Defense contractor General Dynamics Corp., now facing expropriation of a subsidiary in Quebec, reported a record 49 percent increase in first-quarter earnings today.
Davis S. Lewis, chairman and chief executive officer, told shareholders that net earnings for the quarter ending April 1 were $25.9 million ($1.08 a share), nearly 49 percent higher than 1978 first-quarter earnings of $19.8 million (74 cents) adjusted to account for a 2 1/2-for-1 stock split effective in February.
While General Dynamics was holding its annual meeting, Finance Minister Jacques Parizeau said in Quebec that the government will proceed with its plans to expropriate Asbestos Corp. Ltd. During meetings last month in St. Louis, General Dynamics and Quebec failed to reach agreement on a purchase price for the firm, Canada's second-largest asbestos producer.
Although Parizeau did not disclose the province's latest offer in its effort to acquire Asbestos, Lewis said the firm did not expect to receive what "we would consider to be a fair offer," and Guy Fiske, chairman of Asbestos, said Quebec's last offer "wasn't even as high as book value," which is $52 (Canadian) a share.
One General Dynamics official said, "We will utilize all available means to protect our interest and the interest of minority shareholders. We are still open to negotiations if the Quebec government requests them."
A parizeau aide said approval of the expropriation move by the National Assembly doesn't mean it will take place. Quebec is willing to renew negotiations, too, the Canadian said.
During the meeting here, General Dynamics reported sales of $895.6 million during the first quarter were also a record and were nearly 31 percent higher than the $682.1 million reported for the same period in 1978.
Meeting with reporters later, Lewis said the firm would spend $250 million on capital investments this year compared with $157 million in 1978.
General Dynamics, a $3.2 billion high-techology firm based in St. Louis, has interests in aviation, electronics, shipbuilding and building products. It had a funded backlog at the end of the first quarter of $10 million, up from $8.8 million for the same period in 1978.
Although Lewis reported record earnings to shareholders, he spent a question-and-answer session defending General Dynamic's role as a manufacturer of military products. The questions came after shareholders over-whelmingly defeated a minority stock-holder resolution that would have required the company to establish a committee to examine alternate uses for some of the firm's submarine production facilities in Connecticut and Rhode Island.