General Dynamics Corporation -- Moody's: General Dynamics' weak results are a credit negative

New York, January 24, 2013 -- Moody's Investors Service said that General Dynamics Corp.'s (A2 stable) weak fourth quarter financial results were a credit negative development, but not one that would impact the company's ratings on an immediate basis. "The earnings miss is a bit disconcerting given that almost every business segment was impacted," noted Russell Solomon, Senior Vice President and lead analyst for the company. "The degree of underperformance may portend the beginning of a difficult period -- both for General Dynamics and the defense industry more broadly -- with the large write-offs suggesting a diminished earnings outlook," added Solomon, a trend which Moody's believes will continue if defense spending cuts are fully implemented. Moody's noted, nonetheless, that the company enjoys strong liquidity and maintains sufficient financial flexibility to withstand the coming downturn, particularly in consideration of its Gulfstream aerospace business which is still really just taking off.

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