SECURITIES AND EXCHANGE COMMISSION
                   Washington, D. C.  20549



                           FORM 8-K

                        CURRENT REPORT


              Pursuant to section 13 or 15(d)
           of the Securities Exchange Act of 1934




Date of Report (Date of earliest event reported) September 13, 1995





                 GENERAL DYNAMICS CORPORATION

    (Exact name of registrant as specified in its charter)




       Delaware                 1-3671            13-1673581
   (State or other           (Commission        (IRS Employer
     jurisdiction            File Number)    Identification No.)
  of incorporation)



3190 Fairview Park Drive, Falls Church, Virginia   22042-4523
  (Address of principal executive offices)         (Zip Code)



                         (703) 876-3000
       Registrant's telephone number, including area code





Item 2.   Acquisition or Disposition of Assets

     As of September 13, 1995, General Dynamics Corporation
(the registrant) acquired all of the issued and outstanding
shares of Bath Iron Works Corporation from Bath Holding Corp.
and the Prudential Insurance Company of America.  Founded in
1884, Bath Iron Works is one of the U.S. Navy's premier
builders of surface combatant ships, and has served as the
lead shipyard for 10 of the 20 classes of surface combatants
built for the Navy since World War II.  The total backlog
includes contracts for the delivery of 11 DDG 51 destroyers.
Navy plans call for the delivery of an additional 25
destroyers; it is expected that these will be allocated
between Bath Iron Works and its principal competitor.  Bath
Iron Works employs approximately 8,300 people at three primary
locations in Maine: a headquarters and shipyard in Bath;
fabrication, warehousing and engineering facilities in
Brunswick; and an overhaul and repair facility in Portland.

      The purchase consideration of $300 million was
established by negotiation and the registrant paid such amount
in cash from available funds.  The Merger Agreement provides
that the purchase consideration is subject to post-closing
adjustment based generally upon changes in specified account
balances.

      The assets acquired include, among other things,
machinery, equipment and other physical property the primary
use of which relates to the design and construction of surface
combatant ships.  It is the present intent of the registrant
to continue to devote the assets to such purposes.

Item 7. Financial Statements and Exhibits

(a)     Financial statements of businesses acquired.

        Bath Iron Works Corporation
        Unaudited Financial Statements for the period ended July 2, 1995
        Audited Financial Statements for the years ended
        January 1, 1995 and January 2, 1994 Together With Auditors' Report

(b)     Pro forma financial information.

        Unaudited Pro Forma Combined Condensed Financial Statements
        Notes to Unaudited Pro Forma Combined Condensed
        Financial Statements

(c)     Exhibits.

        Exhibit 10 - Merger Agreement (without Exhibits and
        Schedules) dated as of August 17, 1995 between the registrant and
        Bath Iron Works Corporation.

        Exhibit 23 - Consent of Arthur Andersen LLP

                              SIGNATURES

     Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.

                                GENERAL DYNAMICS CORPORATION
                                         (Registrant)



                                  By    /s/ John W. Schwartz
                                       John W. Schwartz
                                          Controller
Dated September 28, 1995


                                                 Item 7 (a).

     Bath Iron Works Corporation

     Unaudited Financial Statements for the period ended July 2, 1995

     Audited Financial Statements for the years ended January 1, 1995
     and January 2, 1994 Together With Auditors' Report

                       BATH IRON WORKS CORPORATION

                        Balance Sheet-July 2, 1995

                              (In thousands)

Assets                                        1995
Current Assets:
Cash and cash equivalents                  $    268
Restricted funds                             11,601
Accounts receivable-
  U.S. Government                            38,865
  Other                                         395
Shipbuilding contracts in progress          199,672
Inventories                                   6,470
Prepaid tax asset, net                       28,667
Other                                         1,627

                                            287,565


Property, Plant and Equipment:
Land and land improvements                   10,538
Buildings                                   151,475
Machinery and equipment                     104,855
Construction in process                       5,719

                                            272,587

Less-Accumulated depreciation               127,576

                                            145,011


Other Assets:
Excess of purchase price over
  net assets acquired                       267,103
Prepaid tax asset, net                       27,785
Restricted funds                             21,796
Intangible pension asset                        266
Other noncurrent assets                       3,332

  Total assets                             $752,858


Liabilities and Stockholders Equity
Current Liabilities:
Current portion of long-term debt          $ 42,500
Accounts payable                             85,606
Accrued liabilities-
  Workers' compensation                      45,346
  Vacation and sick pay                      27,065
  Pension                                     6,901
  Interest                                       85
  Income taxes                                1,175
  Other                                      20,077

                                            228,755

Long-term Liabilities:
  Debt                                       74,054
  Accrued postretirement benefit cost        30,128
  Workers' compensation                      18,313
  Pension                                    14,734
  Other                                       2,673

                                            139,902

Commitments and Contingencies                     -

Accrued Dividends on Preferred Stock        158,637

Senior Redeemable Exchangeable
  Preferred Stock                           163,984

Stockholders Equity:
Common stock                                      1
Additional paid-in capital                  187,370
Accumulated deficit                        (125,383)
Unrealized loss on securities
  available for sale                            152
Minimum pension liability
  adjustments                                 (560)

                                             61,580

Total liabilities and stockholders equity  $752,858

The accompanying notes are an integral part of the financial
statements.
                     BATH IRON WORKS CORPORATION

                      Statements of Income
     For the Six Months Ended July 2, 1995 and July 3, 1994

                         (In thousands)



                                               1995       1994

Revenues                                     $483,174   $442,697

Cost of Revenues                              464,169    420,853

  Operating income                             19,005     21,844

Interest Expense, net                          (7,288)    (9,574)

Amortization of Goodwill                       (4,285)    (4,285)

  Income before provision
    for income taxes                            7,432      7,985

Provision for Income Taxes                      4,940      5,031

  Net income                                  $ 2,492     $2,954

The accompanying notes are an integral part of the financial
statements.

                  BATH IRON WORKS CORPORATION

                    Statements of Cash Flows
     For the Six Months Ended July 2, 1995 and July 3, 1994

                         (In thousands)


                                                1995      1994
Cash Flows from Operating Activities:
 Net income                                   $2,492     $2,954
   Adjustments to reconcile net income to
   net cash provided by operating activities-
     Depreciation                             10,015      9,308
     Amortization                              4,463      4,463
     Deferred income taxes                     4,347      4,413
     Debt discount amortization                  321        321

                                              21,638     21,459

   Changes in operating assets and liabilities-
     Accounts receivable                     (22,862)   (14,655)
     Restricted funds                         (5,117)    (3,432)
     Shipbuilding contracts
       in progress                            (5,320)    (8,989)
     Inventories and other assets               (153)       821
     Accounts payable and
       accrued liabilities                     9,901     21,742

     Net cash provided (used) by
       operating activities                   (1,913)    16,946

Cash Flows from Investing Activities:
 Purchases of property,
   plant and equipment                        (5,335)    (7,679)

Cash Flows from Financing Activities:
 Repayment of debt                           (21,250)   (10,625)
 Net borrowing under revolving
   line of credit                              6,350          -
 Deferred financing costs                          -       (450)

     Net cash used in financing
       activities                            (14,900)   (11,075)

Net Decrease in Cash and
  Cash Equivalents                           (22,148)    (1,808)

Cash and Cash Equivalents,
  beginning of period                         22,416     41,309

Cash and Cash Equivalents,
  end of period                               $  268    $39,501

The accompanying notes are an integral part of the financial
statements.
                  BATH IRON WORKS CORPORATION

           Notes to Financial Statements (Unaudited)
                          July 2, 1995




(1)  Basis of Presentation

     The unaudited financial statements included herein have
     been prepared pursuant to the rules and regulations of
     the Securities and Exchange Commission. Although certain
     information and footnote disclosures normally included in
     financial statements prepared in accordance with
     generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and
     regulations, the Company believes that the disclosures
     included herein are adequate to make the information
     presented not misleading. Operating results for the six
     month period ended July 2, 1995, are not necessarily
     indicative of the results that may be expected for the
     year ended December 31, 1995. These unaudited financial
     statements should be read in conjunction with the
     financial statements and the notes thereto included in
     the Company's audited financial statements for the year
     ended January 1, 1995 included in this Current Report on
     Form 8-K.
     
     In the opinion of the Company, the unaudited financial
     statements contain all adjustments (consisting only of
     normal recurring accruals, except as discussed in Note 2)
     necessary for a fair presentation of the results for the
     six month periods ended July 2, 1995 and July 3, 1994.
     
(2)  Voluntary Early Retirement Incentive Program
     
     The Company established a Voluntary Early Retirement
     Incentive Program (VERIP) in early 1995. Salaried
     employees who were at least 52 years old and had at least
     10 years of service were eligible. The program provides
     each participant with four years of additional credited
     service and four years of additional age for purposes of
     calculating the pension benefit. During 1995, the Company
     recorded an approximate $9 million charge to operating
     income representing the estimated additional liability
     due to the VERIP.
     
(3)  Contingencies
     
     During the first six months of 1995, there has been no
     change in the Company's position relating to
     contingencies discussed in Note 10 of the 1994 audited
     financial statements. No other matters of a contingent
     nature have arisen.
     
(4)  Subsequent Events
     
     On September 13, 1995, the Company's common stock was
     acquired by General Dynamics Corporation pursuant to a
     Merger Agreement dated August 17, 1995. On August 17,
     1995, the Company entered into an Assignment Agreement
     transferring to the principal stockholder of the Company
     the Company's beneficial interest in any recovery or
     outstanding claims with the U.S. Navy, net of certain
     amounts. Prior to the acquisition, the Company entered
     into severance arrangements with certain officers and key
     employees providing severance benefits upon a change in
     control of the Company, as defined, and the occurrence of
     certain events.

             INDEX TO AUDITED FINANCIAL STATEMENTS



                                                        Page

Report of Independent Public Accountants                   1

Balance Sheets as of
January 1, 1995 and January 2, 1994                        2

Statements of Income for the
Years Ended January 1, 1995 and January 2, 1994            3

Statements of Changes in Stockholders Equity,
Senior Redeemable Exchangeable Preferred
Stock and Long-term Debt for the Years Ended
January 1, 1995 and January 2, 1994                        4

Statements of Cash Flows for the Years
Ended January 1, 1995 and January 2, 1994                  5

Notes to Financial Statements                              6

            Report of Independent Public Accountants



To the Board of Directors of
Bath Iron Works Corporation:

We have audited the accompanying balance sheets of Bath Iron
Works Corporation (a Maine corporation) as of January 1, 1995
and January 2, 1994, and the related statements of income,
changes in stockholders equity, senior redeemable exchangeable
preferred stock and long-term debt, and cash flows for the
years then ended.  These financial statements are the
responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  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 financial
position of Bath Iron Works Corporation as of January 1, 1995
and January 2, 1994, and the results of their operations and
their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

As explained in Notes 2 and 3 to the financial statements,
effective January 3, 1994, the Company changed its method of
accounting for certain investments in debt securities.






Boston, Massachusetts                        ARTHUR ANDERSEN LLP
February 21, 1995
(except with respect to the matter
discussed in Note 12, as to which the
date is September 13, 1995)

                       BATH IRON WORKS CORPORATION

            Balance Sheets-January 1, 1995 and January 2, 1994

            (In thousands except share and per share amounts)

Assets                                        1994        1993
Current Assets:
Cash and cash equivalents                  $ 22,416   $ 41,309
Restricted funds                              9,932      8,426
Accounts receivable-
  U.S. Government                            15,571      8,348
  Other                                         827      1,634
Shipbuilding contracts in progress          198,372    170,180
Inventories                                   6,744      6,684
Prepaid tax asset, net                       29,391     29,507
Other                                           228         32

                                            283,481    266,120


Property, Plant and Equipment:
Land and land improvements                   10,538     10,538
Buildings                                   149,528    145,121
Machinery and equipment                      94,534     84,547
Construction in process                      13,979     12,559

                                            268,579    252,765

Less-Accumulated depreciation               118,887    100,640

                                            149,692    152,125


Other Assets:
Excess of purchase price over
  net assets acquired                       271,388    279,959
Prepaid tax asset, net                       31,885     43,663
Restricted funds                             17,201     11,600
Intangible pension asset                        266      1,511
Other noncurrent assets                         470        382

  Total assets                             $754,383   $755,360


Liabilities and Stockholders Equity
Current Liabilities:
Current portion of long-term debt          $ 42,500   $ 31,875
Accounts payable                             73,347     70,555
Accrued liabilities-
  Workers' compensation                      37,651     36,818
  Vacation and sick pay                      27,463     18,579
  Pension                                     8,685      8,700
  Interest                                    7,597          -
  Income taxes                                1,599      1,245
  Other                                      23,928     24,884

                                            222,770    192,656

Long-term Liabilities:
  Debt                                       94,982    136,839
  Accrued postretirement
    benefit cost                             27,429     25,108
  Workers' compensation                      18,878     11,607
  Pension                                     6,620     12,061
  Due to U.S. Government                          -      4,800
  Other                                       2,673      3,396

                                            150,582    193,811

Commitments and Contingencies                     -          -

Accrued Dividends on Preferred Stock        147,882    126,372

Senior Redeemable Exchangeable
  Preferred Stock                           163,819    163,487
Authorized 1,654,625 Shares Issued
  and 1,654,625 Shares Outstanding

Stockholders Equity:
Common stock, $1.00 par value per share-
Authorized-1,000 shares
Issued and outstanding-1,000 shares               1          1
Additional paid-in capital                  187,370    187,370
Accumulated deficit                        (116,955)  (105,244)
Unrealized loss on securities
  available for sale                          (526)          -
Other                                         (560)    (3,093)

                                             69,330     79,034

Total liabilities and
  stockholders equity                      $754,383   $755,360


The accompanying notes are an integral part of these financial
statements.
                     BATH IRON WORKS CORPORATION

                      Statements of Income
    for the Years Ended January 1, 1995 and January 2, 1994

                         (In thousands)



                                             1994       1993

Revenues                                   $893,266  $872,422

Cost of Revenues                            843,005   828,959

  Operating income                           50,261    43,463

Interest Expense, net                       (17,795)  (21,828)

Amortization of Goodwill                    (8,571)   (8,570)

  Income before provision
    for income taxes                         23,895    13,065

Provision for Income Taxes                   13,764     7,400

  Net income                                $10,131   $ 5,665


The accompanying notes are an integral part of these financial
statements.


<TABLE>
                                BATH IRON WORKS CORPORATION

<CAPTION>
                       Statements of Changes in Stockholders Equity,
             Senior Redeemable Exchangeable Preferred Stock and Long-term Debt
                  for the Years Ended January 1, 1995 and January 2, 1994

                                       (In thousands)

                                               STOCKHOLDERS EQUITY
                                                             Unrealized                         Senior
                                                              Loss on     Minimum             Redeemable
                                      Additional             Securities   Pension            Exchangeable  Long-
                            Common     Paid-in    Retained   available   Liability            Preferred     Term
                            Stock      Capital    Deficit     for sale   adjustment  Total      Stock       Debt
<S>                        <C>        <C>         <C>        <C>         <C>        <C>          <C>        <C>
Balance, January 3, 1993   $      1   $187,370    $(89,066)  $      -    $      -   $   98,305   $163,156   $168,071
Net income                        -          -       5,665          -           -        5,665          -          -
Net payments and current
  maturities                      -          -           -          -           -            -          -    (31,875)
Recognition of minimum
  pension plan liability          -          -           -          -     (3,093)       (3,093)         -          -
Dividends accrued on preferred
  stock and accretion of
  preferred stock discount        -          -     (21,843)         -           -      (21,843)       331         -
Amortization of debt discount     -          -           -          -           -            -          -        643

Balance, January 2, 1994          1    187,370    (105,244)         -     (3,093)       79,034    163,487    136,839
Net income                        -          -      10,131          -           -       10,131          -          -
Net payments and current
  maturities                      -          -          -           -           -            -          -    (42,500)
Adjustment of minimum
  pension plan liability          -          -          -           -       2,533        2,533          -          -
Recognition of unrealized
  loss on securities available
  for sale, net of tax            -          -          -        (526)           -       (526)          -          -
Dividends accrued on preferred
  stock and accretion of
  preferred stock discount        -          -    (21,842)          -           -     (21,842)        332          -
Amortization of debt discount     -          -          -           -           -           -           -        643

Balance, January 1, 1995   $      1   $187,370  $(116,955)     $ (526)    $  (560)   $ 69,330    $163,819    $94,982
</TABLE>

The accompanying notes are an integral part of these financial statements.

                  BATH IRON WORKS CORPORATION

                    Statements of Cash Flows
    for the Years Ended January 1, 1995 and January 2, 1994

                         (In thousands)


                                               1994     1993
Cash Flows from Operating Activities:
 Net income                                  $10,131   $5,665
   Adjustments to reconcile net income to
   net cash provided by operating activities-
     Depreciation                             18,886   19,940
     Amortization                              8,927    9,672
     Deferred income taxes                    12,074    6,302
     Debt discount amortization                  643      643

                                              50,661   42,222

   Changes in operating assets and liabilities-
     Accounts receivable                      (6,416)  15,898
     Restricted funds                         (7,996)  (3,777)
     Shipbuilding contracts
       in progress                           (20,727)  10,514
     Inventories and other assets               (250)     256
     Accounts payable and
       accrued liabilities                    14,613   26,839

     Net cash provided by
       operating activities                   29,885   91,952

Cash Flows from Investing Activities:
 Purchases of property,
   plant and equipment                       (16,453) (11,845)

Cash Flows from Financing Activities:
 Repayment of debt                           (31,875)       -
 Net payments on revolving
   line of credit                                  -  (39,000)
 Deferred financing costs                       (450)       -

     Net cash used in financing
       activities                            (32,325) (39,000)

Net Change in Cash and
  Cash Equivalents                           (18,893)  41,107

Cash and Cash Equivalents,
  beginning of year                           41,309      202

Cash and Cash Equivalents,
  end of year                                $22,416  $41,309

Supplemental Disclosures of Cash Flow Information:
 Cash paid for-
   Interest                                   $9,962  $20,441
   Income taxes                               $  840   $  836

Supplemental Disclosures of Noncash Financing Activities:
 Accrual of dividends on
   Preferred Stock                           $21,510  $21,510
 Accretion of discount on
   Preferred Stock                            $  332   $  331

The accompanying notes are an integral part of these financial
statements.
                  BATH IRON WORKS CORPORATION

                 Notes to Financial Statements
                        January 1, 1995




(1)  Acquisition

     Bath Iron Works Corporation (the Company) is a wholly-
     owned subsidiary of Bath Holding Corp., which was formed
     in 1986 to acquire all of the outstanding stock of the
     Company. The Company constructs, converts and modernizes
     naval vessels and merchant ships.
     
     The August 1986 transaction, which was accounted for as a
     purchase, was financed through the issuance of common and
     preferred stock and long-term debt (see Notes 5 and 11).
     The purchase price has been pushed down to Bath Iron
     Works Corporation and allocated to the net assets
     acquired based on the fair market value at the date of
     acquisition.  The excess purchase cost is reflected in
     the accompanying balance sheets as excess of purchase
     price over net assets acquired.  The purchase price
     allocation was subject to change to the extent that tax
     benefits were realized from the acquired net operating
     loss carryforwards (see Note 6).
     
(2)  Summary of Significant Accounting Policies

(a)  Fiscal Year

       The Company's annual accounting period ends on the
       Sunday closest to December 31.  The fiscal year-end
       date for 1994 is January 1, 1995 and 1993 is January 2,
       1994. Fiscal 1994 and 1993 each contain 52 weeks.

(b)  Long-term Contract Accounting

       The performance on shipbuilding contracts normally
       extends over several years.  Revenues include the costs
       of materials expended, direct labor, overhead and
       estimated profit.  Profit on contracts is accrued using
       the percentage-of-completion method of accounting.  The
       percentage of completion is determined based on
       physical progress, which closely approximates the ratio
       of total costs incurred to total estimated costs at
       completion.  Losses on a contract are recorded during
       the period in which the loss is first indicated.
       Estimated revenues and costs at completion are reviewed
       and revised periodically throughout the lives of the
       contracts, and adjustments are made to current period
       earnings for the cumulative effect of changes in price
       and cost estimates of prior periods.  In accordance
       with normal practice in the shipbuilding industry, the
       Company includes in current assets and current
       liabilities amounts relating to contracts realizable
       and payable over a period in excess of one year.

(2)  Summary of Significant Accounting Policies (Continued)

(c)  Cash and Cash Equivalents

       For purposes of the statements of cash flows, the
       Company considers all highly liquid debt instruments
       purchased with a maturity of three months or less to be
       cash equivalents.

(d)  Restricted Funds

       Investments in U.S. Government obligations, which are
       included in restricted funds, are stated at the lower
       of cost or market; cost approximates market value at
       January 2, 1994. Effective January 3, 1994, the Company
       adopted the provisions of Statement of Financial
       Accounting Standards No. 115, Accounting for Certain
       Investments in Debt and Equity Securities (SFAS No.
       115).  Under SFAS No. 115, the Company has classified
       its investments in U.S. Government obligations as
       available-for-sale and valued the securities at fair
       market value with an offsetting balance in stockholders
       equity representing the difference between the
       amortized cost of the securities and fair market value
       of the securities, net of tax.

(e)  Inventories

       Inventories consist of materials and supplies stated at
       the lower of average cost, which approximates first-in,
       first-out (FIFO) cost or market.

(f)  Property, Plant and Equipment

       Land, buildings, machinery and equipment are recorded
       at cost.  Depreciation is provided over the estimated
       remaining lives of the assets using the straight-line
       method for financial statement purposes.  The estimated
       useful lives are as follows:
       
                   Land improvements        10 - 24 years
                   Buildings                20 - 33 years
                   Machinery and equipment  2 - 16 years

(g)  Income Taxes

       Effective December 30, 1991, the Company adopted
       Statement of Financial Accounting Standards No. 109,
       Accounting for Income Taxes (SFAS No. 109).  SFAS No.
       109 requires the asset and liability method of
       accounting for income taxes.  Under the asset and
       liability method, deferred income taxes are recognized
       for the tax consequences of temporary differences by
       applying enacted statutory tax rates applicable to
       future years to differences between the financial
       statement carrying amounts and the tax bases of
       existing assets and liabilities.

(2) Summary of Significant Accounting Policies (Continued)

(g)  Income Taxes (Continued)
   
       Under SFAS No. 109, the effect on deferred taxes of a
       change in tax rates is recognized in the statements of
       income in the period that includes the enactment date.
   
(h)  Excess of Purchase Price over Net Assets Acquired

       The excess of purchase price over net assets acquired
       (goodwill) is being amortized on a straight-line basis
       over 40 years.  Amortization expense amounted to $8.6
       million in 1994 and 1993.

(i)  Reclassifications

       Certain reclassifications have been made to the prior
       year's financial statements to conform to the current
       year presentation.

(3)  Restricted Funds

   The Company has established trust funds for self-insured
   workers' compensation under an agreement with the State of
   Maine.  The Company is required to deposit into trusts
   funds that are restricted for payment of workers'
   compensation benefits.
   
   Effective January 3, 1994, the Company adopted the
   provisions of SFAS No. 115.  Accordingly, the Company's
   investments, principally in U.S. Government obligations,
   have been classified as available-for-sale and are
   reported at their fair value of $27.1 million.  Gross
   unrealized losses of $0.9 million are reported as a
   separate component of stockholders equity net of deferred
   taxes of $0.4 million.  Total amortized cost of the
   investment is $28.0 million and essentially all securities
   mature prior to 2000.

(4)  Shipbuilding Contracts in Progress

   Shipbuilding contracts in progress represents the excess
   of contract costs and profits recognized to date over
   billings on specific contracts.

   Shipbuilding contracts in progress includes $148.6 million
   at January 1, 1995 and $111.1 million at January 2, 1994
   withheld under contract retainage provisions, a portion of
   which will not be collected within one year.


(4)  Shipbuilding Contracts in Progress (Continued)
   
   Shipbuilding contracts in progress at January 1, 1995 and
   January 2, 1994 includes approximately $26.3 million of
   unfunded accrued workers' compensation costs (see Note 7).
   As this type of cost is reimbursable under the Company's
   major shipbuilding contracts, the Company expects to
   recover these costs when the costs are actually paid.

(5)  Long-term Debt

   Long-term debt consists of the following at January 1,
   1995 and January 2, 1994 (in thousands):

                                             1994      1993
   11% Senior notes payable to a stockholder,
   due in installments from 1995 to 1997
   (less unamortized discount of $643 and
   $1,286 in 1994 and 1993, respectively) $137,482  $168,714
   
   Less - Current portion                   42,500    31,875
                                           $94,982  $136,839

   On January 27, 1994, the Company entered into a credit
   agreement with a bank to fund its working capital needs.
   The Company can borrow up to $25.0 million under the
   agreement, which expires on June 30, 1996.  Borrowings
   under the credit agreement are in the form of either a
   prime rate loan or a Eurodollar rate loan at the election
   of the Company.  Prime rate loans bear interest at the
   bank's prime rate (8.5% at January 1, 1995) plus 1%, and
   Eurodollar rate loans bear interest at the Eurodollar rate
   (6% at January 1, 1995) plus 3%.  The Company must also
   pay a facility fee of 3/8 of 1% of the commitment amount
   per year.  For the year ended January 2, 1994, the Company
   had entered into a credit agreement, which expired in
   December 1993, with a group of banks.

   Terms of the various loan agreements, as amended, include
   various covenants, the most restrictive of which restricts
   the amount of additional debt and certain corporate acts,
   such as sale and leaseback transactions, investments and
   guarantees, and stock dividends and redemptions.  The
   terms also limit the amount of capital expenditures and
   require the Company to maintain minimum working capital,
   cash flow and various financial ratios.  As of January 1,
   1995 the Company was in compliance with all debt
   covenants.

   The aggregate annual principal payments, excluding future
   amortization of debt discount, due in future years on all
   long-term debt are as follows (in thousands):

                                  Annual Principal Payments
                   Fiscal year-
                        1995              $ 42,500
                        1996                42,500
                        1997                53,125

(5)  Long-term Debt (Continued)
   
   Discounts and costs incurred in connection with the
   issuance of debt have been deferred and are being
   amortized over the terms of the notes.
   
   In accordance with Statement of Financial Accounting
   Standards No. 107, Disclosures about Fair Value of
   Financial Instruments (SFAS No. 107), the Company believes
   that the carrying value of the 11% senior notes reasonably
   approximates the fair value at January 1, 1995 and January
   2, 1994.

(6)  Income Taxes

   The components of the provision for income taxes reflected
   in the accompanying statements of income are as follows
   (in thousands):

                                          1994     1993
   
   Current                              $1,690    $1,098
   Deferred                             12,074     6,302
   
                                        $13,764   $7,400

   Deferred income taxes arise primarily from the use of
   accelerated methods of depreciation for tax purposes,
   differences between book and tax profit recognition on
   long-term contracts, net operating loss and credit
   carryforwards and accruals that are not deductible for tax
   purposes until paid.

   A reconciliation between the provision for income taxes
   computed at statutory rates and the amount reflected in
   the accompanying statements of income is as follows (in
   thousands):

                                          1994     1993
   
   Computed expected tax provision        $8,363   $4,573
   Increase (reduction) in taxes resulting
     from Amortization of goodwill         3,000    3,000
   State income taxes, net of
     federal tax benefit                   1,975    1,308
   Effect of tax rate increase on
     deferred tax assets                       -   (1,540)
   Other                                     426       59
   
                                         $13,764   $7,400


(6)  Income Taxes (Continued)

   In August 1993, the U.S. tax law was revised to increase
   corporate tax rates by one percentage point for income
   over $10.0 million.  The increase in the tax rate
   decreased the tax provision and increased prepaid current
   and long-term tax assets by $1.5 million.
   
   Effective December 30, 1991, the Company adopted SFAS No.
   109, which resulted in the recognition of net prepaid tax
   assets of approximately $74 million and a corresponding
   reduction in goodwill of $74 million. The adoption of SFAS
   No. 109 allowed the Company to recognize the anticipated
   benefit of remaining preacquisition net operating loss
   carryforwards.
   
   The significant items making up net prepaid tax assets at
   January 1, 1995 and January 2, 1994 are as follows (in
   thousands):

                                 1994             1993
                          Current Long-term Current Long-term
   
   Assets-
   Net operating loss and
     credit carryforwards $11,535  $20,980  $16,400  $34,237
   Deferred postretirement
     benefits other than
     pensions                   -   11,187        -   10,294
   Deferred workers'
     compensation           4,644    7,699    4,326    4,759
   Shipbuilding contract
     differences            5,793        -      352        -
   Deferred payment due to
     U.S. Government        1,968        -    1,927    1,968
   Health insurance
     reserves               1,628        -    2,545        -
   Vacation accrual         3,086        -    2,539        -
   Deferred pension
     deduction              1,040    2,591    1,034    3,057
   Other                      602      393    1,294    1,146
   
                           30,296   42,850   30,417   55,461
   Liabilities-
   Accelerated
     depreciation               -   10,965        -   11,798
   Other                      905        -      910        -
   
                              905   10,965      910   11,798
   
   Prepaid tax asset      $29,391  $31,885  $29,507  $43,663


(6)  Income Taxes (Continued)

   The Company believes it will have sufficient future
   taxable income to allow for the realization of future tax
   benefits in accordance with the more likely than not
   criteria established in SFAS No. 109. As substantially all
   of the net operating loss carryforwards relate to
   preacquisition net operating loss carryforwards, any
   differences between the net prepaid tax assets recorded
   and the amount ultimately realized will result in a
   corresponding increase or decrease to goodwill.

   The Company has available, for tax purposes, net operating
   loss carryforwards of approximately $56.6 million at
   January 1, 1995, subject to review by the Internal Revenue
   Service, which expire in fiscal years 2001 through 2008.
   The Company has tax credit carryforwards of approximately
   $9.3 million at January 1, 1995.  Of these credits, $8.3
   million have no expiration date.  The remainder expire in
   1999 through 2004.  The Tax Reform Act of 1986 contains
   provisions that limit the net operating loss carryforwards
   to be used in any given year upon the occurrence of
   certain events, including significant changes in ownership
   interests.

(7)  Employee Benefit Plans

   (a) Pensions

       The Company sponsors two qualified noncontributory
       defined benefit pension plans that cover substantially
       all salaried employees and hourly employees who meet a
       one-year service requirement.  The Company's funding
       policy is to make the minimum contribution to the
       salaried plan required by the Employee Retirement
       Income Securities Act (ERISA) and the Internal Revenue
       Code (IRC) maximum tax deductible contribution (without
       regard to IRC Section 404(a)(1)(D)) to the hourly plan.
       However, this policy may be periodically impacted by
       U.S. Government Cost Accounting Standards, with which
       the Company must also comply.
       
       Effective September 1, 1994, hourly employees
       represented by certain unions became participants of
       the International Association of Machinist National
       Pension Plan (IAM Plan) and ceased earning service
       under the Company's defined benefit plan.  As a result,
       the Company experienced a curtailment loss of
       approximately $1.2 million.  Under the IAM Plan, the
       employees will receive upon retirement $21.30 per month
       for each year of service after September 1, 1994 and
       $11.22 per month for each year of service before
       September 1, 1994.  Total years of service is capped at
       30 years.  The Company contributes to the IAM Plan
       $0.38 for each hour of service rendered by the
       represented employee.  Total contributions for the year
       ended January 1, 1995 were $1.4 million.  As of January
       1, 1995, the actuarially computed value of vested
       benefits for the IAM Plan was less than the value of
       net assets of the IAM Plan. Therefore, the Company
       would have no withdrawal liability.  However, the
       Company has no intentions of withdrawing from the IAM
       Plan, nor has the Company been informed that there is
       any intention to terminate the IAM Plan.

(7)  Employee Benefit Plans (Continued)

   (a) Pensions (Continued)

       In addition to the plans described above, the Company
       has a supplemental retirement plan for certain salaried
       employees.

       The net pension cost for the years ended January 1,
       1995 and January 2, 1994 for the Company's pension
       plans is as follows (in thousands):

                                            1994      1993
        
        Service cost                      $ 5,901   $ 5,925
        Interest cost on projected
          benefit obligations              10,740    10,308
        Actual loss (return) on
          plan assets                         271   (12,052)
        Net amortization and deferral               (11,637)
        2,231
        Effect of plan curtailment          1,198         -
        Net pension cost                  $ 6,473   $ 6,412

       The following table sets forth the funded status of the
       Company's pension plans and the amounts recognized in
       the accompanying balance sheets (in thousands):

                                            1994      1993
       Actuarial present value of benefit obligations at
       valuation date-
       Vested benefits                    $117,371  $117,100
       Nonvested benefits                    7,824    14,313
       Accumulated benefit obligation     $125,195  $131,413
       Projected benefit obligation       $140,108  $148,989
       Plan assets at fair value at
        valuation date                     128,283   127,006
       Projected benefit obligation in excess
         of plan assets                     11,825    21,983
       Unrecognized net asset                  415       450
       Unrecognized net (gain) loss          2,275    (4,671)
       Adjustment to recognize minimum
         plan liability                      1,213     4,604
       Unrecognized prior service cost        (423)   (1,605)
       Net pension liability               $15,305   $20,761
       Accrued company contributions,
         current                           $ 8,685   $ 8,700
       Accrued company contributions,
         long-term                           6,620    12,061
                                           $15,305   $20,761

(7)  Employee Benefit Plans (Continued)

   (a) Pensions (Continued)

       The discount rate and the rate of increase in future
       compensation levels used in determining the actuarial
       present value of the projected benefit obligation were
       8.5% and 5.5%, respectively, as of January 1, 1995 and
       7.5% and 4.5%, respectively, as of January 2, 1994.
       The expected long-term rate of return on assets was 9%
       for both years.
       
       In accordance with Statement of Financial Accounting
       Standards No. 87, Employers' Accounting for Pensions,
       (SFAS No. 87), the Company recorded additional minimum
       pension liability adjustments of $1.2 million and $4.6
       million as of January 1, 1995 and January 2, 1994,
       respectively, representing the amount by which the
       accumulated benefit obligation exceeds the fair value
       of plan assets and accrued pension liability.  The
       additional liability has been offset by an intangible
       asset to the extent of previously unrecognized prior
       service cost of $0.3 million and $1.5 million as of
       January 1, 1995 and January 2, 1994, respectively.  The
       amount in excess of previously unrecognized prior
       service cost is recorded as a reduction to stockholders
       equity, net of tax.  These amounts totaled $0.6 million
       and $3.1 million as of January 1, 1995 and January 2,
       1994, respectively.
       
       The Company also maintains two defined contribution
       benefit plans covering substantially all of its
       employees.  Employees can contribute up to 15% of
       salary, subject to certain limitations.  During 1994,
       the Company matched between 20% and 40% of the first 5%
       contributed by the employee, depending on employee
       classification.  Prior to January 3, 1994, the Company
       matched 20% of the first 5% contributed by the
       employee.  The total costs of the defined contribution
       plans for the years ended January 1, 1995 and January
       2, 1994 were $2.1 million and $1.2 million,
       respectively.

   (b) Postretirement Benefits Other Than Pensions

       Employees who have attained certain age and service
       requirements are eligible for postretirement benefits
       for medical costs and life insurance coverage.  The
       postretirement benefit for medical costs covers the
       period from eligible early retirement age (generally
       age 55 for most employees) to age 65, at which time no
       further benefits are due to the retiree.  The cost to
       the Company for postretirement medical benefits is
       equal to the difference between the actual annual
       medical costs incurred by the retiree less an amount
       charged to the retiree.  Employees who leave the
       Company prior to early retirement eligibility are not
       eligible for any postretirement benefits.  The Company
       funds all postretirement benefits other than pensions
       on a pay-as-you-go basis.
       

(7)  Employee Benefit Plans (Continued)

   (b) Postretirement Benefits Other Than Pensions (Continued)
       
       In fiscal 1992, the Company adopted the provisions of
       SFAS No. 106.  In connection with the adoption of SFAS
       No. 106, the Company immediately recognized the
       accumulated postretirement benefit obligation as of the
       beginning of the fiscal year.

       The following table sets forth the funded status of the
       Company's accumulated postretirement benefit obligation
       reconciled to the accrued postretirement benefit cost
       included in the accompanying balance sheets as of
       January 1, 1995 and January 2, 1994 (in thousands):
       
                                            1994      1993
       Accumulated postretirement benefit obligation-
       Retirees                           $ 3,850   $ 4,928
       Fully eligible active
         plan participants                  6,143     3,821
       Other active plan participants      14,675    18,668
                                           24,668    27,417
       Plan assets                              -         -
       Unrecognized net gain (loss)         2,337   (2,309)
       Unrecognized prior service cost        424         -
       Accrued postretirement
         benefit cost                     $27,429   $25,108

       The components of net periodic postretirement benefit
       expense included in the accompanying statements of
       income for the years ended January 1, 1995 and January
       2, 1994 are as follows (in thousands):

                                            1994      1993
       Service cost                       $ 1,334   $ 1,444
       Interest cost                        1,784     1,896
       Net amortization and deferral          (84)        -
                                          $ 3,034   $ 3,340

       For the purpose of measuring medical costs, the annual
       rates of increase in the per capita cost of covered
       health care benefits were assumed for fiscal 1994 and
       1993 to be 13% and 14%.
       

(7)  Employee Benefit Plans (Continued)

   (b) Postretirement Benefits Other Than Pensions (Continued)
       
       respectively. The rate was assumed to decrease
       gradually to 6% for fiscal 2001 and remain at that
       level thereafter.  The impact of a 1% increase in the
       assumed health care cost trend rates would have the
       effect of increasing the accumulated postretirement
       benefit obligation by approximately $2.5 million as of
       January 1, 1995 and January 2, 1994.  The impact of a
       1% increase in the assumed health care cost trend rates
       would have the effect of increasing the postretirement
       benefit expense by approximately $0.4 million, for the
       years ended January 1, 1995 and January 2, 1994.

       The weighted average discount rate used in determining
       the accumulated postretirement benefit obligation was
       8.5% in 1994 and 7.5% in 1993.
       
   (c) Workers' Compensation
       
       Using a combination of trust funds and aggregate excess
       loss insurance policies, the Company has self-insured
       all workers' compensation claims since September 1,
       1988.  As of January 1, 1995, the trust funds totaled
       at $27.1 million, which is the estimated present value
       of future claim payments.  For the periods prior to
       September 1, 1988, the Company has accrued a liability
       of approximately $28.4 million for potential workers'
       compensation insurance premium adjustments.  This
       amount is included in the accompanying balance sheets
       as of January 1, 1995 and January 2, 1994.

(8)  Due to U.S. Government

   In connection with a claim settlement entered into in
   1987, the Company has incurred an obligation to pay
   certain considerations to the U.S. Government, totaling
   $18.9 million.  The remaining balance of $4.8 million has
   been recorded as a current liability in the accompanying
   balance sheets.

   In accordance with SFAS No. 107, the Company estimates
   that the fair value of the amount due to the U.S.
   Government at January 1, 1995 was approximately $4.4
   million, based on the present value of the payment stream
   using an assumed market interest rate of 9.5%.


(9)  Lease Commitments

   The Company leases various data processing, shipbuilding
   and automotive equipment.  Total rental expenses charged
   to operations amounted to $7.9 million and $9.0 million in
   1994 and 1993, respectively. Minimum annual rental
   commitments under all noncancelable operating leases are
   as follows (in thousands):
   
                                         Minimum Annual
                                      Rental Commitment
                    Fiscal year-
                        1995              $ 7,114
                        1996                4,769
                        1997                2,441
                        1998                1,923
                        1999                1,547

(10) Commitments and Contingencies

   The Company is a party to various pending claims and legal
   proceedings, including environmental claims and
   proceedings, some of which are for significant amounts.
   The accompanying balance sheets include an accrual, which
   is not material, for the impact of expected costs under
   these claims and proceedings after consideration of
   applicable insurance coverage.  As a result, although the
   outcome of such matters cannot be forecasted with
   certainty, it is the opinion of management that the
   likelihood is remote that the ultimate outcome of such
   claims and proceedings will have a material adverse effect
   on the Company's financial position and results of
   operations.
   
   Effective August 22, 1994, the Company signed three-year
   labor contracts with labor unions representing production
   workers, clerical workers and guards.  As part of these
   agreements, the Company granted that there would be no
   involuntary layoffs for the duration of their respective
   union contracts.  These contracts expire on August 24,
   1997.  Based on current backlog, management anticipates
   that there will be no requirements for layoff.

   The Company's 1994 and 1993 revenues, as well as projected
   revenues on backlog work, were derived primarily from
   fixed-price incentive-fee contracts with the U.S. Navy on
   its AEGIS shipbuilding programs.  To date, the Company has
   delivered eight cruisers and five destroyers from
   contracts for eight cruisers and eighteen destroyers.
   
   The Company has outstanding claims with the U.S. Navy on
   these contracts totaling approximately $175.1 million,
   excluding interest on the claims.  These claims request
   compensation for design changes, defective government-
   furnished information, related delay and disruption costs,
   and other issues caused by Navy actions.  The Company is
   pursuing these issues at the Armed Services Board of
   Contract Appeals and the Court of Federal Claims.  At this
   time, the Company cannot reasonably estimate the time
   required to resolve these contractual issues.

(10) Commitments and Contingencies (Continued)
   
   Favorable resolution of these claims will have a positive
   impact on the Company's financial position, cash flow and
   operating income.  Management believes it has a strong
   case for the submitted amounts and that the claims will be
   resolved favorably but is unable to state with reasonable
   certainty the ultimate value or timing of such resolution.
   Accordingly, it has chosen not to reflect such related
   expected revenues in the January 1, 1995 financial
   statements.  In addition, management believes that the
   Company should be able to meet its financial obligations
   in the absence of favorable resolution of these
   contractual issues. (See Note 12 for further discussion.)
   
   During 1993 and 1992, the Company filed for property tax
   abatements for 1993, 1992 and 1991 from the City of Bath,
   Maine (the City).  These filings reflected management's
   belief that the City had overvalued the Company's property
   and, therefore, was overtaxing the Company.  The City
   denied these abatements.
   
   In December 1992, the Company filed a petition for
   assessment review with the State Board of Property Tax
   Review for the 1991 tax year.  In December 1993, the
   Company received a favorable judgment that required the
   City to repay approximately $1.8 million in back taxes and
   approximately $0.4 million in interest.  In addition, the
   property tax base of the Company's assets was reduced,
   thereby reducing the Company's annual expenditure for
   property taxes by approximately $1.8 million.
   
   Based on the ruling for 1991, the Company and the City
   entered into negotiations to settle the tax dispute for
   1992 and 1993 as well as for 1991.  Accordingly, the
   Company and the City reached a repayment agreement in
   March 1994 for all three years. Under the agreement, the
   City repaid the Company $0.8 million in 1994, and agreed
   to repay $1.0 million in 1995, $1.0 million in 1996, $1.2
   million in 1997 and $1.4 million in 1998.  In return, the
   Company agreed to waive all interest charges.  On January
   24, 1995 the City settled its obligation to the Company by
   purchasing and delivering to the Company U.S. Treasury
   Bonds that will mature annually in 1995 through 1998.  The
   U.S. Treasury Bonds are in amounts sufficient to settle
   the agreed amounts due.  Consistent with established
   practices, the Company will recognize such rebates to cost
   in the years in which the U.S. Treasury Bonds mature.
   
   The Company is also secondarily liable for payment of
   approximately $1.0 million of letter-of-credit obligations
   related to workers' compensation self-insurance.
   Management does not believe that the Company will be
   required to discharge these obligations.

(11) Senior Redeemable Exchangeable Preferred Stock

   The senior redeemable exchangeable preferred stock (the
   Senior Preferred Stock) holds no voting rights.  Each
   share is entitled to annual dividends of $13 (cumulative)
   and a preference of $100 plus unpaid dividends in
   liquidation.  Under the terms of the various loan and
   securities purchase agreements, dividends are restricted,
   and, as a result, dividends on Senior Preferred Stock will
   not be paid prior to expiration of the revolving credit
   agreement (see Note 5).

   The Senior Preferred Stock is scheduled for redemption at
   face value in installments as follows:


                    Fiscal Year         Number of Shares
                        1998               413,656
                        1999               413,656
                        2000               413,656
                        2001               413,657
                                         1,654,625

   The Company may redeem all of the Senior Preferred Stock
   in exchange for 13% senior subordinated notes due August
   15, 1997 in a principal amount equal to the preference
   value of the Senior Preferred Stock.  The difference
   between the face value of the Senior Preferred Stock of
   $165.5 million and the carrying amount of the Senior
   Preferred Stock of $163.8 million is being accreted over
   the applicable terms of the installments.

   In accordance with SFAS No. 107, the Company believes that
   the fair value of its Senior Preferred Stock cannot be
   reasonably estimated, as there is no public market and the
   Company does not believe that comparable preferred stock
   issuances exist or are relevant.
   
(12) Subsequent Events
     
   On September 13, 1995, the Company's common stock was
   acquired by General Dynamics Corporation pursuant to a
   Merger Agreement dated August 17, 1995. On August 17,
   1995, the Company entered into an Assignment Agreement
   transferring to the principal stockholder of the Company
   the Company's beneficial interest in any recovery or
   outstanding claims with the U.S. Navy, net of certain
   amounts. Prior to the acquisition, the Company entered
   into severance arrangements with certain officers and key
   employees providing severance benefits upon a change in
   control of the Company, as defined, and the occurrence of
   certain events.
                                                 Item 7 (b).

                     GENERAL DYNAMICS CORPORATION

           PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

                             (UNAUDITED)



          As of September 13, 1995, the registrant acquired
all of the issued and outstanding shares of Bath Iron Works
Corporation from Bath Holding Corp. and the Prudential
Insurance Company of America for a purchase price of $300
million in cash.  A portion of the purchase consideration was
utilized to prepay the outstanding debt of Bath Iron Works
Corporation.

          The following unaudited pro forma combined condensed
financial statements have been prepared by the registrant from
its historical consolidated financial statements and from the
historical financial statements of Bath Iron Works Corporation
which are included in this Current Report on Form 8-K.  The
unaudited pro forma combined condensed statements of earnings
reflect adjustments as if the transaction had occurred on
January 1, 1994.  The unaudited pro forma combined condensed
balance sheet reflects adjustments as if the transaction had
occurred on July 2, 1995.  The pro forma adjustments described
in the accompanying notes are based upon preliminary estimates
and certain assumptions that the registrant believes are
reasonable in the circumstances.

          The unaudited pro forma combined condensed financial
statements are not necessarily indicative of what the
financial position or results of operations actually would
have been if the transaction had occurred on the applicable
dates indicated.  Moreover, they are not intended to be
indicative of future results of operations or financial
position.  The unaudited pro forma combined condensed
financial statements should be read in conjunction with the
historical consolidated financial statements of the registrant
and the related notes thereto which were included in the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.  The unaudited pro forma combined condensed
financial statements should also be read in conjunction with
the historical financial statements of Bath Iron Works
Corporation which are included in this Current Report on Form
8-K.



             GENERAL DYNAMICS CORPORATION

  PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS

                     (UNAUDITED)


   (Dollars in millions, except per share amounts)




                                 For The Six Months Ended July 2, 1995

                                             BATH
                                   GENERAL   IRON    PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS  ADJUSTMENTS   COMBINED

NET SALES                           $1,456   $483      $   -       $1,939

OPERATING COSTS AND EXPENSES         1,301    464          4  (a)   1,760
                                                          (9) (b)

OPERATING EARNINGS                     155     19          5          179

Interest, net                           28     (8)         8  (d)      20
                                                          (8) (c)
Other income, net                        2     (4)         4  (d)       2

EARNINGS FROM CONTINUING OPERATIONS
    BEFORE INCOME TAXES                185      7          9          201

Provision for income taxes              64      5          -  (e)      69

EARNINGS FROM CONTINUING OPERATIONS $  121   $  2      $   9       $  132


EARNINGS PER SHARE FROM
    CONTINUING OPERATIONS            $1.92                          $2.09

WEIGHTED AVERAGE SHARES AND EQUIVALENTS
  OUTSTANDING (in millions)           63.2                           63.2



See accompanying notes.






                  GENERAL DYNAMICS CORPORATION

       PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS

                          (UNAUDITED)




        (Dollars in millions, except per share amounts)




                                   For the Year Ended December 31, 1994

                                             BATH
                                   GENERAL   IRON   PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS ADJUSTMENTS  COMBINED


NET SALES                           $3,058   $893      $   -      $3,951

OPERATING COSTS AND EXPENSES         2,737    843          8  (a)  3,588

OPERATING EARNINGS                     321     50         (8)        363

Interest, net                           22    (17)        17  (d)
                                                         (13) (c)      9
Other income, net                        -     (9)         9  (d)      -

EARNINGS FROM CONTINUING OPERATIONS
    BEFORE INCOME TAX                  343     24          5         372

Provision for income taxes             120     14         (4)(e)     130

EARNINGS FROM CONTINUING OPERATIONS $  223   $ 10      $   9     $   242



EARNINGS PER SHARE FROM
    CONTINUING OPERATIONS            $3.51                         $3.82

WEIGHTED AVERAGE SHARES AND EQUIVALENTS
    OUTSTANDING (in millions)         63.4                          63.4


See accompanying notes.

                  GENERAL DYNAMICS CORPORATION

           PRO FORMA COMBINED CONDENSED BALANCE SHEET

                          (UNAUDITED)

                     (Dollars in millions)


                                            As of July 2, 1995

                                             BATH
                                   GENERAL   IRON   PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS ADJUSTMENTS   COMBINED
ASSETS

CURRENT ASSETS:
Cash and equivalents                $ 371    $   -    $(300) (f) $   71
Marketable securities                 867        -        -         867
                                    1,238        -     (300)        938
Accounts receivable                    94       39        -         133
Contracts in process                  292      206        -         498
Other current assets                  250       42      (29) (g)    263
Total Current Assets                1,874      287     (329)      1,832

NONCURRENT ASSETS:
Leases receivable -
  finance operations                  212        -        -         212
Real estate held for development      132        -        -         132
Property, plant and equipment, net    249      145       30  (h)    424
Goodwill                                -      267     (267) (i)      -
Intangible asset related to
  destroyer program                     -        -      141  (h)    141
Other assets                          233       54      (28) (g)    259
Total Noncurrent Assets               826      466     (124)      1,168
                                   $2,700    $ 753    $(453)     $3,000

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt   $   -    $  43    $ (43) (f) $    -
Accounts payable                       58       85       (6) (f)    137
Other current liabilities             488      101       62 (h),(j) 651
Total Current Liabilities             546      229       13         788

NONCURRENT LIABILITIES:
Long-term debt                         38       74      (74) (f)     38
Long-term debt - finance operations   150        -        -         150
Preferred stock and accrued dividends   -      323     (323) (f)      -
Other liabilities                     555       66       (8)(h),(j) 613
Total Noncurrent Liabilities          743      463     (405)        801

SHAREHOLDERS' EQUITY:
Shareholders' equity                1,411        -        -       1,411
Net investment in Bath Iron Works       -       61      (61) (h)      -
Total Shareholders' Equity          1,411       61      (61)      1,411
                                   $2,700    $ 753    $(453)     $3,000


See accompanying notes.

                  GENERAL DYNAMICS CORPORATION

             NOTES TO UNAUDITED PRO FORMA COMBINED

                 CONDENSED FINANCIAL STATEMENTS




The following adjustments give pro forma effect to the
transaction:


(a)    Record amortization of the intangible asset related to
       the destroyer program over a 25-year period and
       depreciation of the increased value of equipment over
       an 11-year period.

(b)    Eliminate charge taken by Bath Iron Works related to
       adoption of a voluntary early retirement incentive
       program which would not have been recorded under the
       registrant's accounting method for retirement benefits
       which are recoverable under government contracts.

(c)    Reduction in interest income due to the payment of the
       purchase price in cash.

(d)    Eliminate interest expense of debt retired and
       amortization expense of goodwill from previous
       acquisition.

(e)    Adjust the tax provision to the company's effective tax
       rate of 34.5% in 1995 and 35% in 1994.

(f)    Cash purchase price used to retire all outstanding debt
       and acquire all outstanding stock of Bath Iron Works.

(g)    Eliminate Bath Iron Works' Federal income tax accounts
       not acquired.

(h)    To adjust the acquired assets and assumed liabilities
       to their estimated fair values, including the recording
       of an intangible asset related to the destroyer
       program, and an increase in the value of equipment and
       retirement liabilities.

(i)    Eliminate goodwill from previous acquisition.

(j)    Certain reclassifications were made to conform to the
       company's presentation.

Because there is not a material difference between primary and
fully diluted earnings per share, only fully diluted earnings
per share are presented.
[{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 70729}]
{"company-data": {"conformed-name": "GENERAL DYNAMICS CORP", "cik": "0000040533", "assigned-sic": "3730", "irs-number": "131673581", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-03671", "film-number": "95576653"}, "business-address": {"street1": "3190 FAIRVIEW PARK DRIVE", "city": "FALLS CHURCH", "state": "VA", "zip": "22042", "phone": "7038763375"}, "mail-address": {"street1": "3190 FAIRVIEW PARK DR", "city": "FALLS CHURCH", "state": "VA", "zip": "22042"}}
SECURITIES AND EXCHANGE COMMISSION
                   Washington, D. C.  20549

                           FORM 8-K

                        CURRENT REPORT

              Pursuant to section 13 or 15(d)
           of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) September 13, 1995

                 GENERAL DYNAMICS CORPORATION

    (Exact name of registrant as specified in its charter)

       Delaware                 1-3671            13-1673581
   (State or other           (Commission        (IRS Employer
     jurisdiction            File Number)    Identification No.)
  of incorporation)

3190 Fairview Park Drive, Falls Church, Virginia   22042-4523
  (Address of principal executive offices)         (Zip Code)

                         (703) 876-3000
       Registrant's telephone number, including area code

Item 2.   Acquisition or Disposition of Assets

     As of September 13, 1995, General Dynamics Corporation
(the registrant) acquired all of the issued and outstanding
shares of Bath Iron Works Corporation from Bath Holding Corp.
and the Prudential Insurance Company of America.  Founded in
1884, Bath Iron Works is one of the U.S. Navy's premier
builders of surface combatant ships, and has served as the
lead shipyard for 10 of the 20 classes of surface combatants
built for the Navy since World War II.  The total backlog
includes contracts for the delivery of 11 DDG 51 destroyers.
Navy plans call for the delivery of an additional 25
destroyers; it is expected that these will be allocated
between Bath Iron Works and its principal competitor.  Bath
Iron Works employs approximately 8,300 people at three primary
locations in Maine: a headquarters and shipyard in Bath;
fabrication, warehousing and engineering facilities in
Brunswick; and an overhaul and repair facility in Portland.

      The purchase consideration of $300 million was
established by negotiation and the registrant paid such amount
in cash from available funds.  The Merger Agreement provides
that the purchase consideration is subject to post-closing
adjustment based generally upon changes in specified account
balances.

      The assets acquired include, among other things,
machinery, equipment and other physical property the primary
use of which relates to the design and construction of surface
combatant ships.  It is the present intent of the registrant
to continue to devote the assets to such purposes.

Item 7. Financial Statements and Exhibits

(a)     Financial statements of businesses acquired.

        Bath Iron Works Corporation
        Unaudited Financial Statements for the period ended July 2, 1995
        Audited Financial Statements for the years ended
        January 1, 1995 and January 2, 1994 Together With Auditors' Report

(b)     Pro forma financial information.

        Unaudited Pro Forma Combined Condensed Financial Statements
        Notes to Unaudited Pro Forma Combined Condensed
        Financial Statements

(c)     Exhibits.

        Exhibit 10 - Merger Agreement (without Exhibits and
        Schedules) dated as of August 17, 1995 between the registrant and
        Bath Iron Works Corporation.

        Exhibit 23 - Consent of Arthur Andersen LLP

                              SIGNATURES

     Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.

                                GENERAL DYNAMICS CORPORATION
                                         (Registrant)

                                  By    /s/ John W. Schwartz
                                       John W. Schwartz
                                          Controller
Dated September 28, 1995

                                                 Item 7 (a).

     Bath Iron Works Corporation

     Unaudited Financial Statements for the period ended July 2, 1995

     Audited Financial Statements for the years ended January 1, 1995
     and January 2, 1994 Together With Auditors' Report

                       BATH IRON WORKS CORPORATION

                        Balance Sheet-July 2, 1995

                              (In thousands)

Assets                                        1995
Current Assets:
Cash and cash equivalents                  $    268
Restricted funds                             11,601
Accounts receivable-
  U.S. Government                            38,865
  Other                                         395
Shipbuilding contracts in progress          199,672
Inventories                                   6,470
Prepaid tax asset, net                       28,667
Other                                         1,627

                                            287,565

Property, Plant and Equipment:
Land and land improvements                   10,538
Buildings                                   151,475
Machinery and equipment                     104,855
Construction in process                       5,719

                                            272,587

Less-Accumulated depreciation               127,576

                                            145,011

Other Assets:
Excess of purchase price over
  net assets acquired                       267,103
Prepaid tax asset, net                       27,785
Restricted funds                             21,796
Intangible pension asset                        266
Other noncurrent assets                       3,332

  Total assets                             $752,858

Liabilities and Stockholders Equity
Current Liabilities:
Current portion of long-term debt          $ 42,500
Accounts payable                             85,606
Accrued liabilities-
  Workers' compensation                      45,346
  Vacation and sick pay                      27,065
  Pension                                     6,901
  Interest                                       85
  Income taxes                                1,175
  Other                                      20,077

                                            228,755

Long-term Liabilities:
  Debt                                       74,054
  Accrued postretirement benefit cost        30,128
  Workers' compensation                      18,313
  Pension                                    14,734
  Other                                       2,673

                                            139,902

Commitments and Contingencies                     -

Accrued Dividends on Preferred Stock        158,637

Senior Redeemable Exchangeable
  Preferred Stock                           163,984

Stockholders Equity:
Common stock                                      1
Additional paid-in capital                  187,370
Accumulated deficit                        (125,383)
Unrealized loss on securities
  available for sale                            152
Minimum pension liability
  adjustments                                 (560)

                                             61,580

Total liabilities and stockholders equity  $752,858

The accompanying notes are an integral part of the financial
statements.
                     BATH IRON WORKS CORPORATION

                      Statements of Income
     For the Six Months Ended July 2, 1995 and July 3, 1994

                         (In thousands)

                                               1995       1994

Revenues                                     $483,174   $442,697

Cost of Revenues                              464,169    420,853

  Operating income                             19,005     21,844

Interest Expense, net                          (7,288)    (9,574)

Amortization of Goodwill                       (4,285)    (4,285)

  Income before provision
    for income taxes                            7,432      7,985

Provision for Income Taxes                      4,940      5,031

  Net income                                  $ 2,492     $2,954

The accompanying notes are an integral part of the financial
statements.

                  BATH IRON WORKS CORPORATION

                    Statements of Cash Flows
     For the Six Months Ended July 2, 1995 and July 3, 1994

                         (In thousands)

                                                1995      1994
Cash Flows from Operating Activities:
 Net income                                   $2,492     $2,954
   Adjustments to reconcile net income to
   net cash provided by operating activities-
     Depreciation                             10,015      9,308
     Amortization                              4,463      4,463
     Deferred income taxes                     4,347      4,413
     Debt discount amortization                  321        321

                                              21,638     21,459

   Changes in operating assets and liabilities-
     Accounts receivable                     (22,862)   (14,655)
     Restricted funds                         (5,117)    (3,432)
     Shipbuilding contracts
       in progress                            (5,320)    (8,989)
     Inventories and other assets               (153)       821
     Accounts payable and
       accrued liabilities                     9,901     21,742

     Net cash provided (used) by
       operating activities                   (1,913)    16,946

Cash Flows from Investing Activities:
 Purchases of property,
   plant and equipment                        (5,335)    (7,679)

Cash Flows from Financing Activities:
 Repayment of debt                           (21,250)   (10,625)
 Net borrowing under revolving
   line of credit                              6,350          -
 Deferred financing costs                          -       (450)

     Net cash used in financing
       activities                            (14,900)   (11,075)

Net Decrease in Cash and
  Cash Equivalents                           (22,148)    (1,808)

Cash and Cash Equivalents,
  beginning of period                         22,416     41,309

Cash and Cash Equivalents,
  end of period                               $  268    $39,501

The accompanying notes are an integral part of the financial
statements.
                  BATH IRON WORKS CORPORATION

           Notes to Financial Statements (Unaudited)
                          July 2, 1995

(1)  Basis of Presentation

     The unaudited financial statements included herein have
     been prepared pursuant to the rules and regulations of
     the Securities and Exchange Commission. Although certain
     information and footnote disclosures normally included in
     financial statements prepared in accordance with
     generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and
     regulations, the Company believes that the disclosures
     included herein are adequate to make the information
     presented not misleading. Operating results for the six
     month period ended July 2, 1995, are not necessarily
     indicative of the results that may be expected for the
     year ended December 31, 1995. These unaudited financial
     statements should be read in conjunction with the
     financial statements and the notes thereto included in
     the Company's audited financial statements for the year
     ended January 1, 1995 included in this Current Report on
     Form 8-K.
     
     In the opinion of the Company, the unaudited financial
     statements contain all adjustments (consisting only of
     normal recurring accruals, except as discussed in Note 2)
     necessary for a fair presentation of the results for the
     six month periods ended July 2, 1995 and July 3, 1994.
     
(2)  Voluntary Early Retirement Incentive Program
     
     The Company established a Voluntary Early Retirement
     Incentive Program (VERIP) in early 1995. Salaried
     employees who were at least 52 years old and had at least
     10 years of service were eligible. The program provides
     each participant with four years of additional credited
     service and four years of additional age for purposes of
     calculating the pension benefit. During 1995, the Company
     recorded an approximate $9 million charge to operating
     income representing the estimated additional liability
     due to the VERIP.
     
(3)  Contingencies
     
     During the first six months of 1995, there has been no
     change in the Company's position relating to
     contingencies discussed in Note 10 of the 1994 audited
     financial statements. No other matters of a contingent
     nature have arisen.
     
(4)  Subsequent Events
     
     On September 13, 1995, the Company's common stock was
     acquired by General Dynamics Corporation pursuant to a
     Merger Agreement dated August 17, 1995. On August 17,
     1995, the Company entered into an Assignment Agreement
     transferring to the principal stockholder of the Company
     the Company's beneficial interest in any recovery or
     outstanding claims with the U.S. Navy, net of certain
     amounts. Prior to the acquisition, the Company entered
     into severance arrangements with certain officers and key
     employees providing severance benefits upon a change in
     control of the Company, as defined, and the occurrence of
     certain events.

             INDEX TO AUDITED FINANCIAL STATEMENTS

                                                        Page

Report of Independent Public Accountants                   1

Balance Sheets as of
January 1, 1995 and January 2, 1994                        2

Statements of Income for the
Years Ended January 1, 1995 and January 2, 1994            3

Statements of Changes in Stockholders Equity,
Senior Redeemable Exchangeable Preferred
Stock and Long-term Debt for the Years Ended
January 1, 1995 and January 2, 1994                        4

Statements of Cash Flows for the Years
Ended January 1, 1995 and January 2, 1994                  5

Notes to Financial Statements                              6

            Report of Independent Public Accountants

To the Board of Directors of
Bath Iron Works Corporation:

We have audited the accompanying balance sheets of Bath Iron
Works Corporation (a Maine corporation) as of January 1, 1995
and January 2, 1994, and the related statements of income,
changes in stockholders equity, senior redeemable exchangeable
preferred stock and long-term debt, and cash flows for the
years then ended.  These financial statements are the
responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  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 financial
position of Bath Iron Works Corporation as of January 1, 1995
and January 2, 1994, and the results of their operations and
their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

As explained in Notes 2 and 3 to the financial statements,
effective January 3, 1994, the Company changed its method of
accounting for certain investments in debt securities.

Boston, Massachusetts                        ARTHUR ANDERSEN LLP
February 21, 1995
(except with respect to the matter
discussed in Note 12, as to which the
date is September 13, 1995)

                       BATH IRON WORKS CORPORATION

            Balance Sheets-January 1, 1995 and January 2, 1994

            (In thousands except share and per share amounts)

Assets                                        1994        1993
Current Assets:
Cash and cash equivalents                  $ 22,416   $ 41,309
Restricted funds                              9,932      8,426
Accounts receivable-
  U.S. Government                            15,571      8,348
  Other                                         827      1,634
Shipbuilding contracts in progress          198,372    170,180
Inventories                                   6,744      6,684
Prepaid tax asset, net                       29,391     29,507
Other                                           228         32

                                            283,481    266,120

Property, Plant and Equipment:
Land and land improvements                   10,538     10,538
Buildings                                   149,528    145,121
Machinery and equipment                      94,534     84,547
Construction in process                      13,979     12,559

                                            268,579    252,765

Less-Accumulated depreciation               118,887    100,640

                                            149,692    152,125

Other Assets:
Excess of purchase price over
  net assets acquired                       271,388    279,959
Prepaid tax asset, net                       31,885     43,663
Restricted funds                             17,201     11,600
Intangible pension asset                        266      1,511
Other noncurrent assets                         470        382

  Total assets                             $754,383   $755,360

Liabilities and Stockholders Equity
Current Liabilities:
Current portion of long-term debt          $ 42,500   $ 31,875
Accounts payable                             73,347     70,555
Accrued liabilities-
  Workers' compensation                      37,651     36,818
  Vacation and sick pay                      27,463     18,579
  Pension                                     8,685      8,700
  Interest                                    7,597          -
  Income taxes                                1,599      1,245
  Other                                      23,928     24,884

                                            222,770    192,656

Long-term Liabilities:
  Debt                                       94,982    136,839
  Accrued postretirement
    benefit cost                             27,429     25,108
  Workers' compensation                      18,878     11,607
  Pension                                     6,620     12,061
  Due to U.S. Government                          -      4,800
  Other                                       2,673      3,396

                                            150,582    193,811

Commitments and Contingencies                     -          -

Accrued Dividends on Preferred Stock        147,882    126,372

Senior Redeemable Exchangeable
  Preferred Stock                           163,819    163,487
Authorized 1,654,625 Shares Issued
  and 1,654,625 Shares Outstanding

Stockholders Equity:
Common stock, $1.00 par value per share-
Authorized-1,000 shares
Issued and outstanding-1,000 shares               1          1
Additional paid-in capital                  187,370    187,370
Accumulated deficit                        (116,955)  (105,244)
Unrealized loss on securities
  available for sale                          (526)          -
Other                                         (560)    (3,093)

                                             69,330     79,034

Total liabilities and
  stockholders equity                      $754,383   $755,360

The accompanying notes are an integral part of these financial
statements.
                     BATH IRON WORKS CORPORATION

                      Statements of Income
    for the Years Ended January 1, 1995 and January 2, 1994

                         (In thousands)

                                             1994       1993

Revenues                                   $893,266  $872,422

Cost of Revenues                            843,005   828,959

  Operating income                           50,261    43,463

Interest Expense, net                       (17,795)  (21,828)

Amortization of Goodwill                    (8,571)   (8,570)

  Income before provision
    for income taxes                         23,895    13,065

Provision for Income Taxes                   13,764     7,400

  Net income                                $10,131   $ 5,665

The accompanying notes are an integral part of these financial
statements.

                                BATH IRON WORKS CORPORATION
Statements of Changes in Stockholders Equity,
             Senior Redeemable Exchangeable Preferred Stock and Long-term Debt
                  for the Years Ended January 1, 1995 and January 2, 1994

                                       (In thousands)

                                               STOCKHOLDERS EQUITY
                                                             Unrealized                         Senior
                                                              Loss on     Minimum             Redeemable
                                      Additional             Securities   Pension            Exchangeable  Long-
                            Common     Paid-in    Retained   available   Liability            Preferred     Term
                            Stock      Capital    Deficit     for sale   adjustment  Total      Stock       Debt
Balance, January 3, 1993   $      1   $187,370    $(89,066)  $      -    $      -   $   98,305   $163,156   $168,071
Net income                        -          -       5,665          -           -        5,665          -          -
Net payments and current
  maturities                      -          -           -          -           -            -          -    (31,875)
Recognition of minimum
  pension plan liability          -          -           -          -     (3,093)       (3,093)         -          -
Dividends accrued on preferred
  stock and accretion of
  preferred stock discount        -          -     (21,843)         -           -      (21,843)       331         -
Amortization of debt discount     -          -           -          -           -            -          -        643

Balance, January 2, 1994          1    187,370    (105,244)         -     (3,093)       79,034    163,487    136,839
Net income                        -          -      10,131          -           -       10,131          -          -
Net payments and current
  maturities                      -          -          -           -           -            -          -    (42,500)
Adjustment of minimum
  pension plan liability          -          -          -           -       2,533        2,533          -          -
Recognition of unrealized
  loss on securities available
  for sale, net of tax            -          -          -        (526)           -       (526)          -          -
Dividends accrued on preferred
  stock and accretion of
  preferred stock discount        -          -    (21,842)          -           -     (21,842)        332          -
Amortization of debt discount     -          -          -           -           -           -           -        643

Balance, January 1, 1995   $      1   $187,370  $(116,955)     $ (526)    $  (560)   $ 69,330    $163,819    $94,982
The accompanying notes are an integral part of these financial statements.

                  BATH IRON WORKS CORPORATION

                    Statements of Cash Flows
    for the Years Ended January 1, 1995 and January 2, 1994

                         (In thousands)

                                               1994     1993
Cash Flows from Operating Activities:
 Net income                                  $10,131   $5,665
   Adjustments to reconcile net income to
   net cash provided by operating activities-
     Depreciation                             18,886   19,940
     Amortization                              8,927    9,672
     Deferred income taxes                    12,074    6,302
     Debt discount amortization                  643      643

                                              50,661   42,222

   Changes in operating assets and liabilities-
     Accounts receivable                      (6,416)  15,898
     Restricted funds                         (7,996)  (3,777)
     Shipbuilding contracts
       in progress                           (20,727)  10,514
     Inventories and other assets               (250)     256
     Accounts payable and
       accrued liabilities                    14,613   26,839

     Net cash provided by
       operating activities                   29,885   91,952

Cash Flows from Investing Activities:
 Purchases of property,
   plant and equipment                       (16,453) (11,845)

Cash Flows from Financing Activities:
 Repayment of debt                           (31,875)       -
 Net payments on revolving
   line of credit                                  -  (39,000)
 Deferred financing costs                       (450)       -

     Net cash used in financing
       activities                            (32,325) (39,000)

Net Change in Cash and
  Cash Equivalents                           (18,893)  41,107

Cash and Cash Equivalents,
  beginning of year                           41,309      202

Cash and Cash Equivalents,
  end of year                                $22,416  $41,309

Supplemental Disclosures of Cash Flow Information:
 Cash paid for-
   Interest                                   $9,962  $20,441
   Income taxes                               $  840   $  836

Supplemental Disclosures of Noncash Financing Activities:
 Accrual of dividends on
   Preferred Stock                           $21,510  $21,510
 Accretion of discount on
   Preferred Stock                            $  332   $  331

The accompanying notes are an integral part of these financial
statements.
                  BATH IRON WORKS CORPORATION

                 Notes to Financial Statements
                        January 1, 1995

(1)  Acquisition

     Bath Iron Works Corporation (the Company) is a wholly-
     owned subsidiary of Bath Holding Corp., which was formed
     in 1986 to acquire all of the outstanding stock of the
     Company. The Company constructs, converts and modernizes
     naval vessels and merchant ships.
     
     The August 1986 transaction, which was accounted for as a
     purchase, was financed through the issuance of common and
     preferred stock and long-term debt (see Notes 5 and 11).
     The purchase price has been pushed down to Bath Iron
     Works Corporation and allocated to the net assets
     acquired based on the fair market value at the date of
     acquisition.  The excess purchase cost is reflected in
     the accompanying balance sheets as excess of purchase
     price over net assets acquired.  The purchase price
     allocation was subject to change to the extent that tax
     benefits were realized from the acquired net operating
     loss carryforwards (see Note 6).
     
(2)  Summary of Significant Accounting Policies

(a)  Fiscal Year

       The Company's annual accounting period ends on the
       Sunday closest to December 31.  The fiscal year-end
       date for 1994 is January 1, 1995 and 1993 is January 2,
       1994. Fiscal 1994 and 1993 each contain 52 weeks.

(b)  Long-term Contract Accounting

       The performance on shipbuilding contracts normally
       extends over several years.  Revenues include the costs
       of materials expended, direct labor, overhead and
       estimated profit.  Profit on contracts is accrued using
       the percentage-of-completion method of accounting.  The
       percentage of completion is determined based on
       physical progress, which closely approximates the ratio
       of total costs incurred to total estimated costs at
       completion.  Losses on a contract are recorded during
       the period in which the loss is first indicated.
       Estimated revenues and costs at completion are reviewed
       and revised periodically throughout the lives of the
       contracts, and adjustments are made to current period
       earnings for the cumulative effect of changes in price
       and cost estimates of prior periods.  In accordance
       with normal practice in the shipbuilding industry, the
       Company includes in current assets and current
       liabilities amounts relating to contracts realizable
       and payable over a period in excess of one year.

(2)  Summary of Significant Accounting Policies (Continued)

(c)  Cash and Cash Equivalents

       For purposes of the statements of cash flows, the
       Company considers all highly liquid debt instruments
       purchased with a maturity of three months or less to be
       cash equivalents.

(d)  Restricted Funds

       Investments in U.S. Government obligations, which are
       included in restricted funds, are stated at the lower
       of cost or market; cost approximates market value at
       January 2, 1994. Effective January 3, 1994, the Company
       adopted the provisions of Statement of Financial
       Accounting Standards No. 115, Accounting for Certain
       Investments in Debt and Equity Securities (SFAS No.
       115).  Under SFAS No. 115, the Company has classified
       its investments in U.S. Government obligations as
       available-for-sale and valued the securities at fair
       market value with an offsetting balance in stockholders
       equity representing the difference between the
       amortized cost of the securities and fair market value
       of the securities, net of tax.

(e)  Inventories

       Inventories consist of materials and supplies stated at
       the lower of average cost, which approximates first-in,
       first-out (FIFO) cost or market.

(f)  Property, Plant and Equipment

       Land, buildings, machinery and equipment are recorded
       at cost.  Depreciation is provided over the estimated
       remaining lives of the assets using the straight-line
       method for financial statement purposes.  The estimated
       useful lives are as follows:
       
                   Land improvements        10 - 24 years
                   Buildings                20 - 33 years
                   Machinery and equipment  2 - 16 years

(g)  Income Taxes

       Effective December 30, 1991, the Company adopted
       Statement of Financial Accounting Standards No. 109,
       Accounting for Income Taxes (SFAS No. 109).  SFAS No.
       109 requires the asset and liability method of
       accounting for income taxes.  Under the asset and
       liability method, deferred income taxes are recognized
       for the tax consequences of temporary differences by
       applying enacted statutory tax rates applicable to
       future years to differences between the financial
       statement carrying amounts and the tax bases of
       existing assets and liabilities.

(2) Summary of Significant Accounting Policies (Continued)

(g)  Income Taxes (Continued)
   
       Under SFAS No. 109, the effect on deferred taxes of a
       change in tax rates is recognized in the statements of
       income in the period that includes the enactment date.
   
(h)  Excess of Purchase Price over Net Assets Acquired

       The excess of purchase price over net assets acquired
       (goodwill) is being amortized on a straight-line basis
       over 40 years.  Amortization expense amounted to $8.6
       million in 1994 and 1993.

(i)  Reclassifications

       Certain reclassifications have been made to the prior
       year's financial statements to conform to the current
       year presentation.

(3)  Restricted Funds

   The Company has established trust funds for self-insured
   workers' compensation under an agreement with the State of
   Maine.  The Company is required to deposit into trusts
   funds that are restricted for payment of workers'
   compensation benefits.
   
   Effective January 3, 1994, the Company adopted the
   provisions of SFAS No. 115.  Accordingly, the Company's
   investments, principally in U.S. Government obligations,
   have been classified as available-for-sale and are
   reported at their fair value of $27.1 million.  Gross
   unrealized losses of $0.9 million are reported as a
   separate component of stockholders equity net of deferred
   taxes of $0.4 million.  Total amortized cost of the
   investment is $28.0 million and essentially all securities
   mature prior to 2000.

(4)  Shipbuilding Contracts in Progress

   Shipbuilding contracts in progress represents the excess
   of contract costs and profits recognized to date over
   billings on specific contracts.

   Shipbuilding contracts in progress includes $148.6 million
   at January 1, 1995 and $111.1 million at January 2, 1994
   withheld under contract retainage provisions, a portion of
   which will not be collected within one year.

(4)  Shipbuilding Contracts in Progress (Continued)
   
   Shipbuilding contracts in progress at January 1, 1995 and
   January 2, 1994 includes approximately $26.3 million of
   unfunded accrued workers' compensation costs (see Note 7).
   As this type of cost is reimbursable under the Company's
   major shipbuilding contracts, the Company expects to
   recover these costs when the costs are actually paid.

(5)  Long-term Debt

   Long-term debt consists of the following at January 1,
   1995 and January 2, 1994 (in thousands):

                                             1994      1993
   11% Senior notes payable to a stockholder,
   due in installments from 1995 to 1997
   (less unamortized discount of $643 and
   $1,286 in 1994 and 1993, respectively) $137,482  $168,714
   
   Less - Current portion                   42,500    31,875
                                           $94,982  $136,839

   On January 27, 1994, the Company entered into a credit
   agreement with a bank to fund its working capital needs.
   The Company can borrow up to $25.0 million under the
   agreement, which expires on June 30, 1996.  Borrowings
   under the credit agreement are in the form of either a
   prime rate loan or a Eurodollar rate loan at the election
   of the Company.  Prime rate loans bear interest at the
   bank's prime rate (8.5% at January 1, 1995) plus 1%, and
   Eurodollar rate loans bear interest at the Eurodollar rate
   (6% at January 1, 1995) plus 3%.  The Company must also
   pay a facility fee of 3/8 of 1% of the commitment amount
   per year.  For the year ended January 2, 1994, the Company
   had entered into a credit agreement, which expired in
   December 1993, with a group of banks.

   Terms of the various loan agreements, as amended, include
   various covenants, the most restrictive of which restricts
   the amount of additional debt and certain corporate acts,
   such as sale and leaseback transactions, investments and
   guarantees, and stock dividends and redemptions.  The
   terms also limit the amount of capital expenditures and
   require the Company to maintain minimum working capital,
   cash flow and various financial ratios.  As of January 1,
   1995 the Company was in compliance with all debt
   covenants.

   The aggregate annual principal payments, excluding future
   amortization of debt discount, due in future years on all
   long-term debt are as follows (in thousands):

                                  Annual Principal Payments
                   Fiscal year-
                        1995              $ 42,500
                        1996                42,500
                        1997                53,125

(5)  Long-term Debt (Continued)
   
   Discounts and costs incurred in connection with the
   issuance of debt have been deferred and are being
   amortized over the terms of the notes.
   
   In accordance with Statement of Financial Accounting
   Standards No. 107, Disclosures about Fair Value of
   Financial Instruments (SFAS No. 107), the Company believes
   that the carrying value of the 11% senior notes reasonably
   approximates the fair value at January 1, 1995 and January
   2, 1994.

(6)  Income Taxes

   The components of the provision for income taxes reflected
   in the accompanying statements of income are as follows
   (in thousands):

                                          1994     1993
   
   Current                              $1,690    $1,098
   Deferred                             12,074     6,302
   
                                        $13,764   $7,400

   Deferred income taxes arise primarily from the use of
   accelerated methods of depreciation for tax purposes,
   differences between book and tax profit recognition on
   long-term contracts, net operating loss and credit
   carryforwards and accruals that are not deductible for tax
   purposes until paid.

   A reconciliation between the provision for income taxes
   computed at statutory rates and the amount reflected in
   the accompanying statements of income is as follows (in
   thousands):

                                          1994     1993
   
   Computed expected tax provision        $8,363   $4,573
   Increase (reduction) in taxes resulting
     from Amortization of goodwill         3,000    3,000
   State income taxes, net of
     federal tax benefit                   1,975    1,308
   Effect of tax rate increase on
     deferred tax assets                       -   (1,540)
   Other                                     426       59
   
                                         $13,764   $7,400

(6)  Income Taxes (Continued)

   In August 1993, the U.S. tax law was revised to increase
   corporate tax rates by one percentage point for income
   over $10.0 million.  The increase in the tax rate
   decreased the tax provision and increased prepaid current
   and long-term tax assets by $1.5 million.
   
   Effective December 30, 1991, the Company adopted SFAS No.
   109, which resulted in the recognition of net prepaid tax
   assets of approximately $74 million and a corresponding
   reduction in goodwill of $74 million. The adoption of SFAS
   No. 109 allowed the Company to recognize the anticipated
   benefit of remaining preacquisition net operating loss
   carryforwards.
   
   The significant items making up net prepaid tax assets at
   January 1, 1995 and January 2, 1994 are as follows (in
   thousands):

                                 1994             1993
                          Current Long-term Current Long-term
   
   Assets-
   Net operating loss and
     credit carryforwards $11,535  $20,980  $16,400  $34,237
   Deferred postretirement
     benefits other than
     pensions                   -   11,187        -   10,294
   Deferred workers'
     compensation           4,644    7,699    4,326    4,759
   Shipbuilding contract
     differences            5,793        -      352        -
   Deferred payment due to
     U.S. Government        1,968        -    1,927    1,968
   Health insurance
     reserves               1,628        -    2,545        -
   Vacation accrual         3,086        -    2,539        -
   Deferred pension
     deduction              1,040    2,591    1,034    3,057
   Other                      602      393    1,294    1,146
   
                           30,296   42,850   30,417   55,461
   Liabilities-
   Accelerated
     depreciation               -   10,965        -   11,798
   Other                      905        -      910        -
   
                              905   10,965      910   11,798
   
   Prepaid tax asset      $29,391  $31,885  $29,507  $43,663

(6)  Income Taxes (Continued)

   The Company believes it will have sufficient future
   taxable income to allow for the realization of future tax
   benefits in accordance with the more likely than not
   criteria established in SFAS No. 109. As substantially all
   of the net operating loss carryforwards relate to
   preacquisition net operating loss carryforwards, any
   differences between the net prepaid tax assets recorded
   and the amount ultimately realized will result in a
   corresponding increase or decrease to goodwill.

   The Company has available, for tax purposes, net operating
   loss carryforwards of approximately $56.6 million at
   January 1, 1995, subject to review by the Internal Revenue
   Service, which expire in fiscal years 2001 through 2008.
   The Company has tax credit carryforwards of approximately
   $9.3 million at January 1, 1995.  Of these credits, $8.3
   million have no expiration date.  The remainder expire in
   1999 through 2004.  The Tax Reform Act of 1986 contains
   provisions that limit the net operating loss carryforwards
   to be used in any given year upon the occurrence of
   certain events, including significant changes in ownership
   interests.

(7)  Employee Benefit Plans

   (a) Pensions

       The Company sponsors two qualified noncontributory
       defined benefit pension plans that cover substantially
       all salaried employees and hourly employees who meet a
       one-year service requirement.  The Company's funding
       policy is to make the minimum contribution to the
       salaried plan required by the Employee Retirement
       Income Securities Act (ERISA) and the Internal Revenue
       Code (IRC) maximum tax deductible contribution (without
       regard to IRC Section 404(a)(1)(D)) to the hourly plan.
       However, this policy may be periodically impacted by
       U.S. Government Cost Accounting Standards, with which
       the Company must also comply.
       
       Effective September 1, 1994, hourly employees
       represented by certain unions became participants of
       the International Association of Machinist National
       Pension Plan (IAM Plan) and ceased earning service
       under the Company's defined benefit plan.  As a result,
       the Company experienced a curtailment loss of
       approximately $1.2 million.  Under the IAM Plan, the
       employees will receive upon retirement $21.30 per month
       for each year of service after September 1, 1994 and
       $11.22 per month for each year of service before
       September 1, 1994.  Total years of service is capped at
       30 years.  The Company contributes to the IAM Plan
       $0.38 for each hour of service rendered by the
       represented employee.  Total contributions for the year
       ended January 1, 1995 were $1.4 million.  As of January
       1, 1995, the actuarially computed value of vested
       benefits for the IAM Plan was less than the value of
       net assets of the IAM Plan. Therefore, the Company
       would have no withdrawal liability.  However, the
       Company has no intentions of withdrawing from the IAM
       Plan, nor has the Company been informed that there is
       any intention to terminate the IAM Plan.

(7)  Employee Benefit Plans (Continued)

   (a) Pensions (Continued)

       In addition to the plans described above, the Company
       has a supplemental retirement plan for certain salaried
       employees.

       The net pension cost for the years ended January 1,
       1995 and January 2, 1994 for the Company's pension
       plans is as follows (in thousands):

                                            1994      1993
        
        Service cost                      $ 5,901   $ 5,925
        Interest cost on projected
          benefit obligations              10,740    10,308
        Actual loss (return) on
          plan assets                         271   (12,052)
        Net amortization and deferral               (11,637)
        2,231
        Effect of plan curtailment          1,198         -
        Net pension cost                  $ 6,473   $ 6,412

       The following table sets forth the funded status of the
       Company's pension plans and the amounts recognized in
       the accompanying balance sheets (in thousands):

                                            1994      1993
       Actuarial present value of benefit obligations at
       valuation date-
       Vested benefits                    $117,371  $117,100
       Nonvested benefits                    7,824    14,313
       Accumulated benefit obligation     $125,195  $131,413
       Projected benefit obligation       $140,108  $148,989
       Plan assets at fair value at
        valuation date                     128,283   127,006
       Projected benefit obligation in excess
         of plan assets                     11,825    21,983
       Unrecognized net asset                  415       450
       Unrecognized net (gain) loss          2,275    (4,671)
       Adjustment to recognize minimum
         plan liability                      1,213     4,604
       Unrecognized prior service cost        (423)   (1,605)
       Net pension liability               $15,305   $20,761
       Accrued company contributions,
         current                           $ 8,685   $ 8,700
       Accrued company contributions,
         long-term                           6,620    12,061
                                           $15,305   $20,761

(7)  Employee Benefit Plans (Continued)

   (a) Pensions (Continued)

       The discount rate and the rate of increase in future
       compensation levels used in determining the actuarial
       present value of the projected benefit obligation were
       8.5% and 5.5%, respectively, as of January 1, 1995 and
       7.5% and 4.5%, respectively, as of January 2, 1994.
       The expected long-term rate of return on assets was 9%
       for both years.
       
       In accordance with Statement of Financial Accounting
       Standards No. 87, Employers' Accounting for Pensions,
       (SFAS No. 87), the Company recorded additional minimum
       pension liability adjustments of $1.2 million and $4.6
       million as of January 1, 1995 and January 2, 1994,
       respectively, representing the amount by which the
       accumulated benefit obligation exceeds the fair value
       of plan assets and accrued pension liability.  The
       additional liability has been offset by an intangible
       asset to the extent of previously unrecognized prior
       service cost of $0.3 million and $1.5 million as of
       January 1, 1995 and January 2, 1994, respectively.  The
       amount in excess of previously unrecognized prior
       service cost is recorded as a reduction to stockholders
       equity, net of tax.  These amounts totaled $0.6 million
       and $3.1 million as of January 1, 1995 and January 2,
       1994, respectively.
       
       The Company also maintains two defined contribution
       benefit plans covering substantially all of its
       employees.  Employees can contribute up to 15% of
       salary, subject to certain limitations.  During 1994,
       the Company matched between 20% and 40% of the first 5%
       contributed by the employee, depending on employee
       classification.  Prior to January 3, 1994, the Company
       matched 20% of the first 5% contributed by the
       employee.  The total costs of the defined contribution
       plans for the years ended January 1, 1995 and January
       2, 1994 were $2.1 million and $1.2 million,
       respectively.

   (b) Postretirement Benefits Other Than Pensions

       Employees who have attained certain age and service
       requirements are eligible for postretirement benefits
       for medical costs and life insurance coverage.  The
       postretirement benefit for medical costs covers the
       period from eligible early retirement age (generally
       age 55 for most employees) to age 65, at which time no
       further benefits are due to the retiree.  The cost to
       the Company for postretirement medical benefits is
       equal to the difference between the actual annual
       medical costs incurred by the retiree less an amount
       charged to the retiree.  Employees who leave the
       Company prior to early retirement eligibility are not
       eligible for any postretirement benefits.  The Company
       funds all postretirement benefits other than pensions
       on a pay-as-you-go basis.
       

(7)  Employee Benefit Plans (Continued)

   (b) Postretirement Benefits Other Than Pensions (Continued)
       
       In fiscal 1992, the Company adopted the provisions of
       SFAS No. 106.  In connection with the adoption of SFAS
       No. 106, the Company immediately recognized the
       accumulated postretirement benefit obligation as of the
       beginning of the fiscal year.

       The following table sets forth the funded status of the
       Company's accumulated postretirement benefit obligation
       reconciled to the accrued postretirement benefit cost
       included in the accompanying balance sheets as of
       January 1, 1995 and January 2, 1994 (in thousands):
       
                                            1994      1993
       Accumulated postretirement benefit obligation-
       Retirees                           $ 3,850   $ 4,928
       Fully eligible active
         plan participants                  6,143     3,821
       Other active plan participants      14,675    18,668
                                           24,668    27,417
       Plan assets                              -         -
       Unrecognized net gain (loss)         2,337   (2,309)
       Unrecognized prior service cost        424         -
       Accrued postretirement
         benefit cost                     $27,429   $25,108

       The components of net periodic postretirement benefit
       expense included in the accompanying statements of
       income for the years ended January 1, 1995 and January
       2, 1994 are as follows (in thousands):

                                            1994      1993
       Service cost                       $ 1,334   $ 1,444
       Interest cost                        1,784     1,896
       Net amortization and deferral          (84)        -
                                          $ 3,034   $ 3,340

       For the purpose of measuring medical costs, the annual
       rates of increase in the per capita cost of covered
       health care benefits were assumed for fiscal 1994 and
       1993 to be 13% and 14%.
       

(7)  Employee Benefit Plans (Continued)

   (b) Postretirement Benefits Other Than Pensions (Continued)
       
       respectively. The rate was assumed to decrease
       gradually to 6% for fiscal 2001 and remain at that
       level thereafter.  The impact of a 1% increase in the
       assumed health care cost trend rates would have the
       effect of increasing the accumulated postretirement
       benefit obligation by approximately $2.5 million as of
       January 1, 1995 and January 2, 1994.  The impact of a
       1% increase in the assumed health care cost trend rates
       would have the effect of increasing the postretirement
       benefit expense by approximately $0.4 million, for the
       years ended January 1, 1995 and January 2, 1994.

       The weighted average discount rate used in determining
       the accumulated postretirement benefit obligation was
       8.5% in 1994 and 7.5% in 1993.
       
   (c) Workers' Compensation
       
       Using a combination of trust funds and aggregate excess
       loss insurance policies, the Company has self-insured
       all workers' compensation claims since September 1,
       1988.  As of January 1, 1995, the trust funds totaled
       at $27.1 million, which is the estimated present value
       of future claim payments.  For the periods prior to
       September 1, 1988, the Company has accrued a liability
       of approximately $28.4 million for potential workers'
       compensation insurance premium adjustments.  This
       amount is included in the accompanying balance sheets
       as of January 1, 1995 and January 2, 1994.

(8)  Due to U.S. Government

   In connection with a claim settlement entered into in
   1987, the Company has incurred an obligation to pay
   certain considerations to the U.S. Government, totaling
   $18.9 million.  The remaining balance of $4.8 million has
   been recorded as a current liability in the accompanying
   balance sheets.

   In accordance with SFAS No. 107, the Company estimates
   that the fair value of the amount due to the U.S.
   Government at January 1, 1995 was approximately $4.4
   million, based on the present value of the payment stream
   using an assumed market interest rate of 9.5%.

(9)  Lease Commitments

   The Company leases various data processing, shipbuilding
   and automotive equipment.  Total rental expenses charged
   to operations amounted to $7.9 million and $9.0 million in
   1994 and 1993, respectively. Minimum annual rental
   commitments under all noncancelable operating leases are
   as follows (in thousands):
   
                                         Minimum Annual
                                      Rental Commitment
                    Fiscal year-
                        1995              $ 7,114
                        1996                4,769
                        1997                2,441
                        1998                1,923
                        1999                1,547

(10) Commitments and Contingencies

   The Company is a party to various pending claims and legal
   proceedings, including environmental claims and
   proceedings, some of which are for significant amounts.
   The accompanying balance sheets include an accrual, which
   is not material, for the impact of expected costs under
   these claims and proceedings after consideration of
   applicable insurance coverage.  As a result, although the
   outcome of such matters cannot be forecasted with
   certainty, it is the opinion of management that the
   likelihood is remote that the ultimate outcome of such
   claims and proceedings will have a material adverse effect
   on the Company's financial position and results of
   operations.
   
   Effective August 22, 1994, the Company signed three-year
   labor contracts with labor unions representing production
   workers, clerical workers and guards.  As part of these
   agreements, the Company granted that there would be no
   involuntary layoffs for the duration of their respective
   union contracts.  These contracts expire on August 24,
   1997.  Based on current backlog, management anticipates
   that there will be no requirements for layoff.

   The Company's 1994 and 1993 revenues, as well as projected
   revenues on backlog work, were derived primarily from
   fixed-price incentive-fee contracts with the U.S. Navy on
   its AEGIS shipbuilding programs.  To date, the Company has
   delivered eight cruisers and five destroyers from
   contracts for eight cruisers and eighteen destroyers.
   
   The Company has outstanding claims with the U.S. Navy on
   these contracts totaling approximately $175.1 million,
   excluding interest on the claims.  These claims request
   compensation for design changes, defective government-
   furnished information, related delay and disruption costs,
   and other issues caused by Navy actions.  The Company is
   pursuing these issues at the Armed Services Board of
   Contract Appeals and the Court of Federal Claims.  At this
   time, the Company cannot reasonably estimate the time
   required to resolve these contractual issues.

(10) Commitments and Contingencies (Continued)
   
   Favorable resolution of these claims will have a positive
   impact on the Company's financial position, cash flow and
   operating income.  Management believes it has a strong
   case for the submitted amounts and that the claims will be
   resolved favorably but is unable to state with reasonable
   certainty the ultimate value or timing of such resolution.
   Accordingly, it has chosen not to reflect such related
   expected revenues in the January 1, 1995 financial
   statements.  In addition, management believes that the
   Company should be able to meet its financial obligations
   in the absence of favorable resolution of these
   contractual issues. (See Note 12 for further discussion.)
   
   During 1993 and 1992, the Company filed for property tax
   abatements for 1993, 1992 and 1991 from the City of Bath,
   Maine (the City).  These filings reflected management's
   belief that the City had overvalued the Company's property
   and, therefore, was overtaxing the Company.  The City
   denied these abatements.
   
   In December 1992, the Company filed a petition for
   assessment review with the State Board of Property Tax
   Review for the 1991 tax year.  In December 1993, the
   Company received a favorable judgment that required the
   City to repay approximately $1.8 million in back taxes and
   approximately $0.4 million in interest.  In addition, the
   property tax base of the Company's assets was reduced,
   thereby reducing the Company's annual expenditure for
   property taxes by approximately $1.8 million.
   
   Based on the ruling for 1991, the Company and the City
   entered into negotiations to settle the tax dispute for
   1992 and 1993 as well as for 1991.  Accordingly, the
   Company and the City reached a repayment agreement in
   March 1994 for all three years. Under the agreement, the
   City repaid the Company $0.8 million in 1994, and agreed
   to repay $1.0 million in 1995, $1.0 million in 1996, $1.2
   million in 1997 and $1.4 million in 1998.  In return, the
   Company agreed to waive all interest charges.  On January
   24, 1995 the City settled its obligation to the Company by
   purchasing and delivering to the Company U.S. Treasury
   Bonds that will mature annually in 1995 through 1998.  The
   U.S. Treasury Bonds are in amounts sufficient to settle
   the agreed amounts due.  Consistent with established
   practices, the Company will recognize such rebates to cost
   in the years in which the U.S. Treasury Bonds mature.
   
   The Company is also secondarily liable for payment of
   approximately $1.0 million of letter-of-credit obligations
   related to workers' compensation self-insurance.
   Management does not believe that the Company will be
   required to discharge these obligations.

(11) Senior Redeemable Exchangeable Preferred Stock

   The senior redeemable exchangeable preferred stock (the
   Senior Preferred Stock) holds no voting rights.  Each
   share is entitled to annual dividends of $13 (cumulative)
   and a preference of $100 plus unpaid dividends in
   liquidation.  Under the terms of the various loan and
   securities purchase agreements, dividends are restricted,
   and, as a result, dividends on Senior Preferred Stock will
   not be paid prior to expiration of the revolving credit
   agreement (see Note 5).

   The Senior Preferred Stock is scheduled for redemption at
   face value in installments as follows:

                    Fiscal Year         Number of Shares
                        1998               413,656
                        1999               413,656
                        2000               413,656
                        2001               413,657
                                         1,654,625

   The Company may redeem all of the Senior Preferred Stock
   in exchange for 13% senior subordinated notes due August
   15, 1997 in a principal amount equal to the preference
   value of the Senior Preferred Stock.  The difference
   between the face value of the Senior Preferred Stock of
   $165.5 million and the carrying amount of the Senior
   Preferred Stock of $163.8 million is being accreted over
   the applicable terms of the installments.

   In accordance with SFAS No. 107, the Company believes that
   the fair value of its Senior Preferred Stock cannot be
   reasonably estimated, as there is no public market and the
   Company does not believe that comparable preferred stock
   issuances exist or are relevant.
   
(12) Subsequent Events
     
   On September 13, 1995, the Company's common stock was
   acquired by General Dynamics Corporation pursuant to a
   Merger Agreement dated August 17, 1995. On August 17,
   1995, the Company entered into an Assignment Agreement
   transferring to the principal stockholder of the Company
   the Company's beneficial interest in any recovery or
   outstanding claims with the U.S. Navy, net of certain
   amounts. Prior to the acquisition, the Company entered
   into severance arrangements with certain officers and key
   employees providing severance benefits upon a change in
   control of the Company, as defined, and the occurrence of
   certain events.
                                                 Item 7 (b).

                     GENERAL DYNAMICS CORPORATION

           PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

                             (UNAUDITED)

          As of September 13, 1995, the registrant acquired
all of the issued and outstanding shares of Bath Iron Works
Corporation from Bath Holding Corp. and the Prudential
Insurance Company of America for a purchase price of $300
million in cash.  A portion of the purchase consideration was
utilized to prepay the outstanding debt of Bath Iron Works
Corporation.

          The following unaudited pro forma combined condensed
financial statements have been prepared by the registrant from
its historical consolidated financial statements and from the
historical financial statements of Bath Iron Works Corporation
which are included in this Current Report on Form 8-K.  The
unaudited pro forma combined condensed statements of earnings
reflect adjustments as if the transaction had occurred on
January 1, 1994.  The unaudited pro forma combined condensed
balance sheet reflects adjustments as if the transaction had
occurred on July 2, 1995.  The pro forma adjustments described
in the accompanying notes are based upon preliminary estimates
and certain assumptions that the registrant believes are
reasonable in the circumstances.

          The unaudited pro forma combined condensed financial
statements are not necessarily indicative of what the
financial position or results of operations actually would
have been if the transaction had occurred on the applicable
dates indicated.  Moreover, they are not intended to be
indicative of future results of operations or financial
position.  The unaudited pro forma combined condensed
financial statements should be read in conjunction with the
historical consolidated financial statements of the registrant
and the related notes thereto which were included in the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.  The unaudited pro forma combined condensed
financial statements should also be read in conjunction with
the historical financial statements of Bath Iron Works
Corporation which are included in this Current Report on Form
8-K.

             GENERAL DYNAMICS CORPORATION

  PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS

                     (UNAUDITED)

   (Dollars in millions, except per share amounts)

                                 For The Six Months Ended July 2, 1995

                                             BATH
                                   GENERAL   IRON    PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS  ADJUSTMENTS   COMBINED

NET SALES                           $1,456   $483      $   -       $1,939

OPERATING COSTS AND EXPENSES         1,301    464          4  (a)   1,760
                                                          (9) (b)

OPERATING EARNINGS                     155     19          5          179

Interest, net                           28     (8)         8  (d)      20
                                                          (8) (c)
Other income, net                        2     (4)         4  (d)       2

EARNINGS FROM CONTINUING OPERATIONS
    BEFORE INCOME TAXES                185      7          9          201

Provision for income taxes              64      5          -  (e)      69

EARNINGS FROM CONTINUING OPERATIONS $  121   $  2      $   9       $  132

EARNINGS PER SHARE FROM
    CONTINUING OPERATIONS            $1.92                          $2.09

WEIGHTED AVERAGE SHARES AND EQUIVALENTS
  OUTSTANDING (in millions)           63.2                           63.2

See accompanying notes.

                  GENERAL DYNAMICS CORPORATION

       PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS

                          (UNAUDITED)

        (Dollars in millions, except per share amounts)

                                   For the Year Ended December 31, 1994

                                             BATH
                                   GENERAL   IRON   PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS ADJUSTMENTS  COMBINED

NET SALES                           $3,058   $893      $   -      $3,951

OPERATING COSTS AND EXPENSES         2,737    843          8  (a)  3,588

OPERATING EARNINGS                     321     50         (8)        363

Interest, net                           22    (17)        17  (d)
                                                         (13) (c)      9
Other income, net                        -     (9)         9  (d)      -

EARNINGS FROM CONTINUING OPERATIONS
    BEFORE INCOME TAX                  343     24          5         372

Provision for income taxes             120     14         (4)(e)     130

EARNINGS FROM CONTINUING OPERATIONS $  223   $ 10      $   9     $   242

EARNINGS PER SHARE FROM
    CONTINUING OPERATIONS            $3.51                         $3.82

WEIGHTED AVERAGE SHARES AND EQUIVALENTS
    OUTSTANDING (in millions)         63.4                          63.4

See accompanying notes.

                  GENERAL DYNAMICS CORPORATION

           PRO FORMA COMBINED CONDENSED BALANCE SHEET

                          (UNAUDITED)

                     (Dollars in millions)

                                            As of July 2, 1995

                                             BATH
                                   GENERAL   IRON   PRO FORMA   PRO FORMA
                                   DYNAMICS  WORKS ADJUSTMENTS   COMBINED
ASSETS

CURRENT ASSETS:
Cash and equivalents                $ 371    $   -    $(300) (f) $   71
Marketable securities                 867        -        -         867
                                    1,238        -     (300)        938
Accounts receivable                    94       39        -         133
Contracts in process                  292      206        -         498
Other current assets                  250       42      (29) (g)    263
Total Current Assets                1,874      287     (329)      1,832

NONCURRENT ASSETS:
Leases receivable -
  finance operations                  212        -        -         212
Real estate held for development      132        -        -         132
Property, plant and equipment, net    249      145       30  (h)    424
Goodwill                                -      267     (267) (i)      -
Intangible asset related to
  destroyer program                     -        -      141  (h)    141
Other assets                          233       54      (28) (g)    259
Total Noncurrent Assets               826      466     (124)      1,168
                                   $2,700    $ 753    $(453)     $3,000

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt   $   -    $  43    $ (43) (f) $    -
Accounts payable                       58       85       (6) (f)    137
Other current liabilities             488      101       62 (h),(j) 651
Total Current Liabilities             546      229       13         788

NONCURRENT LIABILITIES:
Long-term debt                         38       74      (74) (f)     38
Long-term debt - finance operations   150        -        -         150
Preferred stock and accrued dividends   -      323     (323) (f)      -
Other liabilities                     555       66       (8)(h),(j) 613
Total Noncurrent Liabilities          743      463     (405)        801

SHAREHOLDERS' EQUITY:
Shareholders' equity                1,411        -        -       1,411
Net investment in Bath Iron Works       -       61      (61) (h)      -
Total Shareholders' Equity          1,411       61      (61)      1,411
                                   $2,700    $ 753    $(453)     $3,000

See accompanying notes.

                  GENERAL DYNAMICS CORPORATION

             NOTES TO UNAUDITED PRO FORMA COMBINED

                 CONDENSED FINANCIAL STATEMENTS

The following adjustments give pro forma effect to the
transaction:

(a)    Record amortization of the intangible asset related to
       the destroyer program over a 25-year period and
       depreciation of the increased value of equipment over
       an 11-year period.

(b)    Eliminate charge taken by Bath Iron Works related to
       adoption of a voluntary early retirement incentive
       program which would not have been recorded under the
       registrant's accounting method for retirement benefits
       which are recoverable under government contracts.

(c)    Reduction in interest income due to the payment of the
       purchase price in cash.

(d)    Eliminate interest expense of debt retired and
       amortization expense of goodwill from previous
       acquisition.

(e)    Adjust the tax provision to the company's effective tax
       rate of 34.5% in 1995 and 35% in 1994.

(f)    Cash purchase price used to retire all outstanding debt
       and acquire all outstanding stock of Bath Iron Works.

(g)    Eliminate Bath Iron Works' Federal income tax accounts
       not acquired.

(h)    To adjust the acquired assets and assumed liabilities
       to their estimated fair values, including the recording
       of an intangible asset related to the destroyer
       program, and an increase in the value of equipment and
       retirement liabilities.

(i)    Eliminate goodwill from previous acquisition.

(j)    Certain reclassifications were made to conform to the
       company's presentation.

Because there is not a material difference between primary and
fully diluted earnings per share, only fully diluted earnings
per share are presented.