General Dynamics GD · USD

SEGMENT INFORMATIONWe have four operating segments: Aerospace, Marine Systems, Combat Systems and Technologies. We organize our segments in accordance with the nature of products and services offered. Our chief operating decision maker is our Chairman and Chief Executive Officer (CEO). We measure each segment’s profitability based on operating earnings. Segment operating earnings exclude net interest and other income and expense items. The Chairman and CEO uses segment operating earnings as an input when assessing segment performance and when making decisions to allocate financial resources between segments. The Chairman and CEO uses operating earnings in assessing segment performance by comparing operating earnings to prior period results and plan-to-actual variances. The Chairman and CEO also uses forecasted expense information for each segment to manage operations. Summary financial information for each of our segments follows:Revenue (a)Other Segment Items (b)Operating EarningsYear Ended December 31202520242023202520242023202520242023Aerospace$13,110 $11,249 $8,621 $(11,364)$(9,785)$(7,439)$1,746 $1,464 $1,182 Marine Systems16,723 14,343 12,461 (15,546)(13,408)(11,587)1,177 935 874 Combat Systems9,246 8,997 8,268 (7,915)(7,721)(7,121)1,331 1,276 1,147 Technologies13,471 13,127 12,922 (12,194)(11,867)(11,720)1,277 1,260 1,202 Corporate (c)— — — — — — (175)(139)(160)Total$52,550 $47,716 $42,272 $(47,019)$(42,781)$(37,867)$5,356 $4,796 $4,245 (a)See Note B for additional revenue information by segment.(b)Other segment items consist of material and labor costs, depreciation and amortization, and other overhead and general and administrative expenses.(c)Corporate operating costs consisted of equity-based compensation expense and other miscellaneous expenses. The following is additional summary financial information for each of our segments: Capital ExpendituresDepreciation and Amortization*Identifiable AssetsYear Ended December 31202520242023202520242023202520242023Aerospace$336 $235 $200 $254 $220 $200 $16,815 $16,192 $15,099 Marine Systems517 424 511 270 243 217 7,313 7,019 6,209 Combat Systems144 135 107 112 117 108 10,111 10,275 10,479 Technologies160 119 85 276 294 327 19,252 19,286 19,534 Corporate4 3 1 12 12 11 3,758 3,108 3,489 Total$1,161 $916 $904 $924 $886 $863 $57,249 $55,880 $54,810 * Depreciation and amortization by reportable segment is included within the other segment items expense caption.

REVENUEPerformance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (development, production, maintenance and support). For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service. We classify revenue as products or services based on the predominant attributes of the associated performance obligation.Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in customer specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract. Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for 75% of our revenue in 2025, 76% in 2024 and 79% in 2023. Substantially all of our revenue in the defense segments is recognized over time because control is transferred continuously to our customers. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

COMMITMENTS AND CONTINGENCIESLitigationOn October 6, 2023, a putative class action lawsuit was filed in the United States District Court for the Eastern District of Virginia against General Dynamics Corporation, certain of its subsidiaries and various other companies alleging that they conspired, in violation of the Sherman Act, not to solicit naval architects and marine engineers from each other. The named plaintiffs purport to represent a class of individuals consisting of all naval architects and marine engineers employed by the shipyard and consultancy defendants, their predecessors, their subsidiaries and/or their related entities in the United States at any time since January 1, 2000. The plaintiffs allege that the conspiracy suppressed compensation paid to the putative class members, and the plaintiffs seek trebled monetary damages, attorneys’ fees, injunctive and other equitable relief. On May 9, 2025, the U.S. Court of Appeals for the Fourth Circuit reversed an earlier decision of the District Court dismissing the plaintiffs’ complaint and remanded the case for further proceedings. On September 11, 2025, the defendants filed a petition for a writ of certiorari with the U.S. Supreme Court. Given the current status of this matter, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss. Depending on the outcome of this matter, there could be a material impact on our results of operations, financial condition and cash flows.Additionally, various other claims and legal proceedings incidental to the normal course of business are pending or threatened against us. These other matters relate to such issues as government investigations and claims, the protection of the environment, asbestos-related claims and employee-related matters. The nature of litigation is such that we cannot predict the outcome of these other matters. However, based on information currently available, we believe any potential liabilities in these other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows.EnvironmentalWe are subject to and affected by a variety of federal, state, local and foreign environmental laws and regulations.

DEBTDebt consisted of the following:December 3120252024Fixed-rate notes due:Interest rate:April 20253.250%$— $750 May 20253.500%— 750 June 20261.150%500 500 August 20262.125%500 500 April 20273.500%750 750 November 20272.625%500 500 May 20283.750%1,000 1,000 April 20303.625%1,000 1,000 June 20312.250%500 500 August 20354.950%750 — April 20404.250%750 750 June 20412.850%500 500 November 20423.600%500 500 April 20504.250%750 750 OtherVarious74 76 Total debt principal8,074 8,826 Less unamortized debt issuance costs and discounts61 64 Total debt8,013 8,762 Less current portion1,006 1,502 Long-term debt$7,007 $7,260 In March 2025, we repaid fixed-rate notes of $750 with cash on hand and commercial paper issuances. In May 2025, we issued $750 of fixed-rate notes that mature in August 2035. The proceeds were used to repay fixed-rate notes of $750 that matured in May 2025. Interest payments associated with our debt were $376 in 2025, $385 in 2024 and $378 in 2023.The aggregate amounts of scheduled principal maturities of our debt are as follows:Year Ended December 31DebtPrincipal2026$1,006 20271,257 20281,007 20297 20301,007 Thereafter3,790 Total debt principal$8,074 On December 31, 2025, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. In addition, we have a $5 billion committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper issuances. These credit facilities include a $4 billion facility expiring March 2027 and a $1 billion 364-day facility that we established in early April 2025. We may renew or replace this credit facility in whole or in part at or prior to its expiration date. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.Our financing arrangements contain a number of customary covenants and restrictions. We were in compliance with all covenants and restrictions on December 31, 2025.

INCOME TAXESIncome Tax Provision. We calculate our provision for federal, state and foreign income taxes based on current tax law. The following is a summary of our net provision for income taxes for continuing operations:Year Ended December 31202520242023Current:U.S. federal$357 $622 $619 State3 32 27 Foreign277 190 200 Total current637 844 846 Deferred:U.S. federal282 (90)(131)State16 (4)7 Foreign(42)8 (53)Total deferred256 (86)(177)Provision for income taxes, net:U.S. federal639 532 488 State19 28 34 Foreign235 198 147 Provision for income taxes, net$893 $758 $669 Net income tax payments$568 $560 $1,100 The reported tax provision differs from the amounts paid because some income and expense items are recognized in different time periods for financial reporting than for income tax purposes. This includes the impact of the requirement, effective January 1, 2022, through December 31, 2024, to capitalize and amortize over five years certain R&D expenditures that were previously deductible immediately for tax purposes. Among other changes, the Budget Reconciliation Act of 2025 (Act) allows for the immediate deduction of domestic research and development expenditures beginning January 1, 2025, and permits the accelerated deduction of amounts capitalized under prior law. We otherwise do not expect the Act to have a material effect on our tax provision.State and local income taxes allocable to U.S. government contracts are included in operating costs and expenses in the Consolidated Statement of Earnings and, therefore, are not included in the provision above.The reconciliation from the statutory federal income tax rate to our effective income tax rate, applying ASU 2023-09 prospectively, follows:Year Ended December 312025U.S. federal statutory income tax$1,072 21.0%Tax creditsResearch and development tax credit(180)(3.5)Effects of cross-border tax lawsForeign-derived intangible income(36)(0.7)State tax on commercial operations, net of federal benefits15 0.3 Foreign tax effects38 0.7 Nontaxable or nondeductible items37 0.7 Other reconciling itemsEquity-based compensation(43)(0.8)Other, net(10)(0.2)Effective income tax rate$893 17.5%The reconciliation from the statutory federal income tax rate to our effective income tax rate, applying ASC 740 prior to the adoption of ASU 2023-09, follows: Year Ended December 3120242023U.S. federal statutory income tax rate21.0%21.0%Domestic tax credits(3.3)(3.3)Equity-based compensation(1.0)(0.

LEASESWe determine at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize an ROU asset and lease liability for leases with terms of 12 months or less. Some of our leases include options to extend the term of the lease for up to 40 years or to terminate the lease within one year. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining total future lease payments. As most of our lease agreements do not explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate on the commencement date to calculate the present value of future payments. Certain of our leases include variable payments, which may be calculated based on the Consumer Price Index (CPI) or similar indices at the lease commencement date. To the extent these variable payments are not considered fixed, we exclude such payments from the ROU asset and lease liability and expense as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease, such as commissions. In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred. Our leases are for office space, manufacturing facilities, and machinery and equipment. Real estate represents more than 75% of our lease obligations.

We face various cybersecurity threats. The purpose of our cybersecurity program is to assess, identify, manage and mitigate cybersecurity risk while supporting the achievement of our business objectives.Under our comprehensive risk management program, the board of directors (Board) of the company maintains oversight of the most significant risks facing the company, including cybersecurity risks, while senior management is responsible for the identification and prioritization of risks that are material to our business, corresponding risk-mitigation efforts and day-to-day management of our risk management program. The full Board retains oversight over management’s cybersecurity efforts. At least annually, and often more frequently, the Board receives cybersecurity briefings from senior executives, including, when appropriate, executives focused on cybersecurity matters. Our companywide cybersecurity policy sets the framework for our approach to cybersecurity. Each business unit and our corporate headquarters designates individuals with appropriate qualifications and experience to be responsible for addressing cybersecurity matters, including assessing, identifying and managing risks from cybersecurity threats, with a direct reporting line to senior management. Under our approach to cybersecurity, each business unit designs and operates its own information and cybersecurity program tailored to its market, customer requirements, regulatory requirements and threats. Our cybersecurity policy and procedures are designed to ensure senior management receives timely and adequate information regarding cybersecurity matters, including threats and incident response, as appropriate to the matter. Our policies and procedures are also designed to oversee and identify material cybersecurity risks related to third-party vendors and service providers.Our companywide Cyber Council, comprised of information technology and cybersecurity executives from our business units, shares information and cybersecurity practices throughout the company, recommends policy and procedure updates and tracks emerging trends. The chair of the Cyber Council reports directly to the company’s chief executive officer.As part of our approach to cyber risk management, we regularly perform internal audits of internal processes and controls relating to cybersecurity.

FAIR VALUEFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:•Level 1 – quoted prices in active markets for identical assets or liabilities.•Level 2 – inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly.•Level 3 – unobservable inputs significant to the fair value measurement.We did not have any significant non-financial assets or liabilities measured at fair value on December 31, 2025 or 2024.Our financial instruments include cash and equivalents, accounts receivable and payable, marketable securities held in trust and other investments, short- and long-term debt, and derivative financial instruments. The carrying values of cash and equivalents and accounts receivable and payable on the Consolidated Balance Sheet approximate their fair value.