UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2013
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-3671
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
GENERAL DYNAMICS CORPORATION
401(K) PLAN FOR REPRESENTED EMPLOYEES
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
GENERAL DYNAMICS CORPORATION
2941 Fairview Park Drive, Suite 100
Falls Church, Virginia 22042-4513
GENERAL DYNAMICS CORPORATION 401(k)
PLAN FOR REPRESENTED EMPLOYEES
Report of Independent Registered Public Accounting Firm
The Participants and Administrator of the General Dynamics Corporation 401(k) Plan for Represented Employees:
We have audited the accompanying statements of net assets available for benefits of the General Dynamics Corporation 401(k) Plan for Represented Employees (the Plan) as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules, Schedule H, Line 4a Schedule of Delinquent Participant Contributions for the year ended December 31, 2013 and Schedule H, Line 4i Schedule of Assets (Held at End of Year) as of December 31, 2013, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plans management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ KPMG
McLean, VA
June 27, 2014
2
GENERAL DYNAMICS CORPORATION 401(k)
PLAN FOR REPRESENTED EMPLOYEES
Statements of Net Assets Available for Benefits
December 31, 2013 and 2012
2013 | 2012 | |||||||
Assets: | ||||||||
Investments in Master Trust at fair value (note 4) |
$ | 1,137,404,294 | 1,012,131,579 | |||||
Notes receivable from participants |
41,810,935 | 40,025,426 | ||||||
Contributions receivable employer |
1,352,794 | 1,462,683 | ||||||
Contributions receivable participant |
1,222,140 | 987,347 | ||||||
Due from the merged plans |
2,563,976 | | ||||||
|
|
|
|
|||||
Total assets |
1,184,354,139 | 1,054,607,035 | ||||||
Liabilities: | ||||||||
Accrued administrative expenses |
128,259 | 223,421 | ||||||
|
|
|
|
|||||
Net assets reflecting all investments at fair value |
1,184,225,880 | 1,054,383,614 | ||||||
Adjustment from fair value to contract value for fully |
(4,529,163 | ) | (8,355,787 | ) | ||||
|
|
|
|
|||||
Net assets available for benefits |
$ | 1,179,696,717 | 1,046,027,827 | |||||
|
|
|
|
See accompanying notes to financial statements.
3
GENERAL DYNAMICS CORPORATION 401(k)
PLAN FOR REPRESENTED EMPLOYEES
Statements of Net Assets Available for Benefits
Year ended December 31, 2013
Additions to net assets attributed to: | ||||
Participation in income of Master Trust (Note 4) |
$ | 202,937,751 | ||
Interest income from notes receivable from participants |
2,312,180 | |||
Contributions: |
||||
Rollover |
1,208,816 | |||
Participant |
45,171,009 | |||
Employer |
19,400,066 | |||
|
|
|||
Total contributions |
65,779,891 | |||
|
|
|||
Total additions |
271,029,822 | |||
|
|
|||
Deductions from net assets attributed to: | ||||
Benefits paid to participants (note 7) |
96,965,438 | |||
Administrative expenses |
990,925 | |||
|
|
|||
Total deductions |
97,956,363 | |||
|
|
|||
Net increase prior to transfers |
173,073,459 | |||
Transfers in due to mergers (note 1) | 12,233,658 | |||
Net transfers to and from other plans within the master trust (note 1) | (51,638,227 | ) | ||
Net assets available for benefits: | ||||
Beginning of year |
1,046,027,827 | |||
|
|
|||
End of year |
$ | 1,179,696,717 | ||
|
|
See accompanying notes to financial statements.
4
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
(1) | Plan Description |
The following description of the General Dynamics Corporation 401(k) Plan for Represented Employees (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions.
(a) | General |
The Plan is a defined contribution plan covering eligible employees of General Dynamics Corporation and its subsidiaries (the Company or the Plan Sponsor) subject to a collective bargaining agreement. The Plan is one of four plans that comprise the General Dynamics Corporation 401(k) Plan Master Trust Agreement (Master Trust).
Effective March 28, 2013, the portion of the General Dynamics Ordnance and Tactical Systems, Inc. Scranton Retirement Savings Plan representing the account balances of represented employees was merged into the Plan. Effective December 31, 2013, the AxleTech International Union 401(k) Plan was also merged into the Plan.
As a result of the mergers discussed above, during 2013, assets in the following amounts were transferred from the plans noted below:
AxleTech International Union 401(k) Plan |
$ | 2,664,647 | ||
General Dynamics Ordnance and Tactical Systems, Inc. |
||||
Scranton Retirement Savings Plan |
9,569,011 | |||
|
|
|||
$ | 12,233,658 | |||
|
|
The net transfers to and from plans are a result of either entire employee groups being transferred from one plan to another or from individual participants transferring jobs which causes them to become a participant of a different plan.
(b) | Plan Administration |
Prior to December 31, 2012, The Northern Trust Company (TNT) held the Plans assets as the Plans trustee and Hewitt Associates, LLC (Aon Hewitt) was the Plans recordkeeper. Effective December 31, 2012, Fidelity Management Trust Company (Fidelity) became the Plans trustee and Fidelity Workplace Services, LLC became the Plans recordkeeper.
(c) | Contributions |
Participants are eligible to participate in the Plan upon hire. Contribution percentages range from 1% to 100% of eligible compensation on a before-tax or after-tax basis (Roth contributions), up to the statutory limits defined by the Internal Revenue Code (IRC). The employer match amount varies based on the business unit with whom the participant is employed.
5 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
Participants at certain business units that do not accrue credited service under a Company-sponsored defined benefit pension plan may be eligible to receive an employer profit-sharing contribution based on a percentage of their eligible compensation. At December 31, 2013 and 2012, $559,325 and $796,929, respectively, of such profit-sharing contributions were included as a receivable in the Plans financial statements.
(d) | Participant Accounts |
Each participant directs his or her contributions to be invested in various funds. Changes to investment elections can be made according to rules set by the Plan Sponsor. Each participants account is credited with the participants contribution and allocations of (a) the Companys contribution and (b) Plan earnings, less an allocation of administrative expenses. The benefit to which a participant is entitled is the vested balance of his or her account.
(e) | Vesting |
Participants contributions are always 100% vested. Vesting in any Company matching or profit-sharing contributions varies by business unit, but does not exceed five years.
(f) | Notes Receivable from Participants |
The Plan permits active participants to borrow the lesser of $50,000 less the highest outstanding note receivable (or participant loans or loan) balance during the last 12 months, or 50% of the vested amount in their accounts (subject to limits defined in the Plan document and by the IRC). Loans are secured by the remaining balance in the participants accounts. Participants are required to repay the loan by regular payroll deductions over a period of up to five years. The Plan also offers primary residence loans (with terms up to 20 years). Loans are issued at the U.S. prime rate of interest. Participant loans outstanding at December 31, 2013, bear interest at rates that range from 3.25% to 9.50%. Participant loans are recorded at amortized cost, which is the remaining unpaid principal balance plus any accrued but unpaid interest.
(g) | Payment of Benefits |
On termination of service, a participant (or designated beneficiary) may elect to (a) receive a lump-sum amount equal to the value of the participants vested interest in his or her account, (b) roll over the value of the participants vested interest in his or her account into another qualified plan, (c) receive annual or monthly installment payments over a specified period or in specified amounts, or (d) receive a partial distribution of his or her total account balance. Active participants may be eligible to receive in-service or hardship withdrawals or withdrawals allowed under the IRC for participants that reach age 59 1⁄2.
6 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
(h) | Forfeited Accounts |
During 2013, $73,215 in forfeitures were used to reduce employer contributions. At December 31, 2013, participants forfeited nonvested accounts totaled $29. These amounts will be used to reduce employer contributions.
(i) | Administrative Expenses |
The Master Trust generally pays the administrative expenses of the Plan. The Plan document provides that the Company may reimburse the Plan for administrative expenses. The Company did not reimburse any administrative expenses in 2013.
Company employees perform certain administrative functions that are not reimbursed by the Master Trust. The Plan document provides that the Company is entitled to reimbursement for certain costs incurred on behalf of the Plan. The Company did not seek reimbursement for these costs in 2013.
Administrative expenses are specifically identified to the four plans that participate in the Master Trust. Specifically identified expenses of the Plan for 2013 were $990,925 and are reflected as administrative expenses in the Statement of Changes in Net Assets Available for Benefits.
(j) | Risks and Uncertainties |
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, liquidity and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
(2) | Summary of Significant Accounting Policies |
(a) | Basis of Accounting |
The accompanying financial statements are prepared under the accrual basis of accounting.
(b) | Investment Valuation and Income Recognition |
The Plans investments are stated at fair value with the exception of fully benefit-responsive investment contracts (referred to herein as guaranteed investment contracts or GICs), which are adjusted from fair value to contract value. The Master Trust has a direct investment in GICs through its investment in the Fixed Income Fund.
Purchases and sales of investments are recorded on the trade date. Investment income consists of dividend income, interest income, and net appreciation (depreciation) in the fair value of investments. Dividends are recognized on the ex-dividend date, the date on which an entity or an individual must own the stock to receive the pending dividend. Interest income is recorded on an accrual basis. Net appreciation (depreciation) includes the gains and losses on investments bought and sold as well as held during the year.
7 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
(c) | Payment of Benefits |
Benefits are recorded when paid.
(d) | Use of Estimates |
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
(3) | Tax Status |
The Internal Revenue Service (IRS) issued a favorable determination letter on September 23, 2013, indicating that the Plan is a qualified plan under Section 401(a) of the IRC. The Plan is exempt from federal income tax under Section 501(a) of the IRC. Although the Plan has been amended subsequent to the date of the latest determination from the IRS, the Plan Sponsor and the Plans tax counsel believe the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC.
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan and has concluded that, as of December 31, 2013 and 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. There are currently no audits in progress for any tax periods. Under the IRS statute of limitations, the Plan is no longer subject to income tax examinations for years prior to 2010.
(4) | Investments |
(a) | General |
The Plans investments are held by the Master Trust, which was established for the investment of the Plans assets and the assets of the General Dynamics Corporation 401(k) Plan 3.0, the General Dynamics Corporation 401(k) Plan 4.5, and the General Dynamics Corporation 401(k) Plan 5.0 (collectively, the Plans). Each of the Plans has a pro rata interest in the Master Trust. Net assets and net participation in the net income of the Master Trust are allocated to the Plans according to each Plans participants investment elections and earnings thereon. At December 31 of both 2013 and 2012, the Plans interest in the net assets of the Master Trust was approximately 11% and 12%, respectively.
8 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The following table presents the investments of the Master Trust as of December 31, 2013 and 2012:
2013 | 2012 | |||||||
Brokerage accounts |
$ | 105,480,509 | $ | | ||||
General Dynamics Corporation common stock |
2,543,378,903 | 2,127,670,462 | ||||||
Equity securities |
1,032,284,124 | 631,654,975 | ||||||
Fixed Income Fund (Synthetic GIC) |
||||||||
Wrapper contracts |
24,481,676 | 23,204,606 | ||||||
Mortgage backed securities |
406,440,533 | 476,689,165 | ||||||
Asset backed securities |
85,650,686 | 109,497,411 | ||||||
Corporate debt obligations |
963,823,226 | 878,412,662 | ||||||
Government debt obligations |
926,544,948 | 788,454,053 | ||||||
Foreign government debt obligations |
1,867,782 | | ||||||
Short term investment funds |
209,392,312 | 389,666,711 | ||||||
Collective trusts |
29,144,831 | | ||||||
Units of collective trusts (CCTs) |
4,211,014,209 | 2,907,186,787 | ||||||
Units of registered investment companies (RICs) |
161,534,624 | | ||||||
Cash and cash equivalents, other |
20,455,628 | 19,094,252 | ||||||
|
|
|
|
|||||
Total investments at fair value |
10,721,493,991 | 8,351,531,084 | ||||||
Pending trades receivable |
1,693,846,291 | | ||||||
|
|
|
|
|||||
Total assets |
12,415,340,282 | | ||||||
Pending trades payable |
(1,582,790,189 | ) | | |||||
|
|
|
|
|||||
Total liabilities |
(1,582,790,189 | ) | | |||||
|
|
|
|
|||||
Net assets of Master Trust before adjustment to contract value |
10,832,550,093 | 8,351,531,084 | ||||||
Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
(33,528,140 | ) | (60,274,062 | ) | ||||
|
|
|
|
|||||
Net assets of Master Trust |
$ | 10,799,021,953 | $ | 8,291,257,022 | ||||
|
|
|
|
9 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The Plans interests in the Master Trusts net assets at December 31, 2013 and 2012 were as follows:
General Dynamics Corporation 401(k) Plan 3.0 |
$ | 3,247,426,122 | $ | 3,100,365,484 | ||||
General Dynamics Corporation 401(k) Plan 4.5 |
4,222,196,109 | 1,744,551,380 | ||||||
General Dynamics Corporation 401(k) Plan 5.0 |
2,196,524,591 | 2,442,564,365 | ||||||
General Dynamics Corporation 401(k) Plan for Represented Employees |
1,132,875,131 | 1,003,775,793 | ||||||
|
|
|
|
|||||
Total |
$ | 10,799,021,953 | $ | 8,291,257,022 | ||||
|
|
|
|
Net investment income for the Master Trust for the year ended December 31, 2013 consisted of the following:
Net appreciation on equity securities other than Company stock |
$ | 264,202,008 | ||
Net appreciation on Company stock |
735,782,057 | |||
Net appreciation in collective trust funds |
753,568,991 | |||
Net appreciation in registered investment companies |
10,148,319 | |||
Interest on fixed income fund |
46,394,284 | |||
Dividends on Company stock |
45,130,911 | |||
Dividends other than on Company stock |
12,320,567 | |||
Net appreciation on brokerage account |
6,860,462 | |||
|
|
|||
Total |
$1,874,407,599 | |||
|
|
The Plans interests in the Master Trusts investment income for the year ended December 31, 2013 were as follows:
General Dynamics Corporation 401(k) Plan 3.0 |
$ | 723,074,381 | ||
General Dynamics Corporation 401(k) Plan 4.5 |
393,316,082 | |||
General Dynamics Corporation 401(k) Plan 5.0 |
555,079,385 | |||
General Dynamics Corporation 401(k) Plan for |
202,937,751 | |||
|
|
|||
Total |
$ | 1,874,407,599 | ||
|
|
10 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The fair value of the Master Trusts investments that represented 5% or more of the Master Trusts ending net assets as of December 31, 2013 and 2012 were as follows:
2013 | 2012 | |||||||
General Dynamics Corporation common stock |
$ | 2,543,378,903 | $ | 2,127,670,462 | ||||
Fixed Income Fund |
2,647,345,994 | 2,665,924,608 | ||||||
BTC US Debt Index Non-Lending Fund F |
| 666,716,465 | ||||||
Northern Trust S&P 500 Non-Lending Fund |
1,553,538,888 | 1,132,558,169 | ||||||
Northern Trust Extended Market Index Fund |
773,647,226 | 552,167,464 |
(b) | Fixed Income Fund (Synthetic GIC) |
The Fixed Income Fund holds fully benefit-responsive investment contracts (wrapper contracts) with MetLife Insurance Company (MetLife) in order to provide participants with a stable, fixed-rate of return on investments, and protection of principal from changes in market interest rates. MetLifes credit rating from Standard & Poors at December 31, 2013 was AA-. The Fixed Income Fund is a synthetic guaranteed investment contract (synthetic GIC) which is valued at the estimated fair value of the underlying investments of the contracts, primarily debt securities and wrapper contracts. Interest is credited to the contract at interest rates that reflect the performance of the underlying portfolio. MetLife resets the interest rate semi-annually based on the market value of the portfolio and the guaranteed value over the weighted average duration of the investments. Participants will receive the principal and accrued interest upon withdrawal for events such as transfers to other Plan investment options or payments for retirement, termination of employment, disability, death and in-service withdrawals as permitted by the Plan.
The contract value of the Fixed Income Fund at December 31, 2013 and 2012 was $2,613,817,854 and $2,605,650,546, respectively, as compared to the fair value of $2,647,345,994 and $2,665,924,608, respectively. The average yield and crediting interest rates ranged from 1.62% to 2.34% for 2013 and 2.15% to 2.75% for 2012. The crediting interest rate resets semi-annually and is based on an agreed-upon formula with the issuers, but cannot be less than zero. The key factors that influence future interest crediting rates could include the following: the level of market interest rates; the difference between the fully benefit-responsive investment contracts book and market values; the amount and timing of Participant contributions; transfers and withdrawals into/out of the fully benefit-responsive investment contracts; and the duration of the underlying investments backing the fully benefit-responsive investment contracts.
11 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
(c) | Fair Value Determination |
Fair 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 under U.S. GAAP:
| Level 1 Quoted prices (unadjusted) in active markets for identical investments. |
General Dynamics Corporation Common Stock, Investments in Equity Securities, Brokerage Accounts and Units of Registered Investment Companies:
General Dynamics Corporation common stock, investments in equity securities, brokerage accounts and units of registered investment companies are valued using quoted prices in an active market.
| Level 2 Inputs other than quoted prices that are observable to the market participant for the asset, or quoted prices in a market that is not active. |
Units of Collective Trusts:
Units of collective trusts are private investment securities valued using the Net Asset Value (NAV) provided by the Plans trustee. NAV is based on the value of the underlying assets owned minus its liabilities, divided by the number of units outstanding. Investments in collective trusts are redeemable daily at NAV, and there are no restrictions on redemptions. Investments in collective trusts have investment strategies consistent with their classifications in the tables that follow. The NAV is quoted on a private market that is not active. However, the unit price is based primarily on underlying investments that are traded on an active market.
Fixed Income Fund (Synthetic GIC):
Asset-backed and mortgage-backed securities are valued at their most recent bid prices (sales prices if their principal market is an exchange) in the principal market in which such securities are traded, as determined by recognized dealers in such securities, or are valued on the basis of information provided by a pricing service. The fair values of corporate debt obligations are estimated based on yields currently available on comparable securities of issues with similar credit ratings. The fair values of government debt obligations and foreign government debt obligations are estimated based on current rates for similar instruments. The short term investment funds hold short term investments for capital preservation and fair values are estimated at their quoted redemption prices and recent transaction prices of $1.00 per unit, with no discounts for credit quality or liquidity restrictions.
12 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
| Level 3 Inputs are unobservable to the market participant. |
Wrapper Contracts:
Investments in wrapper contracts are valued at fair value using a discounted cash flow model which considers recent fee bids as determined by recognized dealers, discount rate, and the duration of the underlying portfolio of securities. The contracts are unallocated in nature and are fully benefit-responsive. Therefore, net assets available for benefits reflects the Plans interest in the contract value of the Fixed Income Fund because the Plans allocable share of the difference between fair value and contract value for this investment is presented as a separate adjustment in the statement of net assets available for benefits. There are no reserves against contract values (which represent contributions made under the contract, plus earnings, less withdrawals and administrative expenses) for credit risk of the contract issuer or otherwise. Wrapper contracts provide the Fixed Income Fund with the ability to use contract value accounting to maintain a constant $1.00 unit price. Wrapper contracts also provide for the payment of Participant-directed withdrawals and exchanges at contract value (principal and interest accrued to date) during the term of the wrapper contracts. However, withdrawals prompted by certain events (e.g., layoffs, retirement during specified early retirement window periods, spin-offs, sale of a division, facility closings, plan terminations, partial plan terminations, changes in law or regulation, material breach of contract responsibilities, loss of the Plans qualified status, etc.) may be paid at fair value which may be less than contract value. Currently, management believes that the occurrence of an event that would cause the Plan to be paid at less than contract value is not probable. A wrap issuer may terminate a wrapper contract at any time; however, if the fair value of the contract is less than the contract value, the wrap issuer can either hold the contract until the fair value and contract value are equal or make up the difference between the two. If the funds in the wrapper contracts are needed for benefit payments prior to contract maturity, they may be withdrawn without penalty.
13 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The following tables present the fair values of the Master Trusts assets on December 31, 2013 and 2012 and the basis for determining their fair values:
Quoted price | ||||||||||||||||
in active | Significant | |||||||||||||||
markets for | other | Significant | ||||||||||||||
identical | observable | unobservable | ||||||||||||||
assets | inputs | inputs | ||||||||||||||
Fair value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
December 31, 2013: |
||||||||||||||||
General Dynamics Corporation |
$ | 2,543,378,903 | $ | 2,543,378,903 | $ | | $ | | ||||||||
Brokerage account |
105,480,509 | 105,480,509 | | | ||||||||||||
Investments in other equity securities |
||||||||||||||||
Financial |
121,415,799 | 121,415,799 | | | ||||||||||||
Capital goods |
18,578,759 | 18,578,759 | | | ||||||||||||
Consumer durables and apparel |
46,941,360 | 46,941,360 | | | ||||||||||||
Energy |
70,967,104 | 70,967,104 | | | ||||||||||||
Food and beverage |
55,938,807 | 55,938,807 | | | ||||||||||||
Healthcare and pharmaceutical |
141,769,747 | 141,769,747 | | | ||||||||||||
Hospitality |
50,393,625 | 50,393,625 | | | ||||||||||||
Media and telecommunications |
113,888,143 | 113,888,143 | | | ||||||||||||
Retail |
74,306,043 | 74,306,043 | | | ||||||||||||
Technology |
294,871,589 | 294,871,589 | | | ||||||||||||
Other |
43,213,148 | 43,213,148 | | | ||||||||||||
Synthetic guaranteed investment contracts: |
|
|||||||||||||||
Wrapper contracts |
24,481,676 | | | 24,481,676 | ||||||||||||
Mortgage backed securities |
406,440,533 | | 406,440,533 | | ||||||||||||
Asset back securities |
85,650,686 | | 85,650,686 | | ||||||||||||
Corporate debt obligations |
963,823,226 | | 963,823,226 | | ||||||||||||
Government debt obligations |
926,544,948 | | 926,544,948 | | ||||||||||||
Foreign government debt obligations |
1,867,782 | | 1,867,782 | | ||||||||||||
Short term investment funds |
209,392,312 | | 209,392,312 | | ||||||||||||
Collective trusts |
29,144,831 | | 29,144,831 | | ||||||||||||
Units of collective trusts: |
||||||||||||||||
Large cap U.S. equity |
1,582,540,815 | | 1,582,540,815 | | ||||||||||||
Small/mid cap U.S. equity |
937,913,740 | | 937,913,740 | | ||||||||||||
Blended equity/bond fund |
36,670,242 | | 36,670,242 | | ||||||||||||
International equity |
57,353,370 | | 57,353,370 | | ||||||||||||
Fixed income |
508,885,931 | | 508,885,931 | | ||||||||||||
Target date 2010 2020 |
415,344,386 | | 415,344,386 | | ||||||||||||
Target date 2025 2035 |
511,921,158 | | 511,921,158 | | ||||||||||||
Target date 2040 2050 |
150,817,149 | | 150,817,149 | | ||||||||||||
Target date 2055 2060 |
9,567,418 | | 9,567,418 | | ||||||||||||
Registered investment companies |
161,534,624 | 161,534,624 | | | ||||||||||||
Cash and cash equivalents, other |
20,455,628 | 20,455,628 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 10,721,493,991 | $ | 3,863,133,788 | $ | 6,833,878,527 | $ | 24,481,676 | |||||||||
|
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14 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
Quoted price | ||||||||||||||||
in active | Significant | |||||||||||||||
markets for | other | Significant | ||||||||||||||
identical | observable | unobservable | ||||||||||||||
assets | inputs | inputs | ||||||||||||||
Fair value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
December 31, 2012: |
||||||||||||||||
General Dynamics Corporation |
$ | 2,127,670,462 | $ | 2,127,670,462 | $ | | $ | | ||||||||
Investments in other equity securities |
|
|||||||||||||||
U.S. companies: |
||||||||||||||||
Financial |
91,834,839 | 91,834,839 | | | ||||||||||||
Capital goods |
16,426,484 | 16,426,484 | | | ||||||||||||
Consumer durables and apparel |
21,818,739 | 21,818,739 | | | ||||||||||||
Energy |
36,402,794 | 36,402,794 | | | ||||||||||||
Food and beverage |
32,311,638 | 32,311,638 | | | ||||||||||||
Healthcare and pharmaceutical |
89,707,751 | 89,707,751 | | | ||||||||||||
Hospitality |
30,284,517 | 30,284,517 | | | ||||||||||||
Media and telecommunications |
79,721,555 | 79,721,555 | | | ||||||||||||
Retail |
45,949,159 | 45,949,159 | | | ||||||||||||
Technology |
151,583,326 | 151,583,326 | | | ||||||||||||
Other |
35,614,173 | 35,614,173 | | | ||||||||||||
Synthetic guaranteed investment contracts: |
|
|||||||||||||||
Wrapper contracts |
23,204,606 | | | 23,204,606 | ||||||||||||
Mortgage backed securities |
476,689,165 | | 476,689,165 | | ||||||||||||
Asset backed securities |
109,497,411 | | 109,497,411 | | ||||||||||||
Corporate debt obligations |
878,412,662 | | 878,412,662 | | ||||||||||||
Government debt obligations |
788,454,053 | | 788,454,053 | | ||||||||||||
Short term investment funds |
389,666,711 | | 389,666,711 | | ||||||||||||
Units of collective trusts: |
||||||||||||||||
Large cap U.S. equity |
1,163,318,496 | | 1,163,318,496 | | ||||||||||||
Small/mid cap U.S. equity |
552,167,464 | | 552,167,464 | | ||||||||||||
Blended equity/bond fund |
24,902,553 | | 24,902,553 | | ||||||||||||
Fixed income |
666,716,465 | | 666,716,465 | | ||||||||||||
Target date 2010 2020 |
232,152,010 | | 232,152,010 | | ||||||||||||
Target date 2025 2035 |
226,348,124 | | 226,348,124 | | ||||||||||||
Target date 2040 2050 |
40,763,154 | | 40,763,154 | | ||||||||||||
Target date 2055 2060 |
818,521 | | 818,521 | | ||||||||||||
Cash and cash equivalents, other |
19,094,252 | | 19,094,252 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 8,351,531,084 | $ | 2,759,325,437 | $ | 5,569,001,041 | $ | 23,204,606 | |||||||||
|
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|
15 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The table below presents a reconciliation of Plan investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2013, including the reporting classifications for the applicable gains and losses included in the statement of changes in net assets available for benefits:
Fair Value | ||||
Measurements | ||||
Using | ||||
Significant | ||||
Unobservable | ||||
Inputs (Level 3) | ||||
Wrapper contracts: |
||||
Beginning balance, January 1, 2013 |
$ | 23,204,606 | ||
Total gains or losses included in change in net assets available for benefits: |
||||
Realized appreciation |
| |||
Unrealized appreciation (relating to assets held at end of year) |
1,277,070 | |||
|
|
|||
Net appreciation in fair value of investments |
1,277,070 | |||
Ending balance, December 31, 2013 |
$ | 24,481,676 | ||
|
|
The valuation methods described above may produce a fair value that is not indicative of a net realizable value or reflective of future fair values. Furthermore, although the Plan Sponsor believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of financial instruments could result in a different fair value measurement at the reporting date.
(5) | Plan Termination |
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. In the event the Plan is terminated, each participant will automatically become vested in his or her unvested Company contributions. Each participant will receive payments based on the specific dollar amounts and shares of the Companys common stock in his or her account.
(6) | Party-in-Interest Transactions |
The Plan may, at the discretion of the Plans participants or via the Company match, invest through the Master Trust an unlimited amount of its assets in the Companys common stock. The Master Trust held 26,618,275 and 30,715,612 shares of the Companys common stock as of December 31, 2013 and 2012, respectively. Dividends earned by the Master Trust on the Companys common stock were $45,130,911 for the year ended December 31, 2013.
16 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The Plan also invests, through the Master Trust, in collective trust funds and a money market fund that are managed by the trustees or affiliates of the trustees of the Plan (TNT until December 31, 2012 and Fidelity as of December 31, 2012). The Plan also invests, through the Master Trust, in a collective trust managed by one of its investment managers. These funds are considered party-in-interest investments.
The following table summarizes the value of shares held by the Master Trust in these funds at December 31, 2013 and 2012:
2013 | 2012 | |||||||
NT Collective Daily S&P 500 Equity Fund |
| * | 30,760,327 | |||||
BTC US Debt Index Non-Lending Fund F |
508,885,931 | 666,716,465 | ||||||
NT Extended Market Index Fund |
| * | 552,167,464 | |||||
NT S&P 500 Index Non-Lending Fund |
| * | 1,132,558,169 | |||||
Fidelity Institutional Cash US Government Fund |
48,291,565 | | ||||||
Fidelity Government Money Market Fund |
3,523,711 | 242,043,364 |
* | TNT is not deemed as a party-in-interest as of January 1, 2013. |
The following table summarizes the aggregate net interest earned, and realized and unrealized gains recognized by the Master Trust on these funds for the year ended December 31, 2013:
BTC US Debt Index Non-Lending Fund F |
$ | (11,047,685 | ) | |
Fidelity Institutional Cash US Government Fund |
265 | |||
Fidelity Government Money Market Fund |
228 |
Notes receivable from participants are also considered party-in-interest transactions.
(7) | Reconciliation of Financial Statements to Form 5500 |
Benefit requests that have been processed and approved for payment prior to December 31 but not yet paid as of that date are not reported in the financial statements until the subsequent year but are included in amounts allocated to withdrawing participants on the Form 5500 for that year.
17 | (Continued) |
GENERAL DYNAMICS CORPORATION
401(k) PLAN FOR REPRESENTED EMPLOYEES
Notes to Financial Statements
December 31, 2013 and 2012
The following is a reconciliation of net assets available for benefits at December 31, 2013 and 2012, as reported in the financial statements to the Form 5500:
2013 | 2012 | |||||||
Net assets available for benefits as reported in the financial statements |
$ | 1,179,696,717 | 1,046,027,827 | |||||
Delinquent notes receivable in financial statements recorded as distributions in the Form 5500 |
(4,121,328 | ) | | |||||
Amounts allocated to withdrawing participants |
| (893 | ) | |||||
|
|
|
|
|||||
Net assets available for benefits as reported in the Form 5500 |
$ | 1,175,575,389 | 1,046,026,934 | |||||
|
|
|
|
The following is a reconciliation of benefits paid to participants for the year ended December 31, 2013, as reported in the financial statements to the Form 5500:
Net increase prior to transfers per financial statements |
$ | 173,073,459 | ||
Deemed distributions of paricipant loans reported in the 2013 Form 5500 |
(4,121,328 | ) | ||
Amounts allocated to withdrawing participants at December 31, 2012 |
893 | |||
|
|
|||
Net income (loss) per the Form 5500 |
$ | 168,953,024 | ||
|
|
(8) | Untimely Contributions |
Untimely contributions represent the failure to segregate and forward participant contributions to a plan from the general assets of the employer within a reasonable period of time following the pay period in which such amounts would have been payable to the participant in cash. During the Plan year ended December 31, 2012, there were untimely contributions of $56 (as reported in Schedule H, Line 4a of the Form 5500) that were corrected during that Plan year. In addition, there were $3,660 in untimely contributions during 2013 (as reported in Schedule H, Line 4(a) of the Form 5500) that were corrected during the Plan year.
18 |
GENERAL DYNAMICS CORPORATION 401(k)
PLAN FOR REPRESENTED EMPLOYEES
Schedule H, Line 4a Schedule of Delinquent Participant Contributions
Year ended December 31, 2013
Total that constitute nonexempt prohibited transactions |
Total fully corrected under VFCP and PTE 2002-51 |
|||||||||||||||
Participant contributions transferred late to plan |
Contributions not corrected |
Contributions corrected outside VFCP |
Contributions pending correction in VFCP |
|||||||||||||
Check here if late participant loan repayments are included |
| $ | 3,716 | | |
See accompanying independent auditors report.
19
401(k) PLAN FOR REPRESENTED EMPLOYEES
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 31, 2013
(a) |
(b) Identity of issuer, borrower, lessor or similar party |
(c) Description of investment including maturity date, rate of interest, collateral par or maturity date |
(d) Cost | (e) Current value | ||||||||
* | Participant Loans | Interest Rates (3.25-9.50%) | # | 37,689,607 |
* | Party-in-interest |
# | Cost information omitted for participant directed investments |
See accompanying independent auditors report.
20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
GENERAL DYNAMICS CORPORATION | ||
As Plan Administrator of the General Dynamics Corporation 401(k) Plan for Represented Employees | ||
by | /s/ Henry C. Eickelberg | |
Henry C. Eickelberg Vice President, Human Resources and Shared Services |
Dated: June 27, 2014