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General Dynamics Annual Report • 201028
INFORMATIONSYSTEMSANDTECHNOLOGY
Review of2010vs. 2009
TheInformationSystemsand Technology group generatedstrong
top-linegrowthin2010, withover5percentorganic growth.Theincrease
in revenues over2009 wasdrivenbythegroup’stactical communication
systemsand informationtechnology services businesses:
Revenues in thetactical communicationsystemsbusiness increased
significantly in 2010duetohighervolumein battlefield communication
programs, in particular theWarfighter InformationNetwork–Tactical
(WIN-T)mobilecommunicationnetwork,and ruggedizedcomputing
products. Revenues in thegroup’sUnitedKingdom-basedoperationsalso
increasedin2010aswork began onthedemonstrationphase oftheU.K.
Ministry ofDefenceSpecialist Vehicleprogram.
In theIT services business, volumeincreasedonthegroup’sIT
supportand modernizationprogramsfortheintelligencecommunityand
the Network-Centric Solutions (NETCENTS) program,which provides
network supportforfederal agencies. Revenues also increasedinthis
business asaresultoftheBase Realignmentand Closure(BRAC) facility
changes, including work ontheNewCampusEast (NCE) contractforthe
National Geospatial-IntelligenceAgency,and theWalterReedNational
Military Medical Centerrelocation and FortBelvoir CommunityHospital
outfitting fortheArmy.
Revenues wereup in 2010comparedwith2009 in thegroup’s
ISRbusiness asaresultoftheacquisitionofAxsysTechnologies, Inc.,
in thethird quarterof2009. Thegroup also experiencedgrowthin
cyber-relatedprogramsacross its businesses in 2010, including systems
thatpreventnetwork attacks, increase situational awareness and reduce
network vulnerability.
TheInformationSystemsand Technology group’soperating earnings
increasedin2010, although ataslightly lowerrate than revenues,
resulting in a modest decrease in marginscomparedwith2009. The
reduction in marginsresultedfromashiftin thegroup’scontractmix to
includeagrowing proportionofITservices work.
Review of2009 vs. 2008
TheInformationSystemsand Technology group generatedrevenue
growthineach ofthegroup’smarket segments in 2009. Organic growth
ofmorethan 4 percentwasaugmented by acquisitionsin thegroup’sIT
services and ISRbusinesses. Revenues increasedontheWIN-Tprogram
and ground-basedsatellite communicationsprogramsin thegroup’s
tactical communicationbusiness. In theIT services business, higher
volumeonseveral IT infrastructureand supportcontracts, including NCE
and NETCENTS, accountedfortheincrease in revenues. Growing levels
ofcybersecurity-relatedwork and higheractivityonseveral classified
programscontributedto thegrowthinthegroup’sISRbusiness.
Operating earningsincreasedinlinewithrevenues in 2009, resulting
in operating marginsof10.7percent, consistentwith2008. Highermargins
in thetactical communicationsand ISRbusinesses duetoimproved
performanceand a favorableshiftin contractmix wereoffset by
decreasedmarginsin theIT services business.
Backlog and EstimatedPotential Contract Value
TheInformationSystemsand Technology group receivedthehighest level
ofordersin thegroup’shistory in 2010, generating a book-to-bill ratioof
nearly one-to-one. Asaresult, thegroup endedtheyear withabacklogof
$9.8 billionafterreporting record-levelrevenues in 2010. Thegroup’s
backlogdoes not includeapproximately $15.2 billionofestimatedpoten-
tial contractvalueassociatedwithits anticipatedshareofIDIQ
contracts and unexercisedoptions. In 2010, funding underIDIQ contracts
and optionscontributedover$4.3 billionto thegroup’sbacklog,ornearly
40percentofthegroup’sorders. Theestimatedpotential contractvalue
in theInformationSystemsand Technology group increasednearly 20
Tactical communicationsystems$421
Informationtechnology (IT)services 342
Intelligence, surveillanceand reconnaissance(ISR)systems47
Total increase in revenues $810
Year EndedDecember312009 2010Variance
Revenues $10,802 $11,612$8107.5%
Operating earnings1,1511,219 68 5.9%
Operating margin 10.7%10.5%
Year EndedDecember312008 2009 Variance
Revenues $10,038 $10,802 $7647.6%
Operating earnings1,0751,151767.1%
Operating margin 10.7%10.7%
$25,000
20,000
15,000
10,000
5,000
0
2008 2009 2010
■EstimatedPotential
ContractValue
■UnfundedBacklog
■FundedBacklog