General Dynamics Annual Report: 1967 Page: 2

                                
To the Share Owners:

1967 was another year of growth for General Dynamics.
Sales were up 25% to a new high. Our backlog of funded
orders was up 43% from 1966. Expenditures for new plant
and equipment were at a record $97,000,000.
Net income for the year was down slightly.
The decline was concentrated in a few of our multiple
operations. The reasons have been identified, and are being
brought under control.
Consolidated sales of General Dynamics Corporation and
subsidiaries for the year ending December 31, 1967 were
$2,253,336,000. This compares with sales in the preceding
year of $1,796,991,000. The largest gain was in military aircraft.
Deliveries to Government services and agencies represented
approximately 83% of total sales in 1967.
Sales to industrial and commercial customers accounted for
approximately 17% of total sales. This includes commercial
communication equipment, coal, lime, building materials,
machinery and compressed gases.
Aircraft and components represented 49% of total sales;  Sales by Product Line
marine systems 16%; military electronics and tactical             Aircraft  Communications,  1 Marine
missiles 12% ; and  space vehicles and  related  activities 6%.  $ millions  Space  Electronics and Tactical  1 Industrial
2400
Backlog of orders at the end of 1967 was $2,372,000,000.
The year before it had been $1,651,000,000. Backlog includes  1800
only amounts actually funded and not those for orders
under negotiation or unfunded on multiyear production  1200
contracts.
Consolidated net income for the year ending December 31,  600
1967 was $57,026,000, equivalent to $5.46 per common share.
Of this total, $51,289,000 represented net income from
operations and $5,737,000 represented nonrecurring gains   1963    194      195     1966     1967
from the sale of securities. Net income in 1966 was
$58,407,000, equivalent to $5.59 per common share, and
included $4,452,000 in nonrecurring gains.
Earnings did not keep pace with the increase in sales  Cash Flow
due largely to two factors.                                                Net Income
$ millions          Depreciation
100
The first was costs in marine operations.
Most of our marine work, for both surface ships and  75
submarines, is currently on a firm fixed-price basis, obtained
on close competitive bidding, for ships which take several
years to construct. Costs of these contracts are now expected
to exceed earlier estimates.
Consistent with customary accounting practice, we have
absorbed during the 1967 year all identifiable losses-
totalling $18,700,000 after taxes-on contracts for         16       194 16          1966    1967

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