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Defense Contractor Mulls Sales

May 4, 1994

NEW YORK (AP) _ General Dynamics Corp. said Wednesday it’s considering a number of options, including buying or selling businesses or merging with another company, as part of an on-going restructuring program,

James R. Mellor, chief executive officer, told shareholders at the defense company’s annual meeting that the Falls Church, Va.-based company is mulling various business opportunities, but declined to reveal specific plans.

The company, hard hit by cuts in defense spending, has undergone a profound retooling since 1991 to lower costs and streamline operations. It sold airplane, rocket, missile and electronics divisions, and has focused on building nuclear submarines and tanks.

Mellor said at the meeting in New York that the company will have $1 billion in cash by the end of the year as a result of the three-year restructuring program. Last week the company completed the sale of its space launch division to Martin Marietta Corp., raising $200 million in cash.

″We are in the formative stages of a reinvestment program,″ said Mellor. ″We are considering a wide range of options, such as buying, selling or merging.″

He also said the company is considering additional stock repurchase programs. Earlier this year General Dynamics said it would buy up to 3 million of its share on the open market.

Peter Aseritis, an analyst at CS First Boston, said General Dynamics has few non-core businesses left to sell and is unlikely to divest its submarine business or tank division, which is the sole supplier of armored vehicles to the U.S. government.

As for acquisitions or mergers, Aseritis said an outright merger with another defense company is less likely than an acquisition of a major division of another firm, such as the track vehicle business of FMC Corp.

Meanwhile, Mellor assumed the additional title of chairman, as expected. He succeeds William A. Anders, who joined the company as chairman and chief executive in 1991 and oversaw the restructuring. Mr. Anders stepped down as chief executive officer last year. He will serve as a consultant to the company.

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