UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[☑] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022
OR
[☐] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 1-3671

GENERAL DYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware					13-1673581	
State or other jurisdiction of incorporation or organization			I.R.S. Employer Identification No.	
						
11011 Sunset Hills Road	Reston,	Virginia			20190	
	
Address of principal executive offices			Zip code	

(703)	876-3000	
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Common Stock	GD	New York Stock Exchange	

Securities registered pursuant to Section 12(g) of the Act:

None	

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes _ü_ No ___

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ___ No _ü_
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _ü_ No ___
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes _ü_ No ___
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer _ü_ Accelerated filer ___ Non-accelerated filer ___ Smaller reporting company ___☐ Emerging growth company ___☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes _ü_☑No ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___☐No _ü_☑
The aggregate market value of the voting common equity held by non-affiliates of the registrant was $54,293,907,678 as of July 3, 2022 (based on the closing price of the shares on the New York Stock Exchange).
274,430,054 shares of the registrant’s common stock, $1 par value per share, were outstanding on January 29, 2023.
DOCUMENTS INCORPORATED BY REFERENCE:
Part III incorporates by reference information from certain portions of the registrant’s definitive proxy statement for the 2023 annual meeting of shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year.

	

INDEX

PART I		PAGE	
Item 1.	Business	3	
Item 1A.	Risk Factors	21	
Item 1B.	Unresolved Staff Comments	27	
Item 2.	Properties	27	
Item 3.	Legal Proceedings	28	
Item 4.	Mine Safety Disclosures	28	
	Information About our Executive Officers	28	
PART II			
			
Item 5.	Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29	
Item 6.	[Reserved]	31	
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32	
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	53	
Item 8.	Financial Statements and Supplementary Data	54	
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99	
Item 9A.	Controls and Procedures	99	
Item 9B.	Other Information	101	
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	101	
PART III			
Item 10.	Directors, Executive Officers and Corporate Governance	101	
Item 11.	Executive Compensation	101	
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	102	
Item 13.	Certain Relationships and Related Transactions, and Director Independence	102	
Item 14.	Principal Accountant Fees and Services	102	
PART IV			
Item 15.	Exhibits and Financial Statement Schedules	102	
Item 16.	Form 10-K Summary	106	
	Signatures	108	
2

PART I

ITEM 1. BUSINESS
(Dollars in millions, except per-share amounts or unless otherwise noted)

BUSINESS OVERVIEW
General Dynamics is a global aerospace and defense company that specializes in high-end design, engineering and manufacturing to deliver state-of-the-art solutions to our customers. We offer 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 leadership positions in attractive business aviation and defense markets enable us to deliver superior and enduring shareholder returns.
Our company consists of 10 business units, which are organized into four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We refer to the latter three collectively as our defense segments. To optimize market focus, customer intimacy, agility and operating expertise, each business unit is responsible for the development and execution of its strategy and operating results. This structure allows for a lean corporate function, which sets the overall strategy and governance for the company and is responsible for allocating and deploying capital.
Our business units seek to deliver superior operating results by building industry-leading franchises. To achieve this goal, we invest in advanced technologies, pursue a culture of continuous improvement, and strive to be the low-cost, high-quality provider in each of our markets. The result is long-term value creation measured by strong earnings and cash flow and an attractive return on capital.
Over the past 10 years, we have invested in our business to create, renew or expand our portfolio of products and services across our businesses. This includes product development investments in Aerospace to bring to market an all-new lineup of business jet aircraft, capital investments in Marine Systems to support significant growth in U.S. Navy ship and submarine construction plans over the next two decades, development of next-generation platforms and technologies to meet customers’ emerging requirements in Combat Systems, and strategic acquisitions to achieve critical mass and build out a complete spectrum of solutions for our Technologies customers. As we emerge from this period of significant investment, we expect to realize an attractive return from these investments in each of our segments and continue to evaluate our capital deployment opportunities to deliver long-term growth and enduring value to our shareholders.
Following is additional information on each of our operating segments. For a supplemental discussion of segment performance and backlog, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
AEROSPACE
Our Aerospace segment is recognized as a leading producer of business jets and the standard bearer in new technology aircraft, aircraft repair, support and completion services. The segment consists of our Gulfstream and Jet Aviation business units. We have earned our reputation through:
•superior aircraft design, quality, performance, safety and reliability;
•technologically advanced flight deck and cabin systems; and
•industry-leading customer support.
3

We believe the key to long-term value creation in the business jet industry is steady investment in new aircraft models and technologies and in customer service capabilities. As a result, since we acquired Gulfstream more than 20 years ago, we have made significant investments in research and development (R&D), state-of-the-art manufacturing facilities, and maintenance and support through a combination of product development efforts, capital expansion and the acquisition of Jet Aviation’s global support network. We are also the industry leader in the use of sustainable aviation fuel (SAF) and energy efficient engines.
We are committed to continual investment in R&D to create new aircraft that consistently broaden customer offerings while raising the bar for safety and performance. The result is the unprecedented development of an all-new lineup of the most technologically advanced business jet aircraft in the world. The Gulfstream family of aircraft offer industry-leading cabin, cockpit and safety technologies and the longest ranges at the fastest speeds in their respective classes.
The following represents Gulfstream’s current product line, along with the maximum range, maximum speed, cabin length (excluding baggage), and total number of city-pair speed records held for each aircraft:

The most recent additions to the in-service Gulfstream fleet are two large-cabin aircraft, the G500 and G600, which entered service in 2018 and 2019, respectively. These clean-sheet (i.e., all-new) aircraft replace the G450 and G550 models, whose combined family has an installed base of more than
4

1,650 aircraft around the world. Our investment included development of a new wing, new avionics, new fuselage and new ergonomically designed larger interiors, as well as systems and technologies to improve the manufacturing process and quality of the platform. As a result, the G500 and G600 are faster, more fuel efficient, and have greater cabin volume, reduced emissions, more range and improved flight controls compared with the aircraft they are replacing. These aircraft hold more than 90 city-pair speed records, and at year-end 2022, cumulative deliveries for the aircraft totaled over 200.
The next model to join the Gulfstream lineup is the ultra-long-range, ultra-large-cabin G700. It combines our most spacious cabin with our advanced Symmetry Flight Deck, the industry’s most technologically advanced flight deck, which we launched on our G500 and G600 aircraft, and the superior high-speed performance of all-new engines to create best-in-class capabilities. Gulfstream is in the process of flight testing and seeking U.S. Federal Aviation Administration (FAA) certification of the G700, which currently has logged more than 3,200 test hours. We expect the G700 to enter service following certification from the FAA in the summer of 2023.
In 2021, we introduced two new aircraft, the ultra-long-range, ultra-large-cabin G800 and large-cabin G400, completing a nearly two-decade effort to develop an all-new family of Gulfstream aircraft. Both aircraft combine our industry-leading high-speed range and efficiency, safety enhancements, and our advanced Symmetry Flight Deck. The G800 is Gulfstream’s longest-range aircraft, with an 8,000 nautical mile range at Mach 0.85, and it is expected to enter service approximately six months after the G700, pending FAA certification. The G400 is a clean-sheet design developed in concert with the G500 and G600, thus expanding the commonality across the Gulfstream family of aircraft. Expected to enter service in 2025, pending FAA certification, the G400 will join a market segment in which Gulfstream has not participated for several decades.
The ultra-long-range, ultra-large-cabin G650 and G650ER continue to generate significant customer interest, with more than 500 aircraft of this family currently operating in more than 50 countries. Since the first G650 entered service in December 2012, its capabilities and reliability have led to significant sales and expansion of our installed base around the globe. Gulfstream’s current product line holds more than 325 city-pair speed records, more than any other business jet manufacturer, led by the G650ER, which holds the National Aeronautic Association’s polar and westbound around-the-world speed records.
Our disciplined and consistent approach to new product development has allowed us to introduce repeatedly first-to-market capabilities that set industry standards for safety, performance, quality, speed and comfort. Product enhancement and development efforts include initiatives in advanced avionics, composites, flight-control and vision systems, acoustics, and cabin technologies.
Gulfstream designs, develops and manufactures aircraft in Savannah, Georgia, including all large-cabin models. The mid-cabin G280 is assembled by a non-U.S. partner. All models are outfitted in Gulfstream’s U.S. facilities. As Gulfstream’s aircraft portfolio and customer base have grown and become increasingly global in reach over the years, we have invested in our facilities and operations around the world. At our Savannah campus, we added new purpose-built manufacturing facilities, increased aircraft service capacity, opened a customer-support distribution center and expanded our R&D capabilities.
We offer comprehensive support for the more than 3,000 Gulfstream aircraft in service around the world and operate an extensive network of factory-owned service centers. We continue to invest in these maintenance, repair and overhaul (MRO) facilities and inventory to accommodate fleet growth. We also operate a 24/7 year-round customer support center and offer on-call Gulfstream aircraft technicians
5

ready to deploy around the world for customer service requirements under our Field and Airborne Support Team (FAST) rapid-response unit.
In addition to expanding the reach of Gulfstream’s aircraft maintenance network outside the United States, Jet Aviation provides a comprehensive suite of innovative aircraft services for aircraft owners and operators around the world. With approximately 50 locations throughout North America, Europe, the Middle East and the Asia-Pacific region, our offerings include maintenance, aircraft management, charter, staffing and fixed-base operator (FBO) services.
Jet Aviation manages approximately 300 business aircraft globally on behalf of individuals and corporate owners. We operate a leading global FBO network and support all aircraft types with a full range of maintenance services, including 24/7 global aircraft-on-ground support. We also operate one of the world’s largest custom completion and refurbishment centers for both narrow- and wide-body aircraft and perform modifications, upgrades and lifecycle sustainment support for various government fleets. We continue to grow our global footprint through acquisitions, expansions and significant renovations in strategic business aviation markets most frequented by our customers.
The following map displays the broad reach of our combined Gulfstream and Jet Aviation services network, including authorized service centers:

The Aerospace segment places a priority on sustainability throughout its manufacturing and service operations, producing aircraft that maximize fuel efficiency while offering customers options to reduce or eliminate their carbon footprints. Gulfstream and Jet Aviation have been at the forefront of the industry by adopting and expanding the availability of SAF, which achieves as much as an 80% reduction in carbon dioxide emissions per gallon over its lifecycle compared to petroleum-based jet fuel. Gulfstream’s service and test aircraft have flown more than 2 million nautical miles on SAF since 2016, and in 2019 Gulfstream became the first business jet manufacturer to make SAF available to customers. Gulfstream also offers operators the ability to achieve carbon-neutral travel by facilitating the purchase of carbon-offset credits. In addition to actively expanding the availability of SAF at its FBO locations,
6

Jet Aviation allows customers to purchase SAF at locations where it is not available through a book-and-claim system. Since 2019, Jet Aviation has uploaded more than 10 million gallons of blended SAF to its customers.
Revenue for the Aerospace segment was 22% of our consolidated revenue in 2022 and 21% in 2021 and 2020. Revenue by major products and services was as follows:

Year Ended December 31	2022		2021		2020	
Aircraft manufacturing	$	5,876 			$	5,864 			$	6,115 		
Aircraft services	2,691 			2,271 			1,960 		
	
Total Aerospace	$	8,567 			$	8,135 			$	8,075 		
MARINE SYSTEMS
Our Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S. Navy. We also provide maintenance, modernization and lifecycle support services for Navy ships and maintain the most sophisticated marine engineering expertise in the world to support future capabilities. Our ability to design, build and maintain our nation’s most technologically sophisticated warships is a critical element of the U.S. defense industrial base. In addition to Navy ships, we design and build ocean-going Jones Act ships for commercial customers. Marine Systems consists of three business units — Electric Boat, Bath Iron Works and NASSCO.
In support of our Navy customer’s significant increase in demand for submarines and surface ships, we are making substantial investments to expand our facilities, grow and train our workforce, and expand our supply chain. The resulting increase in capacity and capabilities will support the unprecedented growth expected in our shipbuilding business, particularly submarines, over the next two decades.
Electric Boat is the prime contractor and lead shipyard on all Navy nuclear-powered submarine programs. The business is responsible for all aspects of design and engineering and leads the construction of both Virginia-class attack submarines and Columbia-class ballistic-missile submarines.
The Navy procures Virginia-class submarines in multi-boat blocks at a two-per-year rate. Along with an industry partner, we are currently working on Blocks IV and V in the program, with 17 Virginia-class submarines in our backlog scheduled for delivery through 2032. Nine of the boats in Block V include the Virginia Payload Module, an 84-foot Electric Boat-designed-and-built hull section that adds four additional payload tubes, more than tripling the strike capacity of these submarines and providing unique capabilities to support special missions.
The Columbia-class ballistic-missile submarine is a 12-boat program that the Navy considers its top acquisition priority. Accordingly, the program has received the highest possible rating from the government’s Defense Priorities and Allocations System. These submarines will provide strategic deterrent capabilities for decades, with the first boat delivering in 2027 to begin replacement of the current Ohio-class ballistic-missile submarine fleet as it reaches the end of its service life. Construction is scheduled to continue for two decades, and the value of the Navy’s program of record is in excess of $110 billion. The submarine’s design was more than 80% complete at the time we began construction of the first boat in 2020, nearly twice as mature as any of the Navy’s previous submarine programs at the start of construction.
7

We are investing $1.8 billion of capital in expanded and modernized facilities at Electric Boat to support the growth in submarine construction and expect the investments to be substantially complete by the end of 2023. Equal to the commitment of capital is our commitment to developing our Electric Boat workforce. While the steepest portion of our personnel ramp is behind us, we still expect the Electric Boat workforce to grow another 25% by the end of the decade, particularly in support of Columbia-class production. Along with strong contributions from the states of Connecticut and Rhode Island, we continue to invest in the training and tools necessary for our employees to deliver these next-generation submarines to the Navy on time and on budget. We are also working with our network of approximately 3,000 suppliers — mostly small businesses — to support concurrent production of the two submarine programs.
Bath Iron Works builds the Arleigh Burke-class (DDG-51) guided-missile destroyers and manages modernization and lifecycle support for the class. We have a total of 10 ships in backlog scheduled for delivery through 2029.
NASSCO specializes in Navy auxiliary and support ships and is currently building the Expeditionary Sea Base (ESB), which serves as an afloat forward-staging base for U.S. Marines and special operations forces, and the John Lewis-class (T-AO-205) fleet replenishment oiler. Work on the three ESBs in backlog will continue into 2026, while the seven T-AO-205 ships currently in backlog have deliveries planned into 2027. NASSCO has also designed and built crude oil and product tankers and container and cargo ships for commercial customers, satisfying Jones Act requirements that ships carrying cargo between U.S. ports be built in U.S. shipyards.
8

On December 31, 2022, backlog for our major ship construction programs and the scheduled final delivery date of ships currently in backlog were as follows:

In addition to design and construction activities, our Marine Systems segment provides comprehensive post-delivery services to modernize and extend the service life of these and other Navy ships. NASSCO conducts full-service maintenance and surface-ship repair operations in Navy fleet concentration areas in San Diego, California; Norfolk, Virginia; Mayport, Florida; and Bremerton, Washington. Electric Boat provides submarine maintenance and modernization services in a variety of U.S. locations, and Bath Iron Works provides lifecycle support services for Navy surface ships in both U.S. and overseas ports. In support of allied navies, we offer program management, planning, engineering and design support for submarine construction programs.
Revenue for the Marine Systems segment was 28% of our consolidated revenue in 2022, 27% in 2021 and 26% in 2020. Revenue by major products and services was as follows:

Year Ended December 31	2022		2021		2020	
Nuclear-powered submarines	$	7,310 			$	7,117 			$	6,938 		
Surface ships	2,561 			2,328 			2,055 		
Repair and other services	1,169 			1,081 			986 		
Total Marine Systems	$	11,040 			$	10,526 			$	9,979 		
9

COMBAT SYSTEMS
Our Combat Systems segment is a premier manufacturer and integrator of land combat solutions worldwide, including wheeled and tracked combat vehicles, weapons systems and munitions. The segment consists of three business units — Land Systems, European Land Systems (ELS), and Ordnance and Tactical Systems (OTS).
Combat Systems creates long-term value through operational excellence — high-quality, on-schedule and on-budget performance — combined with investments in innovative technologies that modernize existing platforms and develop next-generation capabilities to meet our customers’ rapidly evolving requirements. We maintain our market-leading position by focusing on innovation, affordability and speed to market to deliver increased survivability, performance and lethality on the battlefield. Our large installed base of wheeled and tracked vehicles around the world and expertise gained from research, engineering and production programs position us well for modernization programs, support and sustainment services, and future development programs.
Land Systems is the sole-source producer of two foundational products central to the U.S. Army’s warfighting capabilities — the M1A2 Abrams main battle tank and Stryker wheeled combat vehicle. Both of these platforms are core components of the multi-domain, joint war fight envisioned on the battlefield of the future.
We are maximizing the effectiveness and lethality of the Army’s tank fleet with next-generation Abrams upgrades, providing technological advancements in communications, power generation, fuel efficiency, optics and armor. Even as we are delivering this modernized platform in the System Enhanced Package Version 3 (SEPv3) configuration, we are developing an Abrams SEPv4 configuration with third-generation forward-looking infrared sights (3GEN FLIR) and additional advanced capabilities that will allow this platform to adapt and incorporate transformative capabilities into the future. We are also upgrading Abrams tanks for several non-U.S. partners.
The Stryker is an eight-wheeled, medium-weight combat vehicle that combines lethality, mobility and survivability. Land Systems continues to develop upgrades and enhancements to this highly versatile and combat-proven platform to address the Army’s evolving operational needs. We are currently fielding an enhanced Stryker platform that includes the double-V-hull for survivability, increased power, improved cross-country mobility and an advanced digital, in-vehicle network. We have completed fielding these vehicles for the first of nine Army brigades, as well as for the Army’s Ranger Regiment. In addition, coordination continues with the Army for next-generation upgrades to the platform and new uses for the vehicle. Leveraging our rapid prototyping expertise and customer intimacy, we continue to expand the mission capabilities of this platform, including an air defense mission package (M-SHORAD), a state-of-the-art electronic warfare suite, a high-energy laser, a high-power microwave, and several command post options.
In 2022, we introduced new capabilities within each of these two foundational product lines in support of the Army’s climate and electrification strategies, including incorporating next-generation electronic architecture technology, hybrid electric engines, integrated active protection systems, and the ability to employ air and ground robotic teaming. AbramsX is a next-generation main battle tank technology demonstrator that features significantly reduced weight for improved mobility and transportation and delivers the same tactical range as the M1A2 Abrams with 50% less fuel consumption. Like AbramsX, StrykerX offers next-generation capabilities such as silent movement, silent watch, exportable electric power and reduced fuel consumption via a hybrid diesel-electric power
10

pack. Our focus on innovation and technological investments in these platforms positions us to continue to meet our customers’ evolving requirements.
In addition, during 2022 we were awarded a low-rate initial production (LRIP) contract for the Army’s Mobile Protected Firepower (MPF) vehicle — the first ground combat vehicle to transition from prototype to production in 40 years. The MPF vehicle will enhance the relevance of Infantry Brigade Combat Teams in large-scale combat operations against near-peer threats. The highly lethal, survivable and mobile direct-fire combat vehicle melds recently developed and battle-tested designs to dominate ground threats on the multi-domain battlefield.
Combat Systems provides similar capabilities for U.S. allies through export opportunities and through our operations in several countries around the world, including Canada, the United Kingdom, Spain, Switzerland, Austria, Germany and Romania. As a result, we have a market-leading position in light armored vehicles (LAVs) with approximately 12,000 of the high-mobility, versatile Pandur, Piranha and other LAVs in service worldwide.
Land Systems is producing 399 new LAVs in eight variants, including ambulances, command posts, maintenance and recovery vehicles, and troop-carrying vehicles, for the Canadian Army, as well as upgrading its existing fleet. Land Systems is also producing the British Army’s Ajax armored fighting vehicle, a next-generation, medium-weight tracked combat vehicle. With six variants, including a reconnaissance vehicle, an armored personnel carrier, and various support platforms, the Ajax family of vehicles offers advanced electronic architecture and proven technology for an unparalleled balance of survivability, lethality and mobility, along with high reliability for a vehicle in its weight class.
ELS is producing and upgrading Piranha vehicles, a premier 8x8 armored combat vehicle, around the world. We are currently providing Piranha 5 vehicles for several countries, including Denmark, Romania and Spain. Additionally, we provide mobile bridge systems with payloads ranging from 100 kilograms to 100 tons to customers worldwide. We offer the ASCOD, a highly versatile tracked combat vehicle with multiple versions, including the Spanish Pizarro and the Austrian Ulan. ELS also offers Duro and Eagle tactical vehicles in a range of options and weight classes and is currently producing these vehicles for Denmark, Luxembourg, Switzerland and Germany, while providing a full range of product support for the German armed forces.
We are expanding our platform capabilities through continued investment in robotic and autonomous vehicle technology. We have the Multi-Utility Tactical Transport (MUTT), a semi-autonomous robotic platform that can be equipped with an array of modular mission payloads for use alongside dismounted soldiers. This platform was selected as the Army’s first robotic vehicle program of record and is officially designated as the Small Multipurpose Equipment Transport (SMET). Additionally, we have the Tracked Robot 10-ton (TRX) prototype, a medium-sized, semi-autonomous combat vehicle that enables critical battlefield roles, such as direct and indirect fire, autonomous resupply, reconnaissance and other battlefield missions.
11

On December 31, 2022, the installed base for our major vehicle programs, as well as the quantity and scheduled final delivery date of vehicles and vehicle upgrades in backlog were as follows:

Complementing these military-vehicle offerings, OTS designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces, including the M2/M2-A1 heavy machine guns and MK19/MK47 grenade launchers. OTS also produces next-generation weapon systems for shipboard and aircraft applications, including high-speed Gatling guns for all U.S. fighter aircraft, including the F-35 Joint Strike Fighter.
OTS’s munitions portfolio covers the full breadth of naval, air and ground forces applications across all calibers and weapon platforms for the U.S. government and its non-U.S. partners. Globally, we maintain a market-leading position in the supply of Hydra-70 rockets, bomb bodies, large-caliber tank ammunition, medium-caliber ammunition, military propellants, mortar and artillery projectiles. OTS is also the systems integrator for the next generation of artillery solutions in support of the Army’s Indirect Fire Modernization objectives. Additionally, OTS maintains a leading position providing missile subsystems in support of U.S. tactical and strategic missiles, provisioning both legacy and next-generation missiles with critical aerostructures, control actuators, high-performance warheads and cutting-edge hypersonic rocket cases.
12

Revenue for the Combat Systems segment was 18% of our consolidated revenue in 2022 and 19% in 2021 and 2020. Revenue by major products and services was as follows:

Year Ended December 31	2022		2021		2020	
Military vehicles	$	4,581 			$	4,699 			$	4,687 		
Weapons systems, armament and munitions	2,024 			2,006 			1,991 		
Engineering and other services	703 			646 			545 		
Total Combat Systems	$	7,308 			$	7,351 			$	7,223 		
TECHNOLOGIES
Our Technologies segment provides a full spectrum of services, technologies and products to an expanding market that increasingly seeks solutions combining leading-edge electronic hardware with specialized software. The segment is organized into two business units — Information Technology (GDIT) and Mission Systems. Together they serve a wide range of military, intelligence, federal civilian and state customers with a diverse portfolio that includes:
•information technology (IT) solutions and mission-support services;
•mobile communication, computers, command-and-control and cyber (C5) mission systems; and
•intelligence, surveillance and reconnaissance (ISR) solutions.
Over the past decade, the Department of Defense (DoD), the intelligence community and federal civilian agencies have increasingly prioritized technology solutions as a critical element of their missions, transforming technology resources from back-office support functions to a strategic priority for this customer community. The coronavirus (COVID-19) pandemic, the cyber threat landscape and demand for advanced warfighter connectivity have accelerated these trends, adding urgency to required technology investments. The result is a significant increase in federal IT modernization and technology spending in recent years and a shift to large-scale, end-to-end, highly engineered solutions that require a broad array of integrated technology services and hardware offerings to meet these customer demands.
GDIT and Mission Systems share the same defense, intelligence and federal civilian customer base and increasingly go to market together to meet the ever-changing information-systems and mission-support needs of these customers. In addition, with the convergence of digital technologies, the two businesses benefit from significant complementary offerings and solution sets. The segment makes strategic investments in new and emerging technologies and combines an in-depth understanding of the evolving technology landscape with an intimate knowledge of our customers’ mission needs. The segment’s highly skilled workforce is one of its key differentiators and comprises approximately 40,000 employees, including technologists, engineers, mission experts and cleared personnel dedicated to solving the toughest security and technology challenges facing the United States and its allies.
With a broad network of global partners, the segment develops solutions that keep its customers at the leading edge of technology in support of their missions. This includes operating a network of technology labs to prototype solutions and accelerate the development of advanced capabilities for customers’ environments. As technology continues to advance, we are at the forefront of new technological trends, including cloud computing, cybersecurity, zero trust, fifth generation (5G) technology, artificial intelligence and machine learning (AI/ML), data analytics, and high-performance computing.
GDIT modernizes large-scale IT enterprises and deploys the latest technologies to optimize and protect customer networks, data and information. Operating thousands of complex digital modernization
13

programs across the federal government, GDIT’s expansive portfolio includes cloud services, cybersecurity, network modernization, AI/ML, application development, high-performance computing, and 5G and next-generation wireless communications.
Mission Systems offers solutions across all domains and produces a unique combination of products and capabilities that are purpose-built for essential C5ISR applications. Our technologies and products are often built into platforms and integrated systems on which our customers rely. The business’ portfolio includes prime contract programs to provide innovative defense-electronics solutions as well as subcontract efforts that enhance the capabilities of large-scale land, air, sea and space platforms.
The Technologies segment leverages its scale, partnerships and deep knowledge of its customers’ missions and challenges to bring innovation to those customers across a portfolio of thousands of contracts. While no individual contract is material to the segment’s results, the following highlights provide a sampling of the value of this business.
GDIT delivers a full spectrum of cloud solutions and services to modernize customers’ legacy IT infrastructures and systems. These cloud capabilities advance security and accelerate access to cutting-edge technologies such as high-performance computing and AI/ML. For the National Geospatial-Intelligence Agency (NGA), GDIT is providing hybrid cloud services, including commercial clouds and data centers, and innovative IT design, engineering, implementation and operations support services to the NGA and its mission partners. In the federal civilian market, GDIT is delivering a scalable, hybrid multi-cloud platform to modernize the United States Patent and Trademark Office’s IT infrastructure and services.
We apply AI/ML to expand the human capacity to make better decisions and implement smarter actions as we automate, secure and enhance our customers’ operations. For the Department of Veterans Affairs (VA), GDIT leverages managed services and AI/ML to accelerate veteran benefits claims processing, develops applications and software to improve the veteran user experience, and provides on-demand 24/7/365 IT support to more than 500,000 VA personnel nationwide. In the federal civilian sector, GDIT’s high-performance supercomputers, ranked 49th and 50th fastest in the world by TOP500, run the National Oceanic and Atmospheric Administration (NOAA) operational models used to forecast the weather and model climate data.
To adapt to a constantly evolving threat landscape, GDIT embeds cyber solutions into every aspect of digital modernization. More than 3,000 cyber professionals support cyber projects across 30 agencies in the federal government. This work includes supporting the U.S. Army National Guard’s Department of Defense Information Network’s IT infrastructure, cybersecurity, application hosting and associated services. This enterprise network, one of the largest in the DoD, provides soldiers with access to the internet; allows them to connect securely with other databases and networks; and provides leaders with tools for training, mission planning and execution.
Mission Systems develops and manufactures high-assurance encryption products that are widely deployed to protect national security systems, data and networks against persistent threats. These Type 1 National Security Agency (NSA)-certified products and capabilities provide needed protection for classified voice, video and data in-transit or at-rest in all domains. Capabilities range from enterprise systems to embedded applications required for terrestrial, airborne or space environments.
We are working with our Army customer to adapt elements of advanced resilient radio frequency (RF) and 5G technologies to address battlefield realities such as jamming, spoofing, cyberattacks and
14

lack of ground connectivity. We also provide similar capabilities to non-U.S. customers, including Canada and the United Kingdom.
Mission Systems continues to help advance our nation’s dominance in the space domain. We designed and manufactured mission-critical communications and optical technologies for the National Aeronautics and Space Administration’s (NASA) Artemis I and James Webb Space Telescope missions. Additionally, the U.S. Space Development Agency (SDA) selected Mission Systems to establish the ground operations and integration segment for Tranche 1 of the National Defense Space Architecture by building ground entry points and operations centers, as well as providing network operations and systems integration services for the SDA’s next tranche of proliferated low-earth orbit satellites.
On the platform side, we have a more than 60-year legacy of providing advanced fire-control systems for the Navy’s submarine programs. We are developing and integrating commercial off-the-shelf software and hardware upgrades to improve the tactical control capabilities for several submarine classes, including the Columbia and U.K. Dreadnought ballistic-missile submarines.
Mission Systems also continues to invest in autonomous capabilities, including through its Unmanned Undersea Vehicle (UUV) Manufacturing and Assembly Center of Excellence in Taunton, Massachusetts. The facility provides manufacturing, assembly, integration and testing capabilities for Mission Systems’ Knifefish and Bluefin Robotics UUVs, as well as the recently awarded Hammerhead program for the Navy.
Revenue for the Technologies segment was 32% of our consolidated revenue in 2022, 33% in 2021 and 34% in 2020. Revenue by major products and services was as follows:

Year Ended December 31	2022		2021		2020	
IT services	$	8,195 			$	8,069 			$	7,892 		
C5ISR solutions	4,297 			4,388 			4,756 		
Total Technologies	$	12,492 			$	12,457 			$	12,648 		

CUSTOMERS
In 2022, 70% of our consolidated revenue was from the U.S. government, 15% was from U.S. commercial customers, 9% was from non-U.S. government customers and the remaining 6% was from non-U.S. commercial customers.
U.S. GOVERNMENT
Our primary customer is the DoD. We also contract with other U.S. government customers, including the intelligence community and the Departments of Homeland Security and Health and Human Services. Our revenue from the U.S. government was as follows:
15

																		
Year Ended December 31	2022		2021		2020	
DoD	$	22,250 			$	21,386 			$	20,840 		
Non-DoD	4,808 			4,862 			4,726 		
Foreign military sales (FMS)*	633 			598 			737 		
Total U.S. government	$	27,691 			$	26,846 			$	26,303 		
% of total revenue	70 	%		70 	%		69 	%	
*In addition to our direct non-U.S. sales, we sell to non-U.S. governments through the FMS program. Under the FMS program, we contract with and are paid by the U.S. government, and the U.S. government assumes the risk of collection from the non-U.S. government customer.
Our U.S. government revenue is derived from fixed-price, cost-reimbursement and time-and-materials contracts. Our production contracts are primarily fixed-price. Under these contracts, we agree to perform a specific scope of work for a fixed amount. Contracts for research, engineering, repair and maintenance, and other services are typically cost-reimbursement or time-and-materials. Under cost-reimbursement contracts, the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee. The amount for an incentive or award fee is determined by our ability to achieve targets set in the contract, such as cost, quality, schedule and performance. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials.
Of our U.S. government revenue, fixed-price contracts accounted for 56% in 2022, 57% in 2021 and 59% in 2020; cost-reimbursement contracts accounted for 38% in 2022, 36% in 2021 and 35% in 2020; and time-and-materials contracts accounted for 6% in 2022, 7% in 2021 and 6% in 2020.
For information on the advantages and disadvantages of each of these contract types, see Note B to the Consolidated Financial Statements in Item 8.
U.S. COMMERCIAL
Our U.S. commercial revenue was $5.7 billion in 2022, $4.8 billion in 2021 and $4.9 billion in 2020, which represented 15%, 12% and 13% of our consolidated revenue in each of the respective years. The majority of this revenue was for business jet aircraft and related services where our customer base consists of individuals and public and privately held companies across a wide range of industries.
NON-U.S.
Our revenue from non-U.S. government and commercial customers was $6 billion in 2022, $6.8 billion in 2021 and $6.7 billion in 2020, which represented 15% of our consolidated revenue in 2022 and 18% in 2021 and 2020.
We conduct business with customers around the world. Our non-U.S. defense subsidiaries maintain long-term relationships with their customers and have established themselves as principal regional suppliers and employers, providing a broad portfolio of products and services.
Our non-U.S. commercial revenue consists primarily of business jet aircraft exports and worldwide aircraft services. While the installed base of aircraft is concentrated in North America, orders from customers outside North America represent a significant portion of our aircraft business with approximately 40% of the Aerospace segment’s aircraft backlog on December 31, 2022.

16

COMPETITION
Several factors determine our ability to compete successfully in the defense and business aviation markets. While customers’ evaluation criteria vary, the principal competitive elements include:
•the technical excellence, reliability, safety and cost competitiveness of our products and services;
•our ability to innovate and develop new products and technologies that improve mission performance and adapt to dynamic threats;
•successful program execution and on-time delivery of complex, integrated systems;
•our global footprint and accessibility to customers;
•the reputation and customer confidence derived from past performance; and
•the successful management of customer relationships.
DEFENSE MARKET COMPETITION
The U.S. government contracts with numerous domestic and non-U.S. companies for products and services. We compete against other contractors as well as smaller companies that specialize in a particular technology or capability. Outside the United States, we compete with global defense contractors’ exports and the offerings of local, private and state-owned defense manufacturers. Our Marine Systems segment has one primary competitor with which it also partners on the Virginia-class submarine program, and to which it subcontracts on the Columbia-class submarine program. Our Combat Systems segment competes with a large number of U.S. and non-U.S. businesses. Our Technologies segment competes with many companies, from large government contracting and commercial technology companies to small niche competitors with specialized technologies or expertise. The operating cycle of many of our major programs can result in sustained periods of program continuity when we perform successfully.
We are involved in teaming and subcontracting relationships with some of our competitors. Competitions for major defense and other government contracting programs often require companies to form teams to bring together a spectrum of capabilities to meet the customer’s requirements. Opportunities associated with these programs include roles as the program’s integrator, overseeing and coordinating the efforts of all participants on a team, or as a provider of a specific component or subsystem.
BUSINESS JET AIRCRAFT MARKET COMPETITION
The Aerospace segment has several competitors for each of its Gulfstream products. Key competitive factors include aircraft safety, reliability and performance; comfort and in-flight productivity; service quality, global footprint and responsiveness; technological and new-product innovation; and price. We believe that Gulfstream competes effectively in all of these areas.
The Aerospace segment competes worldwide in the business jet aircraft services market primarily on the basis of quality, price and timeliness. While competition for each type of service varies somewhat, the segment faces a number of competitors of varying sizes for each of its offerings.

INTELLECTUAL PROPERTY
We develop technology, manufacturing processes and systems-integration practices. In addition to owning a large portfolio of proprietary intellectual property, we license some intellectual property rights to and from others. The U.S. government holds licenses to many of our patents developed in the
17

performance of U.S. government contracts, and it may use or authorize others to use the inventions covered by these patents. Although these intellectual property rights are important to the operation of our business, no existing patent, license or other intellectual property right is of such importance that its loss or termination would have a material impact on our business.

HUMAN CAPITAL MANAGEMENT
Our company is a global community of approximately 106,500 employees dedicated to our Ethos of transparency, trust, honesty and alignment. These four core values drive how we operate our business; govern how we interact with each other, our customers, partners and suppliers; guide the way that we treat our workforce; and determine how we connect with our communities. Our commitment to ethical business practices is outlined in our Standards of Business Ethics and Conduct, which states our expectation that all employees conduct business in accordance with our Ethos, applicable laws and our policies. Each employee is asked to acknowledge receipt, understanding of and compliance with our standards.
Due to the highly specialized nature of our business, we must hire and train skilled and qualified people to design and build the products and perform the services required by our customers. The health, welfare and safety of our employees is paramount throughout our workplaces. This effort starts with treating all employees with dignity and respect and providing them with fair, market-based, competitive and equitable compensation. We recognize and reward the performance of our employees in line with our pay-for-performance philosophy and provide a comprehensive suite of benefit options that aim to enable our employees and their dependents to live healthy and productive lives.
Across our businesses, we take measures to prevent workplace hazards, encourage safe behaviors and enforce a culture of continuous improvement to ensure our processes help reduce safety incidents and illnesses and comply with applicable health and safety laws. These efforts continue to be of the utmost importance as we address ongoing challenges, including those presented by the COVID-19 pandemic.
We recognize that our success as a company depends on our ability to attract, develop and retain qualified people. Our commitment to promoting diversity of thought, experience, perspectives, backgrounds and capabilities to drive innovation strengthens the solutions we deliver to our customers. General Dynamics works hard to promote an environment that values and supports all employees. We proudly support a work environment that respects diverse opinions, values individual skills, celebrates unique experiences and cultivates teamwork. These efforts are a demonstration of our dedication to equal employment opportunities that foster and support a principled, productive and inclusive work environment. We stand for basic universal human rights, including that employment must be voluntary. We track, measure and analyze our workforce trends to establish accountability for putting people first across our businesses and at every level of our company.
Our values motivate us to promote strong workplace practices with opportunities for development and training. Our training and development efforts focus on ensuring that our people are appropriately trained on critical job skills as well as on leadership behaviors that are consistent with our Ethos. We conduct rigorous succession planning exercises to ensure that key positions have the appropriate level of bench strength to provide for future key positions and leadership transitions. We listen to our people to assess areas of concern and levels of engagement.
18

2022 WORKFORCE STATISTICS
•Approximately 84% of our employees are based in the United States, of which roughly 71% are white, 29% are people of color, 19% are veterans of the U.S. armed forces and 7% have self-reported having a disability. The remaining 16% of our workforce is based internationally in over 65 countries with the primary concentrations being in North America and Europe.
•Our global workforce is 76% male and 24% female, and our senior leadership teams across the business are represented by 74% males and 26% females. During 2022, the diversity profile of our workforce continued to improve across our businesses, as we hired approximately 24,000 individuals of which 71% were male and 29% were female. For our approximately 19,800 U.S.-based hires in 2022, 60% were white and 40% were people of color.

RAW MATERIALS AND SUPPLIERS
We depend on suppliers and subcontractors for raw materials, components and subsystems. Our U.S. government customer is a supplier for some of our programs. These supply networks can experience price fluctuations and capacity constraints, which can put pressure on our costs. Effective management and oversight of suppliers and subcontractors is an important element of our successful performance. If our sources of supply are disrupted, particularly in instances where we rely on only one or two sources of supply, or in the event that international conflicts result in the disruption of manufacturing or trade relations for some supply components, our ability to meet our customer commitments could be adversely impacted. We attempt to mitigate risks with our suppliers by entering into long-term agreements and leveraging company-wide agreements to achieve economies of scale and by negotiating flexible pricing terms in our customer contracts.

REGULATORY MATTERS
U.S. GOVERNMENT CONTRACTS
U.S. government contracts are subject to procurement laws and regulations. The Federal Acquisition Regulation (FAR) and the Cost Accounting Standards (CAS) govern the majority of our contracts. The FAR mandates uniform policies and procedures for U.S. government acquisitions and purchased services. Also, individual agencies can have acquisition regulations that provide implementing language for the FAR or that supplement the FAR. For example, the DoD implements the FAR through the Defense Federal Acquisition Regulation Supplement (DFARS). For all federal government entities, the FAR regulates the phases of any product or service acquisition, including:
•acquisition planning;
•competition requirements;
•contractor qualifications;
•protection of source selection and supplier information; and
•acquisition procedures.
In addition, the FAR addresses the allowability of our costs, while the CAS addresses the allocation of those costs to contracts. The FAR and CAS subject us to audits and other government reviews covering issues such as cost, performance, internal controls and accounting practices relating to our contracts.
19

NON-U.S. REGULATORY
Our non-U.S. operations are subject to the applicable government regulations and procurement policies and practices, as well as U.S. policies and regulations. We are also subject to regulations governing investments, exchange controls, repatriation of earnings and import-export control.
BUSINESS JET AIRCRAFT
The Aerospace segment is subject to FAA regulation in the United States and other similar aviation regulatory authorities internationally, including the Civil Aviation Administration of Israel (CAAI), the European Aviation Safety Agency (EASA) and the Civil Aviation Administration of China (CAAC). For an aircraft to be manufactured and sold, the model must receive a type certificate from the appropriate aviation authority, and each aircraft must receive a certificate of airworthiness. Aircraft outfitting and completions also require approval by the appropriate aviation authority, which is often accomplished through a supplemental type certificate. Aviation authorities can require changes to a specific aircraft or model type before granting approval. Maintenance facilities and charter operations must be licensed by aviation authorities as well.
ENVIRONMENTAL
We are subject to a variety of federal, state, local and foreign environmental laws and regulations. These laws and regulations cover the discharge, treatment, storage, disposal, investigation and remediation of materials, substances and wastes identified in the laws and regulations. We are directly or indirectly involved in environmental investigations or remediation at some of our current and former facilities and at third-party sites that we do not own but where we have been designated a potentially responsible party (PRP) by the U.S. Environmental Protection Agency or a state environmental agency. As a PRP, we are potentially liable to the government or third parties for the cost of remediating contamination. In cases where we have been designated a PRP, we generally seek to mitigate these environmental liabilities through available insurance coverage and by pursuing appropriate cost-recovery actions. In the unlikely event that we are required to fully fund the remediation of a site, the current statutory framework would allow us to pursue contributions from other PRPs. We regularly assess our compliance status and management of environmental matters.
Operating and maintenance costs associated with environmental compliance and management of contaminated sites are a normal, recurring part of our operations. Historically, these costs have not been material. In addition, we could be affected by future laws or regulations imposed in response to concerns over climate change, the timing and effect of which are difficult to assess.
Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional investment in product designs or facilities and could increase environmental compliance expenditures, including increased energy and raw materials costs. Environmental costs are often recoverable under our contracts with the U.S. government. Based on information currently available and current U.S. government policies relating to cost recovery, we do not expect continued compliance with environmental regulations, including costs associated with changes in environmental and climate change laws or regulations, to have a material impact on our results of operations, financial condition or cash flows. For additional information relating to the impact of environmental matters, see Note M to the Consolidated Financial Statements in Item 8.

20

AVAILABLE INFORMATION
We file reports and other information with the Securities and Exchange Commission (SEC) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. These reports and information include an annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements. Free copies of these items are made available on our website (www.gd.com) as soon as practicable. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information.
In addition to the information contained in this Form 10-K, information about the company can be found on our website and our Investor Relations website (investorrelations.gd.com). Our Investor Relations website contains a significant amount of information about the company, including financial information, our corporate governance principles and practices, and other information for investors. We encourage investors to visit our website, as we frequently update and post new information about our company, and it is possible that this information could be deemed material information.
References to our website and the SEC’s website in this Form 10-K do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the websites. The information should not be considered a part of this Form 10-K, unless otherwise expressly incorporated by reference.

ITEM 1A. RISK FACTORS
An investment in our common stock or debt securities is subject to risks and uncertainties. Investors should consider the following factors, in addition to the other information contained in this annual report on Form 10-K, before deciding whether to purchase our securities.
Investment risks can be market-wide as well as unique to a specific industry or company. The market risks faced by an investor in our securities are similar to the uncertainties faced by investors in a broad range of industries. There are some risks that apply more specifically to our business.
Our revenue is concentrated with the U.S. government. This customer relationship involves some specific risks. In addition, our sales to non-U.S. customers expose us to different financial and legal risks. Despite the varying nature of our government and commercial operations and the markets they serve, each segment shares some common risks, such as the ongoing development of high-technology products and the price, availability and quality of commodities and subsystems.
Risks Relating to Our Business and Industry
The U.S. government provides a significant portion of our revenue. In 2022, 70% of our consolidated revenue was from the U.S. government. Levels of U.S. defense spending may be impacted by numerous factors, such as the domestic political environment, changes in national and international priorities, and threats to national security. Competing demands for federal funds can pressure various areas of spending. Decreases in U.S. government defense and other spending or changes in spending allocation or priorities could result in one or more of our programs being reduced, delayed or terminated, which could impact our financial performance.
For additional information relating to U.S. budget matters, see the Business Environment section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
21

U.S. government contracts are not always fully funded at inception, and any funding is subject to disruption or delay. Our U.S. government revenue is funded by agency budgets that operate on an October-to-September fiscal year. Early each calendar year, the President of the United States presents to the Congress the budget for the upcoming fiscal year. This budget proposes funding levels for every federal agency and is the result of months of policy and program reviews throughout the executive branch. For the remainder of the year, the Appropriations and Authorization Committees of the Congress review the President’s budget proposals and establish the funding levels for the upcoming fiscal year. Once these levels are enacted into law, the Executive Office of the President administers the funds to the agencies.
There are two primary risks associated with the U.S. government budget cycle. First, the annual process may be delayed or disrupted. If the annual budget is not approved by the beginning of the government fiscal year, portions of the U.S. government can shut down or operate under a continuing resolution that maintains spending at prior-year levels, which can impact funding for our programs and timing of new awards. Second, the Congress typically appropriates funds on a fiscal-year basis, even though contract performance may extend over many years. Future revenue under existing multi-year contracts is conditioned on the continuing availability of congressional appropriations. Changes in appropriations in subsequent years may impact the funding available for these programs. Delays or changes in funding can impact the timing of available funds or lead to changes in program content.
Government contracts are subject to termination rights by the customer. U.S. government contracts generally permit the government to terminate a contract, in whole or in part, for convenience. If a contract is terminated for convenience, a contractor usually is entitled to receive payments for its allowable costs incurred and the proportionate share of fees or earnings for the work performed. The government may also terminate a contract for default in the event of a breach by the contractor. If a contract is terminated for default, the government in most cases pays only for the work it has accepted. Many foreign contracts have similar termination rights by customers. The termination of multiple or large programs could have a material adverse effect on our future revenue and earnings.
Government contractors operate in a highly regulated environment and are subject to audit by the U.S. government. Numerous U.S. government agencies routinely audit and review government contractors. These agencies review a contractor’s performance under its contracts and compliance with applicable laws, regulations and standards. The U.S. government also reviews the adequacy of, and compliance with, internal control systems and policies, including the contractor’s purchasing, property, estimating, material, earned value management and accounting systems. In some cases, audits may result in delayed payments or contractor costs not being reimbursed or subject to repayment. If an audit or investigation were to result in allegations against a contractor of improper or illegal activities, civil or criminal penalties and administrative sanctions could result, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. government. In addition, reputational harm could result if allegations of impropriety were made. In some cases, audits may result in disputes with the respective government agency that can result in negotiated settlements, arbitration or litigation. Moreover, new laws, regulations or standards, or changes to existing ones, can increase our performance and compliance costs and reduce our revenue and earnings.
Our Aerospace segment is subject to changing customer demand for business aircraft. The business jet market is driven by the demand for business-aviation products and services by corporate, individual and government customers in the United States and around the world. The Aerospace segment’s results also depend on other factors, including general economic conditions, the availability
22

and cost of credit, pricing pressures and trends in capital goods markets. In addition, if customers default on existing contracts and the contracts are not replaced, the segment’s anticipated revenue and profitability could be reduced materially.
Earnings and margin depend on our ability to perform on our contracts. When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events. The accounting for our contracts requires assumptions and estimates about these conditions and events. These projections and estimates assess, among other things:
•the productivity and availability of labor;
•the complexity of the work to be performed;
•the cost and availability of materials and components; and
•schedule requirements.
If there is a significant change in one or more of these circumstances, estimates or assumptions, or if the risks under our contracts are not managed adequately, the profitability of contracts could be adversely affected. This could affect earnings and margin materially.
Revenue, earnings and margin depend in part on supplier performance. We rely on other companies and our government customers to provide materials, components and subsystems for our products. Suppliers, including subcontractors, sometimes perform some of the services that we provide to our customers. We depend on these suppliers and government entities to meet our contractual obligations in full compliance with customer requirements and applicable law. Misconduct by suppliers, such as a failure to comply with procurement regulations or engaging in unauthorized activities, may harm our future revenue, earnings and margin.
We sometimes rely on only one or two sources of supply, and any disruption in our supply chain could have an adverse effect on our ability to meet our customer commitments. For example, some of our operating segments rely on the supply of semiconductors for the manufacture of our products, and any inability of or delay by our suppliers to meet our order demands (including due to the suppliers’ competing commercial priorities, any military conflict resulting in a disruption of manufacturing or trade relations, or any other business disruption) could delay or disrupt our ability to procure semiconductors. Our ability to perform our obligations to our customers, and our future revenue, earnings and margin, may be materially adversely affected if (1) any one or more of our suppliers is unable to provide the agreed-upon materials, or perform the agreed-upon services in a timely and cost-effective manner, or engages in misconduct or other improper activities or (2) we are unable to otherwise obtain necessary materials, components, subsystems or services in a timely and cost-effective manner.
Our success depends in part on our ability to develop new products and technologies and maintain a qualified workforce to meet the needs of our customers. Many of the products and services we provide involve sophisticated technologies and engineering, with related complex manufacturing and system-integration processes. Our customers’ requirements change and evolve regularly. Accordingly, our performance depends in part on our ability to continue to develop, manufacture and provide innovative products and services and bring those offerings to market quickly at cost-effective prices. Many of our new products must meet extensive and time-consuming regulatory requirements that are often outside our control and may result in unanticipated delays. Additionally, due to the highly specialized nature of our business, we must hire and retain the skilled and qualified personnel necessary to perform the services required by our customers and to develop and manufacture our products. To the extent that the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting or training costs in order to attract and retain such employees. If we were unable
23

to develop new products that meet customers’ changing needs and satisfy regulatory requirements in a timely manner or successfully attract and retain qualified personnel, our future revenue and earnings may be materially adversely affected.
Risks Relating to Our International Operations
Operations outside the United States are subject to various risks that may be associated with doing business in foreign countries. In some countries there is increased chance for economic, legal or political instability, and procurement procedures may be less robust or mature, which may complicate the contracting process. Our non-U.S. operations may be sensitive to and impacted by (1) changes in a foreign government’s national policies and priorities, political leadership and budgets, which may be influenced by changes in threat environments, geopolitical uncertainties, volatility in economic conditions and other economic and political factors including inflationary pressures; (2) changes in U.S., foreign, and international laws, regulations, and policies; (3) energy, natural resource and other commodity shortages; and (4) global trade disputes and supply chain disruptions. For example, the ongoing conflict between Russia and Ukraine has resulted in the imposition of numerous economic and trade sanctions, export controls, and other restrictions targeting Russia and Belarus, and the Russian government has implemented counter-sanctions and export controls targeting the U.S. and various foreign countries in which we operate. These actions have caused some economic disruptions around the world and have exacerbated global supply chain challenges. Changes and developments in any of these matters or factors may occur suddenly and could impact funding for programs or delay purchasing decisions or customer payments.
Non-U.S. transactions can involve increased risks arising from foreign exchange rate variability, which could, among other things, negatively impact sales and the translation of our international revenue from local currencies into U.S. dollars, and differing legal systems. Our non-U.S. operations are subject to U.S. and foreign laws and regulations, including laws and regulations relating to import-export controls, technology transfers, the Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws, and the International Traffic in Arms Regulations (ITAR). An unfavorable event or trend in any one or more of these factors or a failure to comply with U.S. or foreign laws could result in administrative, civil or criminal liabilities, including suspension or debarment from government contracts or suspension of our export privileges, and could materially adversely affect revenue and earnings.
In addition, some non-U.S. government customers require contractors to enter into letters of credit, performance or surety bonds, bank guarantees and other similar financial arrangements. We may also be required to agree to specific in-country purchases, manufacturing agreements or financial support arrangements, known as offsets, that require us to satisfy investment or other commitments or face penalties. Offset requirements may extend over several years and could require us to team with local companies to fulfill these commitments. If we do not satisfy these financial or offset requirements, our future revenue and earnings may be materially adversely affected.
Risks Relating to Our Acquisitions and Similar Investment Activities
We have made and expect to continue to make investments, including acquisitions and joint ventures, that involve risks and uncertainties. When evaluating potential acquisitions and joint ventures, we make judgments regarding the value of business opportunities, technologies and other assets, and the risks and costs of potential liabilities based on information available to us at the time of the transaction. Whether we realize the anticipated benefits from these transactions depends on multiple factors, including our integration of the businesses involved; the performance of the underlying products, capabilities, or technologies; market conditions following the acquisition; and acquired
24

liabilities, including some that may not have been identified prior to the acquisition. These factors could materially adversely affect our financial results.
Changes in business conditions may cause goodwill and other intangible assets to become impaired. Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is not amortized and remains on our balance sheet indefinitely unless there is an impairment or a sale of a portion of the business. We review goodwill for impairment annually at each of our reporting units or when circumstances indicate that the likelihood of an impairment is greater than 50%. Such circumstances include a significant adverse change in the business climate for one of our reporting units or a decision to dispose of a reporting unit or a significant portion of a reporting unit. We face some uncertainty in our business environment due to a variety of challenges, including the risk factors discussed in this section. We may experience unforeseen circumstances that adversely affect the value of our goodwill or intangible assets. Future write-offs of goodwill or other intangible assets as a result of an impairment in the business could materially adversely affect our results of operations and financial condition.
Other Business and Operational Risks
Our business could be negatively impacted by cybersecurity events and other disruptions. We face various cybersecurity threats, including threats to our IT infrastructure and attempts to gain unauthorized access to our proprietary or classified information, denial-of-service attacks, as well as threats to the physical security of our facilities and employees, and threats from terrorist acts. We also design and manage IT systems and products for various customers. We generally face the same security threats for these systems and products as for our own internal systems. In addition, we face cyber threats from entities and persons that may seek to target us through our customers, suppliers and other third parties with whom we do business. Many of these cybersecurity threats are increasingly sophisticated and constantly evolving. Accordingly, we maintain information security staff, policies and procedures for managing risk to our information systems, and we review and update our policies, procedures and practices in light of evolving threats. We conduct employee training on cybersecurity to mitigate persistent and continuously evolving cybersecurity threats, and we report cybersecurity events or losses of customer data to affected customers and applicable regulatory authorities. However, there can be no assurance that any such actions, including the timeliness of our efforts to review, update or implement policies, procedures and practices in light of evolving threats, or the safeguards put in place by our customers, suppliers and other parties on which we rely, will be sufficient to detect, prevent and mitigate cybersecurity breaches or disruptions, or the unauthorized release of sensitive information or corruption of data.
We have experienced cybersecurity events and disruptions such as viruses and attacks targeting our IT systems. Such prior events have not had a material impact on our financial condition, results of operations or liquidity. However, future threats could have a materially adverse impact on our company by, among other things, causing harm to our business, results of operations or reputation; disrupting our operations; exposing us to potential liability, regulatory actions and loss of business; and challenging our eligibility for future work on sensitive or classified systems for government customers. Due to the evolving nature of these security threats, the potential impact of any future incident cannot be predicted. Our insurance coverage may not be adequate to cover all the costs related to cybersecurity attacks or disruptions resulting from such events.
Our business may continue to be negatively impacted by the coronavirus (COVID-19) pandemic and could be negatively impacted by other pandemics and outbreaks. The COVID-19 pandemic has had, and could continue to have, a negative effect on our business, results of operations
25

and financial condition. This includes disruptions or restrictions on our employees’ ability to work effectively, temporary closures of our facilities and the facilities of our customers, and supply-chain disruptions. Any such effects could materially adversely affect our ability to perform on our contracts. In addition, the U.S. government’s federal contractor vaccine mandate, if enforced, could adversely affect our ability, and our subcontractors’ ability, to hire and retain highly skilled employees to work on U.S. government programs. Any cost increases that result from these effects may not be fully recoverable on our contracts or adequately covered by insurance.
In addition, the COVID-19 pandemic has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries, which could result in a prolonged economic downturn that may negatively affect demand for our products and services. The imposition of quarantine and travel restrictions has negatively affected and, if reimposed, may continue to negatively affect portions of our business. The extent to which COVID-19 continues to impact our business, results of operations and financial condition is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, including the emergence of new variants, the severity of the disease, vaccination rates and the actions that may be taken by various governmental authorities and other third parties in response to the pandemic. Other outbreaks of contagious diseases, or other adverse public health developments in countries where we operate or our customers are located, could similarly adversely affect our business, results of operations and financial condition in the future.
Global climate change could negatively affect our business. Increased public awareness and concern regarding global climate change may result in state, federal or international requirements to reduce or mitigate global warming, such as the imposition of carbon pricing mechanisms, stricter limits on greenhouse gas emissions, or other business restrictions or compliance requirements regarding reducing or mitigating global climate change. If environmental or climate-change laws or regulations are adopted or changed that directly or indirectly impose significant new costs, operational restrictions or compliance requirements on our business, products, customers or suppliers, they could increase our costs, require additional capital expenditures, reduce our margins and adversely affect our business, results of operations and financial condition.
Further, while we continuously evaluate the evolving landscape of environmental-related legislation and seek opportunities for continuous improvement of our existing climate-related measures, as well as new ways to minimize our impact on the planet, there can be no assurance that changes in customer demand patterns and competition driven by climate change, as well as potential climate-related reputational risks will not adversely affect our business, results of operations and financial condition.

FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K contains forward-looking statements that 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 and expected future developments as well as other factors we consider appropriate under the circumstances. We believe our estimates and judgments are reasonable based on information available to us at the time. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation
26

Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including the risk factors discussed in this Form 10-K.
All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. 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 filings with the SEC.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

ITEM 2. PROPERTIES
We operate in a number of offices, manufacturing plants, laboratories, warehouses and other facilities in the United States and abroad. We believe our facilities are adequate for our present needs and, given planned improvements and construction, expect them to remain adequate for the foreseeable future.
On December 31, 2022, our segments had material operations at the following locations:
•Aerospace – Mesa, Arizona; Van Nuys, California; West Palm Beach, Florida; Brunswick and Savannah, Georgia; Cahokia, Illinois; Westfield, Massachusetts; Teterboro, New Jersey; New York, New York; Tulsa, Oklahoma; Dallas and Fort Worth, Texas; Dulles, Virginia; Appleton, Wisconsin; Sydney, Australia; Beijing, China; Mexicali, Mexico; Singapore; Basel, Switzerland; Farnborough, United Kingdom.
•Marine Systems – San Diego, California; Groton and New London, Connecticut; Jacksonville, Florida; Honolulu, Hawaii; Bath and Brunswick, Maine; Middletown and North Kingstown, Rhode Island; Norfolk and Portsmouth, Virginia; Bremerton, Washington; Mexicali, Mexico.
•Combat Systems – Anniston, Alabama; East Camden, Arkansas; Healdsburg, California; Crawfordsville, St. Petersburg and Tallahassee, Florida; Marion, Illinois; Saco, Maine; Sterling Heights, Michigan; Lima, Ohio; Eynon, Scranton and Wilkes-Barre, Pennsylvania; Garland, Texas; Joint Base Lewis-McChord, Washington; Vienna, Austria; Le Gardeur, London and Valleyfield, Canada; Kaiserslautern, Germany; Madrid, Sevilla and Trubia, Spain; Kreuzlingen and Tägerwilen, Switzerland; Merthyr Tydfil, United Kingdom.
•Technologies – Daleville, Alabama; Scottsdale, Arizona; Orlando, Florida; Bossier City, Louisiana; Annapolis Junction, Maryland; Dedham, Pittsfield and Taunton, Massachusetts; Bloomington, Minnesota; Rensselaer, New York; Greensboro, North Carolina; Chesapeake and Marion, Virginia; multiple locations in Northern Virginia; Ottawa, Canada; Oakdale and St. Leonards, United Kingdom.
27

A summary of floor space by segment on December 31, 2022, follows:

(Square feet in millions)	Company-owned
Facilities		Leased
Facilities		Government-owned
Facilities		Total	
Aerospace	5.9 			9.4 			0.5 			15.8 		
Marine Systems	8.7 			4.5 			— 			13.2 		
Combat Systems	6.5 			4.7 			4.9 			16.1 		
Technologies	3.1 			7.9 			0.9 			11.9 		
Total square feet	24.2 			26.5 			6.3 			57.0 		

ITEM 3. LEGAL PROCEEDINGS
For information relating to legal proceedings, see Note M to the Consolidated Financial Statements in Item 8.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS
All of our executive officers are appointed annually. None of our executive officers were selected pursuant to any arrangement or understanding between the officer and any other person. Set forth below is information regarding our executive officers as of February 7, 2023 (references are to positions with General Dynamics Corporation, unless otherwise noted):

Name, Position and Office	Age	
		
Jason W. Aiken – Executive Vice President, Technologies and Chief Financial Officer since January 2023; Senior Vice President and Chief Financial Officer, January 2014 - December 2022; Vice President of the company and Chief Financial Officer of Gulfstream Aerospace Corporation, September 2011 - December 2013; Vice President and Controller, April 2010 - August 2011; Staff Vice President, Accounting, July 2006 - March 2010	50	
		
Christopher J. Brady – Vice President of the company and President of General Dynamics Mission Systems since January 2019; Vice President, Engineering of General Dynamics Mission Systems, January 2015 - December 2018; Vice President, Engineering of General Dynamics C4 Systems, May 2013 - December 2014; Vice President, Assured Communications Systems of General Dynamics C4 Systems, August 2004 - May 2013	60	
		
Mark L. Burns – Vice President of the company and President of Gulfstream Aerospace Corporation since July 2015; Vice President of the company since February 2014; President, Product Support of Gulfstream Aerospace Corporation, June 2008 - June 2015	63	
		
Danny Deep – Vice President of the company and President of General Dynamics Land Systems since April 2020; Chief Operating Officer of General Dynamics Land Systems, September 2018 - April 2020; Vice President of General Dynamics Land Systems – Canada, January 2011 - September 2018	53	
		
28

						
Gregory S. Gallopoulos – Senior Vice President, General Counsel and Secretary since January 2010; Vice President and Deputy General Counsel, July 2008 - January 2010; Managing Partner of Jenner & Block LLP, January 2005 - June 2008	63	
		
M. Amy Gilliland – Senior Vice President of the company since April 2015; President of General Dynamics Information Technology since September 2017; Deputy for Operations of General Dynamics Information Technology, April 2017 - September 2017; Senior Vice President, Human Resources and Administration, April 2015 - March 2017; Vice President, Human Resources, February 2014 - March 2015; Staff Vice President, Strategic Planning, January 2013 - February 2014; Staff Vice President, Investor Relations, June 2008 - January 2013	48	
		
Kevin M. Graney – Vice President of the company and President of Electric Boat Corporation since October 2019; Vice President of the company and President of NASSCO, January 2017 - October 2019; Vice President and General Manager of NASSCO, November 2013 - January 2017	59	
		
Kimberly A. Kuryea – Senior Vice President, Human Resources and Administration since April 2017; Vice President and Controller, September 2011 - March 2017; Chief Financial Officer of General Dynamics Advanced Information Systems, November 2007 - August 2011; Staff Vice President, Internal Audit, March 2004 - October 2007	55	

William A. Moss – Vice President and Controller since April 2017; Staff Vice President, Internal Audit, May 2015 - March 2017; Staff Vice President, Accounting, August 2010 - May 2015	59	
		
Phebe N. Novakovic – Chairman and Chief Executive Officer since January 2013; President and Chief Operating Officer, May 2012 - December 2012; Executive Vice President, Marine Systems, May 2010 - May 2012; Senior Vice President, Planning and Development, July 2005 - May 2010; Vice President, Strategic Planning, October 2002 - July 2005	65	
		
Mark C. Roualet – Executive Vice President, Combat Systems, since March 2013; Vice President of the company and President of General Dynamics Land Systems, October 2008 - March 2013; Senior Vice President and Chief Operating Officer of General Dynamics Land Systems, July 2007 - October 2008	64	
		
Robert E. Smith – Executive Vice President, Marine Systems, since July 2019; Vice President of the company and President of Jet Aviation, January 2014 - July 2019; Vice President and Chief Financial Officer of Jet Aviation, July 2012 - January 2014	55	

PART II

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange under the trading symbol “GD.”
On January 29, 2023, there were approximately 9,000 holders of record of our common stock.
For information regarding securities authorized for issuance under our equity compensation plans, see Note R to the Consolidated Financial Statements contained in Item 8.
We did not make any unregistered sales of equity securities in 2022.
29

The following table provides information about our fourth-quarter purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

						Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program	
Period		Total Number of Shares		Average Price per Share					
Shares Purchased Pursuant to Share Buyback Program					
10/3/22-10/30/22		— 			$	— 			— 			7,150,564 		
10/31/22-11/27/22		441,286 			249.14 			441,286 			6,709,278 		
11/28/22-12/31/22		— 			— 			— 			6,709,278 		
									
Shares Delivered or Withheld Pursuant to Restricted Stock Vesting*					
10/3/22-10/30/22		776 			213.77 						
10/31/22-11/27/22		498 			249.13 						
11/28/22-12/31/22		728 			253.72 						
		443,288 			$	249.09 						
*Represents shares withheld by, or delivered to, us pursuant to provisions in agreements with recipients of restricted stock granted under our equity compensation plans that allow us to withhold, or the recipient to deliver to us, the number of shares with a fair value equal to the statutory tax withholding due upon vesting of the restricted shares.
On December 31, 2022, 6.7 million shares remained authorized by our board of directors for repurchase. For additional information relating to our purchases of common stock during the past three years, see Note N to the Consolidated Financial Statements in Item 8.
30

The following performance graph compares the cumulative total return to shareholders on our common stock, assuming reinvestment of dividends, with similar returns for the Standard & Poor’s 500 Index and the Standard & Poor’s Aerospace & Defense Index, both of which include General Dynamics.
Cumulative Total Return
Based on Investments of $100 Beginning December 31, 2017
(Assumes Reinvestment of Dividends)
(in per-share amounts)

ITEM 6. [RESERVED]

31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per-share amounts or unless otherwise noted)
For an overview of our operating segments, including a discussion of our major products and services, see the Business discussion contained in Item 1. The following discussion of our financial condition and results of operations for 2022 compared with 2021 should be read in conjunction with our Consolidated Financial Statements included in Item 8, while a discussion of 2021 compared with 2020 can be found in Item 7 of our annual report on Form 10-K for the year ended December 31, 2021.

BUSINESS ENVIRONMENT
GLOBAL EVENTS
The coronavirus (COVID-19) pandemic has caused significant disruptions to national and global economies and government activities since March 2020. During this time, we have continued to conduct our operations while responding to the pandemic with actions to mitigate adverse consequences to our employees, business, supply chain and customers.
In February 2022, Russian forces invaded Ukraine. In response, the United States and several other countries imposed economic and trade sanctions, export controls and other restrictions (collectively, global sanctions) targeting Russia and Belarus. The conflict and these sanctions have caused some disruptions to global economies and some global businesses, including heightened cybersecurity risks, increased energy costs and foreign currency exchange rate fluctuations, as well as exacerbated existing supply chain challenges and inflationary pressures.
In our Aerospace segment, we continue to see strong order activity as we emerge from the impacts of the COVID-19 pandemic. However, this segment is the most impacted relatively by the global sanctions, particularly our aircraft services business in Europe, which we have offset to date through additional services revenue in other regions. Across the aerospace industry, the global sanctions impact sales to certain individuals and entities and exports of associated aircraft parts and related services.
Within our defense segments, the COVID-19 pandemic created some staffing and supply chain challenges, particularly in our Marine Systems (especially in the submarine supply chain) and Technologies segments. The Russia-Ukraine conflict could continue to impact future U.S. government defense spending due to the heightened national security threat and the need to replenish stockpiles that have been reduced in support of Ukraine. Internationally, many countries in the region have expressed a renewed commitment to defense-related spending. As a result, we have seen signals of additional demand for our products and services.
Any longer-term impact of these global events to our business is currently unknown due to the uncertainty around duration and their broader impact. For additional information, see the Risk Factors in Part I, Item 1A. The Review of Operating Segments includes information on these global events for the affected segments.

OUR MARKETS
With approximately 70% of our revenue from the U.S. government, government spending levels — particularly defense spending — influence our financial performance. On December 29, 2022, the fiscal
32

year (FY) 2023 defense appropriations bill was signed into law. It totaled approximately $798 billion, representing an increase of approximately 10% over the enacted FY 2022 spending level.
The long-term outlook for our U.S. defense business is influenced by the U.S. military’s funding priorities, the diversity of our programs and customers, our insight into customer requirements stemming from our incumbency on core programs, our ability to evolve our products to address a fast-changing threat environment and our proven track record of successful contract execution.
International demand for military equipment and technologies presents opportunities for our non-U.S. operations and exports from our North American businesses. While the revenue potential can be significant, there are risks to doing business in foreign countries, including changing budget priorities and overall spending pressures unique to each country.
In our Aerospace segment, we expect our investment in the development of new aircraft products and technologies to support the segment’s long-term growth. Similarly, we believe the aircraft services business will be a source of steady revenue growth as the global business jet fleet continues to grow.

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.
In the defense segments, revenue on long-term government contracts is recognized generally over time as the work progresses, either as products are produced or as services are rendered. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at
33

completion to measure progress toward satisfying our performance obligations. 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
2022 IN REVIEW
•Strong operating performance:
◦Record-high revenue of $39.4 billion, an increase of 2.4% from 2021
◦Operating earnings of $4.2 billion with sequential growth throughout the year
◦Record-high diluted earnings per share of $12.19, up 5.5% from 2021
◦Record-high cash provided by operating activities of $4.6 billion, or 135% of net earnings
•Record-high backlog of $91.1 billion increased $3.5 billion, or 4%, from 2021, driven by significant order activity during the year supporting our long-term growth expectations:
◦Outstanding Gulfstream aircraft order activity, including orders across all aircraft models
◦Several significant contract awards received in our defense segments, including $5.4 billion of combined awards from the U.S. Navy for advance procurement and other work for the Columbia-class submarine program

Year Ended December 31	2022		2021		Variance	
Revenue	$	39,407 			$	38,469 			$	938 			2.4 	%	
Operating costs and expenses	(35,196)			(34,306)			(890)			2.6 	%	
Operating earnings	4,211 			4,163 			48 			1.2 	%	
Operating margin	10.7 	%		10.8 	%					
Our consolidated revenue increased in 2022 from growth in U.S. Navy ship construction in our Marine Systems segment and aircraft services activity in our Aerospace segment. Operating earnings increased
34

in 2022 due primarily to strong operating performance in our Aerospace segment, while we managed through the impacts of supply chain challenges and inflationary pressure across the business.

REVIEW OF OPERATING SEGMENTS
Following is a discussion of operating results and outlook for each of our operating segments. For the Aerospace segment, results are analyzed by specific types of products and services, consistent with how the segment is managed. For the defense segments, the discussion is based on markets and the lines of products and services offered with a supplemental discussion of specific contracts and programs when significant to the results. Additional information regarding our segments can be found in Note O to the Consolidated Financial Statements in Item 8.
AEROSPACE

Year Ended December 31	2022		2021		Variance	
Revenue	$	8,567 			$	8,135 			$	432 			5.3 	%	
Operating earnings	1,130 			1,031 			99 			9.6 	%	
Operating margin	13.2 	%		12.7 	%					
Gulfstream aircraft deliveries (in units)	120 			119 			1		0.8 	%	
Operating Results
The increase in the Aerospace segment’s revenue in 2022 consisted of the following:

Aircraft services	$	420 		
Aircraft manufacturing	12 		
Total increase	$	432 		
Revenue was up in our Aerospace segment driven by an increase in demand for aircraft services, particularly maintenance work, and increased activity at our fixed-base operator (FBO) facilities due to growing global air travel.
The increase in the segment’s operating earnings in 2022 consisted of the following:

Aircraft manufacturing	$	123 		
Aircraft services	89 		
	
G&A/other expenses	(113)		
Total increase	$	99 		
Aircraft manufacturing operating earnings were up in 2022 due to a favorable mix of aircraft deliveries and ongoing improvements in manufacturing efficiency. Earnings in 2022 were somewhat impacted by customer accommodations associated with a G500/G600 airworthiness directive while 2021 earnings included mark-to-market adjustments related to aircraft that were in the G500 test program. In 2022, operating earnings from aircraft services were up due to higher volume and favorable cost performance. These increases were offset partially by higher G&A/other expenses due primarily to increased R&D expenses associated with ongoing product development efforts. In total, the Aerospace segment’s operating margin increased 50 basis points in 2022 to 13.2%.
35

2023 Outlook
We expect the Aerospace segment’s 2023 revenue to increase to approximately $10.4 billion due to an increase in new aircraft deliveries to 145. We expect the segment’s operating margin to be approximately 14.6%. This outlook assumes the certification and entry into service of the new G700 aircraft.
MARINE SYSTEMS

Year Ended December 31	2022		2021		Variance	
Revenue	$	11,040 			$	10,526 			$	514 			4.9 	%	
Operating earnings	897 			874 			23 			2.6 	%	
Operating margin	8.1 	%		8.3 	%		 		 	
Operating Results
The increase in the Marine Systems segment’s revenue in 2022 consisted of the following:

U.S. Navy ship construction	$	577 		
	
U.S. Navy ship engineering, repair and other services	(63)		
Total increase	$	514 		
Revenue from U.S. Navy ship construction was up across our shipyards in 2022 due to increased volume on the Columbia-class submarine program, the John Lewis-class (T-AO-205) fleet replenishment oiler program and the Arleigh Burke-class (DDG-51) destroyer program. These increases were offset partially by lower submarine engineering volume. Overall, the Marine Systems segment’s operating margin decreased 20 basis points in 2022 due to program mix and supply chain impacts to the Virginia-class submarine schedule, offset partially by improved performance at NASSCO.
2023 Outlook
We expect the Marine Systems segment’s 2023 revenue to remain steady at approximately $10.9 billion. Operating margin is expected to be approximately 8.1% driven by program mix across our shipyards and ongoing supply chain challenges.
COMBAT SYSTEMS

Year Ended December 31	2022		2021		Variance	
Revenue	$	7,308 			$	7,351 			$	(43)			(0.6)	%	
Operating earnings	1,075 			1,067 			8 			0.7 	%	
Operating margin	14.7 	%		14.5 	%					
36

Operating Results
The change in the Combat Systems segment’s revenue in 2022 consisted of the following:

International military vehicles	$	(318)		
U.S. military vehicles	282 		
Weapons systems and munitions	(7)		
Total decrease	$	(43)		
Revenue from international military vehicles was down in 2022, but this decrease was offset largely by increased revenue from U.S. Stryker wheeled combat vehicles, particularly the maneuver short-range air defense (M-SHORAD) variant.
The strengthening of the U.S. dollar against the euro and British pound has negatively impacted the Combat Systems segment’s results in 2022, specifically the translation of our international revenue from local currencies into U.S. dollars. Had foreign exchange rates in 2022 held constant from 2021, the Combat Systems segment’s revenue would have increased 2.1% in 2022 compared to 2021.
The Combat Systems segment’s operating margin increased 20 basis points compared with 2021 driven by favorable contract mix and strong operating performance.
2023 Outlook
We expect the Combat Systems segment’s 2023 revenue to be approximately $7.3 billion with operating margin of approximately 14.7%.
TECHNOLOGIES

Year Ended December 31	2022		2021		Variance	
Revenue	$	12,492 			$	12,457 			$	35 			0.3 	%	
Operating earnings	1,227 			1,275 			(48)			(3.8)	%	
Operating margin	9.8 	%		10.2 	%					
Operating Results
The increase in the Technologies segment’s revenue in 2022 consisted of the following:

IT services	$	126 		
C5ISR* solutions	(91)		
Total increase	$	35 		
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance
The group’s revenue was up despite continued delays in customer order activity as revenue from IT services increased on several programs, particularly with the group’s federal civilian customers. This increase was offset partially by decreased revenue from C5ISR solutions due to supply chain disruptions. The Technologies segment’s operating margin decreased 40 basis points compared with 2021 due primarily to the mix of service activity and product volume.
37

2023 Outlook
We expect the Technologies segment’s 2023 revenue to be between $12.5 and $12.6 billion with operating margin of around 9.5% driven by a shift in the mix of IT service activity and hardware volume.
CORPORATE
Corporate operating costs totaled $118 in 2022 and $84 in 2021 and consisted primarily of equity-based compensation expense. The increase was due primarily to accelerated recognition of equity-based compensation expense. Corporate operating costs are expected to be approximately $140 in 2023.

OTHER INFORMATION
PRODUCT AND SERVICE REVENUE AND OPERATING COSTS

Year Ended December 31	2022		2021		Variance	
Revenue:								
Products	$	23,022 			$	22,428 			$	594 			2.6 	%	
Services	16,385 			16,041 			344 			2.1 	%	
Operating Costs:								
Products	$	(18,981)			$	(18,524)			$	(457)			2.5 	%	
Services	(13,804)			(13,537)			(267)			2.0 	%	
The increase in product revenue in 2022 consisted of the following:

Ship construction	$	577 		

Other, net	17 		
Total increase	$	594 		
Ship construction revenue increased due to higher volume on the Columbia-class submarine, T-AO-205 oiler and DDG-51 destroyer programs. In 2022, the primary driver of the increase in product operating costs was the change in volume described above.
The increase in service revenue in 2022 consisted of the following:

Aircraft services	$	420 		
	
Other, net	(76)		
Total increase	$	344 		
Aircraft services revenue increased due to additional maintenance work and FBO activity. In 2022, the primary driver of the increase in service operating costs was the change in volume described above.
G&A EXPENSES
As a percentage of revenue, G&A expenses were 6.1% in 2022 and 5.8% in 2021, reflecting an increase in equity-based compensation expense. We expect G&A expenses as a percentage of revenue in 2023 to be generally consistent with 2022.
38

OTHER, NET
Net other income was $189 in 2022 and $134 in 2021 and represents primarily the non-service components of pension and other post-retirement benefits. In 2023, we expect net other income to decrease to approximately $80 due to lower pension income. The decrease in pension income is driven primarily by higher interest rates and a change in investment mix in one of our plans due to its improved funded status.
INTEREST, NET
Net interest expense was $364 in 2022 and $424 in 2021, reflecting repayment of our scheduled debt maturities in 2021. See Note K to the Consolidated Financial Statements in Item 8 for additional information regarding our debt obligations, including interest rates. We expect 2023 net interest expense to be consistent with 2022.
PROVISION FOR INCOME TAX, NET
Our effective tax rate was 16% in 2022 and 15.9% in 2021. For further discussion, including a reconciliation of our effective tax rate from the statutory federal rate, see Note D to the Consolidated Financial Statements in Item 8. For 2023, we anticipate a slightly higher full-year effective tax rate of approximately 17% due to higher taxes on foreign earnings.
In August 2022, the president signed into law the Inflation Reduction Act of 2022, which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows.

BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE
Our total backlog, including funded and unfunded portions, was $91.1 billion on December 31, 2022, up 4% from $87.6 billion at the end of 2021. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the Consolidated Financial Statements in Item 8. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $127.7 billion on December 31, 2022.
39

The following table details the backlog and estimated potential contract value of each segment at the end of 2022 and 2021:

	Funded		Unfunded		Total Backlog		Estimated Potential Contract Value		Total
Estimated Contract Value	
	December 31, 2022	
Aerospace	$	19,077 			$	439 			$	19,516 			$	685 			$	20,201 		
Marine Systems	26,246 			19,453 			45,699 			3,672 			49,371 		
Combat Systems	12,726 			525 			13,251 			5,364 			18,615 		
Technologies	9,100 			3,571 			12,671 			26,889 			39,560 		
Total	$	67,149 			$	23,988 			$	91,137 			$	36,610 			$	127,747 		
										
	December 31, 2021	
Aerospace	$	15,878 			$	415 			$	16,293 			$	1,657 			$	17,950 		
Marine Systems	23,678 			21,177 			44,855 			4,271 			49,126 		
Combat Systems	12,584 			509 			13,093 			6,936 			20,029 		
Technologies	9,005 			4,348 			13,353 			26,997 			40,350 		
Total	$	61,145 			$	26,449 			$	87,594 			$	39,861 			$	127,455 		
For additional information about our major products and services in backlog see the Business discussion contained in Item 1.

AEROSPACE
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended 2022 with backlog of $19.5 billion, up 19.8% from $16.3 billion at year-end 2021.
Orders in 2022 reflected strong demand across our product and services portfolio, including orders for all models of Gulfstream aircraft. The segment’s book-to-bill ratio (orders divided by revenue) was 1.5-to-1 in 2022.
Beyond total backlog, estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On December 31, 2022, estimated potential contract value in the Aerospace segment was $685.
Demand for Gulfstream aircraft remains strong across customer types and geographic regions, generating orders from public and privately held companies, individuals, and governments around the world. Geographically, U.S. customers represented 70% of the segment’s orders in 2022 and 59% of the segment’s backlog on December 31, 2022, demonstrating continued strong domestic demand.
40

The following represents Gulfstream aircraft (in units) in backlog by region on December 31, 2022:

DEFENSE SEGMENTS
The total backlog in our defense segments represents the estimated remaining sales value of work to be performed under firm contracts. 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 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 $71.6 billion on December 31, 2022, compared with $71.3 billion at year-end 2021. In 2022, the total book-to-bill ratio in our defense segments was 1-to-1. Estimated potential contract value in our defense segments was $35.9 billion on December 31, 2022, compared with $38.2 billion at year-end 2021.
41

MARINE SYSTEMS
The Marine Systems segment’s backlog consists of very long-term submarine and surface ship construction programs, as well as numerous engineering and repair contracts. The segment’s book-to-bill ratio was 1.1-to-1 in 2022, resulting in backlog growth of 1.9% from year-end 2021 to $45.7 billion. The segment’s estimated potential contract value was $3.7 billion on December 31, 2022, compared with $4.3 billion at year-end 2021.
Significant contract awards in the Marine Systems segment during 2022 include:
•$5.4 billion from the Navy for the Columbia-class submarine program for advance procurement and advance construction of critical components and material to support follow-on submarines, efforts to support continuous missile tube production, enhancements to develop the submarine industrial base, and sustained class maintenance and support. The awards also include options totaling $585 of additional potential contract value.
•$2 billion from the Navy for long-lead materials and construction of an additional Expeditionary Sea Base (ESB) auxiliary support ship and two additional T-AO-205 oilers. The awards also include a $715 option for an additional T-AO-205 oiler.
•$1.2 billion from the Navy to provide maintenance, modernization and repair services for the DDG-51 destroyer, Wasp-class amphibious assault ship and Los Angeles-class submarine programs.
•$580 from the Navy for lead yard services, development studies and design efforts for Virginia-class submarines. The awards also include options totaling $320 of additional potential contract value.
•$235 from the Navy to provide engineering, technical, design and planning yard support services for operational strategic and attack submarines.
•$170 from the Navy for advanced nuclear plant studies (ANPS) in support of the Columbia-class submarine program.
•$145 from the Navy to provide ongoing planning and lead yard services for the DDG-51 destroyer program.
42

The following represents the Marine Systems segment’s total estimated contract value by major program on December 31, 2022:

COMBAT SYSTEMS
The Combat Systems segment’s backlog consists of a mix of U.S. and international combat vehicles, weapons systems and munitions programs. The vehicle programs are generally long-term franchise programs, while the weapons systems and munitions programs tend to be shorter-term in nature. The segment’s backlog was up from year-end 2021 to $13.3 billion. The segment’s estimated potential contract value was $5.4 billion on December 31, 2022, compared with $6.9 billion at year-end 2021.
Significant contract awards in the Combat Systems segment during 2022 include:
•$1 billion for various munitions and ordnance with additional option value of $465.
•$410 from the U.S. Army to begin low-rate initial production (LRIP) of the Mobile Protected Firepower (MPF) vehicle. The contract has a maximum potential value of $1.1 billion.
•A contract worth up to $1.1 billion to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Poland.
•$770 from the Army for Abrams main battle tank upgrades, engineering and logistics support services, and system and sustainment technical support services.
•$760 from the Army for Stryker vehicle upgrades, spare parts, and inventory management and support services.
•$440 from the Army to produce Stryker M-SHORAD vehicles.
•$355 to produce Abrams main battle tanks in the SEPv3 configuration for Australia.
•$320 to upgrade Ulan tracked vehicles for Austria.
43

•$230 to produce Piranha armored combat vehicles for Switzerland.
•$60 to produce M3 amphibious bridge systems for an international customer. The contract has a maximum potential value of $210.
The following represents the Combat Systems segment’s total estimated contract value by market on December 31, 2022:

TECHNOLOGIES
The Technologies segment’s backlog consists of thousands of contracts and task orders across a mix of U.S. and non-U.S. government and commercial customers. These contracts can be shorter-cycle or span multiple years, but commonly include a small, initially funded order. Therefore, our estimated potential contract value of $26.9 billion is an important indicator of future orders and revenue. In 2022, approximately 75% of the segment’s orders were from additional work on IDIQ contracts or the exercise of options. The segment’s total estimated contract value remained steady compared with year-end 2021.
Significant contract awards in the Technologies segment during 2022 include:
•An IDIQ contract from the National Geospatial-Intelligence Agency (NGA) to provide hybrid cloud services and IT design, engineering, and operations and sustainment services. The contract has a maximum potential value of $4.5 billion over 10 years.
•$1.6 billion for several key classified contracts.
•An IDIQ contract to provide IT infrastructure and modernization support services for the U.S. Air Forces in Europe under the Europe-Wide Information Technology and Enterprise Network (EITEN) program. The contract has a maximum potential value of $910.
•$80 from the U.S. Environmental Protection Agency for managed application, information, networking, enterprise and security services. The contract has a maximum potential value of $660.
44

•An IDIQ contract from the Army to develop and field adversarial electronic warfare threat systems and capabilities in support of the Army’s test and training communities. The contract has a maximum potential value of $580.
•$375 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.
•$160 from the U.S. Space Development Agency to build and operate ground systems for the new low-earth orbit (LEO) satellite network. The contract has a maximum potential value of $325.
•An IDIQ contract for the development and sustainment of applications and websites for the Administrative Office of the United States Courts (AOUSC). The contract has a maximum potential value of $300.
The following represents the Technologies segment’s total estimated contract value by customer on December 31, 2022:

LIQUIDITY AND CAPITAL RESOURCES
We place a strong emphasis on cash flow generation, which is underpinned by an operating discipline focused on cost control and working capital management. 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.
45

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 2022 with a cash and equivalents balance of $1.2 billion compared with $1.6 billion at the end of 2021. The following is a discussion of our major operating, investing and financing activities in 2022 and 2021, as classified on the Consolidated Statement of Cash Flows in Item 8:

Year Ended December 31	2022		2021	
Net cash provided by operating activities	$	4,579 			$	4,271 		
Net cash used by investing activities	(1,489)			(882)		
Net cash used by financing activities	(3,471)			(4,590)		

	

	

	

OPERATING ACTIVITIES
Cash provided by operating activities was $4.6 billion in 2022 compared with $4.3 billion in 2021. The primary driver of cash inflows in both years was net earnings. Cash flows in both years were affected positively by an increase in customer deposits driven by Gulfstream aircraft orders. While cash flows in 2021 were affected positively by a reduction in inventory from the sale of G500 flight-test aircraft in our Aerospace segment, cash flows in 2022 were affected negatively by growth in inventory related to new aircraft models awaiting certification from the U.S. Federal Aviation Administration (FAA).

INVESTING ACTIVITIES
Cash used by investing activities was $1.5 billion in 2022 and $882 in 2021. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales.
Capital Expenditures. The primary use of cash for investing activities in both years was capital expenditures. Capital expenditures were $1.1 billion in 2022 and $887 in 2021. Capital expenditures have been at an elevated level the past two years as we continue to invest in our shipyards, particularly for the planned growth in submarine construction. Other capital expenditures include equipment and facility enhancements to support new and existing programs across our businesses. We expect capital expenditures to be just below 2.5% of revenue in 2023.
Business Acquisitions. In 2022, we acquired a provider of mission-critical embedded computing solutions for U.S. Navy platforms in our Technologies segment.

FINANCING ACTIVITIES
Cash used by financing activities was $3.5 billion in 2022 and $4.6 billion in 2021. Financing activities include the use of cash for repurchases of common stock, payment of dividends, and debt and commercial paper repayments. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
Dividends. On March 2, 2022, our board of directors declared an increased quarterly dividend of $1.26 per share, the 25th consecutive annual increase. Previously, the board had increased the quarterly
46

dividend to $1.19 per share in March 2021. Cash dividends paid were $1.4 billion in 2022 and $1.3 billion in 2021.
Share Repurchases. Our board of directors from time to time authorizes management to repurchase outstanding shares of our common stock on the open market. We paid $1.2 billion and $1.8 billion in 2022 and 2021, respectively, to repurchase our outstanding shares. On December 31, 2022, 6.7 million shares remained authorized by our board of directors for repurchase, representing 2.4% of our total shares outstanding.
Debt Issuances and Repayments. In November 2022, we repaid fixed-rate notes of $1 billion at the scheduled maturity using cash on hand. Fixed-rate notes of $750 and $500 mature in May 2023 and August 2023, respectively. We currently plan to repay these notes at maturity using cash on hand, potentially supplemented by commercial paper or other borrowings. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note K to the Consolidated Financial Statements in Item 8.
On December 31, 2022, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have a $4 billion committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper issuances. 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 MEASURES
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 and return on invested capital (ROIC) to measure our performance in these areas. While we believe these metrics provide useful information, they are not defined operating measures under U.S. generally accepted accounting principles (GAAP), and there are limitations associated with their use. Our calculation of these metrics may not be completely comparable to similarly titled measures of other companies due to potential differences in the method of calculation. As a result, the use of these metrics should not be considered in isolation from, or as a substitute for, GAAP measures.
Free Cash Flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow to assess the quality of our earnings and as a key performance measure in evaluating management. The following table reconciles the free cash flow with net cash provided by operating activities, as classified on the Consolidated Statement of Cash Flows in Item 8:

Year Ended December 31	2022		2021		2020	
Net cash provided by operating activities	$	4,579 			$	4,271 			$	3,858 		
Capital expenditures	(1,114)			(887)			(967)		
Free cash flow	$	3,465 			$	3,384 			$	2,891 		
Cash flows as a percentage of net earnings:						
Net cash provided by operating activities	135 	%		131 	%		122 	%	
Free cash flow	102 	%		104 	%		91 	%	
47

Return on Invested Capital. We believe ROIC is a useful measure for investors because it reflects our ability to generate returns from the capital we have deployed in our operations. We use ROIC to evaluate investment decisions and as a performance measure in evaluating management. We define ROIC as net operating profit after taxes divided by average invested capital. Net operating profit after taxes is defined as net earnings plus after-tax interest and amortization expense, calculated using the statutory federal income tax rate. Average invested capital is defined as the sum of the average debt and average shareholders’ equity excluding accumulated other comprehensive loss. Average debt and average shareholders’ equity excluding accumulated other comprehensive loss are calculated using the respective balances at the end of the preceding year and the respective balances at the end of each of the four quarters of the year presented. ROIC excludes goodwill impairments and non-economic accounting changes as they are not reflective of company performance.
ROIC is calculated as follows:

Year Ended December 31	2022		2021		2020	
Net earnings	$	3,390 			$	3,257 			$	3,167 		
After-tax interest expense	309 			340 			386 		
After-tax amortization expense	235 			254 			280 		
Net operating profit after taxes	$	3,934 			$	3,851 			$	3,833 		
Average invested capital	$	31,260 			$	32,270 			$	32,431 		
Return on invested capital	12.6 	%		11.9 	%		11.8 	%	

CASH REQUIREMENTS
The following is a discussion of how we expect to meet the future cash requirements from known contractual and other obligations.
The majority of our revenue is derived from long-term contracts and programs that can span several years. We similarly enter into long-term agreements with suppliers and subcontractors for goods and services in support of these contracts and programs with payment terms that are generally aligned with the payment terms from our customers. In some instances, we require advance payments or deposits from our customers, which help fund our purchase commitments and reduce the risk of customer performance.
Additionally, we have significant liabilities under our defined benefit retirement plans. As these liabilities are settled using plan assets, our future cash requirements associated with these liabilities are generally limited to the annual cash contributions to these plans required in accordance with Internal Revenue Service (IRS) regulations. See Note S to the Consolidated Financial Statements in Item 8 for additional information.
Other obligations, such as scheduled principal and interest payments on our fixed-rate notes, and scheduled payments in accordance with our lease agreements are expected to be satisfied using cash generated from operations. See Notes J and K to the Consolidated Financial Statements in Item 8 for additional information.

48

ADDITIONAL FINANCIAL INFORMATION
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the Consolidated Financial Statements, which have been prepared in accordance with GAAP. 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.
In our opinion, the following policies are critical and require the use of significant judgment in their application:
Revenue. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. Our performance obligations are satisfied over time as work progresses or at a point in time.
Substantially all of our revenue in the defense segments is recognized over time because control is transferred continuously to our customers. 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.
Most of our revenue recognized at a point in time is for the manufacture of business jet aircraft in our Aerospace segment. Revenue on these contracts is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft.
The majority of our revenue is derived from long-term contracts and programs that can span several years. Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
The nature of our contracts gives rise to several types of variable consideration, including claims, award fees and incentive fees. We include in our contract estimates additional revenue for contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs
49

incurred, the reasonableness of those costs and the objective evidence available to support the claim. We include award fees or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time.
As a significant change in one or more of these estimates could affect the profitability of our contracts, 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. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. The aggregate impact of adjustments in contract estimates increased our operating earnings (and diluted earnings per share) by $370 ($1.05) in 2022 and $377 ($1.06) in 2021. While no adjustment on any one contract was material to the Consolidated Financial Statements in 2022 or 2021, our Marine Systems segment’s 2022 results were affected negatively by supply chain impacts to the Virginia-class submarine schedule, offset partially by improved performance on auxiliary and support ships.
Consistent with industry practice, we classify assets and liabilities related to long-term contracts as current, even though some of these amounts may not be realized within one year. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period.
Long-lived Assets and Goodwill. We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. We assess the recoverability of the carrying value of assets held for use based on a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived assets over the estimated fair value as determined by discounted cash flows.
Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. We review goodwill for impairment annually at each of our reporting units or when circumstances indicate that the likelihood of an impairment is greater than 50%. Such circumstances include a significant adverse change in the business climate for one of our reporting units or a decision to dispose of a reporting unit or a significant portion of a reporting unit. Our reporting units are consistent with our operating segments in Note O to the Consolidated Financial Statements in Item 8. We use both qualitative and quantitative approaches when testing goodwill for impairment. When determining the approach to be used, we consider the current facts and circumstances of each reporting unit as well as the excess of each reporting unit’s estimated fair value over its carrying value based on our most recent quantitative assessments. Our qualitative approach evaluates the business environment and various events impacting the reporting unit including, but not limited to, macroeconomic conditions, changes in the business environment and reporting unit-specific events. If, based on the qualitative assessment, we determine that it is more likely than not that the fair value of a reporting unit is greater than its carrying value, then a quantitative assessment is not necessary. However, if a quantitative assessment is determined to be necessary, we compare the fair value of a reporting unit to its carrying value and, if necessary, recognize an impairment loss for the amount by which the carrying value exceeds the reporting unit’s fair value.
50

Our estimate of fair value is based primarily on the discounted cash flows of the underlying operations and requires the use of judgment by management. The process requires numerous assumptions, including the timing of work embedded in our backlog, our performance and profitability under our contracts, our success in securing future business, the appropriate risk-adjusted interest rate used to discount the projected cash flows, and terminal-value growth rates applied to the final year of projected cash flows. Due to the variables inherent in our estimates of fair value, differences in assumptions may have a material effect on the result of our impairment analysis. To assess the reasonableness of our discounted cash flows, we compare the sum of our reporting units’ fair value to our market capitalization. Additionally, we evaluate the reasonableness of each reporting unit’s fair value by comparing the fair value to peer companies and recent relevant market transactions.
In the fourth quarter of 2022, we completed qualitative assessments for our Aerospace, Marine Systems and Combat Systems reporting units as the estimated fair values of each of the reporting units significantly exceeded the respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018. Our qualitative assessments did not present indicators of impairment for the reporting units.
In the fourth quarter of 2022, we completed a quantitative assessment for our Technologies reporting unit, and the results indicated that no impairment existed. The Technologies reporting unit’s estimated fair value exceeded its carrying value by approximately 25%. The fair value of the Technologies reporting unit decreased since our previous quantitative assessment, performed in the fourth quarter of 2020, driven by the negative impact of increased interest rates on our discounted projected cash flows. As a result, a material decrease in the fair value or increase in carrying value would put the reporting unit at risk of goodwill impairment. For example, a 50-basis-point increase in interest rates would lower our discounted projected cash flows and negatively impact the fair value of the Technologies reporting unit, reducing the cushion to approximately 15%. We believe the projections and assumptions we used in estimating fair value are reasonable, but it is possible actual experience could differ.
Commitments and Contingencies. We are subject to litigation and other legal proceedings arising either from the normal course of business or under provisions relating to the protection of the environment. Estimating liabilities and costs associated with these matters requires the use of judgment. We record a charge against earnings when a liability associated with claims or pending or threatened litigation is probable and when our exposure is reasonably estimable. The ultimate resolution of our exposure related to these matters may change as further facts and circumstances become known.
Retirement Plans. Our pension and other post-retirement benefit costs and obligations depend on several assumptions and estimates, which are based on our best judgment, including consideration of current and future market conditions. For a discussion of our assumptions and any changes to these assumptions, as well as the impact of these changes, which is reported as an actuarial gain or loss in the reconciliation of the change in the benefit obligation, see Note S to the Consolidated Financial Statements in Item 8. The key assumption is the interest rates used to discount estimated future pension benefits. We base the discount rates on a current yield curve developed from a portfolio of high-quality, fixed-income investments with maturities consistent with the projected benefit payout period. The effect of a 25-basis-point increase or decrease in the discount rate assumption on the December 31, 2022, pension benefit obligation is ($319) and $334, respectively.
As described in Note S to the Consolidated Financial Statements in Item 8, our contractual arrangements with the U.S. government provide for the recovery of benefit costs for our government retirement plans. We have elected to defer recognition of the benefit costs until such costs can be
51

allocated to contracts. Therefore, the impact of annual changes in financial reporting assumptions on the retirement benefit cost for these plans does not immediately affect our operating results.

GUARANTOR FINANCIAL INFORMATION
The outstanding notes described in Note K to the Consolidated Financial Statements in Item 8, 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-K.
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 the 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

Year Ended December 31	2022	
Revenue	$	14,246 		
Operating costs and expenses, excluding G&A	(12,310)		
Net earnings	840 		
52

BALANCE SHEET INFORMATION

	December 31, 2022		December 31, 2021	
Cash and equivalents	$	540 			$	925 		
Other current assets	4,279 			3,149 		
Noncurrent assets	4,164 			3,597 		
Total assets	$	8,983 			$	7,671 		
				
Short-term debt and current portion of long-term debt	$	1,250 			$	999 		
Other current liabilities	3,392 			3,190 		
Long-term debt	9,189 			10,424 		
Other noncurrent liabilities	3,814 			3,844 		
Total liabilities	$	17,645 			$	18,457 		
The summarized balance sheet information presented above includes the funded status of the company’s primary qualified U.S. government pension plans as the parent has the ultimate obligation for the plans.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk, primarily from foreign currency exchange rates, interest rates, commodity prices and investments.
Foreign Currency Risk. Our exchange-rate sensitivity relates primarily to changes in the Canadian dollar, euro and Swiss franc exchange rates. We had notional forward exchange contracts outstanding of $6.9 billion and $6.8 billion on December 31, 2022 and 2021, respectively. A 10% unfavorable rate movement in our portfolio of forward exchange contracts would have resulted in the following hypothetical, incremental pretax losses:

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENT OF EARNINGS
																		
	Year Ended December 31	
(Dollars in millions, except per-share amounts)	2022		2021		2020	
Revenue:						
Products	$	23,022 			$	22,428 			$	22,188 		
Services	16,385 			16,041 			15,737 		
	39,407 			38,469 			37,925 		
Operating costs and expenses:						
Products	(18,981)			(18,524)			(18,192)		
Services	(13,804)			(13,537)			(13,408)		
General and administrative (G&A)	(2,411)			(2,245)			(2,192)		
	(35,196)			(34,306)			(33,792)		
Operating earnings	4,211 			4,163 			4,133 		
Other, net	189 			134 			82 		
Interest, net	(364)			(424)			(477)		
Earnings before income tax	4,036 			3,873 			3,738 		
Provision for income tax, net	(646)			(616)			(571)		
Net earnings	$	3,390 			$	3,257 			$	3,167 		
						
Earnings per share						
Basic	$	12.31 			$	11.61 			$	11.04 		
Diluted	$	12.19 			$	11.55 			$	11.00 		
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

54

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
																					
	Year Ended December 31	
(Dollars in millions)		2022		2021		2020	
Net earnings		$	3,390 			$	3,257 			$	3,167 		
Changes in unrealized cash flow hedges		(190)			(174)			366 		
	
Foreign currency translation adjustments		(278)			(103)			353 		
Changes in retirement plans’ funded status		241 			2,365 			(453)		
Other comprehensive (loss) income, pretax		(227)			2,088 			266 		
(Provision) benefit for income tax, net		(5)			(458)			2 		
Other comprehensive (loss) income, net of tax		(232)			1,630 			268 		
Comprehensive income		$	3,158 			$	4,887 			$	3,435 		
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

55

CONSOLIDATED BALANCE SHEET
												
	December 31	
(Dollars in millions)	2022		2021	
				
ASSETS				
Current assets:				
Cash and equivalents	$	1,242 			$	1,603 		
Accounts receivable	3,008 			3,041 		
Unbilled receivables	8,795 			8,498 		
Inventories	6,322 			5,340 		
Other current assets	1,696 			1,505 		
Total current assets	21,063 			19,987 		
Noncurrent assets:				
Property, plant and equipment, net	5,900 			5,417 		
Intangible assets, net	1,824 			1,978 		
Goodwill	20,334 			20,098 		
Other assets	2,464 			2,593 		
Total noncurrent assets	30,522 			30,086 		
Total assets	$	51,585 			$	50,073 		
				
LIABILITIES AND SHAREHOLDERS’ EQUITY				
Current liabilities:				
Short-term debt and current portion of long-term debt	$	1,253 			$	1,005 		
Accounts payable	3,398 			3,167 		
Customer advances and deposits	7,436 			6,266 		
Other current liabilities	3,254 			3,540 		
Total current liabilities	15,341 			13,978 		
Noncurrent liabilities:				
Long-term debt	9,243 			10,490 		
Other liabilities	8,433 			7,964 		
Commitments and contingencies (see Note M)				
Total noncurrent liabilities	17,676 			18,454 		
Shareholders’ equity:				
Common stock	482 			482 		
Surplus	3,556 			3,278 		
Retained earnings	37,403 			35,420 		
Treasury stock	(20,721)			(19,619)		
Accumulated other comprehensive loss	(2,152)			(1,920)		
Total shareholders’ equity	18,568 			17,641 		
Total liabilities and shareholders’ equity	$	51,585 			$	50,073 		
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

56

CONSOLIDATED STATEMENT OF CASH FLOWS
																		
	Year Ended December 31	
(Dollars in millions)	2022		2021		2020	
Cash flows from operating activities – continuing operations:						
Net earnings	$	3,390 			$	3,257 			$	3,167 		
Adjustments to reconcile net earnings to net cash from operating activities:						
Depreciation of property, plant and equipment	586 			568 			523 		
Amortization of intangible and finance lease right-of-use assets	298 			322 			355 		
Equity-based compensation expense	165 			126 			128 		
Deferred income tax benefit	(178)			(66)			(127)		
(Increase) decrease in assets, net of effects of business acquisitions:						
Accounts receivable	46 			138 			371 		
Unbilled receivables	(256)			(410)			(116)		
Inventories	(980)			405 			502 		
Increase (decrease) in liabilities, net of effects of business acquisitions:						
Accounts payable	224 			194 			(215)		
Customer advances and deposits	2,082 			354 			(707)		
Income taxes payable	(436)			(45)			(39)		
	
Other, net	(362)			(572)			16 		
Net cash provided by operating activities	4,579 			4,271 			3,858 		
Cash flows from investing activities:						
Capital expenditures	(1,114)			(887)			(967)		

Other, net	(375)			5 			(7)		
Net cash used by investing activities	(1,489)			(882)			(974)		
Cash flows from financing activities:						
Dividends paid	(1,369)			(1,315)			(1,240)		
Purchases of common stock	(1,229)			(1,828)			(587)		
Repayment of fixed-rate notes	(1,000)			(2,500)			(2,000)		
Proceeds from commercial paper, gross (maturities greater than 3 months)	— 			1,997 			420 		
Repayment of commercial paper, gross (maturities greater than 3 months)	— 			(1,997)			(420)		
Proceeds from fixed-rate notes	— 			1,497 			3,960 		
Repayment of floating-rate notes	— 			(500)			(500)		
Proceeds from (repayment of) credit facility, net	— 			6 			(441)		

Other, net	127 			50 			(95)		
Net cash used by financing activities	(3,471)			(4,590)			(903)		
Net cash provided (used) by discontinued operations	20 			(20)			(59)		
Net (decrease) increase in cash and equivalents	(361)			(1,221)			1,922 		
Cash and equivalents at beginning of year	1,603 			2,824 			902 		
Cash and equivalents at end of year	$	1,242 			$	1,603 			$	2,824 		
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.
57

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
																																				
 	Common Stock		Retained		Treasury		Accumulated
Other 
Comprehensive		
Total
Shareholders’	
(Dollars in millions)	Par		Surplus		Earnings		Stock		Loss		Equity	
December 31, 2019	$	482 			$	3,039 			$	31,633 			$	(17,358)			$	(3,818)			$	13,978 		
Net earnings	— 			— 			3,167 			— 			— 			3,167 		
Cash dividends declared	— 			— 			(1,265)			— 			— 			(1,265)		
Equity-based awards	— 			85 			— 			67 			— 			152 		
Shares purchased	— 			— 			— 			(602)			— 			(602)		
Other comprehensive income	— 			— 			— 			— 			268 			268 		
Other	— 			— 			(37)			— 			— 			(37)		
December 31, 2020	482 			3,124 			33,498 			(17,893)			(3,550)			15,661 		
	
Net earnings	— 			— 			3,257 			— 			— 			3,257 		
Cash dividends declared	— 			— 			(1,335)			— 			— 			(1,335)		
Equity-based awards	— 			154 			— 			109 			— 			263 		
Shares purchased	— 			— 			— 			(1,835)			— 			(1,835)		
Other comprehensive income	— 			— 			— 			— 			1,630 			1,630 		
December 31, 2021	482 			3,278 			35,420 			(19,619)			(1,920)			17,641 		
Net earnings	— 			— 			3,390 			— 			— 			3,390 		
Cash dividends declared	— 			— 			(1,391)			— 			— 			(1,391)		
Equity-based awards	— 			278 			— 			105 			— 			383 		
Shares purchased	— 			— 			— 			(1,207)			— 			(1,207)		
Other comprehensive loss	— 			— 			— 			— 			(232)			(232)		
Other	— 			— 			(16)			— 			— 			(16)		
December 31, 2022	$	482 			$	3,556 			$	37,403 			$	(20,721)			$	(2,152)			$	18,568 		
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except share and per-share amounts or unless otherwise noted)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
The following is a discussion of certain significant accounting policies, and discussion of our other significant accounting policies is contained in the notes to these financial statements.
Basis of Consolidation and Classification. The Consolidated Financial Statements include the accounts of General Dynamics Corporation and our wholly owned and majority-owned subsidiaries. We eliminate all intercompany balances and transactions in the Consolidated Financial Statements.
Consistent with industry practice, we classify assets and liabilities related to long-term contracts as current, even though some of these amounts may not be realized within one year.
Use of Estimates. The nature of our business requires that we make estimates and assumptions in accordance with U.S. generally accepted accounting principles (GAAP). These estimates and assumptions 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 base our estimates on historical experience, currently available information and various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
Research and Development Expenses. Company-sponsored research and development (R&D) expenses, including Aerospace product-development costs, were $480 in 2022, $415 in 2021 and $374 in 2020. R&D expenses have trended upward driven by activities primarily associated with ongoing new aircraft development efforts. R&D expenses are included in operating costs and expenses in the Consolidated Statement of Earnings in the period in which they are incurred. Customer-sponsored R&D expenses are charged directly to the related contracts.
The Aerospace segment has cost-sharing arrangements with some of its suppliers that enhance the segment’s internal development capabilities and offset a portion of the financial cost associated with the segment’s product development efforts. These arrangements explicitly state that supplier contributions are for reimbursement of costs we incur in the development of new aircraft models and technologies, and we retain substantial rights in the products developed under these arrangements. We record amounts received from these cost-sharing arrangements as a reduction of R&D expenses. We have no obligation to refund any amounts received under the agreements regardless of the outcome of the development efforts. Under the typical terms of an agreement, payments received from suppliers for their share of the costs are based on milestones and are recognized as received. Our policy is to defer payments in excess of the costs we have incurred.
59

Interest, Net. Net interest expense consisted of the following:

Year Ended December 31	2022		2021		2020	
Interest expense	$	391 			$	431 			$	489 		
Interest income	(27)			(7)			(12)		
Interest expense, net	$	364 			$	424 			$	477 		
See Note K for information regarding our debt obligations, including interest rates.
Cash and Equivalents and Investments in Debt and Equity Securities. We consider securities with a maturity of three months or less to be cash equivalents. Our cash balances are invested primarily in time deposits rated A-/A3 or higher. Our investments in other securities are included in other current and noncurrent assets on the Consolidated Balance Sheet. We report our equity securities at fair value with subsequent changes in fair value recognized in net earnings. We report our available-for-sale debt securities at fair value with unrealized gains and losses recognized as a component of other comprehensive (loss) income in the Consolidated Statement of Comprehensive Income. We had no trading or held-to-maturity debt securities on December 31, 2022 or 2021. See Note P for additional information regarding our investments in debt and equity securities.
Acquisitions. In the last three years, we acquired four businesses in our Aerospace segment, two businesses in our Combat Systems segment and a business in our Technologies segment. The operating results of these acquisitions have been included in our reported results since their respective closing dates. The purchase prices of the acquisitions have been allocated to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.
Long-lived Assets and Goodwill. We review long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. We assess the recoverability of the carrying value of assets held for use based on a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of the long-lived assets over the estimated fair value as determined by discounted cash flows.
Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination. We review goodwill for impairment annually at each of our reporting units or when circumstances indicate that the likelihood of an impairment is greater than 50%. Our reporting units are consistent with our operating segments in Note O. We use both qualitative and quantitative approaches when testing goodwill for impairment. When determining the approach to be used, we consider the current facts and circumstances of each reporting unit as well as the excess of each reporting unit’s estimated fair value over its carrying value based on our most recent quantitative assessments. Our qualitative approach evaluates the business environment and various events impacting the reporting unit including, but not limited to, macroeconomic conditions, changes in the business environment and reporting unit-specific events. If, based on the qualitative assessment, we determine that it is more likely than not that the fair value of a reporting unit is greater than its carrying value, then a quantitative assessment is not necessary. However, if a quantitative assessment is determined to be necessary, we compare the fair value of a reporting unit to its carrying value and, if necessary, recognize an impairment loss for the amount by which the carrying value exceeds the reporting unit’s fair value. Our estimate of fair value is based primarily on the discounted cash flows of the underlying operations.
In the fourth quarter of 2022, we completed qualitative assessments for our Aerospace, Marine Systems and Combat Systems reporting units as the estimated fair values of each of the reporting units
60

significantly exceeded the respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018. Our qualitative assessments did not present indicators of impairment for the reporting units.
In the fourth quarter of 2022, we completed a quantitative assessment for our Technologies reporting unit, and the results indicated that no impairment existed. The Technologies reporting unit’s estimated fair value exceeded its carrying value by approximately 25%. The fair value of the Technologies reporting unit decreased since our previous quantitative assessment, performed in the fourth quarter of 2020, driven by the negative impact of increased interest rates on our discounted projected cash flows.
For a summary of our goodwill by reporting unit, see Note H.
Accounting Standards Updates. There are accounting standards that have been issued by the Financial Accounting Standards Board (FASB) but are not yet effective. These standards are not expected to have a material impact on our results of operations, financial condition or cash flows.

B. REVENUE
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (development, production, maintenance and support). For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service.
Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract.
Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for 77% of our revenue in 2022, 78% in 2021 and 77% in 2020. Substantially all of our revenue in the defense segments is recognized over time because control is transferred continuously to our customers. 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.
Revenue from goods and services transferred to customers at a point in time accounted for 23% of our revenue in 2022, 22% in 2021 and 23% in 2020. Most of our revenue recognized at a point in time is for the manufacture of business jet aircraft in our Aerospace segment. Revenue on these contracts is
61

recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft.
On December 31, 2022, we had $91.1 billion of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 35% of our remaining performance obligations as revenue in 2023, an additional 40% by the end of 2025 and the balance thereafter.
Contract Estimates. The majority of our revenue is derived from long-term contracts and programs that can span several years. Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer.
The nature of our contracts gives rise to several types of variable consideration, including claims, award fees and incentive fees. We include in our contract estimates additional revenue for contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. We include award fees or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time.
As a significant change in one or more of these estimates could affect the profitability of our contracts, 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. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified.
The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates increased our revenue, operating earnings and diluted earnings per share as follows:

Year Ended December 31	2022		2021		2020	
Revenue	$	343 			$	411 			$	389 		
Operating earnings	370 			377 			283 		
Diluted earnings per share	$	1.05 			$	1.06 			$	0.78 		
While no adjustment on any one contract was material to the Consolidated Financial Statements in 2022, 2021 or 2020, our Marine Systems segment’s 2022 results were affected negatively by supply chain impacts to the Virginia-class submarine schedule, offset partially by improved performance on auxiliary and support ships.
62

Revenue by Category. Our portfolio of products and services consists of approximately 10,000 active contracts. The following series of tables presents our revenue disaggregated by several categories.
Revenue by major products and services was as follows:

Year Ended December 31	2022		2021		2020	
Aircraft manufacturing	$	5,876 			$	5,864 			$	6,115 		
Aircraft services	2,691 			2,271 			1,960 		
Total Aerospace	8,567 			8,135 			8,075 		
Nuclear-powered submarines	7,310 			7,117 			6,938 		
Surface ships	2,561 			2,328 			2,055 		
Repair and other services	1,169 			1,081 			986 		
Total Marine Systems	11,040 			10,526 			9,979 		
Military vehicles	4,581 			4,699 			4,687 		
Weapons systems, armament and munitions	2,024 			2,006 			1,991 		
Engineering and other services	703 			646 			545 		
Total Combat Systems	7,308 			7,351 			7,223 		
Information technology (IT) services	8,195 			8,069 			7,892 		
C5ISR* solutions	4,297 			4,388 			4,756 		
Total Technologies	12,492 			12,457 			12,648 		
Total revenue	$	39,407 			$	38,469 			$	37,925 		
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance
Revenue by contract type was as follows:

Year Ended December 31, 2022	Aerospace		Marine Systems		Combat Systems		Technologies		Total
Revenue	
Fixed-price	$	7,626 			$	6,509 			$	6,434 			$	5,402 			$	25,971 		
Cost-reimbursement	— 			4,529 			813 			5,190 			10,532 		
Time-and-materials	941 			2 			61 			1,900 			2,904 		
Total revenue	$	8,567 			$	11,040 			$	7,308 			$	12,492 			$	39,407 		
Year Ended December 31, 2021										
Fixed-price	$	7,329 			$	6,711 			$	6,400 			$	5,362 			$	25,802 		
Cost-reimbursement	— 			3,812 			890 			5,195 			9,897 		
Time-and-materials	806 			3 			61 			1,900 			2,770 		
Total revenue	$	8,135 			$	10,526 			$	7,351 			$	12,457 			$	38,469 		
Year Ended December 31, 2020										
Fixed-price	$	7,402 			$	6,924 			$	6,159 			$	5,794 			$	26,279 		
Cost-reimbursement	— 			3,045 			997 			5,300 			9,342 		
Time-and-materials	673 			10 			67 			1,554 			2,304 		
Total revenue	$	8,075 			$	9,979 			$	7,223 			$	12,648 			$	37,925 		
Our segments operate under fixed-price, cost-reimbursement and time-and-materials contracts. Our production contracts are primarily fixed-price. Under these contracts, we agree to perform a specific scope of work for a fixed amount. Contracts for research, engineering, repair and maintenance, and other services are typically cost-reimbursement or time-and-materials. Under cost-reimbursement contracts,
63

the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee. The amount for an incentive or award fee is determined by our ability to achieve targets set in the contract, such as cost, quality, schedule and performance. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials.
Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Cost-reimbursement contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under time-and-materials contracts, our profit may vary if actual labor-hour rates vary significantly from the negotiated rates. Also, because these contracts can provide little or no fee for managing material costs, the content mix can impact profitability.
Revenue by customer was as follows:

Year Ended December 31, 2022	Aerospace		Marine Systems		Combat Systems		Technologies		Total
Revenue	
U.S. government:										
Department of Defense (DoD)	$	313 			$	10,874 			$	4,082 			$	6,981 			$	22,250 		
Non-DoD	— 			2 			9 			4,797 			4,808 		
Foreign military sales (FMS)	120 			158 			325 			30 			633 		
Total U.S. government	433 			11,034 			4,416 			11,808 			27,691 		
U.S. commercial	5,236 			3 			237 			233 			5,709 		
Non-U.S. government	587 			3 			2,563 			404 			3,557 		
Non-U.S. commercial	2,311 			— 			92 			47 			2,450 		
Total revenue	$	8,567 			$	11,040 			$	7,308 			$	12,492 			$	39,407 		
Year Ended December 31, 2021										
U.S. government:										
DoD	$	255 			$	10,325 			$	3,869 			$	6,937 			$	21,386 		
Non-DoD	— 			6 			10 			4,846 			4,862 		
FMS	84 			186 			294 			34 			598 		
Total U.S. government	339 			10,517 			4,173 			11,817 			26,846 		
U.S. commercial	4,381 			3 			223 			201 			4,808 		
Non-U.S. government	622 			4 			2,881 			415 			3,922 		
Non-U.S. commercial	2,793 			2 			74 			24 			2,893 		
Total revenue	$	8,135 			$	10,526 			$	7,351 			$	12,457 			$	38,469 		
Year Ended December 31, 2020										
U.S. government:										
DoD	$	394 			$	9,656 			$	3,813 			$	6,977 			$	20,840 		
Non-DoD	— 			9 			12 			4,705 			4,726 		
FMS	119 			206 			366 			46 			737 		
Total U.S. government	513 			9,871 			4,191 			11,728 			26,303 		
U.S. commercial	4,268 			97 			254 			272 			4,891 		
Non-U.S. government	221 			9 			2,704 			551 			3,485 		
Non-U.S. commercial	3,073 			2 			74 			97 			3,246 		
Total revenue	$	8,075 			$	9,979 			$	7,223 			$	12,648 			$	37,925 		
64

Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In our defense segments, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. In our Aerospace segment, we generally receive deposits from customers upon contract execution and upon achievement of contractual milestones. These deposits are liquidated when revenue is recognized. Changes in the contract asset and liability balances during the year ended December 31, 2022, were not materially impacted by any other factors.
Revenue recognized in 2022, 2021 and 2020 that was included in the contract liability balance at the beginning of each year was $4 billion, $3.4 billion and $3.8 billion, respectively. This revenue represented primarily the sale of business jet aircraft.

C. EARNINGS PER SHARE
We compute basic earnings per share (EPS) using net earnings for the period and the weighted average number of common shares outstanding during the period. Basic weighted average shares outstanding decreased in 2022 and 2021 due to share repurchases. See Note N for further discussion of our share repurchases. Diluted EPS incorporates the additional shares issuable upon the assumed exercise of stock options and the release of restricted stock and restricted stock units (RSUs).
Basic and diluted weighted average shares outstanding were as follows (in thousands):

Year Ended December 31	2022		2021		2020	
Basic weighted average shares outstanding	275,311 			280,427 			286,922 		
Dilutive effect of stock options and restricted stock/RSUs*	2,858 			1,590 			991 		
Diluted weighted average shares outstanding	278,169 			282,017 			287,913 		
*Excludes outstanding options to purchase shares of common stock that had exercise prices in excess of the average market price of our common stock during the year and, therefore, the effect of including these options would be antidilutive. These options totaled 1,466 in 2022, 5,037 in 2021 and 7,159 in 2020.

65

D. INCOME TAXES
Income Tax Provision. We calculate our provision for federal, state and foreign income taxes based on current tax law. The following is a summary of our net provision for income taxes for continuing operations:

Year Ended December 31	2022		2021		2020	
Current:						
U.S. federal	$	649 			$	515 			$	558 		
State	52 			30 			8 		
Foreign	123 			137 			132 		
Total current	824 			682 			698 		
Deferred:						
U.S. federal	(196)			(53)			(130)		
State	(11)			(5)			(2)		
Foreign	29 			(8)			5 		
Total deferred	(178)			(66)			(127)		
Provision for income taxes, net	$	646 			$	616 			$	571 		
Net income tax payments	$	1,245 			$	740 			$	764 		
The reported tax provision differs from the amounts paid because some income and expense items are recognized in different time periods for financial reporting than for income tax purposes. This includes the impact of the requirement, effective January 1, 2022, to capitalize and amortize over five years certain research and experimental expenditures that were previously deductible immediately for tax purposes, which contributed to increased net income tax payments and is reflected in the net deferred tax liability related to intangible assets.
State and local income taxes allocable to U.S. government contracts are included in operating costs and expenses in the Consolidated Statement of Earnings and, therefore, are not included in the provision above.
The reconciliation from the statutory federal income tax rate to our effective income tax rate follows:

Year Ended December 31	2022		2021		2020	
Statutory federal income tax rate	21.0 	%		21.0 	%		21.0 	%	
Domestic tax credits	(1.5)			(2.0)			(4.6)		
Equity-based compensation	(0.8)			(0.1)			(0.2)		
Foreign-derived intangible income	(1.6)			(1.5)			(2.1)		
State tax on commercial operations, net of federal benefits	0.8 			0.5 			0.1 		
Global impact of international operations	0.1 			(1.0)			1.9 		
	
Tax impact of restructuring	(1.9)			— 			— 		
Other, net	(0.1)			(1.0)			(0.8)		
Effective income tax rate	16.0 	%		15.9 	%		15.3 	%	
66

Net Deferred Tax Liability. The tax effects of temporary differences between reported earnings and taxable income consisted of the following:

December 31	2022		2021	
Retirement benefits	$	461 			$	570 		
Lease liabilities	373 			370 		
Tax loss and credit carryforwards	259 			294 		
Salaries and wages	200 			236 		
Workers’ compensation	135 			161 		
Other	358 			365 		
Deferred assets	1,786 			1,996 		
Valuation allowances	(237)			(258)		
Net deferred assets	$	1,549 			$	1,738 		
				
Intangible assets	$	(731)			$	(1,059)		
Property, plant and equipment	(444)			(412)		
Lease right-of-use assets	(356)			(367)		
Contract accounting methods	(291)			(259)		
Capital Construction Fund qualified ships	(57)			(57)		
Other	(316)			(411)		
Deferred liabilities	$	(2,195)			$	(2,565)		
Net deferred tax liability	$	(646)			$	(827)		
Our deferred tax assets and liabilities are included in other noncurrent assets and liabilities on the Consolidated Balance Sheet. Our net deferred tax liability consisted of the following:

December 31	2022		2021	
Deferred tax asset	$	39 			$	41 		
Deferred tax liability	(685)			(868)		
Net deferred tax liability	$	(646)			$	(827)		
We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized.
Our deferred tax balance associated with our retirement benefits includes a deferred tax asset of $637 on December 31, 2022, and $692 on December 31, 2021, related to the amounts recorded in accumulated other comprehensive loss (AOCL) to recognize the funded status of our retirement plans. For a reconciliation of the increase in funded status of our defined benefit plans in 2022, see Note S.
One of our deferred tax liabilities results from our participation in the Capital Construction Fund (CCF), a program established by the U.S. government and administered by the Maritime Administration that supports the acquisition, construction, reconstruction or operation of U.S. flag merchant marine vessels. The program allows us to defer federal and state income taxes on earnings derived from eligible programs as long as the proceeds are deposited in the fund and withdrawals are used for qualified activities. We had U.S. government accounts receivable pledged (and thereby deposited) to the CCF of $299 and $295 on December 31, 2022 and 2021, respectively.
On December 31, 2022, we had net operating loss carryforwards of $912, substantially all of which are associated with jurisdictions that have an indefinite carryforward period.
67

Tax Uncertainties. We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time audit of our consolidated federal corporate income tax return. The IRS has examined our consolidated federal income tax returns through 2021.
For all periods open to examination by tax authorities, we periodically assess our liabilities and contingencies based on the latest available information. Where we believe there is more than a 50% chance that our tax position will not be sustained, we record our best estimate of the resulting tax liability, including interest, in the Consolidated Financial Statements. We include any interest or penalties incurred in connection with income taxes as part of income tax expense.
Based on all known facts and circumstances and current tax law, we believe the total amount of any unrecognized tax benefits on December 31, 2022, was not material to our results of operations, financial condition or cash flows. In addition, there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months, producing, individually or in the aggregate, a material effect on our results of operations, financial condition or cash flows.

E. ACCOUNTS RECEIVABLE
Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Accounts receivable consisted of the following:

December 31	2022		2021	
Non-U.S. government	$	1,470 			$	1,569 		
U.S. government	1,093 			1,043 		
Commercial	445 			429 		
Total accounts receivable	$	3,008 			$	3,041 		
Receivables from non-U.S. government customers included amounts related to long-term production programs for the Spanish Ministry of Defence of $1.2 billion and $1.4 billion on December 31, 2022 and 2021, respectively. A different ministry, the Spanish Ministry of Industry, has funded work on these programs in advance of costs incurred by the company. The cash advances are reported on the Consolidated Balance Sheet in current customer advances and deposits and will be repaid to the Ministry of Industry as we collect on the outstanding receivables from the Ministry of Defence. The net amounts for these programs on December 31, 2022 and 2021, were advance payments of $91 and $55, respectively. With respect to our other receivables, we expect to collect substantially all of the year-end 2022 balance during 2023.

F. UNBILLED RECEIVABLES
Unbilled receivables represent revenue recognized on long-term contracts (contract costs and estimated profits) less associated advances and progress billings. These amounts will be billed in accordance with the agreed-upon contractual terms. Unbilled receivables consisted of the following:

December 31	2022		2021	
Unbilled revenue	$	39,482 			$	39,566 		
Advances and progress billings	(30,687)			(31,068)		
Net unbilled receivables	$	8,795 			$	8,498 		
68

On December 31, 2022 and 2021, net unbilled receivables included $2.7 billion and $3.3 billion, respectively, associated with two large international contracts in our Combat Systems segment. A wheeled vehicle contract, originally negotiated in 2012, was amended in 2020 to include a revised payment schedule that addressed a build-up in unbilled receivables. Under the amended contract, we have received progress payments in 2021 and 2022 that have reduced the program’s unbilled balance to $1 billion as of December 31, 2022. The remaining scheduled progress payments will liquidate the net unbilled receivables balance by the end of 2023. A separate tracked vehicle contract signed in 2010 has been experiencing an unbilled receivables build-up since 2021 resulting in a $1.7 billion balance as of December 31, 2022. Based on ongoing discussions with the customer, we expect payments to resume in the first quarter of 2023 assuming continued successful program activity. Other than the balance related to the tracked vehicle contract, we expect to bill substantially all of the remaining year-end 2022 net unbilled receivables balance during 2023, and the amount not expected to be billed in 2023 results primarily from the agreed-upon contractual billing terms.
G&A costs in unbilled revenue on December 31, 2022 and 2021, were $559 and $501, respectively.

G. INVENTORIES
The majority of our inventories are for business jet aircraft. Our inventories are stated at the lower of cost or net realizable value. Work in process represents largely labor, material and overhead costs associated with aircraft in the manufacturing process and is based primarily on the estimated average unit cost in a production lot. Substantially all of our raw materials are valued on either the average cost or the first-in, first-out method. We record pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value.
Inventories consisted of the following:

December 31	2022		2021	
Work in process	$	4,182 			$	3,654 		
Raw materials	2,072 			1,651 		
Finished goods	17 			22 		
Pre-owned aircraft	51 			13 		
Total inventories	$	6,322 			$	5,340 		
The increase in total inventories during 2022 was due primarily to the ramp-up in production of new Gulfstream aircraft models announced in the last three years, as well as increased production of in-service aircraft reflecting strong customer demand. Customer deposits associated with firm orders for these aircraft, which are reflected in customer advances and deposits and other noncurrent liabilities on the Consolidated Balance Sheet, have correspondingly increased.

69

H. GOODWILL AND INTANGIBLE ASSETS
Goodwill. The changes in the carrying amount of goodwill by reporting unit were as follows:

	Aerospace		Marine Systems		Combat Systems		Technologies		Total Goodwill	
December 31, 2020 (a)	$	3,065 			$	297 			$	2,786 			$	13,905 			$	20,053 		
Acquisitions (b)	33 			— 			54 			— 			87 		
Other (c)	(59)			— 			(13)			30 			(42)		
	
December 31, 2021 (a)	3,039 			297 			2,827 			13,935 			20,098 		
Acquisitions	— 			— 			— 			336 			336 		
Other (c)	(20)			— 			(61)			(19)			(100)		
	
December 31, 2022 (a)	$	3,019 			$	297 			$	2,766 			$	14,252 			$	20,334 		
(a)Goodwill in the Technologies reporting unit was net of $1.8 billion of accumulated impairment losses.
(b)Included adjustments during the purchase price allocation period.
(c)Consisted primarily of adjustments for foreign currency translation.
Intangible Assets. Intangible assets consisted of the following:

	Gross Carrying Amount (a)	Accumulated Amortization	Net Carrying Amount		Gross Carrying Amount (a)	Accumulated Amortization	Net Carrying Amount	
December 31	2022		2021	
Contract and program intangible assets (b)	$	3,247 		$	(1,688)		$	1,559 			$	3,239 		$	(1,547)		$	1,692 		
Trade names and trademarks	496 		(248)		248 			501 		(238)		263 		
Technology and software	64 		(48)		16 			70 		(48)		22 		
Other intangible assets	64 		(63)		1 			64 		(63)		1 		
Total intangible assets	$	3,871 		$	(2,047)		$	1,824 			$	3,874 		$	(1,896)		$	1,978 		
(a)Changes in gross carrying amounts consisted primarily of adjustments for write-offs of fully amortized intangible assets, acquired intangible assets and foreign currency translation.
(b)Consisted of acquired backlog and probable follow-on work and associated customer relationships.
We did not recognize any impairments of our intangible assets in 2022, 2021 or 2020. The amortization lives (in years) of our intangible assets on December 31, 2022, were as follows:

Intangible Asset		Range of Amortization Life	
Contract and program intangible assets		7-30	
Trade names and trademarks		30	
Technology and software		7-15	
Other intangible assets		7	
	
Amortization expense is included in operating costs and expenses in the Consolidated Statement of Earnings. Amortization expense for intangible assets was $202 in 2022, $226 in 2021 and $261 in 2020. We expect to record annual amortization expense over the next five years as follows:
70

						
Year Ended December 31	Amortization Expense	
2023	$	192 		
2024	181 		
2025	174 		
2026	169 		
2027	158 		

I. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment (PP&E) is carried at historical cost, net of accumulated depreciation. Net PP&E by major asset class consisted of the following:

December 31	2022		2021	
Machinery and equipment	$	6,620 			$	6,281 		
Buildings and improvements	4,238 			3,712 		
Construction in process	1,020 			1,057 		
Land and improvements	414 			414 		
Total PP&E	12,292 			11,464 		
Accumulated depreciation	(6,392)			(6,047)		
PP&E, net	$	5,900 			$	5,417 		
We depreciate most of our assets using the straight-line method and the remainder using accelerated methods. Buildings and improvements are depreciated over periods of up to 50 years. Machinery and equipment are depreciated over periods of up to 30 years. Our government customers provide certain facilities and equipment for our use that are not included above.

J. LEASES
We determine at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize an ROU asset and lease liability for leases with terms of 12 months or less. Some of our leases include options to extend the term of the lease for up to 29 years or to terminate the lease within one year. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining total future lease payments. As most of our lease agreements do not explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate on the commencement date to calculate the present value of future payments.
Certain of our leases include variable payments, which may be calculated based on the Consumer Price Index (CPI) or similar indices at the lease commencement date. To the extent these variable payments are not considered fixed, we exclude such payments from the ROU asset and lease liability and expense as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease, such as commissions.
71

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.
Our leases are for office space, manufacturing facilities, and machinery and equipment. Real estate represents more than 75% of our lease obligations.
The components of lease costs were as follows:

	
Year Ended December 31	2022		2021		2020	
Finance lease cost:						
Amortization of ROU assets	$	96 			$	96 			$	94 		
Interest on lease liabilities	14 			20 			25 		
Operating lease cost	308 			323 			326 		
Short-term lease cost	68 			71 			62 		
Variable lease cost	23 			18 			12 		
Sublease income	(17)			(18)			(16)		
Total lease costs, net	$	492 			$	510 			$	503 		
Additional information related to leases was as follows:

Year Ended December 31	2022		2021		2020	
	
Cash paid for amounts included in the measurement of lease liabilities:						
Operating cash flows from operating leases	$	307 			$	322 			$	323 		
Operating cash flows from finance leases	13 			21 			25 		
Financing cash flows from finance leases	80 			66 			64 		
ROU assets obtained in exchange for lease liabilities:						
Operating leases	297 			249 			205 		
Finance leases	4 			27 			45 		
Additional quantitative lease information was as follows:

December 31	2022		2021	
	
Weighted-average remaining lease term:				
Operating leases	12.4 years		11.5 years	
Finance leases	15.7 years		13.7 years	
Weighted-average discount rate:				
Operating leases	3 	%		3 	%	
Finance leases	4 	%		5 	%	
72

The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on the Consolidated Balance Sheet on December 31, 2022:

Year Ended December 31	Operating Leases		Finance Leases	
2023	$	285 			$	46 		
2024	232 			29 		
2025	164 			26 		
2026	129 			24 		
2027	112 			23 		
Thereafter	768 			178 		
Total future lease payments	1,690 			326 		
Less imputed interest	334 			64 		
Present value of future lease payments	1,356 			262 		
Less current portion of lease liabilities	250 			38 		
Long-term lease liabilities	$	1,106 			$	224 		
ROU assets	$	1,263 			$	227 		
On December 31, 2021, operating and finance lease liabilities and the related ROU assets were as follows:

	Operating Leases		Finance Leases	
Current portion of lease liabilities	$	258 			$	79 		
Long-term lease liabilities	1,085 			258 		
ROU assets	1,257 			319 		
Lease liabilities are included on the Consolidated Balance Sheet in current and noncurrent other liabilities, while ROU assets are included in noncurrent other assets.
On December 31, 2022, we had additional future payments on leases that had not yet commenced of $351. These leases will commence in 2023, and have lease terms ranging from one to 40 years.

	
73

K. DEBT
Debt consisted of the following:

December 31		2022		2021	
Fixed-rate notes due:	Interest rate:				
November 2022	2.250%	$	— 			$	1,000 		
May 2023	3.375%	750 			750 		
August 2023	1.875%	500 			500 		
November 2024	2.375%	500 			500 		
April 2025	3.250%	750 			750 		
May 2025	3.500%	750 			750 		
June 2026	1.150%	500 			500 		
August 2026	2.125%	500 			500 		
April 2027	3.500%	750 			750 		
November 2027	2.625%	500 			500 		
May 2028	3.750%	1,000 			1,000 		
April 2030	3.625%	1,000 			1,000 		
June 2031	2.250%	500 			500 		
April 2040	4.250%	750 			750 		
June 2041	2.850%	500 			500 		
November 2042	3.600%	500 			500 		
April 2050	4.250%	750 			750 		
	
Other	Various	90 			106 		
Total debt principal		10,590 			11,606 		
Less unamortized debt issuance costs and discounts		94 			111 		
Total debt		10,496 			11,495 		
Less current portion		1,253 			1,005 		
Long-term debt		$	9,243 			$	10,490 		
In November 2022, we repaid fixed-rate notes of $1 billion at the scheduled maturity using cash on hand. Interest payments associated with our debt were $383 in 2022, $433 in 2021 and $459 in 2020.
The aggregate amounts of scheduled principal maturities of our debt are as follows:

Year Ended December 31	Debt
Principal	
2023	$	1,253 		
2024	505 		
2025	1,503 		
2026	1,003 		
2027	1,253 		
Thereafter	5,073 		
Total debt principal	$	10,590 		
74

On December 31, 2022, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have a $4 billion committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper issuances. This credit facility expires in March 2027. We may renew or replace this credit facility in whole or in part at or prior to its expiration date. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Our financing arrangements contain a number of customary covenants and restrictions. We were in compliance with all covenants and restrictions on December 31, 2022.

L. OTHER LIABILITIES
A summary of significant other liabilities by balance sheet caption follows:

December 31	2022		2021	
Salaries and wages	$	1,116 			$	1,022 		
Dividends payable	347 			331 		
Lease liabilities	288 			337 		
Workers’ compensation	215 			270 		
Retirement benefits	38 			288 		
Other	1,250 			1,292 		
Total other current liabilities	$	3,254 			$	3,540 		
				
Retirement benefits	$	2,453 			$	2,813 		
Customer deposits on commercial contracts	2,175 			1,250 		
Lease liabilities	1,330 			1,343 		
Other	2,475 			2,558 		
Total other liabilities	$	8,433 			$	7,964 		

M. COMMITMENTS AND CONTINGENCIES
Litigation
In 2015, Electric Boat Corporation, a subsidiary of General Dynamics Corporation, received a civil investigative demand from the U.S. Department of Justice regarding an investigation of potential False Claims Act violations relating to alleged failures of Electric Boat’s quality system with respect to allegedly non-conforming parts purchased from a supplier. In 2016, Electric Boat was made aware that it is a defendant in a lawsuit related to this matter which had been filed under seal in U.S. district court. Also in 2016, the Suspending and Debarring Official for the U.S. Department of the Navy issued a show cause letter to Electric Boat requesting that Electric Boat respond to the official’s concerns regarding Electric Boat’s oversight and management with respect to its quality assurance systems for subcontractors and suppliers. Electric Boat responded to the show cause letter and engaged in discussions with the U.S. government.
In the third quarter of 2019, the Department of Justice declined to intervene in the qui tam action, noting that its investigation continues, and the court unsealed the relator’s complaint. In the fourth quarter of 2020, the relator filed a second amended complaint. In the third quarter of 2021, the court dismissed the relator’s complaint with prejudice. The relator appealed the dismissal of the complaint to the United States Court of Appeals. In the fourth quarter of 2022, the Court of Appeals heard oral
75

arguments on the appeal, and thereafter took the case under submission. Given the current status of these matters, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss. Depending on the outcome of these matters, there could be a material impact on our results of operations, financial condition and cash flows.
Additionally, various other claims and legal proceedings incidental to the normal course of business are pending or threatened against us. These other matters relate to such issues as government investigations and claims, the protection of the environment, asbestos-related claims and employee-related matters. The nature of litigation is such that we cannot predict the outcome of these other matters. However, based on information currently available, we believe any potential liabilities in these other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows.
Environmental
We are subject to and affected by a variety of federal, state, local and foreign environmental laws and regulations. We are directly or indirectly involved in environmental investigations or remediation at some of our current and former facilities and third-party sites that we do not own but where we have been designated a potentially responsible party (PRP) by the U.S. Environmental Protection Agency or a state environmental agency. Based on historical experience, we expect that a significant percentage of the total remediation and compliance costs associated with these facilities will continue to be allowable contract costs and, therefore, recoverable under U.S. government contracts.
As required, we provide financial assurance for certain sites undergoing or subject to investigation or remediation. We accrue environmental costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. Where applicable, we seek insurance recovery for costs related to environmental liabilities. We do not record insurance recoveries before collection is considered probable. Based on all known facts and analyses, we do not believe that our liability at any individual site, or in the aggregate, arising from such environmental conditions will be material to our results of operations, financial condition or cash flows. We also do not believe that the range of reasonably possible additional loss beyond what has been recorded would be material to our results of operations, financial condition or cash flows.
Other
Government Contracts. As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and treble damages. We believe the outcome of such ongoing government audits and investigations will not have a material impact on our results of operations, financial condition or cash flows.
In the performance of our contracts, we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (REAs) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows.
Letters of Credit and Guarantees. In the ordinary course of business, we have entered into letters of credit, bank guarantees, surety bonds and other similar arrangements with financial institutions and insurance carriers totaling approximately $1.4 billion on December 31, 2022. In addition, from time to
76

time and in the ordinary course of business, we contractually guarantee the payment or performance of our subsidiaries arising under certain contracts.
Aircraft Trade-ins. In connection with orders for new aircraft in contract backlog, our Aerospace segment has outstanding options with some customers to trade in aircraft as partial consideration in their new-aircraft transaction. These trade-in commitments are generally structured to establish the fair market value of the trade-in aircraft at a date generally 45 or fewer days preceding delivery of the new aircraft to the customer. At that time, the customer is required to either exercise the option or allow its expiration. Other trade-in commitments are structured to guarantee a predetermined trade-in value. These commitments present more risk in the event of an adverse change in market conditions. In either case, any excess of the preestablished trade-in price above the fair market value at the time the new aircraft is delivered is treated as a reduction of revenue in the new-aircraft sales transaction. As of December 31, 2022, the estimated change in fair market values from the date of the commitments was not material.
Labor Agreements. On December 31, 2022, approximately one-fifth of the employees of our subsidiaries were working under collectively bargained terms and conditions, including 62 collective agreements that we have negotiated directly with unions and works councils. A number of these agreements expire within any given year. Historically, we have been successful at renegotiating these labor agreements without any material disruption of operating activities. In 2023, we expect to negotiate the terms of 28 agreements covering approximately 12,600 employees. We do not expect the renegotiations will, either individually or in the aggregate, have a material impact on our results of operations, financial condition or cash flows.
Product Warranties. We provide warranties to our customers associated with certain product sales. We record estimated warranty costs in the period in which the related products are delivered. The warranty liability recorded at each balance sheet date is based generally on the number of months of warranty coverage remaining for the products delivered and the average historical monthly warranty payments. Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion. Our other warranty obligations, primarily for business jet aircraft, are included in other current and noncurrent liabilities on the Consolidated Balance Sheet.
The changes in the carrying amount of warranty liabilities for each of the past three years were as follows:

Year Ended December 31	2022		2021		2020	
Beginning balance	$	641 			$	660 			$	619 		
Warranty expense	99 			104 			113 		
Payments	(116)			(124)			(108)		
Adjustments	(21)			1 			36 		
Ending balance	$	603 			$	641 			$	660 		

N. SHAREHOLDERS’ EQUITY
Authorized Stock. Our authorized capital stock consists of 500 million shares of $1 per share par value common stock and 50 million shares of $1 per share par value preferred stock. The preferred stock is issuable in series, with the rights, preferences and limitations of each series to be determined by our board of directors.
77

Shares Issued and Outstanding. On December 31, 2022, we had 481,880,634 shares of common stock issued and 274,411,106 shares of common stock outstanding, including unvested restricted stock of 488,890 shares. On December 31, 2021, we had 481,880,634 shares of common stock issued and 277,620,943 shares of common stock outstanding. No shares of our preferred stock were outstanding on either date. The only changes in our shares outstanding during 2022 and 2021 resulted from shares repurchased in the open market and share activity under our equity compensation plans. See Note R for additional details.
Share Repurchases. Our board of directors, from time to time, authorizes management to repurchase outstanding shares of our common stock on the open market. In 2022, we repurchased 5.3 million of our outstanding shares for $1.2 billion. On December 31, 2022, 6.7 million shares remained authorized by our board of directors for repurchase, representing 2.4% of our total shares outstanding. We repurchased 10.3 million shares for $1.8 billion in 2021 and 4.1 million shares for $602 in 2020.
Dividends per Share. Our board of directors declared dividends per share of $5.04 in 2022, $4.76 in 2021 and $4.40 in 2020. We paid cash dividends of $1.4 billion in 2022, $1.3 billion in 2021 and $1.2 billion in 2020.
Accumulated Other Comprehensive Loss. The changes, pretax and net of tax, in each component of AOCL consisted of the following:

	Changes in Unrealized
Cash Flow Hedges	Foreign Currency Translation Adjustments	Changes in Retirement Plans’ Funded Status	AOCL	
December 31, 2019	$	2 		$	288 		$	(4,108)		$	(3,818)		
	
Other comprehensive income, pretax	366 		353 		(453)		266 		
Benefit from income tax, net	(96)		— 		98 		2 		
Other comprehensive income, net of tax	270 		353 		(355)		268 		
December 31, 2020	272 		641 		(4,463)		(3,550)		
	
Other comprehensive income, pretax	(174)		(103)		2,365 		2,088 		
Provision for income tax, net	46 		— 		(504)		(458)		
Other comprehensive income, net of tax	(128)		(103)		1,861 		1,630 		
December 31, 2021	144 		538 		(2,602)		(1,920)		
	
Other comprehensive loss, pretax	(190)		(278)		241 		(227)		
Provision for income tax, net	50 		— 		(55)		(5)		
Other comprehensive loss, net of tax	(140)		(278)		186 		(232)		
December 31, 2022	$	4 		$	260 		$	(2,416)		$	(2,152)		
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 S for these amounts, which are included in our net annual pension and other post-retirement benefit (credit) cost.

78

O. 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.
Summary financial information for each of our segments follows:

	Revenue (a)		Operating Earnings		Revenue from
U.S. Government	
Year Ended December 31	2022	2021	2020		2022	2021	2020		2022	2021	2020	
Aerospace	$	8,567 		$	8,135 		$	8,075 			$	1,130 		$	1,031 		$	1,083 			$	433 		$	339 		$	513 		
Marine Systems	11,040 		10,526 		9,979 			897 		874 		854 			11,034 		10,517 		9,871 		
Combat Systems	7,308 		7,351 		7,223 			1,075 		1,067 		1,041 			4,416 		4,173 		4,191 		
Technologies	12,492 		12,457 		12,648 			1,227 		1,275 		1,211 			11,808 		11,817 		11,728 		
Corporate (b)	— 		— 		— 			(118)		(84)		(56)			— 		— 		— 		
Total	$	39,407 		$	38,469 		$	37,925 			$	4,211 		$	4,163 		$	4,133 			$	27,691 		$	26,846 		$	26,303 		
(a)See Note B for additional revenue information by segment.
(b)Corporate operating costs consisted primarily of equity-based compensation expense.
The following is additional summary financial information for each of our segments:

	Identifiable Assets		Capital Expenditures		Depreciation and Amortization	
Year Ended December 31	2022	2021	2020		2022	2021	2020		2022	2021	2020	
Aerospace	$	12,676 		$	11,748 		$	12,050 			$	214 		$	102 		$	95 			$	195 		$	205 		$	201 		
Marine Systems	5,864 		5,294 		4,488 			530 		573 		604 			191 		165 		145 		
Combat Systems	11,032 		11,657 		12,034 			94 		100 		92 			105 		109 		95 		
Technologies	19,700 		19,490 		19,663 			175 		111 		172 			383 		401 		428 		
Corporate	2,313 		1,884 		3,073 			101 		1 		4 			10 		10 		9 		
Total	$	51,585 		$	50,073 		$	51,308 			$	1,114 		$	887 		$	967 			$	884 		$	890 		$	878 		
The following table presents our revenue by geographic area based on the location of our customers:

Year Ended December 31	2022		2021		2020	
North America:						
United States	$	33,400 			$	31,654 			$	31,194 		
Other	934 			934 			1,078 		
Total North America	34,334 			32,588 			32,272 		
Europe	2,238 			2,675 			2,846 		
Asia/Pacific	1,224 			1,269 			1,292 		
Africa/Middle East	1,365 			1,703 			1,249 		
South America	246 			234 			266 		
Total revenue	$	39,407 			$	38,469 			$	37,925 		
Our revenue from non-U.S. operations was $4 billion in 2022, $4.4 billion in 2021 and $4.3 billion in 2020, and earnings from continuing operations before income taxes from non-U.S. operations were $567 in 2022, $588 in 2021 and $585 in 2020. The long-lived assets associated with these operations were 4% of our total long-lived assets on December 31, 2022, 2021 and 2020.
79

P. 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 December 31, 2022 or 2021.
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 December 31, 2022 and 2021, and the basis for determining their fair values:
80

																														
	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)	December 31, 2022	
Measured at fair value:										
Marketable securities held in trust:										
Cash and equivalents	$	7 			$	7 			$	— 			$	7 			$	— 		
Available-for-sale debt securities	107 			107 			— 			107 			— 		
Commingled equity funds	42 			42 			42 			— 			— 		
Commingled fixed-income funds	6 			6 			6 			— 			— 		
Other investments	17 			17 			— 			— 			17 		
Cash flow hedge assets	109 			109 			— 			109 			— 		
Cash flow hedge liabilities	(67)			(67)			— 			(67)			— 		
Measured at amortized cost:										
Short- and long-term debt principal	(10,590)			(9,773)			— 			(9,773)			— 		
										
	December 31, 2021	
Measured at fair value:										
Marketable securities held in trust:										
Cash and equivalents	$	4 			$	4 			$	— 			$	4 			$	— 		
Available-for-sale debt securities	125 			125 			— 			125 			— 		
Equity securities	62 			62 			62 			— 			— 		
Other investments	12 			12 			— 			— 			12 		
Cash flow hedge assets	320 			320 			— 			320 			— 		
Cash flow hedge liabilities	(98)			(98)			— 			(98)			— 		
Measured at amortized cost:										
Short- and long-term debt principal	(11,606)			(12,549)			— 			(12,549)			— 		
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.

Q. 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 enter into derivative financial instruments, principally foreign currency forward purchase and sale
81

contracts, designed to offset and minimize our risk. The dollar-weighted two-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 December 31, 2022 and 2021, we held $1.2 billion and $1.6 billion in cash and equivalents, respectively, but held no marketable securities other than those held in trust to meet some of our obligations under workers’ compensation and non-qualified pension plans. On December 31, 2022 and 2021, we held marketable securities in trust of $162 and $191, respectively. These marketable securities are reflected at fair value on the Consolidated Balance Sheet in other current and noncurrent assets. See Note P for additional details.
Hedging Activities. We had notional forward exchange contracts outstanding of $6.9 billion and $6.8 billion on December 31, 2022 and 2021, 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 P 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 in any of the past three years. Net gains and losses reclassified to earnings from AOCL related to qualified hedges were also not material to our results of operations in any of the past three years, 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 December 31, 2022 and 2021.
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 in any of the past three years. In addition, the effect of changes in foreign exchange rates on non-U.S. cash balances was not material in any of the past three years.
82

R. EQUITY COMPENSATION PLANS
Equity Compensation Overview. We have equity compensation plans for employees, as well as for non-employee members of our board of directors. The equity compensation plans seek to provide an effective means of attracting and retaining directors, officers and key employees, and to provide them with incentives to enhance our growth and profitability. Under the equity compensation plans, awards may be granted to officers, employees or non-employee directors in common stock, options to purchase common stock, restricted shares of common stock, participation units (including RSUs, stock appreciation rights and phantom stock units) or any combination of these.
Annually, we grant awards of stock options, restricted stock and RSUs to participants in our equity compensation plans in early March. Additionally, we may make limited ad hoc grants on a quarterly basis for new hires or promotions. We issue common stock under our equity compensation plans from treasury stock. On December 31, 2022, in addition to the shares reserved for issuance upon the exercise of outstanding stock options, approximately 18 million shares have been authorized for awards that may be granted in the future.
Equity-based Compensation Expense. Equity-based compensation expense is included in G&A expenses. The following table details the components of equity-based compensation expense recognized in net earnings in each of the past three years:

Year Ended December 31	2022		2021		2020	
Stock options	$	71 			$	46 			$	43 		
Restricted stock/RSUs	59 			53 			58 		
Total equity-based compensation expense, net of tax	$	130 			$	99 			$	101 		
Stock Options. Stock options granted under our equity compensation plans are issued with an exercise price at the fair value of our common stock determined by the average of the high and low stock prices as listed on the New York Stock Exchange (NYSE) on the date of grant. Participants generally vest in stock options over three years – with 50% of the options vesting after two years and the remaining 50% vesting the following year – and expire 10 years after the grant date.
We recognize compensation expense related to stock options on a straight-line basis over the vesting period of the awards, net of estimated forfeitures, except for awards to retirement-eligible participants that are recognized on an accelerated basis effective with the 2022 grant. Estimated forfeitures are based on our historical forfeiture experience. We estimate the fair value of stock options on the date of grant using the Black-Scholes option pricing model with the following assumptions for each of the past three years:

Year Ended December 31	2022		2021		2020	
Expected volatility	22.4-23.0%		26.7-27.3%		21.1-26.9%	
Weighted average expected volatility	22.5 	%		27.3 	%		21.2 	%	
Expected term (in months)	60		60		60	
Risk-free interest rate	1.7-4.2%		0.6-1.2%		0.4-1.5%	
Expected dividend yield	2.3 	%		2.9 	%		2.4 	%	
83

We determine the above assumptions based on the following:
•Expected volatility is based on the historical volatility of our common stock over a period equal to the expected term of the option
•Expected term is based on assumptions used by a set of comparable peer companies
•Risk-free interest rate is the yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option at the grant date
•Expected dividend yield is based on our historical dividend yield
The resulting weighted average fair value per stock option granted (in dollars) was $38.93 in 2022, $28.87 in 2021 and $24.86 in 2020. Stock option expense reduced pretax operating earnings (and on a diluted per-share basis) by $91 ($0.26) in 2022, $58 ($0.16) in 2021 and $55 ($0.15) in 2020. On December 31, 2022, we had $45 of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 1.5 years.
A summary of stock option activity during 2022 follows:

In Shares and Dollars	Shares Under Option 		Weighted Average
Exercise Price Per Share	
Outstanding on December 31, 2021	11,930,414 			$	170.83 		
Granted	1,782,730 			232.74 		
Exercised	(2,544,434)			155.80 		
Forfeited/canceled	(391,652)			179.00 		
Outstanding on December 31, 2022	10,777,058 			$	184.33 		
Vested and expected to vest on December 31, 2022	10,610,512 			$	184.14 		
Exercisable on December 31, 2022	5,978,398 			$	178.92 		
Summary information with respect to our stock options’ intrinsic value and remaining contractual term on December 31, 2022, follows:

	Weighted Average  Remaining Contractual Term (in years)		Aggregate Intrinsic
Value	
Outstanding	6.5		$	687 		
Vested and expected to vest	6.5		679 		
Exercisable	5.1		414 		
In the table above, intrinsic value is calculated as the excess, if any, of the market price of our stock on the last trading day of the year over the exercise price of the options. For stock options exercised, intrinsic value is calculated as the difference between the market price on the date of exercise and the exercise price. The total intrinsic value of stock options exercised was $205 in 2022, $62 in 2021 and $57 in 2020.
Restricted Stock/RSUs. Grants of restricted stock are awards of shares of common stock. RSUs represent obligations that have a value derived from or related to the value of our common stock, and are payable in cash or common stock. The fair value of restricted stock and RSUs equals the average of the high and low market prices of our common stock as listed on the NYSE on the date of grant.
Participants generally vest in restricted stock and RSUs, over a three-year restriction period after the grant date, during which recipients may not sell, transfer, pledge, assign or otherwise convey their
84

restricted shares to another party. During this period, restricted stock recipients receive cash dividends on their restricted shares and are entitled to vote those shares, while RSU recipients receive dividend-equivalent units instead of cash dividends and are not entitled to vote their RSUs or dividend-equivalent units.
We grant RSUs with one or more performance measures (performance stock units or PSUs) determined by the compensation committee of the board of directors as described in our proxy statement. Depending on the company’s performance, the number of PSUs earned may be less than, equal to or greater than the original number of PSUs awarded subject to a payout range.
We recognize compensation expense related to restricted stock and RSUs on a straight-line basis over the vesting period of the awards, except for restricted stock awards to retirement-eligible participants that are recognized on an accelerated basis. Compensation expense related to restricted stock and RSUs reduced pretax operating earnings (and on a diluted per-share basis) by $74 ($0.21) in 2022, $68 ($0.19) in 2021 and $73 ($0.20) in 2020. On December 31, 2022, we had $73 of unrecognized compensation cost related to restricted stock and RSUs, which is expected to be recognized over a weighted average period of 1.8 years.
A summary of restricted stock and RSU activity during 2022 follows:

In Shares and Dollars	Shares/
Share-Equivalent 
Units		Weighted Average
Grant-Date Fair Value Per Share	
Nonvested at December 31, 2021	1,320,478 			$	169.54 		
Granted	393,126 			249.11 		
Vested	(395,165)			176.38 		
Forfeited	(50,888)			189.42 		
Nonvested at December 31, 2022	1,267,551 			$	194.38 		
The total fair value of vesting shares was $95 in 2022, $52 in 2021 and $103 in 2020.

S. 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
Substantially all of our plans use a December 31 measurement date, consistent with our fiscal year.
Defined Contribution Plans
We provide eligible employees the opportunity to participate in defined contribution plans (commonly known as 401(k) plans), which permit contributions on a before-tax and after-tax basis. Employees may contribute to various investment alternatives. In most of these plans, we match a portion of the employees’ contributions. Our contributions to these plans totaled $415 in 2022, $398 in 2021 and $379 in 2020. The defined-contribution plans held approximately 16 million and 17 million shares of our common stock, representing approximately 6% of our outstanding shares, on December 31, 2022 and 2021.
85

Defined Benefit Plans
Plan Descriptions. We have trusteed, qualified pension plans covering eligible employees aligned with the markets in our business: U.S. government, non-U.S. government and commercial. Some of these plans require employees to make contributions to the plan. We also sponsor several non-qualified pension plans, which provide eligible executives with additional benefits, including excess benefits over limits imposed on qualified plans by federal tax law. The principal factors affecting the benefits earned by participants in our pension plans are employees’ years of service and compensation levels. Our primary U.S. pension plans, which comprise the majority of our unfunded obligation, were closed to new salaried participants on January 1, 2007, and were closed to new hourly participants in subsequent collective bargaining agreements over the next several years. Additionally, we have made several changes to these plans for certain participants that limit or cease the benefits that accrue for future service.
In addition to pension benefits, we maintain plans that provide post-retirement health care and life insurance coverage for certain employees and retirees. These benefits vary by employment status, age, service and salary level at retirement. The coverage provided and the extent to which the retirees share in the cost of the program vary throughout the company. The plans provide health care and life insurance benefits only to those employees who retire directly from our service and not to those who terminate service prior to eligibility for retirement.
Contributions. It is our policy to fund our qualified pension plans in a manner that optimizes the tax deductibility and contract recovery of contributions considered within our capital deployment framework. Therefore, we may make discretionary contributions in addition to the required contributions determined in accordance with IRS regulations. We contributed $50 to our qualified pension plans in 2022. In 2023, our required contributions are $114. In the first quarter of 2023, we also made a discretionary contribution of $92, resulting in total expected pension plan contributions of $206 in 2023.
We maintain several tax-advantaged accounts, primarily Voluntary Employees’ Beneficiary Association (VEBA) trusts, to fund the obligations for some of our other post-retirement benefit plans. For non-funded plans, claims are paid as received. Contributions to our other post-retirement benefit plans were not material in 2022 and are not expected to be material in 2023.
Benefit Payments. We expect the following benefits to be paid from our defined benefit plans over the next 10 years:

	Pension
Benefits		Other  Post-retirement
Benefits	
2023	$	895 			$	54 		
2024	918 			52 		
2025	937 			50 		
2026	957 			49 		
2027	968 			47 		
2028-2032	4,877 			213 		
86

Benefit Cost. Our annual benefit cost consists of five primary elements:
•The cost of benefits earned by employees for services rendered during the year
•An interest charge on our plan liabilities
•An expected return on our plan assets for the year
•Actuarial gains and losses, which result from changes in assumptions and differences between actual and expected return on assets and participant experience
•The cost or credit attributed to prior service resulting from changes we make to plan benefit terms
For qualified pension plans and other post-retirement benefit plans, actuarial gains and losses and prior service costs or credits are initially deferred in AOCL and then amortized on a straight-line basis over future years. For our qualified U.S. government pension plans, we amortize actuarial gains and losses over a custom amortization period based on the amount of pension costs allocable to our U.S. government contracts. For the remaining qualified pension plans and other post-retirement benefit plans, we amortize only the amount of actuarial gains and losses that exceeds 10% of the greater of plan assets or benefit obligations. This amount is amortized over the average remaining service period of plan participants who are active employees unless all or almost all of a plan’s participants are inactive or are not accruing additional benefits. In such cases, the amortization period is based on the average remaining life expectancy of the plan participants. To further reduce the volatility of our annual benefit cost, gains and losses resulting from the return on plan assets are included over five years in the determination of the amortizable amount of actuarial gains and losses. For non-qualified pension plans, we recognize actuarial gains and losses immediately.
Net annual benefit (credit) cost consisted of the following:

	Pension Benefits	
Year Ended December 31	2022		2021		2020	
Service cost	$	102 			$	119 			$	115 		
Interest cost	400 			360 			491 		
Expected return on plan assets	(907)			(963)			(926)		
Net actuarial loss	171 			352 			387 		
Prior service credit	(20)			(20)			(18)		
Settlement/curtailment/other	4 			70 			— 		
Net annual benefit (credit) cost	$	(250)			$	(82)			$	49 		

	Other Post-retirement Benefits	
Year Ended December 31	2022		2021		2020	
Service cost	$	6 			$	10 			$	10 		
Interest cost	19 			19 			27 		
Expected return on plan assets	(31)			(36)			(36)		
Net actuarial gain	(16)			— 			(3)		
Prior service cost (credit)	1 			— 			(1)		
Settlement/curtailment/other	(11)			— 			— 		
Net annual benefit credit	$	(32)			$	(7)			$	(3)		
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
87

the amount determined under GAAP. We defer this difference on the Consolidated Balance Sheet. At this time, the amount allocated to contracts exceeds cumulative benefit costs, resulting in a deferred credit that is reported in other noncurrent liabilities. To the extent there is a non-service component of net annual benefit (credit) cost for our defined benefit plans, it is reported in other income (expense) in the Consolidated Statement of Earnings.
Funded Status. We recognize an asset or liability on the Consolidated Balance Sheet equal to the funded status of each of our defined benefit plans. The funded status is the difference between the fair value of the plan’s assets and its benefit obligation. The following is a reconciliation of the benefit obligations and plan/trust assets, and the resulting funded status, of our defined benefit plans:

 	Pension Benefits		Other Post-retirement Benefits	
Year Ended December 31	2022		2021		2022		2021	
Change in Benefit Obligation								
Benefit obligation at beginning of year	$	(17,779)			$	(19,692)			$	(840)			$	(1,062)		
Service cost	(102)			(119)			(6)			(10)		
Interest cost	(400)			(360)			(19)			(19)		
	
Amendments	6 			3 			(1)			4 		
Actuarial gain	3,884 			955 			185 			187 		
Settlement/curtailment/other	36 			553 			9 			— 		
Benefits paid	850 			881 			55 			60 		
Benefit obligation at end of year	$	(13,505)			$	(17,779)			$	(617)			$	(840)		
Change in Plan/Trust Assets								
Fair value of assets at beginning of year	$	15,167 			$	14,751 			$	777 			$	705 		
Actual return on plan assets	(2,916)			1,692 			(115)			114 		
	
Employer contributions	50 			135 			— 			— 		
Settlement/curtailment/other	(37)			(551)			— 			— 		
Benefits paid	(829)			(860)			(36)			(42)		
Fair value of assets at end of year	$	11,435 			$	15,167 			$	626 			$	777 		
Funded status at end of year	$	(2,070)			$	(2,612)			$	9 			$	(63)		
The overall decrease in our pension benefit obligation for the year ended December 31, 2022, was due primarily to actuarial gains created by the change in the weighted-average discount rate, which increased from 2.84% at December 31, 2021, to 5.08% at December 31, 2022.
The overall decrease in our pension benefit obligation for the year ended December 31, 2021, was due primarily to the settlement resulting from the 2021 purchase of an irrevocable group annuity contract to transfer certain pension obligations to an insurance company, and actuarial gains created by the change in the weighted-average discount rate, which increased from 2.54% at December 31, 2020, to 2.84% at December 31, 2021.
88

Amounts recognized on the Consolidated Balance Sheet consisted of the following:

 	Pension Benefits		Other Post-retirement Benefits	
December 31	2022		2021		2022		2021	
Noncurrent assets	$	169 			$	134 			$	261 			$	292 		
Current liabilities	(23)			(176)			(15)			(112)		
Noncurrent liabilities	(2,216)			(2,570)			(237)			(243)		
Net (liability) asset recognized	$	(2,070)			$	(2,612)			$	9 			$	(63)		
Amounts deferred in AOCL for our defined benefit plans consisted of the following:

 	Pension Benefits		Other Post-retirement Benefits	
December 31	2022		2021		2022		2021	
Net actuarial loss (gain)	$	3,404 			$	3,639 			$	(299)			$	(277)		
Prior service (credit) cost	(61)			(76)			9 			8 		
Total amount recognized in AOCL, pretax	$	3,343 			$	3,563 			$	(290)			$	(269)		
The following is a reconciliation of the change in AOCL for our defined benefit plans:

 	Pension Benefits		Other Post-retirement Benefits	
Year Ended December 31	2022		2021		2022		2021	
Net actuarial gain	$	(61)			$	(1,684)			$	(39)			$	(265)		
Prior service (credit) cost	(5)			(3)			2 			(4)		
Amortization of:								
Net actuarial (loss) gain from prior years	(171)			(352)			16 			— 		
Prior service credit (cost)	20 			20 			(1)			— 		
Settlement/curtailment/other	(3)			(77)			1 			— 		
Change in AOCL, pretax	$	(220)			$	(2,096)			$	(21)			$	(269)		
A pension plan’s funded status is the difference between the plan’s assets and its projected benefit obligation (PBO). The PBO is the present value of future benefits attributed to employee services rendered to date, including assumptions about future compensation levels. On December 31, 2022 and 2021, most of our pension plans had a PBO that exceeded the plans’ assets. Summary information for those plans follows:

December 31	2022		2021	
PBO	$	(12,897)			$	(16,958)		
Fair value of plan assets	10,657 			14,213 		
A pension plan’s accumulated benefit obligation (ABO) is the present value of future benefits attributed to employee services rendered to date, excluding assumptions about future compensation levels. The ABO for all pension plans was $13.4 billion and $17.5 billion on December 31, 2022 and 2021, respectively. The ABO for all other post-retirement plans was $616 and $840 on December 31, 2022 and 2021, respectively. On December 31, 2022 and 2021, most of our defined benefit plans had an ABO that exceeded the plans’ assets. Summary information for those plans follows:
89

																								
	Pension Benefits		Other Post-retirement Benefits	
December 31	2022		2021		2022		2021	
	
ABO	$	(12,793)			$	(16,775)			$	(270)			$	(384)		
Fair value of plan assets	10,657 			14,213 			20 			36 		
Assumptions. We calculate the plan assets and liabilities for a given year and the net annual benefit cost for the subsequent year using assumptions determined as of December 31 of the year in question.
The following table summarizes the weighted average assumptions used to determine our benefit obligations:

Assumptions on December 31	2022		2021	
Pension Benefits				
Benefit obligation discount rate	5.08 	%		2.84 	%	
Rate of increase in compensation levels	2.62 	%		2.77 	%	
Other Post-retirement Benefits				
Benefit obligation discount rate	5.16 	%		2.89 	%	
Health care cost trend rate:				
Trend rate for next year	6.50 	%		5.50 	%	
Ultimate trend rate	5.00 	%		5.00 	%	
Year rate reaches ultimate trend rate	2032		2024	
The following table summarizes the weighted average assumptions used to determine our net annual benefit cost:

Assumptions for Year Ended December 31	2022		2021		2020	
Pension Benefits						
Discount rates:						
Benefit obligation	2.84 	%		2.54 	%		3.19 	%	
Service cost	2.51 	%		2.25 	%		2.74 	%	
Interest cost	2.31 	%		1.87 	%		2.78 	%	
Expected long-term rate of return on assets	6.78 	%		7.14 	%		7.41 	%	
Rate of increase in compensation levels	2.52 	%		2.63 	%		2.73 	%	
Other Post-retirement Benefits						
Discount rates:						
Benefit obligation	2.89 	%		2.52 	%		3.18 	%	
Service cost	3.32 	%		2.97 	%		3.35 	%	
Interest cost	2.33 	%		1.83 	%		2.78 	%	
Expected long-term rate of return on assets	5.12 	%		6.33 	%		6.86 	%	
We base the discount rates on a current yield curve developed from a portfolio of high-quality, fixed-income investments with maturities consistent with the projected benefit payout period.
We determine the long-term rates of return on assets based on consideration of historical and forward-looking returns and the current and expected asset allocation. In 2022, we decreased the expected long-term rates of return on assets by 36 basis points for our pension plans and by 121 basis points for our other post-retirement benefit plans, resulting from changes in our asset allocations.
90

Retirement plan assumptions are based on our best judgment, including consideration of current and future market conditions. Given the long-term nature of the assumptions being made, actual outcomes can and often do differ from these estimates. Changes in these estimates impact future pension and other post-retirement benefit costs. As previously discussed, our contractual arrangements with the U.S. government provide for the recovery of pension and other post-retirement benefit costs. Therefore, the impact of annual changes in financial reporting assumptions on the cost for these plans does not immediately affect our operating results.
Assets. A committee of our board of directors is responsible for the strategic oversight of our defined benefit plan assets held in trust. Management develops investment policies and provides oversight of a third-party investment manager who reports to the committee on a regular basis. The outsourced third-party investment manager develops investment strategies and makes all day-to-day investment decisions related to defined benefit plan assets in accordance with our investment policy and target allocation percentages with the objective of generating future returns at or above our assumed long-term rates of return used to determine net annual benefit cost. In 2022, we selected a new outsourced third-party investment manager that has implemented an investment strategy utilizing primarily commingled funds versus the former outsourced third-party investment manager’s strategy that utilized primarily investments in individually held equity and fixed-income securities.
Our investment policy endeavors to strike the appropriate balance between asset growth and funded status protection. The objective of the policy is to generate asset returns that will increase the funded status of our plans while systematically reducing cost and deficit risk as funded status of the plans improve. Several of our U.S. pension plans are now utilizing a target asset allocation strategy that will automatically increase investments in liability-hedging assets (primarily commingled fixed-income funds) and decrease investments in return-seeking assets (primarily commingled equity funds) as the plans reach specific funded status targets. At the end of 2022, our target asset allocation ranges for plans that are less than fully funded were 40-70% return-seeking assets and 30-60% liability-hedging assets.
More than 90% of our pension plan assets are held in a single trust for our primary qualified U.S. government and commercial pension plans. On December 31, 2022, the trust was invested largely in commingled funds comprised primarily of equity and fixed-income securities. The trust also invests in other asset classes consistent with our investment policy. Our investment policy allows the use of derivative instruments when appropriate to reduce anticipated asset volatility, to gain exposure to an asset class or to adjust the duration of fixed-income assets.
We hold assets in VEBA trusts for some of our other post-retirement benefit plans. On December 31, 2022, these trusts were invested largely in fixed-income securities and commingled funds comprised primarily of equity and fixed-income securities. Our asset allocation strategy for the VEBA trusts considers funded status, potential fluctuations in our other post-retirement benefit obligation, the taxable nature of certain VEBA trusts, tax deduction limits on contributions and the regulatory environment.
Our defined benefit plan assets are reported at fair value. See Note P for a discussion of the hierarchy for determining fair value. Our Level 1 assets include commingled equity and fixed-income funds that are valued using a unit price or NAV. These funds are actively traded and valued using quoted prices for identical securities from the market exchanges. Our Level 2 assets include fixed-income securities and commingled equity and fixed-income funds whose underlying investments are valued using observable marketplace inputs. The fair value of plan assets invested in fixed-income securities is generally 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 plan assets invested in Level 2 commingled funds are valued using a unit price or NAV obtained from the fund’s transfer agent or
91

investment manager that is based on the underlying, observable investments of the fund. Our Level 3 assets consist of insurance deposit contracts, retirement annuity contracts and real estate funds.
Certain investments valued using NAV as a practical expedient are excluded from the fair value hierarchy. These investments are redeemable at NAV generally on a monthly or quarterly basis, and most have redemption notice periods of up to 90 days. The unfunded commitments related to these investments were not material on December 31, 2022 or 2021.
The fair value of our pension plan assets by investment category and the corresponding level within the fair value hierarchy were as follows:

	

Fair
Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		
Significant
Unobservable
Inputs
(Level 3)	
Asset Category	December 31, 2022	
Cash and equivalents	$	100 			$	19 			$	81 			$	— 		
Commingled funds:								
Equity funds	4,429 			468 			3,961 			— 		
Fixed-income funds	5,798 			275 			5,523 			— 		
Real estate funds	12 			— 			— 			12 		

Other investments:								
Insurance deposit contracts	161 			— 			— 			161 		
Retirement annuity contracts	23 			— 			— 			23 		
Total plan assets in fair value hierarchy	$	10,523 			$	762 			$	9,565 			$	196 		
Plan assets measured using NAV as a practical expedient*:								
Real estate funds	733 								
Hedge funds	141 								
Equity funds	38 								
Total pension plan assets	$	11,435 								
*Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are included to permit reconciliation of the fair value hierarchy to the total plan assets.
92

																								

Fair
Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		
Significant
Unobservable
Inputs
(Level 3)	
Asset Category	December 31, 2021	
Cash and equivalents	$	130 			$	9 			$	121 			$	— 		
Commingled funds:								
Equity funds	6,592 			— 			6,592 			— 		
Fixed-income funds	430 			— 			430 			— 		
Real estate funds	8 			— 			— 			8 		
Equity securities (a):								
U.S. companies	1,143 			1,143 			— 			— 		
Non-U.S. companies	151 			151 			— 			— 		
	
Fixed-income securities:								
Corporate bonds (b)	4,090 			— 			4,090 			— 		
Treasury securities	1,495 			— 			1,495 			— 		
Other investments:								
Insurance deposit contracts	163 			— 			— 			163 		
Retirement annuity contracts	35 			— 			— 			35 		
Total plan assets in fair value hierarchy	$	14,237 			$	1,303 			$	12,728 			$	206 		
Plan assets measured using NAV as a practical expedient (c):								
Real estate funds	632 								
Hedge funds	260 								
Equity funds	38 								
Total pension plan assets	$	15,167 								
(a)No single equity holding amounted to more than 1% of the total fair value.
(b)Our corporate bond investments had an average rating of A.
(c)Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are included to permit reconciliation of the fair value hierarchy to the total plan assets.
93

The fair value of our other post-retirement benefit plan assets by category and the corresponding level within the fair value hierarchy were as follows:

	

Fair
Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)	
Asset Category (a)	December 31, 2022	
Cash and equivalents	$	16 			$	— 			$	16 		
Commingled funds:						
Equity funds	112 			65 			47 		
Fixed-income funds	75 			10 			65 		

Fixed-income securities	413 			— 			413 		
Total plan assets in fair value hierarchy	$	616 			$	75 			$	541 		
Plan assets measured using NAV as a practical expedient (b):						
Real estate funds	8 						
Hedge funds	2 						
	
Total other post-retirement benefit plan assets	$	626 						
(a)We had no Level 3 investments on December 31, 2022.
(b)Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are included to permit reconciliation of the fair value hierarchy to the total plan assets.

	

Fair
Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)	
Asset Category (a)	December 31, 2021	
Cash and equivalents	$	12 			$	— 			$	12 		
Commingled funds:						
Equity funds	354 			— 			354 		
Fixed-income funds	140 			— 			140 		
Real estate funds	2 			2 			— 		
Equity securities	105 			105 			— 		
Fixed-income securities	154 			— 			154 		
Total plan assets in fair value hierarchy	$	767 			$	107 			$	660 		
Plan assets measured using NAV as a practical expedient (b):						
Real estate funds	7 						
Hedge funds	3 						
	
Total other post-retirement benefit plan assets	$	777 						
(a)We had no Level 3 investments on December 31, 2021.
(b)Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are included to permit reconciliation of the fair value hierarchy to the total plan assets.
94

Changes in our Level 3 defined benefit plan assets during 2022 and 2021 were as follows:

	Insurance Deposits Contracts		Retirement Annuity Contracts		Private Equity Investments		Real Estate Funds		Total
Level 3 Assets	
December 31, 2020	$	157 			$	38 			$	33 			$	90 			$	318 		
Transfers out of Level 3	— 			— 			(33)			(82)			(115)		
Actual return on plan assets:										
Unrealized gains (losses), net	9 			(3)			— 			— 			6 		
	
Purchases, sales and settlements, net	(3)			— 			— 			— 			(3)		
December 31, 2021	163 			35 			— 			8 			206 		
	
Actual return on plan assets:										
Unrealized losses, net	(10)			(12)			— 			— 			(22)		
Realized losses, net	— 			— 			— 			(1)			(1)		
Purchases, sales and settlements, net	8 			— 			— 			5 			13 		
December 31, 2022	$	161 			$	23 			$	— 			$	12 			$	196 		
95

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
General Dynamics Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying Consolidated Balance Sheet of General Dynamics Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related Consolidated Statements of Earnings, Comprehensive Income, Cash Flows, and Shareholders’ Equity for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 7, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
96

Estimates used to recognize revenue for select long-term contracts
As discussed in Note B to the consolidated financial statements, accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying performance obligations.
For a select group of long-term contracts in the defense segments, we identified the assessment of certain assumptions that are an input into the amount of revenue recognized during the period as a critical audit matter. Examples of these assumptions are estimates of labor hours, the cost of materials for the work to be performed and the transaction price. The evaluation of one or more of the assumptions used to recognize revenue for the select group of long-term contracts required a high level of subjective auditor judgment due to the nature of the individual contracts and related contract performance risks. Specifically, changes to certain assumptions may have a significant impact on the revenue recorded during the period.
The following are primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the assumptions used to recognize revenue for the select group of long-term contracts. This included contract level controls over certain revenue and cost assumptions. For certain contracts, we compared the Company’s historical estimates of costs to actual costs incurred to assess the Company’s ability to estimate accurately. Based on the nature of the individual contract, we evaluated certain revenue and cost assumptions by:
–reading the underlying contract and any related amendments to obtain an understanding of the contractual requirements and related performance obligations
–assessing costs incurred to-date and the relative progress toward satisfying the performance obligation(s) of the contract
–assessing, if relevant, the estimated costs at completion on similar or predecessor contracts and programs
–inquiring of financial and operational personnel of the Company to identify factors that should be considered within the estimated costs at completion or indications of potential management bias
–inspecting correspondence, if any, between the Company and the customer regarding actual to-date and expected performance
–assessing the enforceable rights and obligations of the underlying contractual terms when changes to price or scope, or both, are not yet agreed
–analyzing the sufficiency of the Company’s assessment of contract performance risks included within the estimated costs at completion.
Discount rates used in pension benefit obligation
As discussed in Note S to the consolidated financial statements, the Company’s pension benefit obligation and the associated plan assets were $13.5 billion and $11.4 billion, respectively, on December 31, 2022. These balances resulted in a net liability of $2.1 billion. The weighted average discount rate assumption used in estimating the pension benefit obligation as of December 31, 2022, of 5.08% was based on a current yield curve developed from a portfolio of
97

high-quality, fixed-income investments with maturities consistent with the projected benefit payout period. The selected discount rates have a significant effect on the measurement of the pension benefit obligation.
We identified the evaluation of the discount rates for certain plans’ pension benefit obligations to be a critical audit matter. This is due to the specialized skills required to assess the discount rate assumption used to discount estimated future benefit payments. In addition, certain plans’ pension benefit obligations were sensitive to changes in this assumption.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the pension benefit obligation process. This included a control related to the determination of the discount rate assumption. We involved an actuarial professional with specialized skills and knowledge, who assisted in:
–evaluating the Company’s methodology used to develop the discount rates
–recalculating discount rates using the cash flows and spot rates provided by the Company
–evaluating the Company’s determination of the discount rates by comparing changes in the discount rates from the prior year against changes in published indices using publicly available market data.

	 	/s/ KPMG LLP	
We have served as the Company’s auditor since 2002.
McLean, Virginia
February 7, 2023

98

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE 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 December 31, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, on December 31, 2022, our disclosure controls and procedures were effective.
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.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Shareholders of General Dynamics Corporation:
The management of General Dynamics Corporation is responsible for establishing and maintaining adequate internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on our evaluation we believe that, as of December 31, 2022, our internal control over financial reporting is effective based on those criteria.
KPMG LLP has issued an audit report on the effectiveness of our internal control over financial reporting. The KPMG report immediately follows this report.

												
/s/ Phebe N. Novakovic	 		/s/ Jason W. Aiken	
Phebe N. Novakovic	 		Jason W. Aiken	
Chairman and Chief Executive Officer	 		Executive Vice President, Technologies	
			and Chief Financial Officer	
99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
General Dynamics Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited General Dynamics Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Balance Sheet of the Company as of December 31, 2022 and 2021, the related Consolidated Statements of Earnings, Comprehensive Income, Cash Flows, and Shareholders’ Equity for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 7, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
100

in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

									
		/s/ KPMG LLP	
McLean, Virginia	 		
February 7, 2023	 		

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION
None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required to be set forth herein, except for the information included under Information About Our Executive Officers in Part I, is included in the sections titled “Election of the Board of Directors of the Company,” “Governance of the Company – Our Ethos,” “Audit Committee Report” and, if included, “Other Information – Delinquent Section 16(a) Reports” in our definitive proxy statement for our 2023 annual shareholders meeting (the Proxy Statement), which sections are incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION
The information required to be set forth herein is included in the sections titled “Governance of the Company – Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation” and “Compensation Committee Report” in our Proxy Statement, which sections are incorporated herein by reference.
101

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required to be set forth herein is included in the sections titled “Security Ownership of Management” and “Security Ownership of Certain Beneficial Owners” in our Proxy Statement, which sections are incorporated herein by reference.
The information required to be set forth herein with respect to securities authorized for issuance under our equity compensation plans is included in the section titled “Equity Compensation Plan Information” in our Proxy Statement, which section is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required to be set forth herein is included in the sections titled “Governance of the Company – Related Person Transactions Policy” and “Election of the Board of Directors of the Company – Director Independence” in our Proxy Statement, which sections are incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, McLean, VA, Auditor ID: 185.
The information required to be set forth herein is included in the section entitled “Advisory Vote on the Selection of Independent Auditors – Audit and Non-Audit Fees” in our Proxy Statement, which section is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1.    Consolidated Financial Statements

Consolidated Statement of Earnings	
Consolidated Statement of Comprehensive Income	
Consolidated Balance Sheet	
Consolidated Statement of Cash Flows	
Consolidated Statement of Shareholders’ Equity	
Notes to Consolidated Financial Statements (A to S)	
2.    Index to Exhibits – General Dynamics Corporation
Commission File No. 1-3671
Exhibits listed below, which have been filed with the Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
102

amended, and which were filed as noted below, are hereby incorporated by reference and made a part of this report with the same effect as if filed herewith.

Exhibit
Number	Description	
		
3.1	Restated Certificate of Incorporation of the company (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on October 7, 2004)	
		
3.2	Amended and Restated Bylaws of General Dynamics Corporation (as amended effective December 7, 2022) (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on December 9, 2022)	
		
4.1	Indenture dated as of August 27, 2001, among the company, the Guarantors (as defined therein) and The Bank of New York, as Trustee (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 12, 2018)	
		
4.2	Seventh Supplemental Indenture dated as of November 6, 2012, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on November 6, 2012)	
		
4.3	Indenture dated as of March 24, 2015, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s registration statement on Form S-3, filed with the SEC on March 24, 2015)	
		
4.4	First Supplemental Indenture dated as of August 12, 2016, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on August 12, 2016)	
		
4.5	Second Supplemental Indenture dated as of September 14, 2017, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on September 14, 2017)

4.6	Indenture dated as of March 22, 2018, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s registration statement on Form S-3, filed with the SEC on March 22, 2018)

4.7	First Supplemental Indenture dated as of May 11, 2018, among the company, the Guarantors (as defined therein) and The Bank of New York Mellon, as Trustee (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on May 11, 2018)

4.8	Second Supplemental Indenture, dated as of March 25, 2020, among General Dynamics Corporation, the Guarantors named therein and The Bank of New York Mellon, as Trustee (includes forms of 3.250% Notes due 2025, 3.500% Notes due 2027, 3.625% Notes due 2030, 4.250% Notes due 2040 and 4.250% Notes due 2050) (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on March 25, 2020)	
		
103

						
4.9	Third Supplemental Indenture, dated as of May 10, 2021, among General Dynamics Corporation, the Guarantors named therein and The Bank of New York Mellon, as Trustee (includes forms of 1.150% Notes due 2026, 2.250% Notes due 2031 and 2.850% Notes due 2041) (incorporated herein by reference from the company’s current report on Form 8-K, filed with the SEC on May 10, 2021)	
		
4.10	Description of General Dynamics Corporation’s Securities Registered Pursuant to Section 12 of the Exchange Act**	
		
10.1*	General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (incorporated herein by reference from the company’s registration statement on Form S-8 (No. 333-217656) filed with the SEC on May 4, 2017)	
		
10.2*	Form of Non-Statutory Stock Option Agreement pursuant to the General Dynamics Corporation 2012 Equity Compensation Plan (for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended March 30, 2014, filed with the SEC on April 23, 2014)	
		
10.3*	Form of Non-Statutory Stock Option Agreement pursuant to the General Dynamics Corporation 2012 Equity Compensation Plan (for grants made March 4, 2015, through March 1, 2016, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended April 5, 2015, filed with the SEC on April 29, 2015)	
		
10.4*	Form of Non-Statutory Stock Option Agreement pursuant to the General Dynamics Corporation 2012 Equity Compensation Plan (for grants beginning March 2, 2016, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended April 3, 2016, filed with the SEC on April 27, 2016)	
		
10.5*	Form of Non-Statutory Stock Option Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants beginning May 3, 2017, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended July 2, 2017, filed with the SEC on July 26, 2017)	
		
10.6*	Form of Restricted Stock Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants beginning May 3, 2017, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended July 2, 2017, filed with the SEC on July 26, 2017)	
		
10.7*	Form of Restricted Stock Unit Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants beginning May 3, 2017) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended July 2, 2017, filed with the SEC on July 26, 2017)	
		
104

						
10.8*	Form of Performance Restricted Stock Unit Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants beginning May 3, 2017, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended July 2, 2017, filed with the SEC on July 26, 2017)	
		
10.9*	Form of Performance Stock Unit Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to named executive officers beginning March 6, 2019) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended March 31, 2019, filed with the SEC on April 24, 2019)	
		
10.10*	Form of Non-Statutory Stock Option Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to named executive officers beginning March 4, 2020, and including, as indicated therein, provisions for certain named executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended March 29, 2020, filed with the SEC on April 29, 2020)	
		
10.11*	Form of Restricted Stock Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to named executive officers beginning March 4, 2020, and including, as indicated therein, provisions for certain named executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended March 29, 2020, filed with the SEC on April 29, 2020)	
		
10.12*	Form of Performance Stock Unit Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to named executive officers beginning March 4, 2020, and including, as indicated therein, provisions for certain named executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended March 29, 2020, filed with the SEC on April 29, 2020)	
		
10.13*	Form of Non-Statutory Stock Option Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to executive officers beginning March 2, 2022, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended April 3, 2022, filed with the SEC on April 27, 2022)	
		
10.14*	Form of Restricted Stock Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to executive officers beginning March 2, 2022, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended April 3, 2022, filed with the SEC on April 27, 2022)	
		
105

						
10.15*	Form of Performance Stock Unit Award Agreement pursuant to the General Dynamics Corporation Amended and Restated 2012 Equity Compensation Plan (for grants to executive officers beginning March 2, 2022, and including, as indicated therein, provisions for certain executive officers who are subject to the company’s Compensation Recoupment Policy) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the period ended April 3, 2022, filed with the SEC on April 27, 2022)	
		
10.16*	Successor Retirement Plan for Directors (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2001, filed with the SEC on March 29, 2002)	
		
10.17*	General Dynamics Corporation Supplemental Savings Plan, amended and restated effective October 1, 2021 (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the quarter ended October 3, 2021, filed with the SEC on October 27, 2021)	
		
10.18*	Form of Severance Protection Agreement for executive officers (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 6, 2017)	
		
10.19*	General Dynamics Corporation Supplemental Retirement Plan, restated effective January 1, 2010 (incorporating amendments through March 31, 2011) (incorporated herein by reference from the company’s quarterly report on Form 10-Q for the quarterly period ended April 3, 2011, filed with the SEC on May 3, 2011)	
		
10.20*	Amendment to the General Dynamics Corporation Supplemental Retirement Plan, effective January 5, 2015 (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 9, 2015)	
		
10.21*	Amendment to the General Dynamics Corporation Supplemental Retirement Plan, effective January 1, 2016 (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 6, 2017)	
		
10.22*	Amendment to the General Dynamics Corporation Supplemental Retirement Plan, effective January 1, 2019 (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 13, 2019)	
		
10.23*	Amendment to the General Dynamics Corporation Supplemental Retirement Plan, effective December 20, 2019 (incorporated herein by reference from the company’s annual report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 9, 2021)	
		
21	Subsidiaries**	
		
22	Subsidiary Guarantors**	
		
23	Consent of Independent Registered Public Accounting Firm**	
		
24	Power of Attorney**	
		
31.1	Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**	
		
31.2	Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**	
		
106

						
32.1	Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**	
		
32.2	Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**	
		
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.	
		
101.SCH	Inline XBRL Taxonomy Extension Schema Document**	
		
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document**	
		
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document**	
		
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document**	
		
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document**	
		
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)	

*    Indicates a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.
**    Filed or furnished electronically herewith.
In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.

ITEM 16. FORM 10-K SUMMARY
None.
107

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
									
	GENERAL DYNAMICS CORPORATION	
	by	/s/ William A. Moss	
		William A. Moss	
		Vice President and Controller	
	
Dated: February 7, 2023			

108

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 7, 2023, by the following persons on behalf of the registrant and in the capacities indicated.

/s/ Phebe N. Novakovic	Chairman, Chief Executive Officer and Director	
Phebe N. Novakovic	(Principal Executive Officer)	
		
/s/ Jason W. Aiken	Executive Vice President, Technologies and Chief Financial Officer	
Jason W. Aiken	(Principal Financial Officer)	
		
/s/ William A. Moss	Vice President and Controller	
William A. Moss	(Principal Accounting Officer)	
		
*		
Richard D. Clarke	Director	
		
*		
James S. Crown	Director	
		
*		
Rudy F. deLeon	Director	
		
*		
Cecil D. Haney	Director	
		
*		
Mark M. Malcolm	Director	
		
*		
James N. Mattis	Director	
		
*		
C. Howard Nye	Director	
		
*		
Catherine B. Reynolds	Director	
		
*		
Laura J. Schumacher	Director	
		
*		
Robert K. Steel	Director	
		
*		
John G. Stratton	Director	
		
*		
Peter A. Wall	Director	

*    By Gregory S. Gallopoulos pursuant to a Power of Attorney executed by the directors listed above, which has been filed as an exhibit hereto and incorporated herein by reference thereto.

	/s/ Gregory S. Gallopoulos			
	Gregory S. Gallopoulos	
	Senior Vice President, General Counsel and Secretary	
109

Exhibit 4.10

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
General Dynamics Corporation (the “Company,” “we,” “us” or “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our common stock, par value $1.00 per share.
The general terms and provisions of our common stock are summarized below. This summary does not purport to be complete and is subject to, and qualified in its entirety by express reference to, the provisions of our Restated Certificate of Incorporation (our “Charter”) and our Amended and Restated Bylaws (as amended, our “Bylaws”), each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit is a part, and each of which may be amended from time to time. We encourage you to read our Charter and Bylaws and the applicable provisions of the General Corporation Law of the State of Delaware (“DGCL”) for additional information.
Authorized Capital Stock
Our authorized capital stock consists of 500,000,000 shares of common stock, par value $1.00 per share, and 50,000,000 shares of preferred stock, par value $1.00 per share.
Our board of directors (the “Board of Directors”) has authority at any time and from time to time to issue preferred stock of any series and, in connection with the creation of each such series, to fix the voting powers (if any), the designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such series to the full extent permitted by our Charter and the laws of the State of Delaware.
Dividends
Subject to any preferential rights of the holders of any then-outstanding shares of any series of preferred stock, holders of our common stock are entitled to receive such dividends, if any, as from time to time may be declared by our Board of Directors. The declaration of dividends on our common stock is a business decision to be made by our Board of Directors in its discretion from time to time based upon our results of operations and financial condition, the provisions of the DGCL affecting the payment of dividends and distributions to stockholders and any other factors as our Board of Directors may consider relevant.
Voting Rights
Subject to the provisions of any applicable law, or of our Bylaws, with respect to the closing of the transfer books or the fixing of a record date for determination of stockholders entitled to vote and except as otherwise provided by law or by the resolution or resolutions of our Board of Directors providing for the issue of any series of preferred stock, the holders of

outstanding shares of our common stock shall exclusively possess voting power for the election of directors and for all other purposes, with each holder of record of shares of our common stock being entitled to one vote for each share of common stock standing in its name. Our Charter does not provide for cumulative voting for the election of directors. Our Bylaws provide that all matters presented to the stockholders (other than the election of directors) at a meeting shall be decided by the affirmative vote of the holders of a majority in voting power of the shares present in person or by proxy and entitled to vote on such matters, a quorum being present (unless a different or minimum vote is required by applicable law, our Charter, our Bylaws, the rules or regulations of any stock exchange applicable to the Company or any regulation applicable to the Company or its securities, in which case such different or minimum vote shall be the applicable vote on the matter).
Subject to any rights of the holders of any then-outstanding shares of any series of preferred stock to elect directors, each director shall be elected by the vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present. However, if as of the 10th day preceding the date the Company first mails its notice of meeting for such meeting to the stockholders of the Company the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the votes cast, whether or not such election becomes an uncontested election after such date. A “majority of the votes cast” shall mean that the number of shares cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes,” if applicable, not counted as a vote cast “for” or “against” that director’s election).
Liquidation
In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after payment in full of the preferential amounts, if any, to be distributed to the holders of any then-outstanding shares of preferred stock having a preference over our common stock, the holders of our common stock shall be entitled to share, ratably according to the number of shares of common stock held by them, in all remaining assets of the Company available for distribution to our stockholders.
Preemptive or Other Rights
Holders of our common stock have no preemptive rights, as such holders, to purchase or subscribe for or otherwise acquire any shares of our common stock, and there are no conversion, redemption or sinking fund provisions applicable to our common stock.
Fully Paid and Nonassessable
All outstanding shares of our common stock are fully paid and not liable to any further call or assessments by us.

Certain Anti-Takeover Provisions
Our Charter, our Bylaws and the DGCL contain certain provisions that could delay or make more difficult an acquisition of control of us that is not approved by our Board of Directors, whether by means of a tender offer, open-market purchases, a proxy contest or otherwise. These provisions could have the effect of discouraging third parties from making proposals involving an acquisition or change of control of us, even though such a proposal, if made, might be considered desirable by a majority of our stockholders. These provisions also may have the effect of making it more difficult for third parties to cause the replacement of our current management without the concurrence of our Board of Directors. Set forth below is a description of various provisions contained in our Charter, our Bylaws and the DGCL that could impede or delay an acquisition of control of us that our Board of Directors has not approved. This description is intended as a summary only and is subject to, and qualified in its entirety by reference to, our Charter and our Bylaws, as well as the DGCL.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the DGCL. In general, Section 203 provides that a Delaware corporation with a class of voting stock listed on a national securities exchange or held of record by more than 2,000 stockholders may not engage in various business combination transactions with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder unless:
•the Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder prior to the time that stockholder became an interested stockholder;
•upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding, for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, shares owned (i) by persons who are directors and also officers and (ii) by certain employee stock plans); or
•at or subsequent to such time the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 662⁄3% of the outstanding voting stock which is not owned by the interested stockholder.
In general, a “business combination” is broadly defined to include (i) any merger or consolidation of the corporation or any of its direct or indirect majority-owned subsidiaries with the interested stockholder; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (except proportionally as a stockholder of the corporation) to or with the interested stockholder of assets of the corporation or of any direct or indirect majority-owned subsidiary of the corporation, which assets have a market value equal to 10% or more of either the aggregate market value of all of the assets of the corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; (iii) subject to certain

exceptions, any transaction which results in the issuance or transfer by the corporation or by any of its direct or indirect majority-owned subsidiaries of any stock of the corporation or of such subsidiary to the interested stockholder; (iv) subject to certain exceptions, any transaction involving the corporation or any of its direct or indirect majority-owned subsidiaries which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series of the corporation or of any such subsidiary which is owned by the interested stockholder; and (v) subject to certain exceptions, any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of such corporation), of any loans, advances or other financial benefits provided by or through the corporation or any direct or indirect majority-owned subsidiary. In general and subject certain exceptions, an “interested stockholder” is any person (other than the corporation and any direct or indirect majority-owned subsidiary of the corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the corporation or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the 3-year period immediately prior to the date of determination, and the affiliates and associates of such person.
The DGCL permits a corporation to “opt out” of, or choose not to be governed by, the restrictions in Section 203 of the DGCL by expressly stating so in its original certificate of incorporation (or in a subsequent amendment to its certificate of incorporation or bylaws approved by its stockholders). However, neither our Charter nor our Bylaws contains a provision electing to opt out of Section 203.
Advance Notice Requirements
Stockholders wishing to nominate persons for election to our Board of Directors at an annual meeting or to propose any business to be considered by our stockholders at an annual meeting must comply with certain advance notice and other procedures and requirements set forth in our Bylaws. Likewise, stockholders wishing to nominate persons for election to our Board of Directors at a special meeting of stockholders must comply with certain advance notice and other procedures and requirements set forth in our Bylaws.
Proxy Access
Our Bylaws contain “proxy access” provisions which give a qualified stockholder or group of stockholders the right to include up to a specified number of director nominees in our proxy materials for an annual meeting of stockholders. However, these proxy access provisions are subject to various requirements and restrictions specified in our Bylaws, including the following:
•To qualify, the stockholder (or group of up to twenty stockholders in accordance with, and subject to various requirements, restrictions and provisions of, our Bylaws) must have owned 3% or more of the Company’s outstanding capital stock continuously for at least three years as of the date the written notice of a nomination is delivered to or mailed and received by the Secretary of the Company (in each case in accordance with certain procedures, restrictions and other provisions specified in our Bylaws) and as of the record

date for determining stockholders entitled to vote at the meeting and must continue to own such required shares through the annual meeting date.
•The maximum number of stockholder nominees permitted under the proxy access provisions of our Bylaws to appear in our proxy materials with respect to an annual meeting of stockholders is generally the largest whole number that does not exceed 20% of the number of our directors in office as of the last day on which notice of a nomination under our proxy access provisions may be delivered under our Bylaws.
•To be timely, notice of a nomination under our proxy access provisions, together with other required information, representations and agreements specified in our Bylaws, must be submitted to the Secretary of the Company at our principal executive offices within certain timeframes and in accordance with certain procedures and other requirements specified in our Bylaws.
The foregoing proxy access provisions are subject to additional procedural and other requirements and restrictions set forth in our Bylaws.
Special Meetings
Pursuant to the DGCL, a special meeting of stockholders may be called by the Board of Directors or by any other person authorized to do so in our Charter or Bylaws. Our Bylaws provide that special meetings of stockholders may only be called by our Board of Directors or the Chairman of our Board of Directors. However, our Bylaws provide that, subject to certain limitations and provisions in our Bylaws, a special meeting of stockholders shall be called by our Board of Directors upon the receipt by the Secretary of the Company of a written request for the Board of Directors to call a special meeting by one stockholder of record owning at least 10% or one or more stockholders of record of shares representing in the aggregate at least 25% in each case of the combined voting power of the then outstanding shares of all classes and series of capital stock of the Company entitled to vote on the matter or matters to be brought before the proposed special meeting, voting as a single class. A special meeting request must among other things contain certain information specified in our Bylaws.
Number of Directors; Board Vacancies
Our Bylaws provide that the number of directors shall be not less than 5 nor more than 15, as shall be fixed from time to time by resolution of the Board of Directors pursuant to a vote of two-thirds of the directors then in office (so long as a quorum is present). Vacancies occurring on the Board of Directors (however occurring) and newly created directorships resulting from any increase in the authorized number of directors may be filled by a vote of two-thirds of the directors then in office, although less than a quorum, or by a sole remaining director. Each director so appointed shall hold office until the next annual meeting of stockholders, until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, removal or resignation.

Additional Authorized Shares of Capital Stock
The additional shares of authorized common stock and preferred stock available for issuance under our Charter could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control.
Amendments to Bylaws
Under our Charter and Bylaws, our Board of Directors has the authority to adopt, alter, amend or repeal our Bylaws. Our stockholders may also adopt, alter, amend or repeal our Bylaws at any meeting by the requisite vote of our stockholders; provided that notice of such proposed adoption, alteration, amendment or repeal is included in the notice of such meeting.
Forum Selection
Our Bylaws provide that, unless the Company consents in writing to the selection of an alternative forum, (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our Charter or our Bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the District of Delaware and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Our Bylaws also provide that, to the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions summarized in the immediately preceding sentence.
Stock Exchange Listing
Our shares of common stock are listed on the New York Stock Exchange under the symbol “GD.”
Transfer Agent
The transfer agent and registrar for our common stock is Computershare.

									
Exhibit 21	
GENERAL DYNAMICS CORPORATION	
SUBSIDIARIES	
AS OF JANUARY 31, 2023	
			
Subsidiaries of General Dynamics Corporation
(Parent and Registrant)	Place of
Incorporation	Percent of
Voting Power	
American Overseas Marine Company, LLC	Delaware	100	
Applied Physical Sciences Corp.	Connecticut	100	
ARMA Global Corporation	Florida	100	
Avion Logistics Limited	Hong Kong	100	
Avjet Corporation	California	100	
Bath Iron Works Canada, LLC	Delaware	100	
Bath Iron Works Corporation	Maine	100	
Blueprint Technologies, Inc.	Virginia	100	
Braintree I Maritime Corp.	Delaware	100	
Braintree II Maritime Corp.	Delaware	100	
Braintree III Maritime Corp.	Delaware	100	
Braintree IV Maritime Corp.	Delaware	100	
Braintree V Maritime Corp.	Delaware	100	
Concord I Maritime Corporation	Delaware	100	
Concord II Maritime Corporation	Delaware	100	
Concord III Maritime Corporation	Delaware	100	
Concord IV Maritime Corporation	Delaware	100	
Concord V Maritime Corporation	Delaware	100	
Convair Aircraft Corporation	Delaware	100	
Convair Corporation	Delaware	100	
CSC Computer Sciences Egypt LLC	Egypt	100	
CSC Computer Sciences Venezuela, S.A.	Venezuela	100	
CSRA (Costa Rica) S.A.	Costa Rica	100	
CSRA (Guyana) Inc.	Guyana	100	
CSRA (Middle East) LLC	Virginia	100	
CSRA Argentina S.R.L.	Argentina	100	
CSRA Bahamas Limited	Bahamas	100	
CSRA Bahrain W.L.L.	Bahrain	100	
CSRA Belgium SRL	Belgium	100	
CSRA BH d.o.o.	Bosnia and Herzegovina	100	
CSRA Bolivia S.R.L.	Bolivia	100	
CSRA Brasil Servicos de Tecnologia Ltda.	Brazil	100	
CSRA Canada Inc.	Canada	100	
CSRA Caribbean Inc.	Nevada	100	
CSRA Chile SpA	Chile	100	
CSRA Colombia SAS	Colombia	100	
CSRA Consular Services Holding Company LLC	Nevada	100	
CSRA Consular Services Inc.	Nevada	100	
CSRA Consular Services India Private Limited	India	100	
CSRA France SARL	France	100	
CSRA Honduras, Sociedad Anonima	Honduras	100	
CSRA Information Technology Spain, SL	Spain	100	

									
CSRA Ireland Limited	Ireland	100	
CSRA Italy S.R.L.	Italy	100	
CSRA Kosovo L.L.C.	Kosovo	100	
CSRA LATAM LLC	Virginia	100	
CSRA Mexico S. de R.L. de C.V.	Mexico	100	
CSRA Netherlands B.V.	Netherlands	100	
CSRA Nicaragua, Sociedad Anonima	Nicaragua	100	
CSRA Peru S.R.L.	Peru	100	
CSRA Senegal SARL	Senegal	100	
CSRA South Africa (Pty) Ltd	South Africa	100	
CSRA State and Local Solutions LLC	Nevada	100	
CSRA Trinidad & Tobago Limited	Trinidad and Tobago	100	
CSRA Turkey Bilisim Teknolojileri Limited Sirketi	Turkey	100	
CSRA Uruguay S.R.L.	Uruguay	100	
CSRA Visa Services Israel Ltd.	Israel	100	
CSRAIT - Information Services Portugal, Unipessoal LDA	Portugal	100	
Customer Services Ecuador CSRA S.A.	Ecuador	100	
DynPort Vaccine Company, LLC	Virginia	100	
Eagle Enterprise, Inc.	Delaware	100	
EB Groton Engineering, Inc.	Delaware	100	
EBV Explosives Environmental Company	Delaware	100	
ELCS-CZ, s.r.o.	Czech Republic	100	
Electric Boat - Australia, LLC	Delaware	100	
Electric Boat - UK, LLC	Delaware	100	
Electric Boat Canada, LLC	Delaware	100	
Electric Boat Corporation	Delaware	100	
Electric Boat France, LLC	Delaware	100	
Electrocom, Inc.	Delaware	100	
Expro Finance Inc.	Canada	100	
ForeSight Technology Services, LLC	Virginia	100	
Freeman United Coal Mining Company, LLC	Delaware	100	
GD Arabia Limited	Saudi Arabia	100	
GD European Land Systems - Steyr GmbH	Austria	100	
GD European Land Systems Holding GmbH	Austria	100	
General Dynamics - OTS (Global), Inc.	Delaware	100	
General Dynamics AIS Australia Pty Ltd	Australia	100	
General Dynamics Canadian Finance Inc.	Canada	100	
General Dynamics Canadian Holdings Inc.	Canada	100	
General Dynamics Commercial Cyber Services, LLC	Virginia	100	
General Dynamics European Finance Limited	England and Wales	100	
General Dynamics European Land Systems - Austria GmbH	Austria	100	
General Dynamics European Land Systems – Bridge Systems GmbH	Germany	100	
General Dynamics European Land Systems - Czech s.r.o.	Czech Republic	100	
General Dynamics European Land Systems - Deutschland GmbH	Germany	100	
General Dynamics European Land Systems - FWW GmbH	Germany	100	
General Dynamics European Land Systems - Mowag GmbH	Switzerland	100	
General Dynamics European Land Systems Botswana Proprietary Ltd.	Botswana	100	
General Dynamics European Land Systems Denmark ApS	Denmark	100	
General Dynamics European Land Systems Romania S.R.L.	Romania	100	

									
General Dynamics European Land Systems, S.L.	Spain	100	
General Dynamics Global Force, LLC	Delaware	100	
General Dynamics Global Holdings Limited	England and Wales	100	
General Dynamics Global Imaging Technologies, LLC	Delaware	100	
General Dynamics Government Satellite Services, LLC	Delaware	100	
General Dynamics Government Systems Corporation	Delaware	100	
General Dynamics Government Systems Overseas Corporation	Delaware	100	
General Dynamics Information Technology, Inc.	Virginia	100	
General Dynamics International Corporation	Delaware	100	
General Dynamics Land Systems - Australia Pty. Ltd.	Australia	100	
General Dynamics Land Systems - Canada Corporation	Canada	100	
General Dynamics Land Systems - Canada Services Inc.	Canada	100	
General Dynamics Land Systems - Canadian Services Limited	Canada	100	
General Dynamics Land Systems - Force Protection Inc.	Nevada	100	
General Dynamics Land Systems – Global LLC	Delaware	100	
General Dynamics Land Systems Customer Service & Support Company	Texas	100	
General Dynamics Land Systems Holdings LLC	Delaware	100	
General Dynamics Land Systems Inc.	Delaware	100	
General Dynamics Limited	England and Wales	100	
General Dynamics Marine Systems, Inc.	Delaware	100	
General Dynamics Mission Systems Asia-Pacific SDN BHD	Brunei	100	
General Dynamics Mission Systems International Limited	England and Wales	100	
General Dynamics Mission Systems Overseas Company, LLC	Delaware	100	
General Dynamics Mission Systems, Inc.	Delaware	100	
General Dynamics Mission Systems – Italy S.R.L.	Italy	100	
General Dynamics Motion Control, LLC	Delaware	100	
General Dynamics One Source, LLC	Delaware	100	
General Dynamics Ordnance and Tactical Systems - Canada Inc.	Canada	100	
General Dynamics Ordnance and Tactical Systems - Canada Valleyfield Inc.	Canada	100	
General Dynamics Ordnance and Tactical Systems - Simunition Operations, Inc.	Delaware	100	
General Dynamics Ordnance and Tactical Systems, Inc.	Virginia	100	
General Dynamics OTS (Aerospace), Inc.	Washington	100	
General Dynamics OTS (California), Inc.	California	100	
General Dynamics OTS (DRI), Inc.	Alabama	100	
General Dynamics OTS (Niceville), Inc.	Florida	100	
General Dynamics OTS (Wilkes Barre), LLC	Pennsylvania	100	
General Dynamics Overseas Systems and Services Corporation	Delaware	100	
General Dynamics Properties, Inc.	Delaware	100	
General Dynamics Robotic Systems, Inc.	Delaware	100	
General Dynamics Satellite Communication Services, LLC	Delaware	100	
General Dynamics Saudi Holdings, S.L.	Spain	100	
General Dynamics Shared Resources, LLC	Delaware	100	
General Dynamics Support Services Company	Delaware	100	
General Dynamics Swiss Financial Management Limited	England and Wales	100	
General Dynamics United Kingdom Limited	England and Wales	100	
General Dynamics Worldwide Holdings, Inc.	Delaware	100	
General Dynamics-OTS, Inc.	Delaware	100	
GM GDLS Defense Group, L.L.C.	Delaware	100	
GPS Source, Inc.	Colorado	100	

									
Gulfstream 100 Holdings LLC	Delaware	100	
Gulfstream Aerospace Corporation (CA)	California	100	
Gulfstream Aerospace Corporation (DE)	Delaware	100	
Gulfstream Aerospace Corporation (GA)	Georgia	100	
Gulfstream Aerospace Corporation (OK)	Oklahoma	100	
Gulfstream Aerospace Corporation of Texas	Texas	100	
Gulfstream Aerospace Hong Kong Limited	Hong Kong	100	
Gulfstream Aerospace LLC	Delaware	100	
Gulfstream Aerospace LP	Texas	100	
Gulfstream Aerospace Services Corporation	Delaware	100	
Gulfstream Aerospace, Ltd.	England and Wales	100	
Gulfstream Aerospace, Sociedad de Responsabilidad Limitada de Capital
Variable (S. de R.L. de C.V.)	Mexico	100	
Gulfstream Austria, GmbH	Austria	100	
Gulfstream Do Brasil Servicos De Suporte E Manutencao A Aeronaves Ltda.	Brazil	100	
Gulfstream International Corporation	Delaware	100	
Gulfstream Leasing LLC	Georgia	100	
Gulfstream Product Support Corporation	Delaware	100	
Gulfstream Services Corporation	Georgia	100	
Gulfstream Tennessee Corporation	Delaware	100	
Gulfstream-California, Inc.	Delaware	100	
Hawker Pacific Asia Holdings Pte Ltd	Singapore	100	
Information Services Consulting Limited	England and Wales	100	
Interiores Aereos S.A. de C.V.	Mexico	100	
International Manufacturing Technologies, Inc.	California	100	
Janteq Australia PTY Limited	Australia	100	
Janteq Corp.	Maryland	100	
Jet Aviation (Asia Pacific) Pte Ltd	Singapore	100	
Jet Aviation (Bermuda) Ltd.	Bermuda	100	
Jet Aviation (Hong Kong) Ltd.	Hong Kong	100	
Jet Aviation (Malaysia) MRO SDN BHD	Malaysia	100	
Jet Aviation (Malaysia) SDN, BHD	Malaysia	100	
Jet Aviation 125 Services, LLC	Delaware	100	
Jet Aviation AG	Switzerland	100	
Jet Aviation Airservices Limited	Hong Kong	100	
Jet Aviation Australia Pty Ltd	Australia	100	
Jet Aviation Bozeman, LLC	Montana	100	
Jet Aviation Business Jets (Hong Kong) Limited	Hong Kong	100	
Jet Aviation Business Jets AG	Switzerland	100	
Jet Aviation Business Jets FZCO	UAE	100	
Jet Aviation Business Jets San Marino S.R.L.	San Marino	100	
Jet Aviation Business Jets Singapore Pte Ltd	Singapore	100	
Jet Aviation California, LLC	California	100	
Jet Aviation Dulles, LLC	Delaware	100	
Jet Aviation Flight Services, Inc.	Maryland	100	
Jet Aviation France SAS	France	100	
Jet Aviation French Polynesia	French Polynesia	100	
Jet Aviation Holding GmbH	Switzerland	100	
Jet Aviation Holdings USA, Inc.	Delaware	100	

									
Jet Aviation Houston, Inc.	Texas	100	
Jet Aviation International, Inc.	Florida	100	
Jet Aviation Malaga SA	Spain	100	
Jet Aviation Management AG	Switzerland	100	
Jet Aviation Netherlands B.V.	Netherlands	100	
Jet Aviation New Caledonia	New Caledonia	100	
Jet Aviation NZ Limited	New Zealand	100	
Jet Aviation of America, Inc.	Maryland	100	
Jet Aviation Opa Locka, LLC	Florida	100	
Jet Aviation Savannah Holding, LLC	Delaware	100	
Jet Aviation Scottsdale LLC	Arizona	100	
Jet Aviation Services GmbH	Germany	100	
Jet Aviation St. Louis, Inc.	Missouri	100	
Jet Aviation Staffing, LLC	Delaware	100	
Jet Aviation Teterboro, L.P.	New Jersey	100	
Jet Aviation Texas, Inc.	Texas	100	
Jet Aviation/Palm Beach, Inc.	Florida	100	
Jet Aviation Vienna GmbH	Austria	100	
Longreach Energy, LLC	Delaware	100	
Material Service Resources Company, LLC	Delaware	100	
Mediaware International Pty Ltd	Australia	100	
Metro Machine Corp.	Virginia	100	
Midwest Properties Sales, LLC	Delaware	100	
NASSCO Holdings Incorporated	Delaware	100	
National Steel and Shipbuilding Company	Nevada	100	
Newberry Holdings, LLC	Virginia	100	
Pazo’s Fuel Services, Inc.	Puerto Rico	100	
Plane 79, LLC	Delaware	100	
Praxis Engineering Technologies, LLC	Delaware	100	
Progeny Systems, LLC	Virginia	100	
Proyectos Prohumane Mexico, S.A. de C.V.	Mexico	100	
Quincy Maritime Corporation III	Delaware	100	
Santa Barbara Sistemas S.A.	Spain	100	
Savannah Air Center, LLC	Georgia	100	
Southern Illinois Recovery, Inc.	Delaware	100	
St. Marks Powder, Inc.	Delaware	100	
Tecnologias Internacionales de Manufactura S.A. de C.V.	Mexico	100	
The Depth of Ideas for General Trading, LLC	Iraq	100	
Vangent Servicios de Mexico, S.A. de C.V.	Mexico	100	
Vulnerability Research Labs, LLC	Delaware	100	

Exhibit 22

Subsidiary Guarantors
Each of the following subsidiaries of General Dynamics Corporation, a Delaware corporation (the Company), has fully and unconditionally guaranteed on an unsecured, joint and several basis each of the debt securities of the Company listed below.
Subsidiary Guarantors
American Overseas Marine Company, LLC, a Delaware limited liability company
Bath Iron Works Corporation, a Maine corporation
Electric Boat Corporation, a Delaware corporation
General Dynamics Government Systems Corporation, a Delaware corporation
General Dynamics Land Systems Inc., a Delaware corporation
General Dynamics Ordnance and Tactical Systems, Inc., a Virginia corporation
General Dynamics-OTS, Inc., a Delaware corporation
Gulfstream Aerospace Corporation, a Delaware corporation
National Steel and Shipbuilding Company, a Nevada corporation

Debt Securities of the Company Guaranteed by each of the Subsidiary Guarantors
3.375% Fixed-Rate Notes due May 2023
1.875% Fixed-Rate Notes due August 2023
2.375% Fixed-Rate Notes due November 2024
3.250% Fixed-Rate Notes due April 2025
3.500% Fixed-Rate Notes due May 2025
1.150% Fixed-Rate Notes due June 2026
2.125% Fixed-Rate Notes due August 2026
3.500% Fixed-Rate Notes due April 2027
2.625% Fixed-Rate Notes due November 2027
3.750% Fixed-Rate Notes due May 2028
3.625% Fixed-Rate Notes due April 2030
2.250% Fixed-Rate Notes due June 2031
4.250% Fixed-Rate Notes due April 2040
2.850% Fixed-Rate Notes due June 2041
3.600% Fixed-Rate Notes due November 2042
4.250% Fixed-Rate Notes due April 2050

Exhibit 23
Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements (Nos. 333-107901, 333-159038, 333-159045, 333-181124, 333-186575, 333-186578, 333-208667, 333-217656, 333-224138, 333-226587, 333-231261, and 333-249722) on Form S-8 and in the registration statement No. 333-255513 on Form S-3ASR of our reports dated February 7, 2023, with respect to the consolidated financial statements of General Dynamics Corporation and the effectiveness of internal control over financial reporting.

                        /s/ KPMG LLP

McLean, Virginia
February 7, 2023

Exhibit 24
POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned directors of GENERAL DYNAMICS CORPORATION, a Delaware corporation, hereby constitutes and appoints each of PHEBE N. NOVAKOVIC, JASON W. AIKEN and GREGORY S. GALLOPOULOS as his or her true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of General Dynamics Corporation for the year ended December 31, 2022, and any and all amendments and supplements thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary as fully as to all intents and purposes as he or she might or could do in person, and hereby ratifying and confirming all that each said attorney-in-fact and agent or his or her substitute(s) may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 2nd day of February 2023.

									
/s/ RICHARD D. CLARKE		/s/ C. HOWARD NYE	
Richard D. Clarke		C. Howard Nye	
			
/s/ JAMES S. CROWN		/s/ CATHERINE B. REYNOLDS	
James S. Crown		Catherine B. Reynolds	
			
/s/ RUDY F. DELEON		/s/ LAURA J. SCHUMACHER	
Rudy F. deLeon		Laura J. Schumacher	
			
/s/ CECIL D. HANEY		/s/ ROBERT K. STEEL	
Cecil D. Haney		Robert K. Steel	
			
/s/ MARK M. MALCOLM		/s/ JOHN G. STRATTON	
Mark M. Malcolm		John G. Stratton	
			
/s/ JAMES N. MATTIS		/s/ PETER A. WALL	
James N. Mattis		Peter A. Wall	

			

Exhibit 31.1
CERTIFICATION BY CEO PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Phebe N. Novakovic, certify that:
1.I have reviewed this annual report on Form 10-K of General Dynamics Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

						
		
February 7, 2023	/s/ Phebe N. Novakovic	
	Phebe N. Novakovic	
	Chairman and Chief Executive Officer	

Exhibit 31.2
CERTIFICATION BY CFO PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Jason W. Aiken, certify that:
1.I have reviewed this annual report on Form 10-K of General Dynamics Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

						
February 7, 2023	/s/ Jason W. Aiken	
	Jason W. Aiken	
	Executive Vice President, Technologies and Chief Financial Officer	

Exhibit 32.1
CERTIFICATION BY CEO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of General Dynamics Corporation (the Company) on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Phebe N. Novakovic, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

						
February 7, 2023	/s/ Phebe N. Novakovic	
	Phebe N. Novakovic	
	Chairman and Chief Executive Officer	

Exhibit 32.2
CERTIFICATION BY CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of General Dynamics Corporation (the Company) on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Jason W. Aiken, Executive Vice President, Technologies and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

						
February 7, 2023	/s/  Jason W. Aiken	
	Jason W. Aiken	
	Executive Vice President, Technologies and Chief Financial Officer