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General Dynamics reports $2.13B 4Q loss


February 20. 2013 3:18AM
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(AP) Shares of General Dynamics fell more than 4 percent in morning trading Wednesday after the aerospace and defense company reported a huge fourth-quarter loss due to charges related to slowing defense spending.


The charges reflect the fact that some of our markets are contracting as government budgets shrink at home and abroad, Chairman and CEO Phebe Novakovic said in a statement. They also suggest opportunities for improvement in some areas of our performance, which we are addressing.


The company said it expects to earn $6.60 to $6.70 per share from continuing operations this year. Analysts expected $7.32 per share.


The Falls Church, Va., company said it lost $2.13 billion, or $6.07 per share during the October-December quarter, compared with net income of $603 million, or $1.68 per share, a year earlier.


Revenue fell almost 12 percent to $8.08 billion from $9.15 billion.


Excluding the charges, the company earned $491 million, or $1.39 per share. That fell far short of Wall Street expectations. Analysts polled by FactSet expected earnings of $1.90 per share, on average, on revenue of $8.8 billion.


General Dynamics shares dropped $3.24, or 4.6 percent, to $67.47 in morning trading.


The company said that it recorded a $2 billion goodwill impairment charge in the latest quarter to reduce the value of its Information Systems & Technology group. The company said it took the charge to account for slowed defense spending. It also took $867 million in other charges for asset valuation drops in its Aerospace and Information Systems groups.


During the quarter, revenue fell for three of the company's four business units. Combat systems revenue was down 24 percent, while Marine Systems was off 5.3 percent and Information Systems was down almost 12 percent. Only Aerospace, which includes Gulfstream jets, reported an increase, and that was only 0.2 percent.


For the full year, the company reported a loss of $332 million, or 94 cents per share, including the charges. That compares with net income of $2.53 billion profit, or $6.87 per share, in 2011. Full-year revenue fell 3.6 percent to $31.5 billion.


Associated Press


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