General Dynamics today reported second-quarter 2010 earnings from continuing operations of $651 million, or $1.68 per share on a fully diluted basis, compared to 2009 second-quarter earnings from continuing operations of $621 million, or $1.61 per share fully diluted. Revenues in the quarter were $8.1 billion. Operating earnings grew by 4.2 percent over second-quarter 2009, to $985 million.

Net earnings for the second quarter of 2010 were $648 million, compared to $618 million in the year-ago period. Net earnings on a per-share, fully diluted basis were $1.67 in the current quarter, an increase of 4.4 percent over the year-ago period.

Margins

Company-wide operating margins in the quarter were 12.2 percent, an increase of 50 basis points over second-quarter 2009. Aerospace and Combat Systems margins drove that improvement, increasing 160 and 150 basis points respectively. In comparison to first-quarter 2010, company-wide operating margins increased 40 basis points overall on improvements in Aerospace, Combat Systems and Marine Systems performance. Information Systems and Technology margins remained steady at 10.5 percent.

Backlog

The company's funded backlog at the end of the quarter was $45.9 billion and total backlog was $62.5 billion. Orders received in the quarter underscored the continuing global demand for the company's products and services, including Gulfstream business jets; Stryker, LAV III and Scout SV armored vehicles; Hydra-70 rockets, motors and warheads; engineering, support and lead-yard services for several shipbuilding programs; and information technology, communications and computing products and services.

In addition to the backlog, the company's estimated potential contract value -- management's estimate of the value of unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options -- grew to $21.7 billion at the end of second-quarter 2010, a 28 percent increase over the prior quarter.

Cash

Net cash provided by operating activities in the second quarter totaled $477 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $414 million for the period.

"General Dynamics' focus on operational excellence is reflected in the operating margins of each of our business groups," said Jay L. Johnson, chairman and chief executive officer. "We continue to increase efficiency, improve productivity and drive cost out of our processes in order to deliver the highest-quality, most-affordable products and services to our customers.

"Based on our performance this quarter and a clearer view of what the second half of the year may hold, we now expect full-year 2010 earnings from continuing operations to be $6.60 to $6.65 per share, fully diluted," Johnson said.

About General Dynamics

General Dynamics, headquartered in Falls Church, Virginia, employs approximately 91,000 people worldwide. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. More information about the company is available on the Internet at www.generaldynamics.com.