds that are valued using a unit price or net asset value (NAV). These funds are actively traded and valued using quoted prices for identical securities from the market exchanges. The fair value of our Level 2 assets and liabilities, which consist primarily of fixed-income securities, cash flow hedges and our fixed-rate notes, is determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. Our Level 3 assets include direct private equity investments that are measured using inputs unobservable to a marketplace participant.
N. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risk, primarily from foreign currency exchange rates, commodity prices and investments. We may use derivative financial instruments to hedge some of these risks as described below. We do not use derivative financial instruments for trading or speculative purposes.
Foreign Currency Risk. Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies. To the extent possible, we include terms in our contracts that are designed to protect us from this risk. Otherwise, we
25
enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk. The dollar-weighted one-year average maturity of these instruments generally matches the duration of the activities that are at risk.
Commodity Price Risk. We are subject to commodity price risk, primarily on long-term, fixed-price contracts. To the extent possible, we include terms in our contracts that are designed to protect us from these risks. Some of the protective terms included in our contracts are considered derivative financial instruments but are not accounted for separately, because they are clearly and closely related to the host contract. We have not entered into any material commodity hedging contracts but may do so as circumstances warrant. We do not believe that changes in commodity prices will have a material impact on our results of operations or cash flows.
Investment Risk. Our investment policy allows for purchases of fixed-income securities with an investment-grade rating and a maximum maturity of up to five years. On September 29, 2024, and December 31, 2023, we held $2.1 billion and $1.9 billion in cash and equivalents, respectively, but held no material marketable securities other than those held in trust to meet some of our obligations under workers’ compensation and non-qualified pension plans. On September 29, 2024, and December 31, 2023, we held marketable securities in trust of $191. These marketable securities are reflected at fair value on the Consolidated Balance Sheet in other current and noncurrent assets. See Note M for additional details.
Hedging Activities. We had notional forward exchange contracts outstanding of $7.1 billion and $5.7 billion on September 29, 2024, and December 31, 2023, respectively. These derivative financial instruments are cash flow hedges, and are reflected at fair value on the Consolidated Balance Sheet in other current assets and liabilities. See Note M for additional details.
Changes in fair value (gains and losses) related to derivative financial instruments that qualify as cash flow hedges are deferred in AOCL until the underlying transaction is reflected in earnings. Alternatively, gains and losses on derivative financial instruments that do not qualify for hedge accounting are recorded each period in earnings. All gains and losses from derivative financial instruments recognized in the Consolidated Statement of Earnings are presented in the same line item as the underlying transaction, generally operating costs and expenses.
Net gains and losses recognized in earnings on derivative financial instruments that do not qualify for hedge accounting were not material to our results of operations for the three- and nine-month periods ended September 29, 2024, and October 1, 2023. Net gains and losses reclassified to earnings from AOCL related to qualified hedges were also not material to our results of operations for the three- and nine-month periods ended September 29, 2024, and October 1, 2023, and we do not expect the amount of these gains and losses that will be reclassified to earnings during the next 12 months to be material.
We had no material derivative financial instruments designated as fair value or net investment hedges on September 29, 2024, and December 31, 2023.
Foreign Currency Financial Statement Translation. We translate foreign currency balance sheets from our international businesses’ functional currency (generally the respective local currency) to U.S. dollars at the end-of-period exchange rates, and statements of earnings at the average exchange rates for each period. The resulting foreign currency translation adjustments are a component of AOCL.
We do not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations’ results into U.S. dollars. The impact of translating our non-U.S. operations’ revenue and earnings into U.S. dollars was not material to our results of operations for the
26
three- and nine-month periods ended September 29, 2024, and October 1, 2023. In addition, the effect of changes in foreign exchange rates on non-U.S. cash balances was not material for the nine-month periods ended September 29, 2024, and October 1, 2023.
O. RETIREMENT PLANS
We provide retirement benefits to eligible employees through a variety of plans:
•Defined contribution
•Defined benefit
◦Pension (qualified and non-qualified)
◦Other post-retirement benefit
For our defined benefit plans, net periodic benefit cost (credit) for the three- and nine-month periods ended September 29, 2024, and October 1, 2023, consisted of the following:
Pension Benefits
Other Post-retirement Benefits
Three Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
Service cost
$
19
$
17
$
1
$
1
Interest cost
157
163
7
7
Expected return on plan assets
(206)
(207)
(8)
(8)
Net actuarial loss (gain)
48
183
(7)
(7)
Prior service (credit) cost
(2)
(4)
1
1
Net periodic benefit cost (credit)
$
16
$
152
$
(6)
$
(6)
Nine Months Ended
Service cost
$
56
$
50
$
3
$
3
Interest cost
471
488
21
22
Expected return on plan assets
(617)
(622)
(25)
(24)
Net actuarial loss (gain)
146
550
(23)
(23)
Prior service (credit) cost
(5)
(11)
2
2
Net periodic benefit cost (credit)
$
51
$
455
$
(22)
$
(20)
Our contractual arrangements with the U.S. government provide for the recovery of pension and other post-retirement benefit costs related to employees working on government contracts. The amount allocated to U.S. government contracts is determined in accordance with the Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS), which may result in a timing difference with the amount determined under GAAP. We defer this difference on the Consolidated Balance Sheet. At this time, cumulative benefit costs exceed the amount allocated to contracts, and the difference is reported in other current assets. To the extent there is a non-service component of net periodic benefit cost (credit) for our defined benefit plans, it is reported in other income (expense) in the Consolidated Statement of Earnings.
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollars in millions, except per-share amounts or unless otherwise noted)
BUSINESS OVERVIEW
General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapons systems and munitions; and technology products and services.
Our company is organized into four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We refer to the latter three collectively as our defense segments. Our primary customer is the U.S. government, including the Department of 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, 2023, and with the unaudited Consolidated Financial Statements included in this Form 10-Q.
BUSINESS ENVIRONMENT
With approximately 70% of our revenue from work for the U.S. government, government spending levels — particularly defense spending — influence our financial performance. The Congress has not yet passed a defense appropriations bill for the government’s fiscal year 2025 even though the new year began on October 1, 2024. However, on September 26, 2024, a continuing resolution (CR) was signed into law, providing funding for federal agencies through December 20, 2024. When the government operates under a CR, all programs of record are funded at the prior year’s appropriated levels until the current year appropriations bill is signed into law. Therefore, the DoD is prohibited from starting new programs or increasing funding on existing programs unless there is an exception for the program included in the CR. We do not anticipate the current CR having a material impact on our results of operations, financial condition or cash flows. However, the impact to our business from an extended CR or government shutdown that may result from any continuing delay by Congress to pass a new defense appropriations bill is currently uncertain and would depend on the duration and government implementation of the CR or shutdown. For additional information, see the Risk Factors in Part I, Item 1A, in our most recent Form 10-K filing.
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 targeting Russia and Belarus. Lastly, the impact of the conflict in the Middle East continues to evolve. The disruptions caused by these events continue to impact global economies and businesses. The primary impact to our business is supply chain challenges, including inflationary pressures.
28
In our Aerospace segment, supply chain challenges have paced our ability to ramp up production at the rate we would have liked, in response to strong customer demand for our aircraft and have caused out-of-sequence manufacturing, which increases costs and decreases operational efficiency. In addition, the conflict in the Middle East has impacted the delivery schedule for our Israel-based supplier of mid-cabin aircraft. Within our defense segments, the COVID-19 pandemic resulted in supply chain challenges that continue to impact our Marine Systems segment. The Russia-Ukraine conflict and increased threat environment have created additional demand for certain of our products and services, particularly in our Combat Systems segment.
Earlier this year, our ultra-long-range, ultra-large-cabin G700 aircraft received U.S. Federal Aviation Administration (FAA) and European Union Aviation Safety Agency (EASA) type certification, which paved the way for customer deliveries in the second quarter of 2024. Deliveries were impacted in the third quarter by late supply chain deliveries, additional type certification procedures due to complex interiors, a quality escape from a vendor that was identified and rectified and timing of regional weather events. These impacts are largely behind us and we expect to deliver about 42 G700 aircraft in all this year.
RESULTS OF OPERATIONS
INTRODUCTION
The following paragraphs explain how we recognize revenue and operating costs in our operating segments and the terminology we use to describe our operating results.
In the Aerospace segment, we record revenue on contracts for new aircraft when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft. Revenue associated with the segment’s services businesses is recognized as work progresses or upon delivery of services. Fluctuations in revenue from period to period result from the number and mix of new aircraft deliveries, and the level and type of aircraft services performed during the period.
The majority of the Aerospace segment’s operating costs relates to new aircraft production on firm orders and consists of labor, material, subcontractor and overhead costs. The costs are accumulated in production lots, recorded in inventory and recognized as operating costs at aircraft delivery based on the estimated average unit cost in a production lot. While changes in the estimated average unit cost for a production lot impact the level of operating costs, the amount of operating costs reported in a given period is based largely on the number and type of aircraft delivered. Operating costs in the Aerospace segment’s services businesses are recognized generally as incurred.
For new aircraft, operating earnings and margin are a function of the prices of our aircraft, our operational efficiency in manufacturing and outfitting the aircraft, and the mix of ultra-large-cabin, large-cabin and mid-cabin aircraft deliveries. Aircraft mix can also refer to the stage of program maturity for our aircraft models. A new aircraft model typically has lower margins in its initial production lots, and then margins generally increase as we realize efficiencies in the production process. Additional factors affecting the segment’s earnings and margin include the volume, mix and profitability of services work performed, the market for pre-owned aircraft, and the level of general and administrative (G&A) and net research and development (R&D) costs incurred by the segment.
29
In the defense segments, revenue on long-term government contracts is recognized generally over time as the work progresses, either as products are produced or as services are rendered. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, G&A expenses. Variances in costs recognized from period to period reflect primarily increases and decreases in production or activity levels on individual contracts. Because costs are used as a measure of progress, year-over-year variances in costs result in corresponding variances in revenue, which we generally refer to as volume.
Operating earnings and margin in the defense segments are driven by changes in volume, performance or contract mix. Performance refers to changes in profitability based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract or both. Therefore, changes in costs incurred in the period compared with prior periods do not necessarily impact profitability. It is only when total estimated costs at completion on a given contract change without a corresponding change in the contract value (or vice versa) that the profitability of that contract may be impacted. Contract mix refers to changes in the volume of higher- versus lower-margin work. Higher or lower margins can result from a number of factors, including contract type (e.g., fixed-price/cost-reimbursable) and type of work (e.g., development/production). Contract mix can also refer to the stage of program maturity for our long-term production contracts. New long-term production contracts typically have lower margins initially, and then margins generally increase as we achieve learning curve improvements or realize other cost reductions.
CONSOLIDATED OVERVIEW
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
11,671
$
10,571
$
1,100
10.4
%
Operating costs and expenses
(10,490)
(9,514)
(976)
10.3
%
Operating earnings
1,181
1,057
124
11.7
%
Operating margin
10.1
%
10.0
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
34,378
$
30,604
$
3,774
12.3
%
Operating costs and expenses
(31,005)
(27,647)
(3,358)
12.1
%
Operating earnings
3,373
2,957
416
14.1
%
Operating margin
9.8
%
9.7
%
We had strong growth in consolidated revenue during 2024, including double digit percentage growth in our Aerospace, Marine Systems and Combat Systems segments over the first nine months. Operating margin increased 10 basis points in both the third quarter and the first nine monthsof 2024.
30
REVIEW OF OPERATING SEGMENTS
Following is a discussion of operating results for each of our operating segments. For the Aerospace segment, results are analyzed by specific types of products and services, consistent with how the segment is managed. For the defense segments, the discussion is based on markets and the lines of products and services offered with a supplemental discussion of specific contracts and programs when significant to the results. Additional information regarding our segments can be found in Note L to the unaudited Consolidated Financial Statements in Part I, Item 1.
AEROSPACE
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
2,482
$
2,032
$
450
22.1
%
Operating earnings
305
268
37
13.8
%
Operating margin
12.3
%
13.2
%
Gulfstream aircraft deliveries (in units)
28
27
1
3.7
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
7,506
$
5,877
$
1,629
27.7
%
Operating earnings
879
733
146
19.9
%
Operating margin
11.7
%
12.5
%
Gulfstream aircraft deliveries (in units)
89
72
17
23.6
%
Operating Results
The increase in the Aerospace segment’s revenue in the third quarter and first nine monthsof 2024 consisted of the following:
Third Quarter
Nine Months
Aircraft manufacturing
$
315
$
1,299
Aircraft services
135
330
Total increase
$
450
$
1,629
Aircraft manufacturing revenue increased in the third quarter and first nine months of 2024 due primarily to the number and mix of aircraft deliveries, including initial deliveries of our ultra-long-range, ultra-large-cabin G700 aircraft. Aircraft services revenue was up in the third quarter and first nine months of 2024 due to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
31
The increase in the segment’s operating earnings in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
Aircraft services
$
53
$
105
Aircraft manufacturing
(5)
76
G&A/other expenses
(11)
(35)
Total increase
$
37
$
146
Aircraft services operating earnings increased in the third quarter and first nine months of 2024 due to higher volume. Although aircraft manufacturing revenue increased in 2024, operating earnings have not increased at the same rate, reflecting additional costs associated with the first lot of G700 aircraft and out of station work caused by late supply chain deliveries. G&A/other expenses have increased in 2024 due in part to the R&D efforts supporting the extended FAA certification processes. In total, the Aerospace segment’s operating margin decreased 90 basis points in the third quarter and 80 basis points in the first nine months of 2024 compared with the prior-year periods.
2024 Outlook
We expect the Aerospace segment’s 2024 revenue to be approximately $12.3 billion, with operating margin of approximately 13.2%.
MARINE SYSTEMS
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
3,599
$
3,002
$
597
19.9
%
Operating earnings
258
211
47
22.3
%
Operating margin
7.2
%
7.0
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
10,383
$
9,053
$
1,330
14.7
%
Operating earnings
735
657
78
11.9
%
Operating margin
7.1
%
7.3
%
Operating Results
The increase in the Marine Systems segment’s revenue in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
U.S. Navy ship construction
$
470
$
959
U.S. Navy ship engineering, repair and other services
127
371
Total increase
$
597
$
1,330
Revenue from U.S. Navy ship construction and engineering was up in the third quarter and first nine months of 2024 due primarily to increased volume on the Columbia-class and Virginia-class submarine programs. The Marine Systems segment’s operating margin continues to reflect the impact of supply chain challenges.
32
2024 Outlook
We expect the Marine Systems segment’s 2024 revenue to be approximately $13.9 billion with operating margin of approximately 6.9%.
COMBAT SYSTEMS
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
2,212
$
2,224
$
(12)
(0.5)
%
Operating earnings
325
300
25
8.3
%
Operating margin
14.7
%
13.5
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
6,602
$
5,904
$
698
11.8
%
Operating earnings
920
796
124
15.6
%
Operating margin
13.9
%
13.5
%
Operating Results
The change in the Combat Systems segment’s revenue in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
Weapons systems and munitions
$
(63)
$
429
U.S military vehicles
57
222
International military vehicles
(6)
47
Total change
$
(12)
$
698
Weapons systems and munitions revenue increased in the first nine months of 2024 due to heightened demand for artillery products, including facility expansion efforts to achieve higher production rates. In the third quarter, revenue was down due to program timing. Revenue from U.S. military vehicles was up in the third quarter and first nine months due primarily to higher volume on the U.S. Army’s M10 Booker combat vehicle program.
Overall, the Combat Systems segment’s operating margin increased 120 basis points in the third quarter and 40 basis points in the first nine months of 2024 driven by favorable contract mix and strong operating performance.
2024 Outlook
We expect the Combat Systems segment’s 2024 revenue to be approximately $8.7 billion with operating margin of approximately 14.4%.
33
TECHNOLOGIES
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
3,378
$
3,313
$
65
2.0
%
Operating earnings
326
315
11
3.5
%
Operating margin
9.7
%
9.5
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
9,887
$
9,770
$
117
1.2
%
Operating earnings
941
897
44
4.9
%
Operating margin
9.5
%
9.2
%
Operating Results
The increase in the Technologies segment’s revenue in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
Information technology (IT) services
$
71
$
111
C5ISR* solutions
(6)
6
Total increase
$
65
$
117
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance
The Technologies segment’s revenue was up in the third quarter and first nine months of 2024 due to higher volume of IT services, including the ramp-up of new programs. Overall, the Technologies segment’s operating margin increased 20 basis points in the third quarter and 30 basis points in the first nine months of 2024 due to strong operating performance.
2024 Outlook
We expect the Technologies segment’s 2024 revenue to be approximately $13 billion with operating margin of approximately 9.5%.
CORPORATE
Corporate operating costs totaled $33 in the third quarter and $102 in the first nine months of 2024 compared with $37 in the third quarter and $126 in the first nine months of 2023 and consisted primarily of equity-based compensation expense. Corporate operating costs are expected to be approximately $140 in 2024.
34
OTHER INFORMATION
PRODUCT REVENUE AND OPERATING COSTS
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
6,767
$
6,163
$
604
9.8
%
Operating costs
(5,760)
(5,148)
(612)
11.9
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
20,061
$
17,473
$
2,588
14.8
%
Operating costs
(17,074)
(14,704)
(2,370)
16.1
%
The increase in product revenue in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
Aircraft manufacturing
$
315
$
1,299
Ship construction
470
959
Weapons systems and munitions
(63)
429
Other, net
(118)
(99)
Total increase
$
604
$
2,588
Aircraft manufacturing revenue increased in the third quarter and first nine months of 2024 due to additional aircraft deliveries. Ship construction revenue increased due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Weapons systems and munitions revenue increased in the first nine months of 2024 due to heightened demand for artillery products. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
SERVICE REVENUE AND OPERATING COSTS
Three Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
4,904
$
4,408
$
496
11.3
%
Operating costs
(4,095)
(3,765)
(330)
8.8
%
Nine Months Ended
September 29, 2024
October 1, 2023
Variance
Revenue
$
14,317
$
13,131
$
1,186
9.0
%
Operating costs
(12,025)
(11,151)
(874)
7.8
%
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The increase in service revenue in the third quarter and first nine months of 2024 consisted of the following:
Third Quarter
Nine Months
Ship services
$
127
$
371
Aircraft services
135
330
C5ISR solutions/IT services
123
264
Other, net
111
221
Total increase
$
496
$
1,186
Ship services revenue increased in the third quarter and first nine months of 2024 due to higher volume on the Columbia-class submarine program. Aircraft services revenue was up due to additional maintenance work. C5ISR solutions and IT services revenue was up due to higher volume, including the ramp-up of new programs. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
G&A EXPENSES
As a percentage of revenue, G&A expenses decreased to 5.5% in the first nine months of2024 compared with 5.9% in the first nine months of 2023. We expect G&A expenses as a percentage of revenue in 2024 to be generally consistent with 2023.
OTHER, NET
Net other income was $47 in the first nine months of 2024 compared with $65 in the first nine months of 2023, and represents primarily the non-service components of pension and other post-retirement benefits. In 2024, we expect net other income to be approximately $60.
INTEREST, NET
Net interest expense was $248 in the first nine months of 2024 compared with $265 in the prior-year period, reflecting the repayment of our scheduled debt maturities in 2023. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates. We expect 2024 net interest expense to be approximately $320.
PROVISION FOR INCOME TAX, NET
Our effective tax rate was 17.0% in the first nine months of 2024 compared with 16.2% in the prior-year period. For 2024, based on increased U.S. and foreign tax credits, tax benefits from equity-based compensation and other timing items, we anticipate a full-year effective tax rate of approximately 17.0%.
BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE
Our total backlog, including funded and unfunded portions, was $92.6 billion at the end of the third quarter of 2024 compared with $91.3 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 $137.6 billion on September 29, 2024.
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The following table details the backlog and estimated potential contract value of each segment at the end of the third and second quarters of 2024:
Funded
Unfunded
Total Backlog
Estimated Potential Contract Value
Total Estimated Contract Value
September 29, 2024
Aerospace
$
18,859
$
937
$
19,796
$
254
$
20,050
Marine Systems
29,008
11,463
40,471
9,578
50,049
Combat Systems
17,289
682
17,971
8,016
25,987
Technologies
9,794
4,602
14,396
27,093
41,489
Total
$
74,950
$
17,684
$
92,634
$
44,941
$
137,575
June 30, 2024
Aerospace
$
19,126
$
911
$
20,037
$
372
$
20,409
Marine Systems
29,912
11,436
41,348
3,983
45,331
Combat Systems
16,003
673
16,676
5,816
22,492
Technologies
9,365
3,875
13,240
28,283
41,523
Total
$
74,406
$
16,895
$
91,301
$
38,454
$
129,755
AEROSPACE
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the third quarter of 2024 with backlog of $19.8 billion.
Orders for new Gulfstream aircraft reflected strong demand, yielding a segment book-to-bill ratio (orders divided by revenue) of 1-to-1 for the first nine months of 2024, even as revenue grew by nearly 30% year over year.
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 September 29, 2024, estimated potential contract value in the Aerospace segment was $254.
DEFENSE SEGMENTS
The total backlog in our defense segments represents the estimated remaining sales value of work to be performed under firm contracts. The funded portion of total backlog includes items that have been authorized and appropriated by the U.S. Congress and funded by customers, as well as commitments by international customers that are approved and funded similarly by their governments. The unfunded portion of total backlog includes the amounts we believe are likely to be funded, but there is no guarantee that future budgets and appropriations will provide the same funding level currently anticipated for a given program.
Estimated potential contract value in our defense segments includes unexercised options associated with existing firm contracts and unfunded work on indefinite delivery, indefinite quantity (IDIQ) contracts. Contract options represent agreements to perform additional work under existing contracts at the election of the customer. We recognize options in backlog when the customer exercises the option
37
and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. This amount is often less than the total IDIQ contract value, particularly when the contract has multiple awardees. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.
Total backlog in our defense segments was $72.8 billion on September 29, 2024. In the third quarter of 2024, the Combat Systems and Technologies segments achieved book-to-bill ratios of 1.5-to-1 and 1.3-to-1, respectively. Overall, the total book-to-bill ratio in our defense segments was 1.1-to-1 in the third quarter of 2024. Estimated potential contract value in our defense segments was $44.7 billion on September 29, 2024. We received the following significant contract awards during the third quarter of 2024:
MARINE SYSTEMS
•$780 from the U.S. Navy for the construction of an additional John Lewis-class (T-AO-205) fleet replenishment oiler. The contract including options for an additional seven T-AO-205 oilers has a maximum potential value of more than $6.7 billion.
•$1.5 billion from the Navy for long-lead materials for Block VI Virginia-class submarines.
•$100 from the Navy to provide engineering, technical, design and planning yard support services for operational strategic and attack submarines.
•$85 from the Navy for maintenance and modernization on the USS Chung-Hoon, an Arleigh Burke-class (DDG-51) guided missile destroyer.
•$80 for advanced nuclear plant studies (ANPS) in support of the Columbia-class submarine program for the Navy.
COMBAT SYSTEMS
•$885 for various munitions and ordnance. These contracts have a maximum potential value of $1.7 billion.
•$465 for two contracts from the U.S. Army for the production of 155mm artillery projectile metal parts. These contracts have a maximum potential value of $1.7 billion.
•$395 from the Army for the production of 155mm propelling bag charges.
•$190 from the Army to produce Iron Fist Active Protection System kits.
•$180 from the Army to produce Stryker Sgt. Stout vehicles.
•$100 from the Army for long-lead materials to support the future retrofit of Stryker Sgt. Stout vehicles to a dual Stinger Vehicle Universal Launcher (SVUL) configuration.
TECHNOLOGIES
•$840 for several key contracts for classified customers. These contracts have a maximum potential value of $1 billion.
•$605 for multiple awards from the U.S. Space Development Agency to develop and integrate ground systems for the low-Earth orbit satellite network.
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•$105 from the U.S. Defense Information Systems Agency (DISA) to continue operating and maintaining Pentagon and regional government-furnished network infrastructures. The contract including options has a maximum potential value of $300.
•$185 from the U.S. Department of State (DoS) to manage its global technical security supply chain.
•$135 to provide equipment and tools to the National Oceanic Atmospheric Administration (NOAA) to augment its High-Performance Computing Systems.
•$130 from the National Geospatial-Intelligence Agency (NGA) to provide hybrid cloud services and IT design, engineering, and operations and sustainment services.
•$120 from the DoS to provide overseas consular services to support visa application and issuance at U.S. embassies and consulates throughout the world under the Global Support Strategy (GSS) program.
LIQUIDITY AND CAPITAL RESOURCES
We place a strong emphasis on cash flow generation, which is underpinned by an operating discipline focused on cost control and working capital management. This emphasis gives us the flexibility for prudent capital deployment, while allowing us to step down debt over time, and preserves a strong balance sheet for future opportunities.
We evaluate a variety of capital deployment options based on current market conditions and our long-term outlook, and we believe agility is a key component of our capital deployment strategy as market conditions change over time. Our capital deployment priorities include investments in our products and services to drive long-term growth, a predictable dividend, strategic acquisitions and opportunistic share repurchases.
We believe cash generated by operating activities, supplemented by commercial paper issuances, is sufficient to satisfy our short- and long-term liquidity needs. An additional potential source of capital is the issuance of long-term debt in capital market transactions.
We ended the third quarter of 2024 with a cash and equivalents balance of $2.1 billion compared with $1.9 billion at the end of 2023. The following is a discussion of our major operating, investing and financing activities in the first nine months of 2024and2023, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Nine Months Ended
September 29, 2024
October 1, 2023
Net cash provided by operating activities
$
1,952
$
3,514
Net cash used by investing activities
(588)
(608)
Net cash used by financing activities
(1,173)
(2,792)
OPERATING ACTIVITIES
Cash provided by operating activities was $2 billion in the first nine months of 2024 compared with $3.5 billion in the same period in 2023. The primary driver of cash flows in both periods was net earnings. Cash flows in the first nine months of 2024 were affected negatively by growth in operating working capital, particularly driven by the ramp-up in production of new Gulfstream aircraft models in our Aerospace segment and timing in our Combat Systems segment. Cash flows in the first nine months of
39
2023 were affected positively by a decrease in unbilled receivables due to the receipt of progress payments on large international vehicle contracts in our Combat Systems segment and an increase in customer deposits driven by Gulfstream aircraft orders, offset partially by an increase in inventory due primarily to the ramp-up in production of new Gulfstream aircraft models.
INVESTING ACTIVITIES
Cash used by investing activities was $588 in the first nine months of 2024 compared with $608 in the same period in 2023. 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 $561 in the first nine months of 2024 compared with $600 in the same period in 2023.
FINANCING ACTIVITIES
Cash used by financing activities was $1.2 billion in the first nine months of 2024 compared with $2.8 billion in the same period in 2023. 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.
On March 6, 2024, our board of directors (Board) declared an increased quarterly dividend of $1.42 per share, the 27th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.32 per share in March 2023. Cash dividends paid were $1.1 billion in the first nine months of 2024 and 2023.
We paid $183 and $434 in the first nine months of 2024 and 2023, respectively, to repurchase our outstanding shares. On September 29, 2024, 4 million shares remained authorized by our Board for repurchase, representing 1.5% of our total shares outstanding.
Fixed-rate notes of $500 mature in November 2024. We currently plan to repay these notes at maturity using cash on hand. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
On September 29, 2024, 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. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
NON-GAAP FINANCIAL MEASURE - FREE CASH FLOW
We emphasize the efficient conversion of net earnings into cash and the deployment of that cash to maximize shareholder returns. As described below, we use free cash flow to measure our performance in these areas. While we believe this metric provides useful information, it is not a defined operating measure under U.S. generally accepted accounting principles (GAAP), and there are limitations associated with its use. Our calculation of this metric may not be completely comparable to similarly
40
titled measures of other companies due to potential differences in the method of calculation. As a result, the use of this metric should not be considered in isolation from, or as a substitute for, GAAP measures.
We define free cash flow as net cash from operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, 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:
Nine Months Ended
September 29, 2024
October 1, 2023
Net cash provided by operating activities
$
1,952
$
3,514
Capital expenditures
(561)
(600)
Free cash flow
$
1,391
$
2,914
Cash flows as a percentage of net earnings:
Net cash provided by operating activities
74
%
152
%
Free cash flow
53
%
126
%
ADDITIONAL FINANCIAL INFORMATION
ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES
For a discussion of environmental matters and other contingencies, see Note J to the unaudited Consolidated Financial Statements in Part I, Item 1. Except as otherwise noted in Note J, we do not expect our aggregate liability with respect to these matters to have a material impact on our results of operations, financial condition or cash flows.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the unaudited Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. We employ judgment in making our estimates, but they are based on historical experience, currently available information and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We believe our judgment is applied consistently and produces financial information that fairly depicts our results of operations for all periods presented.
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in
41
contract estimates decreased our operating earnings (and diluted earnings per share) by $12 ($0.03) for the three-month period ended September 29, 2024, and increased our operating earnings (and diluted earnings per share) by $101 ($0.29) for the nine-month period ended September 29, 2024, and $11 ($0.03) and $98 ($0.28) for the three- and nine-month periods ended October 1, 2023, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three- and nine-month periods ended September 29, 2024, or October 1, 2023.
Other critical accounting policies and estimates include long-lived assets and goodwill, commitments and contingencies, and retirement plans. For a full discussion of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the year ended December 31, 2023.
GUARANTOR FINANCIAL INFORMATION
The outstanding notes described in Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, issued by General Dynamics Corporation (the parent), are fully and unconditionally guaranteed on an unsecured, joint and several basis by several of the parent’s 100%-owned subsidiaries (the guarantors). The guarantee of each guarantor ranks equally in right of payment with all other existing and future senior unsecured indebtedness of such guarantor. A listing of the guarantors is included in an exhibit to this Form 10-Q.
Because the parent is a holding company, its cash flow and ability to service its debt, including the outstanding notes, depends on the performance of its subsidiaries and the ability of those subsidiaries to distribute cash to the parent, whether by dividends, loans or otherwise. Holders of the outstanding notes have a direct claim only against the parent and the guarantors.
Under the relevant indenture, the guarantee of each guarantor is limited to the maximum amount that can be guaranteed without rendering the guarantee voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each indenture also provides that, in the event (1) of a merger, consolidation or sale or disposition of all or substantially all of the assets of a guarantor (other than a transaction with the parent or any of its subsidiaries) or (2) there occurs a transfer, sale or other disposition of the voting stock of a guarantor so that the guarantor is no longer a subsidiary of the parent, then the guarantor or the entity acquiring the assets (in the event of a sale or other disposition of all or substantially all of the assets of a guarantor) will be released and relieved of any obligations under the guarantee.
The following summarized financial information presents the parent and guarantors (collectively, the combined obligor group) on a combined basis. The summarized financial information of the combined obligor group excludes net investment in and earnings of subsidiaries related to interests held by the combined obligor group in subsidiaries that are not guarantors of the notes.
STATEMENT OF EARNINGS INFORMATION - COMBINED OBLIGOR GROUP
Nine Months Ended September 29, 2024
Year Ended December 31, 2023
Revenue
$
13,569
$
16,276
Operating costs and expenses, excluding G&A
(12,018)
(14,316)
Net earnings
615
773
42
BALANCE SHEET INFORMATION - COMBINED OBLIGOR GROUP
September 29, 2024
December 31, 2023
Cash and equivalents
$
1,111
$
986
Other current assets
4,709
5,012
Noncurrent assets
4,681
4,506
Total assets
$
10,501
$
10,504
Short-term debt and current portion of long-term debt
$
2,002
$
503
Other current liabilities
2,987
2,890
Long-term debt
7,207
8,700
Other noncurrent liabilities
3,154
3,281
Total liabilities
$
15,350
$
15,374
The summarized balance sheet information presented above includes the funded status of the company’s primary qualified U.S. government pension plans as the parent has the ultimate obligation for the plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Our management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 29, 2024. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, on September 29, 2024, our disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 29, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The certifications of the company’s Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements, which are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “forecasts,” “scheduled,” “outlook,” “estimates,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements. Examples include projections of revenue, earnings, operating margin, segment performance, cash flows, contract awards, aircraft production, deliveries and backlog. In making these statements, we rely on assumptions and analyses based on our experience and perception of historical trends; current conditions
43
and expected future developments; and other factors, estimates and judgments we consider reasonable and appropriate based on information available to us at the time. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve factors, risks and uncertainties that are difficult to predict. Actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. These factors include, among others:
•general U.S. and international political and economic conditions;
•decreases in U.S. government defense spending or changing priorities within the defense budget;
•termination of government contracts due to unilateral government action;
•differences in anticipated and actual program performance, including the ability to perform within estimated costs, and performance issues with key suppliers;
•expected recovery on contract claims and requests for equitable adjustment;
•changing customer demand for business aircraft, including the effects of economic conditions on the business-aircraft market;
•changing prices for energy and raw materials;
•the negative impact of the COVID-19 pandemic, or other similar outbreaks;
•the status or outcome of legal and/or regulatory proceedings;
•potential effects of audits and reviews by government agencies of our government contract performance, compliance and internal control systems and policies;
•cybersecurity events and other disruptions;
•risks and uncertainties relating to our acquisitions and joint ventures; and
•potential for increased regulation related to global climate change.
All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to General Dynamics or any person acting on our behalf are qualified by the cautionary statements in this section. We do not undertake any obligation to update or publicly release revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report. These factors may be revised or supplemented in future SEC filings.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information relating to legal proceedings, see Note J to the unaudited Consolidated Financial Statements in Part I, Item 1.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about our third-quarter purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:
Period
Total Number of Shares
Average Price per Share
Total Number of Shares Purchased as Part of Publicly Announced Program
Maximum Number of Shares That May Yet Be Purchased Under the Program
Shares Purchased Pursuant to Share Buyback Program
7/1/24-7/28/24
17,300
$
288.77
17,300
4,159,557
7/29/24-8/25/24
132,533
287.31
132,533
4,027,024
8/26/24-9/29/24
1,892
290.00
1,892
4,025,132
Shares Delivered or Withheld Pursuant to Restricted Stock Vesting*
7/1/24-7/28/24
527
289.80
7/29/24-8/25/24
806
296.57
8/26/24-9/29/24
1,256
296.38
154,314
$
287.64
*Represents shares withheld by, or delivered to, us pursuant to provisions in agreements with recipients of restricted stock granted under our equity compensation plans that allow us to withhold, or the recipient to deliver to us, the number of shares with a fair value equal to the statutory tax withholding due upon vesting of the restricted shares.
We did not make any unregistered sales of equity securities in the third quarter of 2024.
ITEM 5. OTHER INFORMATION
During the quarter ended September 29, 2024, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined under Item 408 of Regulation S-K).
101.INS Inline eXtensible Business Reporting Language (XBRL) Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
* Filed or furnished electronically herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
