The below text was taken from the weekly GAC Breakfast Minutes, 5/18/99:Management Commentsby Bill Boisture, President & Chief Operating Officer, Gulfstream Aerospace CorporationALL — General Dynamics to Acquire Gulfstream in $5.3 Billion Stock Deal Bill Boisture, President & Chief Operating Officer of Gulfstream Aerospace Corporation, addressed the Breakfast audience. He expanded on the announcement made Monday, May 17, that Gulfstream has entered into a definitive agreement with General Dynamics whereby General Dynamics will acquire Gulfstream in a one-for-one stock swap. Below are Mr. Boisture's comments. Sunday evening Gulfstream's Board of Directors met in New York and agreed for the General Dynamics Corporation of Falls Church, VA, to acquire Gulfstream. That transaction will result in the merging of Gulfstream into General Dynamics. We will operate as the fourth group—the aircraft group—within an organization that now operates marine systems (submarines and surface combatants), armored systems (tanks and armored personnel vehicles), and electronic systems (communications, systems integration, and sensor and intelligence systems). We will operate essentially as we do today. Gulfstream's Chairman, Ted Forstmann, has agreed to continue to chair the subsidiary corporation. The same leadership team in place today has also agreed to operate the business going forward. As an aside, General Dynamics is one of our customers; they operate GIV S/N 1338, which they took delivery of last December. Over the life of their corporation, they have operated Gulfstream aircraft. They are very familiar with our company and are very excited about the prospects for Gulfstream. We see the acquisition as a good opportunity for us, because General Dynamics is financially a very strong company, as are we. (General Dynamics reported $5 billion in revenue in 1998, along with $14.6 billion total backlog.) Looking forward, General Dynamics has almost no debt (under $300 million). Gulfstream's debt is less than that. Market value of the two companies together will be about $13.4 billion. These are two very sound financial entities merging to create additional opportunity. We see the strength of the parent corporation as helping Gulfstream with future product development. We see the opportunity to benefit from availability of their computer-aided manufacturing technologies. Certainly in Gulfstream's government special missions business, General Dynamics' electronic system division, combined with our aircraft capabilities, will offer some interesting opportunities. We think this is a very good day for the people of Gulfstream and for our customers. It will take about 100 days for the transaction to close. We will have to file SEC documents and go through the Hart-Scott-Rodino anti-trust process. We do not anticipate a problem with either. Then shareholder meetings will be called for both corporations to approve the transaction. “We anticipate that this transaction will come to fruition by fourth quarter 1999. In the meantime, we will operate our business the same way we did yesterday and go forward,” said Boisture, in closing. Editor's notes—Below are a few facts to familiarize you with the General Dynamics Corporation: • General Dynamics is the leading supplier of ships, submarines, and combat vehicles, with a growing presence in supplying sophisticated defense information management systems. The company's key customers include the United States and its allies around the world. • General Dynamics' three existing major business segments include: * Marine Systems—offering the broadest range of integration, design, engineering, and production skills in Naval shipbuilding. * Combat Systems—offering a full spectrum of armored vehicles, light wheeled reconnaissance vehicles, suspensions, engines, transmissions, guns, and ammuni-tion handling systems. * Information Systems and Technology—offering capabilities in the integration of marine and ground combat systems • Major products of General Dynamics include: * Seawolf Nuclear-powered Attack Submarine * Arleigh Burke-class Aegis Destroyer * Abrams M1A2 Digitized Main Battle Tank * High-speed Gatling Aircraft and Helicopter Guns * Advanced Fiber-optics Products * High-speed Data Processors for Satellites • In 1998, General Dynamics reported revenues of $5 billion, a 22% increase over 1997. • 1998 earnings per share for General Dynamics were up 15% to $2.86 per share. Total return to shareholders was 38%, one of the highest in the defense industry and ahead of the S&P 500, the S&P Aerospace and Defense Index, and the Dow Jones Industrial Average. • General Dynamics has its headquarters outside of Washington, D.C., in Falls Church, Virginia. • General Dynamics employs 31,000 people (and soon will acquire an additional 7,800 Gulfstream employees). • General Dynamics home page: www.generaldynamics.com • The Gulfstream Web page (www.gulfstreamaircraft.com) provides links to news releases on the agreement for General Dynamics to acquire Gulfstream."Cottonpicker & G-1 Ops Manager
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