General Dynamics (GD)

Retirement Plans

Each of the Named Executive Officers, other than Mr. Moss, participates in a defined benefit pension plan (the “Corporate Retirement Plan”) for officers and other eligible salaried employees of the Company and some of its subsidiaries. Mr. Moss participates in a defined benefit pension plan for eligible Gulfstream employees (the “Gulfstream Retirement Plan”).

Corporate Retirement Plan.    The Corporate Retirement Plan provides benefits based on final average monthly pay, which includes salary and annual bonus, but does not include equity grants under the Company’s equity compensation plans. See the “Summary Compensation Table” under the “Executive Compensation – Summary Compensation” captions for the salary and bonus amounts earned by the Named Executive Officers. The benefits under the Corporate Retirement Plan are not subject to any reduction for social security or other offset amounts.

The Internal Revenue Code limits the benefit amounts that may be paid under corporate retirement plans. To the extent any benefits accrued under the Corporate Retirement Plan exceed those limitations, the Company pays the excess benefits under a separate, non-tax-qualified plan (the “Supplemental Retirement Plan”). Benefits under the Supplemental Retirement Plan are general unsecured obligations of the Company.

The table below depicts projected annual benefits payable at normal retirement age (65) under the Corporate Retirement Plan and the Supplemental Retirement Plan, based on earnings and years of plan participation. In the table below, the Company assumes that each individual will continue as a plan participant until normal retirement age and that annual remuneration will remain constant over this period. Annual remuneration includes salary and annual bonus, but does not include equity grants under the Company’s equity compensation plans. In addition, the Company assumes that each individual will elect to receive the benefit in the form of a single life annuity.

(M) Retirement Plans

The company provides defined-benefit pension and other post-retirement benefits to certain eligible employees.

Net periodic pension and other post-retirement benefit costs for the three-month periods ended April 3, 2005, and April 4, 2004, consisted of the following:

Pension Benefits. General Dynamics’ contractual arrangements with the U.S. government provide for the recovery of contributions to the company’s government plans. The amount contributed to certain plans, charged to contracts and included in net sales has exceeded the net periodic pension cost as determined under Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions. The company has deferred recognition of earnings resulting from this difference to provide a better matching of revenues and expenses. Similarly, pension settlements and curtailments under the government plans have also been deferred. These deferrals have been classified against the prepaid pension cost related to these plans.

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Other Post-retirement Benefits. The company’s contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees’ Beneficiary Association trust and, for non-funded plans, recovery of claims paid. The net periodic post-retirement benefit cost exceeds the company’s cost currently allocable to contracts. To the extent recovery of the cost is considered probable based on the company’s backlog, the company defers the excess in contracts in process until such time that the cost is allocable to contracts.

The company adopted Financial Accounting Standards Board Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, (which superseded FSP No. FAS 106-1) effective December 31, 2004. This FSP provides guidance on the accounting for the federal subsidy and other provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The effects of these provisions resulted in a reduction of $65 in the company’s accumulated post-retirement obligation for benefits attributed to past service as of December 31, 2004, and an expected reduction of $8 in the company’s 2005 net periodic post-retirement benefit cost. The federal government will begin making the subsidy payments to employers in 2006.

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Retirement Plans

Do the Named Executive Officers participate in a pension plan?    Yes. Each of the Named Executive Officers participates in a defined benefit pension plan (the “Corporate Retirement Plan”) for officers and other eligible salaried employees of the Company and certain of its subsidiaries.

Is there a supplemental plan to account for tax code limits on the pension plans?    Yes. The amounts of benefits that may be paid under corporate retirement plans are limited by the Internal Revenue Code. To the extent any benefits accrued under the Corporate Retirement Plan exceed those limitations, the excess is paid under a separate, non-tax-qualified plan (the “Supplemental Retirement Plan”). Benefits under the Supplemental Retirement Plan are considered general unsecured obligations of the Company.

The table below sets forth projected annual benefits payable at normal retirement age (65) under the Corporate Retirement Plan and the Supplemental Retirement Plan, based on earnings and years of plan participation. For purposes of the table, it has been assumed that each individual will continue as a plan participant until normal retirement age and that annual remuneration will remain constant over this period. Annual remuneration includes salary and annual bonus, but does not include equity grants under the Company’s equity compensation plans. In addition, it has been assumed that each individual will elect to receive the benefit in the form of a single life annuity.