Gulfstream Reports Record Sales and Earnings in Second Quarter 1998

Business Wire, July 14, 1998

SAVANNAH, Ga.--(BUSINESS WIRE)--July 14, 1998--

EPS Up 128 Percent to $0.73 Supported by Strong Orders

and Improved Manufacturing Efficiencies

Gulfstream Aerospace Corporation (NYSE:GAC) today announced a 128 percent increase in fully diluted earnings per share for the quarter ended June 30, 1998.

This performance underscores Gulfstream's continued success in increasing orders and production while achieving manufacturing efficiencies, and continues the strong momentum achieved since the Company's initial public offering in the fourth quarter of 1996.

Revenues for the second quarter were $557.0 million, up 6.5 percent from revenues of $522.9 million in the same period a year earlier. Net income for the quarter was $55.6 million, up 122 percent from comparable pro forma fully taxed net income of $25.0 million in the second quarter of 1997. Diluted earnings per share for the second quarter 1998 were $0.73, an increase of 128 percent from the comparable pro forma fully taxed diluted earnings per share of $0.32 in the same period one year ago.

The Company delivered 15 aircraft (eight Gulfstream IV-SPs and seven Gulfstream Vs) in the second quarter. This compares to 12 aircraft delivered in the 1997 second quarter (five GIV-SPs and seven GVs). The Company signed contracts for 17 aircraft (11 GIV-SPs and six GVs) in the quarter, bringing the total contracts signed year-to-date to 42. All 17 new contracts were added to the Company's firm contract backlog, which at June 30, 1998 totaled 90 aircraft, representing $2.9 billion in future revenues. Twelve contracts, taken in the first quarter for a Middle East fractional ownership program, have not yet been included in the backlog. The value of these twelve contracts is approximately $335 million, resulting in Gulfstream having a total of 102 aircraft valued at approximately $3.2 billion under contract at the end of the quarter.

"This was another impressive quarter for Gulfstream," said Chairman Theodore J. Forstmann. "The Company's financial and operating performance continues to exceed expectations and orders for both the Gulfstream IV-SP and Gulfstream V remain very strong. We celebrated the upcoming sale of the 100th Gulfstream V aircraft by awarding every full-time, non-executive employee 100 stock options." Gross margins improved significantly in the quarter. Excluding pre-owned aircraft (which are generally sold at break-even levels), gross margins as a percent of revenues were 24 percent, up from 18.2 percent in the same period one year ago. This is in line with the Company's goal of achieving gross margins in the mid-20s by year-end. For the six months ended June 30, 1998, revenues were $1.06 billion, up 18 percent from the comparable 1997 period. Net income increased 87 percent to $96.1 million in the first six months of 1998, from the comparable pro forma fully taxed net income of $51.3 million in the first half of 1997. Diluted earnings per share were $1.27, an increase of 95 percent from the comparable pro forma fully taxed diluted earnings per share of $0.65 in the same period one year ago. Year-to-date Gulfstream has purchased 4.2 million shares of the Company's common stock at a cost of approximately $150.0 million.

Other highlights of the quarter include:

o The completion of a successful secondary offering of 18 million

shares priced at $43.00 per share on May 12. Forstmann Little

affiliates and Gulfstream management continue to own

approximately 25.3 percent of Gulfstream.

o The Company's receipt of the 1997 Robert J. Collier Trophy from

the National Aeronautical Association at a ceremony on April 29,

1998. Gulfstream received the award for the Gulfstream V - the

world's first ultra-long range business jet.

o The introduction of Gulfstream Management Services, an innovative

new service designed to simplify aircraft ownership by offering

day-to-day flight operations and maintenance services to

purchasers of Gulfstream aircraft worldwide.

Founded in 1958, Gulfstream Aerospace Corporation is the leading designer, developer, manufacturer and marketer of the world's most technologically advanced intercontinental business jet aircraft. Gulfstream has produced more than 1,000 aircraft for customers around the world. The Company offers a range of aircraft products and services to meet the needs of its customers, including the Gulfstream IV-SP(R), the ultra-long range Gulfstream V(R), Gulfstream Shares(R) (fractional ownership interests), Gulfstream Financial Services, Gulfstream Pre-Owned Aircraft Sales, Gulfstream Charter ServicesSM and Gulfstream Management ServicesSM. In 1997, Gulfstream reported revenues of $1.9 billion. The Company employs approximately 5,800 people at five locations.

This press release includes forward-looking statements which are subject to risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerningfactors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company's Securities and Exchange Commission filings. -0-