General Dynamics 2015 Annual Report Download - page 30

Aerospace funded backlog represents aircraft and custom completion
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 group
ended 2015 with backlog of $13.4 billion, up from $13.2 billion at
year-end 2014.
Orders in 2015 reflected strong demand across our product
portfolio. We continued to build our backlog with additional orders for
the new family of business jets introduced in 2014, the G500 and
G600 aircraft, which are expected to enter into service in 2018 and
2019, respectively, as well as orders for all models of in-production
aircraft. In addition, we received several orders in 2015 for custom
completions of narrow- and wide-body aircraft in our Jet Aviation
business.
Estimated potential contract value in the Aerospace group primarily
represents options to purchase new aircraft and long-term agreements
with fleet customers. Estimated potential contract value was $2.4
billion on December 31, 2015, down slightly from $2.7 billion at year-
end 2014.
Demand for Gulfstream aircraft remains strong across customer
types and geographic regions, generating orders from public and
private companies, individuals and governments around the world.
Geographically, U.S. customers represented approximately 45 percent
of the group’s backlog on December 31, 2015, up from year-end 2014
given strong domestic demand.
DEFENSE GROUPS
The total backlog in our three defense groups represents the estimated
remaining sales value of work to be performed under firm contracts.
The funded portion of this backlog includes items that have been
authorized and appropriated by the Congress and funded by the
customer, as well as commitments by international customers that are
similarly approved and funded by their governments. We have included
in total backlog firm contracts at the amounts that we believe are likely
to receive funding, but there is no guarantee that future budgets and
appropriations will provide the funding necessary for a given program.
Total backlog in our defense groups was $52.7 billion on
December 31, 2015, down from $59.2 billion at the end of 2014.
Estimated potential contract value was $22 billion on December 31,
2015, compared with $23.9 billion at year-end 2014.
COMBAT SYSTEMS
$30,000
20,000
10,000
0
2013 2014 2015
Estimated Potential
Contract Value
Unfunded
Funded
After tripling in 2014, Combat Systems’ total backlog was $19 billion at
the end of 2015, down slightly from $19.8 billion at year-end 2014. The
group’s backlog includes two major contracts awarded in 2014:
•$8.1 billion remaining on a $10 billion contract to provide wheeled
armored vehicles and logistics support to a Middle Eastern customer
through 2028, plus an additional potential $2.5 billion of vehicles and
services; and
•$5.5 billion from the U.K. Ministry of Defence to produce AJAX
armoured fighting vehicles scheduled for delivery to the British Army
between 2017 and 2024 and related in-service support. We received
a $610 award for the in-service support in 2015.
The Combat Systems group also has several additional international
military vehicle production contracts in backlog, notably:
•$600 to produce over 300 armored personnel carriers (APCs) for the
Danish Defence Acquisition and Logistics Organization; and
•$495 for light armored vehicles (LAVs) for various international
customers, including $250 for the upgrade and modernization of LAV
III combat vehicles for the Canadian Army.
26 General Dynamics Annual Report 2015