General Dynamics' Profit Jumps 21 Percent

General Dynamics Corp. reported a 21 percent increase in its fourth-quarter profit, buoyed by continued military spending on technology and demand for its Gulfstream business jets.

Information technology continued to be the Falls Church military contractor's fastest growth area. The unit's operating earnings grew by nearly 19 percent in the fourth quarter, to $215 million, and by more than 20 percent for all of 2005, to $865 million.

The company is pursing more growth in the technology market, including a deal announced last year to buy Fairfax-based Anteon International Corp. for $2.1 billion. That deal is expected to close in early spring.

Overall, General Dynamics said it had a profit of $406 million ($2 a share) in the fourth quarter, up from $336 million ($1.66) in the comparable period of 2004. Revenue increased 13 percent, to $5.83 billion, from $5.17 billion. The results were helped by a one-time gain of $24 million, which included land sales.

Revenue in the company's aerospace unit, which includes Gulfstream business jets, rose 13 percent in the fourth quarter, to $946 million, and 14 percent for the year, to $3.43 billion.

For all of 2005, General Dynamics had a profit of $1.46 billion ($7.22), compared with $1.23 billion ($6.09) in 2004. Revenue increased 11 percent, to $21.24 billion from $19.12 billion.

The company's marine systems unit, which includes submarines and oil tankers, continued to lag. General Dynamics has struggled to produce two oil tankers, taking two charges on the project last year. It also warned in December that it will lay off up to 2,400 of its submarine workers in Connecticut and Rhode Island this year. Revenue in the marine division rose 1.9 percent in the fourth quarter, to $1.14 billion, but was down by nearly 1 percent for the year at $4.7 billion.

General Dynamics forecast a profit of $7.80 to $7.85 a share for 2006. The outlook was lower than the $8.02 a share that many Wall Street analysts had expected, David Strauss, aerospace and defense analyst for UBS Investment Research, said in a research note yesterday. Strauss had forecast earnings per share of $7.95.

"We believe GD's guidance will likely prove conservative," he said.

General Dynamics shares closed down $1.46 per share, or 1.3 percent, at $114.34.

Meanwhile, CACI International Inc., an Arlington technology firm, said its second-quarter profit rose 16 percent, to $22.3 million (72 cents a share), from $19.1 million (63 cents) in the comparable quarter of 2004. The results included a stock-option expense of $1.6 million.

During the quarter, revenue from the Pentagon, by far the company's largest customer, increased 8 percent, to $307.3 million. Work with the intelligence community now accounts for 28 percent of CACI's business and increased 26 percent during the quarter, according to a company press release.