General Dynamics 2014 Annual Report Download - page 11

Combat Systems group competes with a large number of domestic and
non-U.S. businesses. Our Information Systems and Technology group
competes with many companies, from large defense companies to
small niche competitors with specialized technologies or expertise. Our
Marine Systems group has one primary competitor with which it also
partners on the Virginia-class submarine program. The operating cycle
of many of our major platform 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 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 group 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 group competes worldwide in the business-jet
aircraft services business primarily on the basis of price, quality and
timeliness. In our maintenance, repair and FBO businesses, the group
competes with several other large companies as well as a number of
smaller companies, particularly in the maintenance business. In our
completions business, the group competes with other OEMs, as well as
several third-party providers.
BACKLOG
Our total backlog represents the estimated remaining value of work to be performed under firm contracts and includes funded and unfunded portions.
For additional discussion of backlog, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
Summary backlog information for each of our business groups follows:
2014 Total
Backlog Not
Expected to Be
Completed in
2015
December 31 2014 2013
Funded Unfunded Total Funded Unfunded Total
Aerospace $ 13,115 $ 117 $ 13,232 $ 13,785 $ 158 $ 13,943 $ 6,931
Combat Systems 19,292 506 19,798 5,451 1,113 6,564 15,060
Information Systems and Technology 7,070 1,539 8,609 7,253 1,267 8,520 2,229
Marine Systems 13,452 17,319 30,771 11,795 5,063 16,858 24,518
Total backlog $ 52,929 $ 19,481 $ 72,410 $ 38,284 $ 7,601 $ 45,885 $ 48,738
RESEARCH AND DEVELOPMENT
To foster innovative product development and evolution, we conduct
sustained R&D activities as part of our normal business operations. In the
commercial sector, most of our Aerospace group’s R&D activities support
Gulfstream’s product enhancement and development programs. In our
U.S. defense businesses, we conduct customer-sponsored R&D activities
under government contracts and company-sponsored R&D. In accordance
with government regulations, we recover a portion of company-sponsored
R&D expenditures through overhead charges to U.S. government
contracts. For more information on our company-sponsored R&D
activities, including our expenditures for the past three years, see Note A
to the Consolidated Financial Statements in Item 8.
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 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.
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