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                                   UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
  /x/             Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the Fiscal Year Ended December 31, 1996
                                        OR
  / /              Transition Report Pursuant to Section 13 or 15(d)
                       of the Securities Exchange Act of 1934
 
                             Commission File No. 1-8461

                          GULFSTREAM AEROSPACE CORPORATION
 
              Delaware                                13-3554834)
   (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                   Identification No.)

                                   P. O. Box 2206
                                500 Gulfstream Road
                                 Savannah, Georgia
                                     31402-2206
                                   (912) 965-3000
 
             Securities registered pursuant to Section 12(b) of the Act:
 


                                                  Name of each exchange
           Title of each class                     on which registered
          --------------------                    -----------------------
      Common Stock, $.01 par value                New York Stock Exchange 
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                                        None
 
    Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes X   No 
                                                  ---     ----
 
    Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amendment to this Form 10-K. X
                                         _
 
    The aggregate market value of the shares of common stock held by 
non-affiliates of the registrant (based on the closing price for the common 
stock on the New York Stock Exchange on March 26, 1997) was approximately 
$956,702,295. For purposes of this computation, shares held by affiliates 
and by directors of the registrant have been excluded. Such exclusion of 
shares held by directors is not intended, nor shall it be deemed, to be an 
admission that such persons are affiliates of the registrant.
 
    As of March 26, 1997, there were outstanding 74,035,328 shares of the 
registrant's common stock, par value $.01, which is the only class of common 
stock of the registrant.
 
                       Documents Incorporated by Reference
 
    Portions of the Registrant's Annual Report to Stockholders for the fiscal 
year ended December 31, 1996, (the "1996 Annual Report") are incorporated by 
reference in Parts II and IV of this Form 10-K. Portions of the Registrant's 
definitive Proxy Statement for the Annual Meeting of Stockholders to be held 
on May 14, 1997, (the "1997 Proxy Statement") are incorporated by reference 
in Part III of this Form 10-K to the extent stated herein. Except with 
respect to information specifically incorporated by reference in this Form 
10-K, neither the Annual Report nor the Proxy Statement is deemed to be filed 
as a part hereof.
________________________________________________________________________________
________________________________________________________________________________



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                                     PART I
 
ITEM 1. BUSINESS
 
    GENERAL
 
    Gulfstream Aerospace Corporation (the "Company") is recognized worldwide 
as a leading designer, developer, manufacturer and marketer of the most 
technologically advanced intercontinental business jet aircraft. Since 1966, 
when the Company created the large cabin business jet category with the 
introduction of the Gulfstream II, the Company has dominated this market 
segment, capturing a cumulative market share of over 60%. The Company has 
manufactured and sold over 960 large business aircraft since the introduction 
of the Gulfstream product line in 1958.
 
    The Company has developed a broad range of aircraft products to meet the 
aviation needs of its targeted customers (which include national and 
multinational corporations, governments and governmental agencies, heads of 
state and wealthy individuals). The Company's current principal aircraft 
products are the Gulfstream IV-SP, the Gulfstream V, Gulfstream 
Shares-TM-(fractional ownership interests in Gulfstream IV-SPs) and pre-owned 
Gulfstream aircraft. As an integral part of its aircraft product offerings, 
the Company offers aircraft completion (exterior painting of the aircraft and 
installation of customer selected interiors and optional avionics) and 
worldwide aircraft maintenance services and technical support for all 
Gulfstream aircraft. In addition, the Company's financial services 
subsidiary, Gulfstream Financial Services Corporation, through its private 
label relationship with a third-party aircraft financing provider, offers 
customized products to finance the worldwide sale of Gulfstream aircraft.
 
    The Company is the ultimate successor to a business (the "Predecessor 
Business") established by Grumman Aerospace in 1956. In 1978, the Predecessor 
Business was acquired by a group of investors headed by Allen E. Paulson, the 
then Chairman of the Predecessor Business. Chrysler Corporation ("Chrysler") 
acquired the Predecessor Business in 1985. In March 1990, the Gulfstream 
business was acquired from Chrysler by certain partnerships (the "Forstmann 
Little Partnerships") formed by Forstmann Little & Co. ("Forstmann Little"). 
On October 16, 1996, the Company sold 4,559,100 shares of the Company's 
Common Stock, and the Forstmann Little Partnerships and certain option 
holders of the Company's Common Stock sold 37,940,900 shares of the Company's 
Common Stock in an initial public offering at a price of $24.00 per share. As 
of March 26, 1997, the Forstmann Little Partnerships owned approximately 
42.4% of the outstanding shares of the Company's Common Stock.
 
PRINCIPAL PRODUCTS
 
    The business jet aircraft market is generally divided into four 
segments--light, medium, large and ultra-long range. These segments are 
defined on the basis of range, cabin volume and gross operating weight.
 
    GULFSTREAM V
 
    The Company's newest aircraft product is the Gulfstream V, which serves 
the ultra-long range market. The Company believes the Gulfstream V provides 
the longest range, fastest cruising speed and most technologically advanced 
avionics of any ultra-long range business jet aircraft currently in 
operation. The Gulfstream V received provisional type certification from the 
Federal Aviation Administration ("FAA") on December 13, 1996 and the Company 
expects to receive final type certification in early 1997. The first 
Gulfstream V deliveries began in the fourth quarter of 1996.
 
    The Gulfstream V has a maximum operating speed of Mach .885. It can 
accommodate up to 19 passengers and has a range of up to 6,500 nautical miles 
and a cruising speed of up to Mach .87. These capabilities will permit 
routine intercontinental travel at cruising speeds comparable to commercial 
airline cruising speeds, while operating efficiently at altitudes as high as 
51,000 feet, flying above most commercial airline traffic and adverse 
weather. The Gulfstream V is versatile enough to fly long-range missions, 
such as New York to Tokyo in approximately 14 hours, as well as high-speed 
missions, such as New York to London, in approximately six hours.

                                     2

<PAGE>
 
    The Gulfstream V design process combined modern technology with the 
conservative design philosophy of all Gulfstream aircraft. The Gulfstream V 
aircraft development was launched in September 1992 and significantly 
enhanced in 1993 in response to extensive market research. Aerodynamic 
profiles were developed and verified using computational fluid dynamics (CFD) 
and scale model wind tunnel testing. Following systems definition, detailed 
designs were prepared on both two dimensional (CADAM) and three dimensional 
(CATIA) digital computer models, thereby eliminating the need to construct a 
physical prototype of the new aircraft. The Company estimates that 
Gulfstream, its revenue share partners and key suppliers will have invested 
over $800 million, in the aggregate, in developing the Gulfstream V.
 
    The Gulfstream V is equipped with two 14,750-pound-thrust BR710 engines 
built by BMW Rolls-Royce GmbH, which were specifically designed for use on 
the Gulfstream V and for which Gulfstream was the launch customer. The sound 
levels of the Gulfstream V's engines are well below FAA Stage 3 and 
ICAO/Chapter 3 regulatory requirements (the FAA's and ICAO's most stringent 
noise abatement regulations). These engines, like the Rolls-Royce Tay engines 
on the Gulfstream IV-SP (which are considered an industry benchmark), are 
designed to operate 7,000 flight hours between major overhauls and, due to 
fuel efficiency, are expected to operate at a lower cost than the engines of 
the Gulfstream IV-SP. The BR710 engine has been certified by the Joint 
Aviation Authorities and the FAA.
 
    The aircraft utilizes dual cabin pressurization systems to minimize cabin 
altitude. At a maximum altitude of 51,000 feet, the Gulfstream V cabin 
altitude is designed to be pressurized to 6,000 feet, the lowest cabin 
altitude pressurization of any business jet aircraft. This low cabin 
altitude, together with a 100% fresh air ventilation system (instead of a 
recirculating air system) is expected to significantly reduce passenger 
fatigue.
 
    The advanced flight systems on the Gulfstream V include automatic 
throttle systems, an integrated performance computer system, an engine 
information crew advisory system, a dual global positioning system and 
independent inertial reference systems. These systems provide accurate flight 
planning, as well as automatic control, throughout the planned flight 
profile. For maximum safety, a Traffic Collision Avoidance System, turbulence 
and wind shear-detecting radar and an enhanced Ground Proximity Warning 
System are also standard. An additional safety feature of the Gulfstream V is 
an optional head-up display ("HUD"). The HUD optimizes pilot performance and 
improves flight safety, especially in low visibility conditions, by reducing 
the pilot's dependence on the instrument panel, thus allowing the pilot to 
direct his vision outside the cockpit.
 
    In order to reduce the business risk associated with the design and 
manufacture of the Gulfstream V, the Company entered into revenue sharing 
agreements with Northrop Grumman Corporation for the wing and Fokker Aviation 
B.V. (a subsidiary of Stork B.V.) for the empennage. Under these agreements, 
the revenue share partner is responsible for the detailed design, tooling and 
manufacture of the systems in exchange for a fixed percentage of revenues of 
each Gulfstream V sold (which the Company records as a cost of goods sold 
upon an aircraft delivery). Thus, in addition to financing the development, 
manufacture and delivery of its components, each manufacturer shares in the 
risk of fluctuations in demand and market price of the Gulfstream V.
 
    The list price for a completed Gulfstream V is currently approximately 
$37,750,000 (depending on escalation and selected options). The Company 
provides a purchaser of a Gulfstream V with a 20 year or 20,000 flight hour 
warranty (whichever comes first) on the airframe structure and a six-year 
warranty on components (other than the engines). BMW Rolls-Royce GmbH 
provides a direct five-year or 2,500 flight hour warranty (whichever comes 
first) on the engines to purchasers of a Gulfstream V.
 
    GULFSTREAM IV-SP
 
    The Company's other principal aircraft product is the Gulfstream IV-SP, 
serving the large cabin business jet market. The Company believes that the 
Gulfstream IV-SP offers the best combination of large cabin size, long range, 
fast cruising speed and technologically advanced avionics of any large 
business jet aircraft in its market segment. The Gulfstream IV-SP is an 
enhanced version of the Gulfstream IV. (See "--Past Aircraft Product 
Offerings" page 11). The Company manufactured and sold 92 Gulfstream IV-SPs 
from 1993 to 1996 and 213 Gulfstream IVs from 1985 to 1992. The Company 
intends to continue to manufacture the Gulfstream IV-SP along with the 
Gulfstream V.

                                      3

<PAGE>
 
    The Gulfstream IV-SP can accommodate up to 19 passengers, has a range of 
up to 4,220 nautical miles and a cruising speed of up to approximately Mach 
 .85. These capabilities permit routine intercontinental travel at cruising 
speeds comparable to commercial airline cruising speeds, while operating 
efficiently at altitudes as high as 45,000 feet, flying above most commercial 
airline traffic and adverse weather. The Gulfstream IV/IV-SP is the holder of 
79 distance, altitude and speed records for aircraft of its class including 
east-bound and west-bound around-the-world speed records (36 hours and 8 
minutes (east-bound) and 45 hours and 25 minutes (west-bound)).
 
    The Company developed the SP (Special Performance) version of the 
Gulfstream IV with enhanced avionics, increased interior cabin width and 
height, and increased allowable landing weight, providing improved mission 
flexibility and allowing the Gulfstream IV-SP to fly multiple-leg trips 
without refueling.
 
    The Gulfstream IV-SP is equipped with two Rolls-Royce Tay fan jet engines 
which have commercial airline-proven reliability and performance. The Tay 
engines can operate 7,000 flight hours between major overhauls, producing 
aircraft operating costs for the Gulfstream IV-SP that the Company believes 
are comparable to those of its competitors. Additionally, the Gulfstream 
IV-SP, together with the Gulfstream IV and the Gulfstream V, are the only 
business jet aircraft combining an electronic "all glass cockpit" and an 
advanced avionics suite consisting of a fully integrated computerized flight 
management system, including a performance computer and automatic throttle 
systems.
 
    The list price for a completed Gulfstream IV-SP is currently 
approximately $28,200,000 (depending upon selected options). The Company 
provides a purchaser of a Gulfstream IV-SP with a 15 year or 15,000 flight 
hour warranty (whichever comes first) on the airframe structure and a 30 
month warranty on most other parts (other than the engines). Rolls-Royce 
provides a direct 5 year or 2,500 flight hour warranty (whichever comes 
first) on the engines to purchasers of a new Gulfstream IV-SP. Since the 
first delivery of a Gulfstream IV in 1985, warranty claims on the Gulfstream 
IV and Gulfstream IV-SP have aggregated less than 1% of aggregate net 
revenues from the sales of Gulfstream IVs and Gulfstream IV-SPs.
 
    GULFSTREAM IV-MPA
 
    The Company has designed and manufactured the Gulfstream IV-MPA, a 
multi-purpose derivative of the Gulfstream IV (designated C20-G) procured by 
and in service for the United States Navy. The Gulfstream IV-MPA may be 
equipped with a six-foot wide cargo door and/or high density seating (up to 
26 passengers). These aircraft have the capability to convert from a cargo 
configuration to a 26 passenger configuration in less than four hours. 
Depending upon the specific configuration, the Gulfstream IV-MPA's list price 
ranges from $28,000,000 to $32,000,000. There are currently 7 Gulfstream 
IV-MPAs in service. The Company believes that the Gulfstream IV-MPA and other 
special mission modifications of the Gulfstream IV-SP aircraft will be 
important products for meeting the needs of government operators, military 
organizations, civil authorities and intelligence gathering agencies.
 
    GULFSTREAM SHARES(Trademark)
 
    The Company offers customers fractional ownership in Gulfstream IV-SP 
aircraft through a program established by the Company in 1995 in conjunction 
with EJI's NetJets-Registered Trademark- program. This program is designed to 
provide customers with the benefits of Gulfstream IV-SP aircraft ownership at 
a substantially lower cost than the purchase of an entire aircraft. The 
program significantly expands the market for Gulfstream IV-SP aircraft to 
include those customers whose aircraft usage patterns or financial resources 
do not justify or permit the direct purchase of a Gulfstream aircraft. The 
Gulfstream Shares(Trademark) program, by teaming Gulfstream and EJI, has 
brought the Gulfstream name, quality, reputation and marketing infrastructure 
together with the operational experience and reputation of the founder and 
leader in the business jet aircraft fractional ownership market.

                                     4

<PAGE>
 
    The Gulfstream Shares(Trademark) program is marketed by the Company. EJI 
purchases Gulfstream IV-SPs from the Company and then sells fractional 
ownership interests in such aircraft generally in one-eighth or one-quarter 
increments for which the customer receives 100 or 200 hours of flying time 
per year, respectively, with a guaranteed response time for pick-up of 10 
hours or 6 hours, respectively. Under the terms of the agreements between the 
Company and EJI, the program consists of EJI's purchase or option to purchase 
over 20 Gulfstream IV-SPs and 2 Gulfstream Vs. As of December 31, 1996, the 
Company had contracted to deliver to EJI 16 Gulfstream IV-SPs and 2 
Gulfstream Vs in connection with the Gulfstream Shares(Trademark) program, 9 of
which had been delivered and 9 of which will be delivered through 1999. In 
addition, EJI had a remaining option to purchase 5 additional Gulfstream 
IV-SPs in 1998. The customers enter into management and operating contracts 
with EJI which provide guaranteed services and operating costs. EJI's 
agreement with its customers provides for a term of 5 years with certain 
termination and renewal rights. There is no recourse to the Company under the 
provisions of these agreements or under the Company's contractual agreement 
with EJI.
 
    The Gulfstream IV-SP aircraft are maintained by the Company under a 
maintenance agreement with EJI. Further, under a lease arrangement, the 
Company provides EJI up to 4 pre-owned Gulfstream IV aircraft (which are 
included in the Company's pre-owned aircraft inventory) which make up EJI's 
core fleet and are used to facilitate EJI's meeting its response time and 
service guarantees. The Company has a proprietary agreement with EJI relating 
to the marketing activities and provision of the core fleet, pursuant to 
which the Company is reimbursed for certain marketing expenses and earns 
royalty fees on certain EJI revenues. The Company's marketing services 
agreement for Gulfstream Shares(Trademark) has a term of three years which 
can be extended by mutual agreement of the parties.
 
    In addition to providing the Company with an incremental source of 
revenues, the Company believes the Gulfstream Shares(Trademark) program 
represents an important marketing tool. Fractional ownership provides the 
Company with a lower priced product that allows it to broaden its potential 
market and to create an entry level product for new Gulfstream customers. 
Fractional ownership also allows the Company to offer an interim solution for 
customers who have an immediate need for aircraft transportation and desire 
to purchase a whole aircraft, but must wait for delivery due to the order 
backlog.
 
    The Company is currently pursuing opportunities for international 
Gulfstream Shares(Trademark) programs. Such programs could expand the 
Company's presence in international markets and assist the Company in selling 
new as well as pre-owned Gulfstream IV and Gulfstream IV-SP aircraft acquired 
by the Company from trade-ins on Gulfstream V deliveries.
 
    AIRCRAFT COMPLETION
 
    When the Company sells a new Gulfstream V or Gulfstream IV-SP, it 
generally contracts with its customer to deliver a green aircraft and a 
completed interior. The Company's completion services include painting and 
installing customer selected interiors and optional avionics. The Company 
believes that its completion services improve customer satisfaction while 
enhancing the Company's profitability. The Company has proprietary control 
over the specifications required to complete a Gulfstream V. Although other 
companies offer completion services for the Gulfstream IV-SP, the Company 
believes it has an advantage over other suppliers due to Gulfstream's 
understanding of its own aircraft and the interface requirements necessary 
for installation of custom-designed interiors and optional avionics systems. 
The Company believes that it also provides superior craftsmanship in 
designing and building customized interiors.
 
    Gulfstream has increased its completion order rate on new aircraft as a 
percentage of green aircraft orders from 70% in 1990 to almost 100% in 1996. 
In an effort to simplify the selling process and to capture completion 
business, the Company currently markets its aircraft to customers on a 
completed basis. As part of this effort, the Company has developed an 
aircraft completion program that offers customers a customized interior using 
core standardized design elements. The use of these standardized elements 
allows the Company to more accurately predict and reduce costs, cut cycle 
times and increase consistency of production. This, together with its 
integrated marketing strategy, has allowed the Company to perform 
substantially all of the completion services for its green aircraft since 
1993.

                                     5

<PAGE>
 
    The Company's completion centers, located in Savannah, Georgia; 
Brunswick, Georgia; and Long Beach, California, offer full completion and 
refurbishing services. The Company's completion centers can accommodate an 
aggregate of up to 20 aircraft at one time.
 
    PREMIUM PRE-OWNED GULFSTREAM AIRCRAFT AND OTHER PRE-OWNED AIRCRAFT
 
    Pre-owned aircraft are routinely accepted in trade to facilitate the sale 
of new Gulfstream IV-SPs and Gulfstream Vs. The Company uses pre-owned 
Gulfstream aircraft as a significant tool in expanding the Company's 
potential market and competing with lower priced, new aircraft products.
 
    The Company has assembled a new, experienced management team and has 
introduced a number of initiatives which have enhanced the marketability of 
its pre-owned aircraft. The Company refurbishes pre-owned Gulfstream aircraft 
and markets these aircraft as a branded product of the Company. Pursuant to 
this program, the Company backs pre-owned Gulfstream aircraft with a 5 year 
warranty on the airframe structure and a 12 month warranty on virtually all 
other parts, including the engines under a separate warranty from Rolls-Royce 
Commercial Aero Engines Limited.
 
    Trade-in values for pre-owned aircraft are based on estimated fair market 
value ("FMV") at the time the trade-in will actually occur. If the trade-in 
time is greater than twelve months into the future, the Company's current 
practice is to reserve the right to determine FMV not more than six months 
prior to delivery of the green aircraft. Trade-in aircraft are always entered 
into inventory at the lower of cost or estimated realizable value. Any excess 
value offered to a customer above estimated realizable value is recognized as 
a reduction in the revenue received in the new aircraft sale transaction.
 
    Through its trade-in agreements, the Company reserves the right to 
pre-market the trade-in aircraft prior to acceptance of title from the 
customer. Over the past several years, the Company has generally been 
successful in entering sales agreements on trade-in aircraft prior to 
acceptance of title. If market conditions change, however, no assurances can 
be made that the Company can continue this practice.
 
    The Company has provided a portion of its Gulfstream V customers whose 
contracts are currently in backlog with an option to trade in a Gulfstream 
aircraft at the time of their Gulfstream V aircraft delivery. These options 
may be at a specified dollar amount or at FMV "to be determined six months 
prior to green delivery" of the Gulfstream V. The Company continues to assess 
those options which are at a fixed dollar amount in light of market 
conditions and has determined such fixed dollar options are no higher than 
the FMV estimated for the time of Gulfstream V aircraft delivery. Although no 
assurance can be given that the fixed dollar trade-in aircraft values will 
remain at or below FMV at the time of trade, any adjustments required for 
values in excess of FMV will be appropriately reflected in the new aircraft 
sales transaction and the pre-owned inventory will be stated on the Company's 
books at the lower of cost or estimated realizable value.
 
    The Company, in 1996, obtained certification of Gulfstream IIIs, 
Gulfstream IVs and Gulfstream IV-SPs for use in the Commonwealth of 
Independent States (the former Soviet Union) as a part of the Company's 
efforts to develop select international markets through the introduction of 
lower priced, pre-owned Gulfstreams.
 
    AIRCRAFT SERVICES, PARTS AND TECHNICAL SUPPORT
 
    The Company is committed to supporting, servicing and expanding the 
Gulfstream aircraft fleet as part of its customer-oriented strategy. The 
Company provides worldwide service and support by integrating a network of 
Company-owned service centers, three levels of authorized third party service 
providers, worldwide parts depots, worldwide service representatives and 24 
hour-a-day technical/AOG (aircraft on the ground) support. The Company 
believes that the service business offers potential for future expansion and 
growth as the Gulfstream fleet grows and that the high level of service the 
Company provides results in significant repeat business.
 
    SERVICE CENTERS.  The Company operates service centers in Savannah and 
Brunswick, Georgia and Long Beach, California for aircraft maintenance 
functions, including modifications and major repairs. In 1996, the Company 
opened a new 200,000 square foot, state-of-the-art, service facility in 
Savannah, Georgia, with capacity for 12 to 20 Gulfstream Vs and Gulfstream 
IVs. Training, level of service and business practices have been 
significantly improved and standardized across the Company's service centers 
since 1994.

                                    6

<PAGE>
 
    Additionally, the Company has license agreements with Marshalls of 
Cambridge (Cambridge, England), Chrysler's Pentastar Aviation subsidiary 
(Ypsilanti, Michigan) and Jet Aviation (Singapore) to provide service, 
maintenance and repairs for Gulfstream aircraft. The licensees provide 
additional geographic service locations for the expanding Gulfstream fleet. 
Royalty fees are paid to the Company by the licensees based on labor hours 
expended. In addition, Associated Airlines (Melbourne, Australia) and Jet 
Aviation Business Jets (Geneva and Basel, Switzerland) serve as authorized 
warranty centers.
 
    PARTS.  Parts are provided to aircraft owners through a network of five 
Company parts depots. Proprietary initiatives (including cancellation of 
discounts to third party outlets, a gradual adjustment of parts pricing for 
high use items, and a gradual elimination of international price premiums) 
have been undertaken in the last 24 months to develop, improve and sustain 
the Company's competitive advantage in the fragmented parts market and to 
improve customer service levels.
 
    TECHNICAL INFORMATION.  The Company markets aircraft support publications 
and technical documents to its customers and to third party service 
facilities. Additionally, a proprietary computerized maintenance program 
(CMP) is offered as a subscription service to customers for the management 
and tracking of the maintenance status of their aircraft. Approximately 90% 
of the Company's customers utilize this service. Recently, the Company 
instituted a policy requiring third party maintenance facilities to purchase 
factory technical support for scheduled maintenance performed on customer 
aircraft. This is expected to offset the cost of providing this technical 
support and further strengthen the competitive position of the Company's own 
service centers.
 
    The Company is in the process of establishing its ServiceCare-SM- program, 
the first comprehensive airframe, engine and avionics maintenance program to 
be offered in the business aircraft market, which will provide customers of 
new Gulfstream IV-SPs with scheduled and unscheduled maintenance at 
guaranteed costs. Coverage will be provided on a world-wide basis, with all 
work to be accomplished at Gulfstream or Gulfstream authorized service 
centers. The program is expected to be implemented during the second quarter 
of 1997.
 
    AIRCRAFT MAINTENANCE SERVICES.  The Company has assembled a new, 
experienced management team for its maintenance services operations. Under 
this new team, the Company has developed a proactive marketing and sales 
effort and made investments in training and facilities, which have supported 
the increase in market share to approximately 55% in 1996. In 1995, the 
Company's estimated market share (based on service center visits) of the 
maintenance services market for the Gulfstream fleet was approximately 40%.
 
    TRAINING AND FACILITIES.  The Company provides pilot and maintenance 
training services to its customers as an integral component of the sale of 
new Gulfstream IV-SP, Gulfstream V and pre-owned Gulfstream aircraft. The 
Company has long-term agreements with FlightSafety International ("FSI") for 
the provision of this high quality training service.
 
    FSI maintains and operates training facilities co-located with the 
Company's Savannah and Long Beach operations and has begun construction of a 
new 64,000 square foot training facility adjacent to the Gulfstream Service 
Center in Savannah. This training center, scheduled to open in the third 
quarter 1997, will be fully funded by FSI and will house classrooms and 
simulators supporting the entire Gulfstream product line (Gulfstream I 
through Gulfstream V). Gulfstream, in conjunction with FSI, facilitates the 
operation of a Customer Training Advisory Board which provides direct 
customer and original equipment manufacturer input to FSI's training 
curriculums and course content.
 
    Additionally, pilot and maintenance training services are provided to 
Gulfstream customers by SimuFlight Training International ("SimuFlight") 
located at Dallas-Fort Worth International Airport, Texas. SimuFlight 
provides training services for Gulfstream II, Gulfstream III and Gulfstream 
IV aircraft. Gulfstream, in conjunction with SimuFlight, facilitates the 
operation of an additional Customer Training Advisory Board which provides 
direct customer and original equipment manufacturer input to SimuFlight 
training curriculums and course content.

                                      7

<PAGE>
 
    AIRCRAFT FINANCING ARRANGEMENTS
 
    The Company, through its subsidiary Gulfstream Financial Services 
Corporation ("GFSC"), provides customers with access to customized financial 
products to support the worldwide sale of Gulfstream new and pre-owned 
aircraft. GFSC representatives typically consult with potential customers to 
develop the most effective means of financing the purchase of a Gulfstream 
jet for each such customer's specialized needs.
 
    The financial products (including capital and operating leases, loans, 
tax advantaged leases, like-kind exchange options, and Export-Import Bank 
support) are provided on a competitive basis through a proprietary, private 
label relationship with a prominent provider of aircraft financing (the 
"Financing Provider"), that has full credit review and approval rights and 
assumes all credit risk with no recourse to the Company. Additionally, the 
Company and the Financing Provider have entered into a re-marketing 
arrangement which enables the Company to manage the resale of any Gulfstream 
aircraft whose lease financing period has ended. This private label agreement 
has a term of five years with a minimum lending commitment of $250 million 
annually, and can be extended by mutual agreement of the parties. In 1996, 
$270 million of aircraft were financed through this program.
 
    The Company believes that the access provided by GFSC to financing 
sources for customers throughout the world serves to expedite and increase 
sales of new and pre-owned aircraft and also enables the Company to 
effectively manage the residual values of the Gulfstream fleet.
 
    BACKLOG AND NEW ORDERS
 
    At December 31, 1996, the Company had a firm contract backlog of 
approximately $3.1 billion, representing a total of 67 contracts for 
Gulfstream Vs and 27 contracts for Gulfstream IV-SPs compared with $1.9 
billion at the end of 1995, representing a total of 50 contracts for 
Gulfstream Vs and 7 contracts for Gulfstream IV-SPs. The Company includes an 
order in backlog only if the Company has entered into a purchase contract 
(with no contingencies) with the customer and has received a significant 
(generally non-refundable) deposit from the customer. Typically, the Company 
begins taking orders and building backlog two to three years prior to 
beginning production of a new aircraft model such as the Gulfstream V, and 
receives a significant number of orders prior to delivering its initial 
aircraft in a program. In total, approximately 55% of the Company's 
contractual backlog is scheduled for delivery beyond 1997.
 
    Generally, at the signing of a Gulfstream IV-SP or Gulfstream V contract, 
a customer makes a non-refundable deposit with the Company. Subsequently, the 
customer makes a series of significant progress payments, with the balance of 
the purchase price due at delivery of the green aircraft. The Company 
monitors the condition of its backlog and believes, based on the nature of 
its customers and its historical experience, that there will not be a 
significant number of cancellations. However, to the extent that there is a 
lengthy period of time between a customer's aircraft order and its expected 
delivery date, there may be increased uncertainty as to changes in business 
and economic conditions which may affect customer cancellations.
 
    New orders for the Gulfstream V and the Gulfstream IV-SP totaled 21 and 
44, respectively in 1996, 12 and 30, respectively, in 1995, and 16 and 25, 
respectively in 1994. Orders tend to vary from year to year reflecting a 
number of factors, including competitive circumstances, worldwide economic 
and geopolitical conditions and the timing of customer decisions in placing 
new orders due to budget planning and specific transportation needs.
 
    CUSTOMERS AND MARKETING
 
    The majority of the Company's aircraft are sold to national and 
multinational corporations and governments. Gulfstream's aircraft are 
operated by customers in a wide spectrum of industries and customer groups, 
including: pharmaceuticals, consumer goods, high technology, energy, 
industrial manufacturing, finance, insurance, real estate, mining, 
transportation, communications, public utilities, retail trade, the United 
States government, other sovereign entities, and individuals. Seventy-eight 
percent of the Gulfstream fleet is based in North America and 22% of the 
fleet is based in 45 countries worldwide. Current owners of Gulfstream 
aircraft include 25 of the Fortune 50 companies and 115 of the Fortune 500 
companies. In addition, the United States government, including all branches 
of the United States military, and 39 foreign governments operate Gulfstream 
aircraft. Gulfstream aircraft provide air transportation for the President, 
Vice President and other senior members of the

                                      8

<PAGE>

United States government. Over 48 Gulfstream aircraft are currently in 
operation with various United States government agencies, including the FAA.
 
    The diverse Gulfstream customer base combined with wide geographic 
distribution requires an integrated marketing, communications and sales 
approach. The Company's marketing and communications program is designed to 
create general awareness of the Company, its products and services, while the 
sales approach is highly personalized and focused on the key decision makers, 
as well as flight departments and other managers within the customer's 
organization.
 
    In 1994, Gulfstream established an International Advisory Board of 16 
prominent international business executives and senior statesmen to advise 
the Company on international activities in support of the Company's strategic 
initiatives to further penetrate the international markets.
 
    In early 1995, to strengthen its overall position in the market and 
effectively focus the resources of the Company on its customers, the Company 
created Gulfstream Aircraft Incorporated ("GAI") as a wholly owned subsidiary 
of the Company. GAI is responsible for all functions directly related to 
customers including: marketing, sales, completions, service and product 
support.
 
    The Company's marketing and communications program is a carefully 
integrated combination of business and trade advertising, direct mail, press 
coverage, trade shows and special events. These activities are specifically 
developed to create personal selling opportunities for the sales team and 
senior management with assistance from the Board of Directors and 
International Advisory Board.
 
    The Company has 22 sales executives located in: New York; New Jersey; 
Washington, D.C.; Atlanta, Georgia; Dallas, Texas; Los Angeles, California; 
Chicago, Illinois; Columbus, Ohio; Miami, Florida; Savannah, Georgia; London; 
Cairo; Singapore; Monaco; and Hong Kong. In the case of international 
operations, these executives are responsible for the Company's relationships 
with 31 international agents who facilitate business transactions in selected 
local markets. The Company's sales executives are compensated through a 
commission program which compliments the Company's overall strategic 
objectives of maintaining the current customer base and expanding market 
share. The program is based on annual orders and provides an additional 
incentive for capturing orders from new customers, as well as a reduction in 
potential compensation for orders lost to competitors.
 
    The Company pursues government and special mission business opportunities 
worldwide with a two person sales team located in Washington, D.C. These 
sales executives are specifically suited by their background and experience 
to deal with military and government customers. The Company's government 
relations function also involves two people with experience in regulatory, 
legislative and appropriations processes essential to the conduct of the 
Company's business with the United States government.
 
    The Company's export sales by geographical area and sales to major 
customers, are included on page 36 of Gulfstream's 1996 Annual Report, which 
information is incorporated herein by reference.
 
    COMPETITION
 
    The business aircraft market generally is divided into four segments 
(light, medium, large and ultra-long range) of aircraft either designed or 
converted for business use.
 
    The Gulfstream IV-SP competes in the large cabin business jet aircraft 
market segment, principally with Dassault Aviation S.A. (which recently 
announced that it will merge with Aerospatiale SA) and Bombardier. The 
Gulfstream V competes in the ultra-long range business jet aircraft market 
segment, primarily with the Global Express, which is being marketed by 
Canadair, a subsidiary of Bombardier, and which is scheduled for 
certification in the second quarter 1998. In addition, in July 1996, Boeing, 
in partnership with General Electric Co., publicly announced that it intends 
to begin to market a version of the Boeing 737 into the ultra-long range 
business jet aircraft market segment. Boeing has indicated that it expects 
that this aircraft could be available for delivery in late 1998 or 1999. The 
Company's competitors may have access to greater resources (including, in 
certain cases, governmental subsidies) than are available to the Company. The 
Company believes, however, that it competes favorably with its competitors on 
the basis of the performance characteristics of its aircraft, the quality, 

                                      9

<PAGE>

range and timeliness of the service it provides and its innovative marketing 
techniques, and that it has the leading market share in both the large cabin 
and ultra-long range business jet aircraft market segments. The Company 
believes its aircraft's operating costs are comparable to or lower than those 
of its competitors and that its products are competitively priced.
 
    RESEARCH AND DEVELOPMENT
 
    The Company conducts an internally funded research and development 
program primarily for the enhancement of the existing Gulfstream aircraft 
fleet and for the development of new aircraft. The Company's research and 
development expenditures are cyclical and tend to be relatively high several 
years prior to the introduction of a new aircraft model and to decrease 
significantly as that product cycle matures. All amounts expended on research 
and development are expensed as incurred.
 
    The Company's research and development program is based on product and 
process improvement to satisfy changing customer needs and changing 
regulatory requirements. The Company's research and development efforts have 
focused on improving operating efficiencies, performance, safety and 
reliability, reducing pilot workloads, realizing environmental benefits, 
reducing weight and improving ease of manufacture.
 
    The Company believes that its emphasis on technology and product 
improvements for aircraft in the Gulfstream fleet has provided and will 
continue to provide added value for the Gulfstream customer. For aircraft 
already produced and in service, aircraft changes, which incorporate product 
improvements, are generally made available for purchase by existing owners of 
Gulfstream aircraft.
 
    Information regarding the Company's research and development expenditures 
is contained on pages 21 and 22 of Gulfstream's 1996 Annual Report, which 
information is incorporated herein by reference.
 
    MATERIALS AND COMPONENTS
 
    Approximately 70% of the production costs of both the Gulfstream IV-SP 
and the Gulfstream V consist of purchased materials and equipment. Many 
materials and items of equipment used in the production of the Company's 
aircraft, such as the engines, wings, landing gear and avionics systems, are 
purchased from other manufacturers, generally pursuant to long-term purchase 
orders. For the Gulfstream V, the Company has entered into revenue sharing 
agreements for the wing and empennage. Under these agreements, the revenue 
share partner is responsible for the detailed design, tooling and manufacture 
of the systems in exchange for a fixed percentage of revenues of each 
Gulfstream V sold. As is typical among general aviation aircraft 
manufacturers, the Company relies on single source suppliers for complex 
aircraft components and systems. These single sources are selected based on 
overall aircraft systems requirements, quality and certification requirements 
and competitiveness in the market. The Company's major suppliers include 
Rolls-Royce Commercial Aero Engines Limited (Gulfstream IV-SP engines), BMW 
Rolls-Royce GmbH (Gulfstream V engines), Honeywell Incorporated (Gulfstream 
IV-SP and Gulfstream V flight management systems/avionics), The 
Aerostructures Corporation (Gulfstream IV-SP wing), Northrop Grumman 
Corporation (Gulfstream V wing revenue share partner and Gulfstream IV-SP 
nacelle supplier), Fokker Aviation B.V., a subsidiary of Stork B.V., 
(Gulfstream V empennage revenue share partner), The B.F. Goodrich Co. 
(Gulfstream IV-SP and Gulfstream V landing gears and air speed sensors), 
Sundstrand Corp. (Gulfstream V electrical system and actuators) and 
AlliedSignal, Inc. (Gulfstream IV-SP and Gulfstream V auxiliary power unit 
and environmental control systems and Gulfstream IV-SP electrical systems).
 
    Suppliers are selected on the basis of their ability to produce high 
quality systems and components at competitive prices on a timely basis. The 
Company has had continuing relationships with most of its major suppliers 
since the inception of the Gulfstream II program in 1966. Ongoing supplier 
relationships are dependent on cooperation, performance and the maintenance 
of competitive pricing. From time to time suppliers have been replaced as the 
quality of such suppliers' products declined or the costs associated 
therewith failed to remain competitive. While the Company's production 
activities have not been materially affected by the inability to obtain 
essential components, and while it maintains business interruption insurance 
in the event that such a disruption should occur, the failure of certain 
suppliers or subcontractors to meet the Company's performance specifications, 
quality standards or delivery schedules could adversely impact the Company's 
operations. In addition, the Company's ability to significantly increase its 
production rate could be limited by the ability of its key suppliers to 

                                     10

<PAGE>

increase their delivery rates; however, in the past, the Company's ability to 
maintain or increase production has not been significantly limited by 
suppliers' performance. In addition, under many of its supply contracts, the 
Company is permitted to increase or decrease the quantity of components or 
systems being ordered at no cost on six months notice.
 
    The Company has negotiated multi-year agreements with its major 
Gulfstream IV-SP and Gulfstream V suppliers. All of the agreements with the 
exception of the revenue share agreements, allow schedule flexibility and 
have no cost termination clauses at the Company's option, subject to certain 
conditions and prior notification periods. In general, the terms of these 
agreements provide for what is anticipated to be slightly deflationary 
pricing through 1999. The terms of the revenue share agreements with Northrop 
Grumman Corporation for the wing and Fokker Aviation B.V. for the empennage 
continue so long as the Company is manufacturing the Gulfstream V and prices 
are determined as a function of the sale price of the Gulfstream aircraft.
 

PAST AIRCRAFT PRODUCT OFFERINGS
 
    GULFSTREAM IV
 
    The Gulfstream IV, launched in 1983, has a range of 4,220 nautical miles 
and was the first truly intercontinental business jet aircraft. The 
Gulfstream IV was designed and built to incorporate the most current 
technologies in aerodynamics, propulsion, digital electronics and automated 
flight management systems and represented a significant technological 
advancement over the Gulfstream III and every other business jet aircraft 
available at the time. Like the Gulfstream IV-SP, the Gulfstream IV is 
equipped with twin Rolls-Royce Tay engines and an advanced avionics suite. 
The Gulfstream IV meets current FAA Stage 3 and ICAO Chapter 3 noise limits. 
The Company produced 213 Gulfstream IVs from 1985 through 1992, 99% of which 
remain in service today.
 
    GULFSTREAM III
 
    In December 1979, the Company introduced the Gulfstream III, a 
twin-engine fan-jet aircraft powered by two Rolls-Royce Spey engines with a 
cabin accommodating up to 19 passengers, a range of 3,600 nautical miles and 
a cruising speed of Mach .80. The Gulfstream III incorporated an advanced 
design utilizing NASA developed winglet technology to provide greater range 
and fuel efficiency than the Gulfstream II. When production ended in January 
1987, 202 Gulfstream IIIs had been built, 99% of which remain in service 
today.
 
    GULFSTREAM II AND IIB
 
    In 1966, the Company introduced the Gulfstream II, which was the first 
business jet aircraft capable of carrying business passengers non-stop, 
coast-to-coast. The Gulfstream II is a twin-engine fan-jet aircraft powered 
by two Rolls-Royce Spey engines with a range of 2,400 nautical miles and a 
cruising speed of Mach .80. Beginning in 1981, the Company modified 43 
Gulfstream IIs to Gulfstream IIBs by retrofitting customers' Gulfstream II 
aircraft with the Gulfstream III's advanced design wing which enhanced the 
range capability of the aircraft to 3,400 nautical miles at Mach .80. When 
production of the Gulfstream II ended in December 1979, 256 units had been 
produced, 95% of which remain in service. Several specially modified 
Gulfstream IIs are still used regularly to train NASA's space shuttle 
astronauts.
 
    GULFSTREAM I
 
    The Company's product line originated in 1958 with the introduction of 
the Gulfstream I, a large twin-engine turboprop powered aircraft built by 
Grumman which was the first aircraft of its size and type designed 
specifically for business use. The Gulfstream I is powered by Rolls-Royce 
Dart engines and has a range of more than 1,700 miles. When production of the 
Gulfstream I ended in 1966, 200 Gulfstream Is had been built, 72% of which 
remain in service today.
 
    REGULATION
 
    In order for an aircraft model to be manufactured for sale, the FAA must 
issue a Type Certificate and a Production Certificate for the aircraft model 
and, in order for an individual aircraft to be operated, an Airworthiness 
Certificate. Type Certificates are issued by the FAA when an aircraft model 
is determined to meet certain performance, environmental, safety and other 
technical criteria. The Production Certificate ensures that the aircraft is 
built to specifications approved under the Type Certificate. An Airworthiness 
Certificate is issued for a

                                     11

<PAGE>


particular aircraft when it is certified to have been built in accordance 
with specifications approved under the Type Certificate for that particular 
model aircraft. Gulfstream has never had a Type Certificate or a Production 
Certificate suspended, nor had any jet aircraft grounded as the result of 
regulatory action.
 
    All of the Company's aircraft models comply with all currently applicable 
federal laws and regulations pertaining to aircraft noise and engine 
emissions. Due to their weight (under 75,000 pounds), all Gulfstream II, III, 
IV and IV-SP aircraft are currently exempt from the FAA Stage 3 noise 
requirements. Notwithstanding federal requirements, foreign and local 
jurisdictions and airport authorities may establish more stringent 
restrictions pertaining to aircraft noise. Such local and foreign regulations 
in several locations currently restrict the operation of certain jet 
aircraft, including the Gulfstream II, IIB and III and certain of their 
competitors from landing or taking off during late evening and early morning 
hours. Each of the Gulfstream IV, IV-SP and V aircraft produce noise levels 
below the FAA's Stage 3 and ICAO's Chapter 3 noise ceilings.
 
    EMPLOYEES
 
    At March 1, 1997, the Company employed approximately 5,200 persons, of 
whom approximately 3,750 were employed at the Company's Savannah, Georgia 
facility, 80 were employed at the Brunswick, Georgia facility, 630 were 
employed at the Bethany, Oklahoma facility, 420 were employed at the Long 
Beach, California facility and 320 were employed at the Mexicali, Mexico 
facility. None of the workers at the Savannah, Brunswick, Long Beach, or 
Mexicali facilities are unionized. On August 12, 1996, the Company entered 
into a new 5-year contract with the International Union of United Automobile, 
Aerospace & Agricultural Implement Workers of America, which represents 
certain of the Company's employees at its Bethany, Oklahoma plant. The 
Company considers its overall employee relations to be good.
 
    ENVIRONMENTAL
 
    The Company's operations, in common with those of the industry generally, 
are subject to various laws and regulations governing, among other things, 
the handling and disposal of solid and hazardous materials, wastewater 
discharges and the remediation of contamination associated with the use and 
disposal of hazardous substances. Because of the nature of its business, the 
Company has incurred, and will continue to incur, costs relating to 
compliance with such environmental laws. Although the Company believes that 
it is in substantial compliance with such environmental requirements, and has 
not in the past been required to incur material costs in connection 
therewith, there can be no assurance that the Company's costs to comply with 
such requirements will not increase in the future. Although the Company is 
unable to predict what legislation or regulations may be adopted in the 
future with respect to environmental protection and waste disposal, 
compliance with existing legislation and regulations has not had, and is not 
expected to have, a material adverse effect on its capital expenditures, 
results of operations, or competitive position.
 
    The Company's expenses for remedial environmental matters and capital 
outlays for environmental compliance was less than $1.0 million in 1996.
 
    The Company received in 1992, at its Long Beach facility, two inquiries 
from the U. S. Environmental Protection Agency (the "EPA") regarding (i) 
documentation errors subject to the Resource Conservation and Recovery Act, 
and (ii) possible shipments of hazardous wastes to two storage facilities 
whose operators are under EPA investigation pursuant to the Comprehensive 
Environmental Response, Compensation and Liability Act. The Company estimates 
that potential fines regarding these inquires, and a 1991 soil contamination 
inquiry at the Oklahoma facility, will not have a material adverse effect on 
the Company's results of operations.
 
    The Company has been named as a Potentially Responsible Party with 
respect to two cleanup sites, one operated by the Mountaineer Refinery and 
the other operated by Omega Chemical Company. Based on the Company's limited 
involvement with such sites, the Company believes that it will not incur 
material costs in respect of such cleanup sites.
 
    The Company is currently engaged in the monitoring and cleanup of certain 
groundwater at its Savannah facility under the oversight of the Georgia 
Department of Natural Resources. The principal expenses for the cleanup have 
been incurred. The Company believes other aspects of the Savannah facility, 
as well as other

                                     12

<PAGE>

Gulfstream properties, are being carefully monitored and are in substantial 
compliance with current federal, state and local environmental regulations.
 
    The Savannah facility has been in existence for 30 years. Like the 
Savannah facility, certain of the Company's other facilities have been in 
operation for a number of years and, over such time, these facilities have 
used substances or generated and disposed of wastes which are or may be 
considered hazardous. As a result, it is possible that the Company could 
become subject to additional environmental liabilities in the future in 
connection with these sites.
 
ITEM 2. PROPERTIES
 
    The Company's production and service facilities are located in Savannah 
and Brunswick, Georgia; Bethany, Oklahoma; Long Beach, California; and 
Mexicali, Mexico.
 
    The Savannah facility occupies approximately 1,450,000 square feet, 
including a new 200,000 square foot service center, and is the location of 
the Company's executive offices. Functions performed at the Savannah complex 
include Gulfstream IV-SP and Gulfstream V manufacturing, assembly and 
completion, product support, service, repair and overhaul of customer-owned 
Gulfstream aircraft and new product design, engineering and development. The 
Savannah completion center, occupying approximately 120,000 square feet, is 
adjacent to the aircraft production line and simultaneously accommodates 
completion of up to 10 Gulfstream IV-SP or 6 Gulfstream V aircraft. All of 
the land and buildings constituting the Savannah facility are owned by the 
Company.
 
    Any prolonged disruption in the use of the Savannah facility due to the 
destruction of or material damage to such facility, or other reasons, could 
have an adverse effect on the Company's operations. The Company maintains 
property and business interruption insurance to protect against any such 
disruption, but there can be no assurance that the proceeds of such insurance 
would be adequate to repair or rebuild its facilities in such event or to 
compensate the Company for losses incurred during the period of any such 
disruption.
 
    The Company leases approximately 51,500 square feet of hangar and 
adjacent office space in Brunswick, Georgia. The Brunswick facility is both a 
service center facility and completion facility and has the capacity for four 
aircraft. The lease term, which is renewable annually at Gulfstream's option, 
extends to May 1998.
 
    The Bethany facility occupies approximately 500,000 square feet, all of 
which are in buildings leased under leases expiring in 2007. At the Bethany 
facility, the Company manufactures over 17,000 different detail parts for the 
Gulfstream IV-SP and over 13,000 for the Gulfstream V.
 
    The 250,000 square foot Long Beach facility consists of a completion 
facility, which has capacity for 8 aircraft and a service center facility 
which has capacity for 10 aircraft. The Long Beach facility also has 
facilities for design and administrative functions. The Company owns the 
buildings and leases the land at the Long Beach facility; the lease expires 
in 2014. In 1996, the Company expanded its completion capacity at the Long 
Beach facility through the lease of an additional 22,000 square feet at an 
adjacent facility. In February 1997, the Company announced plans to expand 
further its Long Beach operations by constructing a 64,000 square foot, $8.5 
million, state-of-the-art aircraft paint facility, expected to become 
operational in the fourth quarter 1997. This expansion is part of the 
Company's overall plan to double the 1996 annual production levels to 
approximately 60 Gulfstream V and Gulfstream IV-SP aircraft by 1999. See 
"--Liquidity and Capital Resources" included on page 22 of Gulfstream's 1996 
Annual Report.
 
    The Company's Mexicali, Mexico plant occupies approximately 50,000 square 
feet of leased space under leases expiring in December 1998 and assembles 
electrical products, including wire harnesses, used in Gulfstream production, 
and performs repair and service operations, as well as other electrical 
subcontracting.
 
    During the last five fiscal years, the Company has invested approximately 
$76.5 million in capital improvements at its facilities. Such capital 
improvements are expected to enhance the Company's ability to build and 
service its aircraft.

                                     13

<PAGE>
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is a defendant in a lawsuit instituted on December 12, 1992 
and pending in Oklahoma styled KMC Leasing, Inc. et al. v. Gulfstream 
Aerospace Corporation et al. (District Court, State of Oklahoma, Oklahoma 
County, Case No. CJ 92 10313). This action, which may be certified as a class 
action on behalf of twin-engine Commander aircraft owners, arises from claims 
relating to potential damage from corrosion and fatigue fractures on wing 
spars and requirements to inspect and possibly replace wing spars in those 
aircraft. While there are currently more than 2,500 twin engine Commander 
aircraft owners, the Company does not believe all of these owners would 
qualify as members of any such class. This product line was discontinued in 
1985 and sold during 1989. This lawsuit is not an insured claim. Other than 
an allegation that the plaintiffs' damages exceed jurisdictional 
requirements, the plaintiffs have not specified a dollar value of the extent 
of their damages. The Company believes it has meritorious defenses to all 
these claims based upon the facts that underlie them. The Company does not 
expect the results in this action to have a material adverse effect on its 
financial condition or results of operations. Although there are other 
lawsuits pending involving the Company's discontinued light aircraft product 
lines, those claims are (i) covered by the General Aviation Revitalization 
Act of 1994, which is a federal statute of repose, (ii) the responsibility of 
the purchasers of those light aircraft product lines, or (iii) covered by the 
Company's product liability insurance. There are no accident or incident 
claims pending with respect to any Gulfstream jet aircraft.
 
    The Company maintains product liability insurance coverage of $250 
million per occurrence and in the aggregate per year, subject to $10 million 
of self-insurance retention. Management believes this coverage is adequate. 
The Company has paid less than $100,000, other than claim expenses and 
insurance premiums, with respect to product liability occurrences taking 
place since January 1, 1991.
 
    The Company is involved in a tax audit by the Internal Revenue Service 
covering the years ended December 31, 1990 and 1991. The revenue agent's 
report includes several proposed adjustments involving the deductibility of 
certain compensation expense and items relating to the initial capitalization 
of the Company as well as the allocation of the purchase price in connection 
with the acquisition by the Company of the Gulfstream business, including the 
treatment of advance payments with respect to and the cost of aircraft that 
were in backlog at the time of the acquisition and the amortization of 
amounts allocated to intangible assets. The Company believes that the 
ultimate resolution of these issues will not have a material adverse effect 
on its financial statements because the financial statements already reflect 
what the Company currently believes is the expected loss of benefit arising 
from the resolution of these issues. However, because the revenue agent's 
report is proposing adjustments in amounts materially in excess of what the 
Company has reflected in its financial statements and because it may take 
several years to resolve the disputed matters, the ultimate extent of the 
Company's expected loss of benefit and liability with respect to these 
matters cannot be predicted with certainty and no assurance can be given that 
the Company's financial position or results of operations will not be 
adversely affected.
 
    The Company is also involved in other litigation, including product and 
general liability matters, and governmental proceedings arising in the 
ordinary course of its business, the ultimate disposition of which in the 
opinion of the Company's management, will not have a material adverse effect 
on the financial position or results of operations of the Company.
 
    See also--Item 1. Business "Environmental".
 
    FORWARD-LOOKING INFORMATION IS SUBJECT TO RISKS AND UNCERTAINTY
 
    Certain statements contained in this Form 10-K contain "forward-looking" 
information that involves risk and uncertainty, including, but not limited 
to, statements regarding expected future deliveries and expenditures. Actual 
future results and trends may differ materially depending on a variety of 
factors. For discussion of these factors, see Exhibit 99, Cautionary 
Statement for Purposes of the "Safe Harbor" Provisions of the Private 
Securities Litigation Reform Act of 1995, included as part of the Company's 
Form 10-Q filed for the quarterly period ended September 30, 1996.

                                     14

<PAGE>
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of the Company's security holders 
during the last quarter of the year ended December 31, 1996.
 
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Set forth below are the executive officers of each of the Company, its 
GAI subsidiary, and GFSC subsidiary as of the date hereof. The Company does 
not have a Chief Executive Officer, but operates principally through a 
five-member management committee (the "Management Committee") chaired by 
Theodore J. Forstmann and comprised of four other key executives who share 
responsibility for strategic decisions, management and oversight of the 
Company's operations. Each Management Committee member is also individually 
responsible for leadership of specific organizations within the Company, such 
as engineering and manufacturing, finance and information technology, sales 
and marketing and service. Officers serve at the discretion of the Board of 
Directors.
 
<TABLE>
<CAPTION>
                        NAME                               AGE                  POSITION (S) WITH THE COMPANY
-----------------------------------------------------      ---      -----------------------------------------------------
<S>                                                        <C>      <C>
Theodore J. Forstmann................................      57       Chairman of the Board and Director of the Company;
                                                                    Chairman of the Management Committee
Fred A. Breidenbach..................................      50       President, Chief Operating Officer, and Director of
                                                                    the Company; Management Committee member
Bryan T. Moss........................................      57       Vice Chairman of the Board and Director of the
                                                                    Company; Vice Chairman and Chief Executive Officer of
                                                                    GAI; Management Committee member
W.W. Boisture, Jr....................................      52       Executive Vice President and Director of the Company;
                                                                    President and Chief Operating Officer of GAI;
                                                                    Management Committee member
Chris A. Davis.......................................      46       Executive Vice President, Chief Financial Officer,
                                                                    Director and Secretary of the Company; Executive Vice
                                                                    President and Chief Financial Officer of GAI;
                                                                    President and Chief Operating Officer of GFSC;
                                                                    Management Committee member
</TABLE>
 
    Theodore J. Forstmann has served as Chairman of the Board of the Company 
since November 1993. Mr. Forstmann has been a general partner of FLC 
Partnership, L.P. since he co-founded Forstmann Little in 1978. He is also a 
director of General Instrument Corporation ("General Instrument").
 
    Fred A. Breidenbach has served as President, Chief Operating Officer and 
a director of the Company since April 1993. Prior to joining the Company, he 
was Vice President and General Manager of General Electric Co.'s Electronics 
Systems Division from 1991 to 1993. He is the Chairman of the General 
Aviation Manufacturing Association , and also a director of the Aerospace 
Industries Association of America, Inc.
 
    Bryan T. Moss has served as Vice Chairman of the Company and Chief 
Executive Officer of GAI since March 1995. Prior to joining the Company, he 
was President of Bombardier Business Aircraft Division where he was 
responsible for the Challenger and Global Express business jet programs from 
1989 to March 1995.
 
    W.W. Boisture, Jr. has served as Executive Vice President since February 
1994 and as a director of the Company since February 1995. He is also 
President and Chief Operating Officer of GAI. Prior to joining the Company, 
he was President and Chief Executive Officer of British Aerospace Corporate 
Jets from October 1992 through 1993 where he was responsible for the "Hawker" 
business jet product line and its worldwide marketing, sales and support 
organization. From early 1990 to 1992, Mr. Boisture was Chairman, President 
and Chief Executive Officer of Butler Aviation, a nationwide aviation 
services company.

                                     15

<PAGE>
 
    Chris A. Davis has served as Executive Vice President and Chief Financial 
Officer of the Company since July 1993, Secretary of the Company since 
August 1996 and as a director of the Company since March 1997. She is also
President and Chief Operating Officer of GFSC. Prior to joining the Company, 
she was Chief Financial Officer for General Electric Co.'s Electronic Systems 
Division from 1990 to 1993.

                                     16

<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
 
MARKET INFORMATION FOR COMMON STOCK
 
    Gulfstream Aerospace Corporation's common stock is traded principally on 
the New York Stock Exchange under the symbol GAC. The following table 
reflects the range of high and low selling prices of Gulfstream Aerospace 
Corporation's common stock since October 10, 1996, the first day the stock 
began trading. This information is based on selling prices as reported by the 
New York Stock Exchange.
 
                                               HIGH         LOW
                                               -----     ---------

    Fourth Quarter--1996.....................   $ 26      $ 20 3/4

 
HOLDERS
 
    At March 26, 1997, there were approximately 114 holders of record of 
its common stock and 74,035,328 shares outstanding.
 
DIVIDEND POLICY
 
    The Company has never paid cash dividends on its Common Stock. The 
Company presently intends to retain all cash for use in the operation and 
expansion of the Company's business and does not anticipate paying any cash 
dividends in the near future. In addition, the Company's existing bank credit 
agreement restricts the declaration or payment of cash dividends on its 
common stock.
 
                               17

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
 
    The following table summarizes certain selected financial data for each 
of the five years in the period ended December 31, 1996. The selected 
consolidated financial data set forth below should be read in conjunction 
with "Management's Discussion and Analysis of Financial Condition and Results 
of Operations" and the consolidated financial statements and notes thereto, 
incorporated herein by reference.

<TABLE>
<CAPTION> 
                                                                                         Year Ended December 31,
                                                                   ------------------------------------------------------------
                                                                      1996          1995         1994        1993         1992 
                                                                   ------------  ------------  ----------  -----------  -------
                                                                                (In Thousands, except per share data)           
<S>                                                                <C>           <C>           <C>         <C>          <C>       
Statement of Operations Data:
Net revenues....................................                   $  1,063,713  $  1,041,514  $  901,638  $   887,113  $  900,419
                                                                   ------------  ------------  ----------  -----------  ----------
Costs and expenses:
    Cost of sales...............................                        839,254       835,547     710,554      737,361     724,554
    Selling and administrative expenses.........                         99,452        93,239      82,180       97,011      98,187
    Stock option and compensation expense.......                          7,186
    Research and development expense............                         58,118        63,098      57,438       47,990      36,295
    Amortization of intangibles and deferred
      charges...................................                          9,434         7,540       7,583       27,613      31,855
    Restructuring charge (1)....................                                                               203,911
                                                                   ------------  ------------  ----------  -----------  ----------
Total costs and expenses........................                      1,013,444       999,424     857,755    1,113,886     890,891
                                                                   ------------  ------------  ----------  -----------  ----------
                                                                   ------------  ------------  ----------  -----------  ----------
Income (loss) from operations...................                         50,269        42,090      43,883     (226,773)      9,528
    Interest income.............................                         14,605         5,508         367          486       2,135
    Interest expense............................                        (17,909)      (18,704)    (20,686)     (48,940)    (61,235)
                                                                   ------------  ------------  ----------  -----------  ----------
    Net income (loss)...........................                   $     46,965  $     28,894  $   23,564  $  (275,227) $  (49,572)
                                                                   ------------  ------------  ----------  -----------  ----------
                                                                   ------------  ------------  ----------  -----------  ----------
    Earnings Per Share:
    Net income per share (2)....................                   $        .60  $        .37
                                                                   ------------  ------------
                                                                   ------------  ------------
Weighted average common and common equivalent
  shares outstanding (2)........................                        78,535        78,535
                                                                   ------------  ------------
                                                                   ------------  ------------
</TABLE>
 
------------------------
 
(1) The Company recorded a charge for a restructuring plan based upon the
    Company's reassessment of its business plan and its products from which it
    has realized improved operating efficiencies, reduced costs, and increased
    overall profitability.
 
(2) Net income per share is based on historical unadjusted net income divided by
    pro forma weighted average number of common and common equivalent shares
    outstanding during the period. Common equivalent shares consist of the
    Company's stock issuable upon exercise of common stock options determined
    using the treasury stock method. All common stock options granted by the
    Company prior to the Company's Offering and the shares issued in the
    Company's Offering have been included in the calculation of pro forma
    common and common equivalent shares outstanding as if they were outstanding
    for all periods presented.

                                     18

<PAGE>

<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                           ----------------------------------------------------------------
                                                              1996           1995        1994        1993        1992
                                                           -----------    ----------  ----------  ----------    ----------
                                                                        (In Thousands, except operating data)
<S>                                                     <C>               <C>         <C>         <C>           <C>
Balance Sheet Data (at end of period):................
    Working capital...................................  $   138,091       $  356,976  $  301,913  $  302,369    $  268,881
    Total assets......................................    1,313,215          981,253     745,761     799,470       945,433
    Total debt........................................      400,000 (1)      146,331     178,145     206,145(2)    670,258
    Total stockholders' equity (deficit)..............     (188,811) (1)     217,540     188,950     164,395       (26,700)
Operating Data:
    Depreciation and amortization.....................  $    26,910       $   23,094  $   24,151  $   47,866    $   52,374
Operating Data:
    Units delivered during period:
        Gulfstream IV/IV-SP...........................           24               26          22          26            25
        Gulfstream V..................................            3                0           0           0             0
                                                        -----------        ----------  ----------  ----------   ----------
        Total deliveries..............................           27               26          22          26            25
    Units ordered during period:
        Gulfstream IV/IV-SP...........................           44               30          25          26            26
        Gulfstream V..................................           21               12          16          17             8
                                                        -----------        ----------  ----------  ----------   ----------
        Total orders..................................           65               42          41          43            34
    Units in backlog at end of period:
        Gulfstream IV/IV-SP (3).......................           27                7           3           3             3
        Gulfstream V (4)..............................           67               50          40          24             8
                                                        -----------        ----------  ----------  ----------   ----------
        Total backlog (5).............................           94               57          43          27            11
Estimated backlog (in billions)(4)....................  $       3.1       $      1.9  $      1.5  $      0.9    $      0.4
</TABLE>
 
------------------------
 
(1) Total stockholders' equity and total debt at December 31, 1996 gives effect
    to the Recapitalization and Offering which occurred during the fourth
    quarter 1996. See "--Liquidity and Capital Resources" on page 22 of the 1996
    Annual Report.
 
(2) During November 1993, the Company converted $469 million of subordinated
    debentures (including accrued interest) to 7% Cumulative Preferred Stock in
    connection with the 1993 recapitalization.
 
(3) Net of 3 cancellations in each of 1994 and 1992, which generally relate to
    orders placed in prior years.
 
(4) Net of cancellations of 1, 2 and 1 in 1996, 1995, and 1993, respectively,
    which generally relate to orders placed in prior years.
 
(5) See "--Contractual Backlog" on page 24 of the 1996 Annual Report.
 
                                     19

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS
 
    Information required by this Item is included in Management's Discussion 
and Analysis on pages 20 to 25 of Gulfstream's 1996 Annual Report, 
incorporated herein by reference.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    Information required by this Item is included in the consolidated 
financial statements of the Company for the years ended December 31, 1996, 
1995, and 1994, the notes to the consolidated financial statements, and the 
report of independent auditors thereon on pages 26 to 37 of the 1996 Annual 
Report, and in the Company's unaudited quarterly financial data for the years 
ended December 31, 1996, 1995, and 1994 on page 25 of Gulfstream's 1996 
Annual Report, incorporated herein by reference.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
    None in 1996.
 
                                     20

<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Information required by this Item concerning directors of the Company is 
included in the 1997 Proxy Statement in the section captioned "Election of 
Directors," and such information is incorporated herein by reference. 
Information required by this Item concerning the executive officers of the 
Company is included in Part I, pages 15 through 16 of this Annual Report on 
Form 10-K as permitted by General Instruction G(3) to Form 10-K. Information 
required by this Item concerning compliance with Section 16(a) of the 
Securities Exchange Act of 1934 is included in the 1997 Proxy Statement in 
the section captioned "Section 16(a) Beneficial Ownership Reporting 
Compliance," and such information is incorporated herein by reference.
 
ITEM 11. EXECUTIVE COMPENSATION
 
    Information required by this Item is included in the 1997 Proxy Statement 
in the section captioned "Further Information Concerning the Board of the 
Directors and Committees--Compensation Committee Interlocks and Insider 
Participation" and "--Director Compensation" and in the section captioned 
"Compensation of Executive Officers" (other than the subsection thereof 
captioned "Committee Reports on Executive Compensation" and "Performance 
Graph"), and such information (other than the subsections thereof captioned 
"Committee Reports on Executive Compensation" and "Performance Graph") is 
incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    Information required by this Item is included in the 1997 Proxy Statement 
in the section captioned "Security Ownership of Certain Beneficial Owners and 
Management," and such information is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    Information required by this Item is included in the 1997 Proxy Statement 
in the section captioned "Certain Transactions," and such information is 
incorporated herein by reference. See also, Note 11 to the consolidated 
financial statements on page 36 of Gulfstream's 1996 Annual Report.
 
                                       21
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
<TABLE>
<CAPTION>
                                                                                                               1996
                                                                                              Form 10-K    Annual Report
                                                                                               (Page)         (Page)
                                                                                             -----------  ---------------
<S>        <C>                                                                               <C>          <C>
 
(a)        Financial Statements
 
             Consolidated Balance Sheets at December 31, 1996
               and December 31, 1995.......................................................                     26
 
             For the years ended December 31, 1996, 1995,
               and 1994:
 
             Consolidated Statements of Income.............................................                     27
 
             Consolidated Statements of Stockholders' Equity...............................                     28
 
             Consolidated Statements of Cash Flows.........................................                     29
 
             Notes to Consolidated Financial Statements....................................                    30-36
             Independent Auditors' Report for the years ended
               December 31, 1996, 1995, and 1994                                                                37
 
           Financial Statement Schedules
                    Independent Auditors' Report...........................................      23
             I.     Condensed financial information........................................     24-25
             II.    Valuation and qualifying accounts......................................      26
</TABLE>
 
    All other schedules have been omitted because they are not applicable, not
required or the information required is included in the consolidated financial
statements or notes thereof.
 
Exhibits
 
    The exhibits are listed in the accompanying Index to Exhibits on pages 30 
to 32.
 
(b) Reports on Form 8-K
 
    None.

                                       22
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Gulfstream Aerospace Corporation:

We have audited the consolidated balance sheets of Gulfstream Aerospace 
Corporation and subsidiaries (the "Company") as of December 31, 1996 and 1995 
and the related consolidated statements of income, stockholders' equity, and 
cash flows for the three years in the period ended December 31, 1996, and 
have issued our report thereon dated January 31, 1997; such financial 
statements and report are included in the Company's 1996 Annual Report to 
Stockholders and are incorporated herein by reference. Our audits also 
included the consolidated financial statement schedules of the Company, 
listed in Item 14 of Form 10-K. These consolidated financial statement 
schedules are the responsibility of the Company's management. Our 
responsibility is to express an opinion based on our audits. In our opinion, 
such consolidated financial statement schedules, when considered in relation 
to the basic consolidated financial statements taken as a whole, present 
fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP
Atlanta, Georgia
January 31, 1997

                                       23
<PAGE>
                        GULFSTREAM AEROSPACE CORPORATION
                             (PARENT COMPANY ONLY)
 
                   SCHEDULE I--CONDENSED FINANCIAL INFORMATION
 
                                 BALANCE SHEETS
 
                        As of December 31, 1996 and 1995
                   (In thousands, except for share amounts)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                           1996        1995
                                                                        ----------  ----------
<S>                                                                     <C>         <C>
Investment in subsidiary                                                $  (87,393) $  219,234)
                                                                        ----------  ----------
Total Assets                                                               (87,393)    219,234
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                           1996       1995
                                                                       -----------  ----------
<S>                                                                    <C>         <C>        
Payable to subsidiary                                                  $   1,418    $   1,694
Note Payable to subsidiary                                               100,000           --
                                                                        ---------  ----------
Total liabilities                                                        101,418        1,694
                                                                        ---------  ----------
Stockholders' equity:
Preferred stock; Series A, 7%
  Cumulative; $.01 par value;
  20,000,000 shares authorized; no
  shares outstanding in 1996 and
  100 shares issued in 1995                                                 --       468,938
Common stock; $.01 par value;                                                859         523
300,000,000 shares authorized;
  85,890,212 shares issued in 1996
  and 77,362,516 shares issued in
  1995
  Additional paid-in capital                                             333,686     210,631
Accumulated deficit                                                     (468,971)   (410,613)
Minimum pension liability                                                 (1,464)     (1,450)
Unamortized stock plan expense                                            (2,432)          0
Less: Treasury stock: 11,978,439 shares
in 1996 and 1995                                                         (50,489)    (50,489)
                                                                       ---------   ---------
Total stockholders' equity                                              (188,811)    217,540
                                                                       ---------   ---------
Total Liabilities and               
  Stockholders' Equity                                                  $(87,393)   $219,234
                                                                        ---------  ---------
                                                                        ---------  ---------
</TABLE>
 
------------------------
 
Notes:
 
(1) The Company accounts for its investment in its subsidiary using the equity
    method of accounting.
 
(2) The Company received cash dividends of approximately $355.0 million from its
    subsidiary in satisfaction of intercompany balances.

See notes to consolidated financial statements included in the 1996 Annual
Report, incorporated herein by reference.

                                     24

<PAGE> 
                        GULFSTREAM AEROSPACE CORPORATION
                             (PARENT COMPANY ONLY)
 
                  SCHEDULE I--CONDENSED FINANCIAL INFORMATION
 
                              STATEMENTS OF INCOME
 
                                 (In thousands)
 
                                   Year Ended December 31,
                                -------------------------------
                                   1996       1995       1994
                                ---------  ---------  ---------
Interest expense                $  (1,418) $      --  $      --
Net income of subsidiary           48,383     28,894     23,564
                                ---------  ---------  ---------
Net income                      $  46,965  $  28,894  $  23,564
                                ---------  ---------  ---------
                                ---------  ---------  ---------
 
    Statements of cash flows are not presented since the Company had no cash 
flows from operations.





 
    See notes to consolidated financial statements included in the 1996 Annual
Report, incorporated herein by reference.
 
                                     25

<PAGE>

                        GULFSTREAM AEROSPACE CORPORATION
 
           SCHEDULE II--CONDENSED SCHEDULE OF VALUATION AND QUALIFYING
         ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
 
                                  (In thousands)
 
<TABLE>
<CAPTION>
                                                                 Balance at    Charged to                       Balance
                                                                  beginning     costs and                      at end of
Description                                                       of period     expenses     Deductions (1)     Period
---------------------------------------------------------------  -----------  -------------  ---------------  -----------
<S>                                                              <C>          <C>            <C>              <C>
Allowance for Doubtful Accounts:
Year ended December 31, 1994...................................   $   1,152     $     286       $     126      $   1,312
Year ended December 31, 1995...................................       1,312         2,506             381          3,437
Year ended December 31, 1996...................................   $   3,437     $     344       $     538      $   3,243
</TABLE>
 
------------------------
 
(1) Deductions from the allowance for doubtful accounts represent the write-off
    of uncollectible accounts.
 
                                     26

<PAGE>
 
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) 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.
 
                                GULFSTREAM AEROSPACE CORPORATION
 
                                BY:              /s/ Chris A. Davis
                                     -----------------------------------------
                                                Chris A. Davis
                                            Executive Vice President,
                                       Chief Financial Officer and Secretary
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.
 
          Signature                        Title                    Date
------------------------------  ---------------------------  -------------------

/s/ Theodore J. Forstmann         Chairman of the Board;
------------------------------    Director                     March 28, 1997
    Theodore J. Forstmann

/s/ Fred A. Breidenbach           President and Chief
------------------------------    Operating Officer;           March 28, 1997
    Fred A. Breidenbach           Director

                                  Executive Vice President,
                                  Chief Financial Officer
/s/ Chris A. Davis                and Secretary; Director
------------------------------    (Principal Financial         March 28, 1997
    Chris A. Davis                Officer and Principal
                                  Accounting Officer)
/s/ William R. Acquavella                               
------------------------------    Director                     March 28, 1997
    William R. Acquavella

/s/ Robert Anderson                               
------------------------------    Director                     March 28, 1997
    Robert Anderson

/s/ Charlotte L. Beers                               
------------------------------    Director                     March 28, 1997
    Charlotte L. Beers

                                     27

<PAGE>

          Signature             Title                              Date
------------------------------  -----------------------        -----------------

/s/ Thomas D. Bell, Jr.           
------------------------------  Director                       March 28, 1997
    Thomas D. Bell, Jr.

/s/ W. W. Boisture, Jr.         Executive Vice President;
------------------------------  Director                        March 28, 1997
    W. W. Boisture, Jr.

/s/ Lynn Forester                              
------------------------------   Director                       March 28, 1997
    Lynn Forester

/s/ Nicholas C. Forstmann                              
------------------------------   Director                       March 28, 1997  
    Nicholas C. Forstmann

/s/ Sandra J. Horbach                               
------------------------------   Director                       March 28, 1997 
    Sandra J. Horbach

/s/ Drew Lewis                               
------------------------------   Director                       March 28, 1997
    Drew Lewis

/s/ Bryan T. Moss                Vice Chairman of the Board;
------------------------------   Director                       March 28, 1997
    Bryan T. Moss                                          

                              
------------------------------   Director                  
    Michael S. Ovitz

/s/ Allen E. Paulson                               
------------------------------   Director                       March 28, 1997
    Allen E. Paulson

/s/ Roger S. Penske                               
------------------------------   Director                       March 28, 1997
    Roger S. Penske

/s/ Colin L. Powell                               
------------------------------   Director                       March 28, 1997
    Colin L. Powell

/s/ Gerard R. Roche                               
------------------------------   Director                       March 28, 1997
    Gerard R. Roche

                                     28
<PAGE>

          Signature             Title                                Date
------------------------------  -------------------------     ------------------

/s/ Donald H. Rumsfeld                               
------------------------------  Director                      March 28, 1997
    Donald H. Rumsfeld

/s/ George P. Shultz                              
------------------------------  Director                      March 28, 1997
    George P. Shultz

/s/ Robert S. Strauss                               
------------------------------  Director                      March 28, 1997
    Robert S. Strauss
 
                                    29


<PAGE>
                        GULFSTREAM AEROSPACE CORPORATION
                               INDEX TO EXHIBITS
                        --------------------------------

<TABLE>
<CAPTION>

   Exhibit                                                  Description
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
 
       2.1   Stock Purchase Agreement, dated as of February 12, 1990, between Electrospace Holdings, Inc. and GA
                   Acquisition Corp. (Incorporated herein by reference to Exhibit 2.1 of Registrant's Registration Statement
                   on Form S-1, No. 333-09897.)
 
       3.1   Restated Certificate of Incorporation of the Company. (Incorporated herein by reference to Exhibit 3.1 of
                   Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.)
 
       3.2   Restated By-Laws of the Company. (Incorporated herein by reference to Exhibit 3.2 of Registrant's
                   Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.)
 
       4.1   Specimen Form of Company's Common Stock Certificate. (Incorporated herein by reference to Exhibit 4.1 of
                   Registrant's Registration Statement on Form S-1, No. 333-09897.)
 
      10.1   Gulfstream Aerospace Corporation Pension Plan, amended and restated January 1, 1989, as amended ("GAC
                   Pension Plan"). (Incorporated herein by reference to Exhibit 10.1 of Registrant's Registration Statement
                   on Form S-1, No. 333-09897.)A
 
      10.2   First Amendment to GAC Pension Plan, dated December 10, 1996.A*
 
      10.3   Gulfstream Aerospace Corporation Supplemental Executive Retirement Plan, effective as of April 1, 1991.
                   (Incorporated herein by reference to Exhibit 10.2 of Registrant's Registration Statement on Form S-1, No.
                   333-09897.)A
 
      10.4   Gulfstream Aerospace Corporation November 1, 1991 Supplemental Executive Retirement Plan. (Incorporated
                   herein by reference to Exhibit 10.3 of Registrant's Registration Statement on Form S-1, No. 333-09897.)A
 
      10.5   Form of Indemnification Agreement between the Company and its directors and executive officers.
                   (Incorporated herein by reference to Exhibit 10.4 of Registrant's Registration Statement on Form S-1, No.
                   333-09897.)
 
      10.6   Form of Outside Director Stock Option Agreement. (Incorporated herein by reference to Exhibit 10.5 of
                   Registrant's Registration Statement on Form S-1, No. 333-09897.)A
 
      10.7   Form of Outside Director Stockholder's Agreement. (Incorporated herein by reference to Exhibit 10.6 of
                   Registrant's Registration Statement on Form S-1, No. 333-09897.)A
 
      10.8   Gulfstream Aerospace Corporation Stock Option Plan. (Incorporated herein by reference to Exhibit 10.7 of
                   Registrant's Registration Statement on Form S-1, No. 333-09897.)A
 
      10.9   Form of Employee Stock Option Agreement. A*
 
     10.10   Form of Employee Stockholder's Agreement. A*
 
     10.11   Lease Agreement, dated as of January 1, 1988, between Oklahoma City Airport Trust and Gulfstream
                   Aerospace Corporation. (Incorporated herein by reference to Exhibit 10.11 of Registrant's Registration
                   Statement on Form S-1, No. 333-09897.)

</TABLE>
                                        30
 
<PAGE>

<TABLE>
<CAPTION>

   Exhibit                                                  Description
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

     10.12   Lease Agreement, dated as of March 14, 1989, between City of Long Beach and 7701 Woodley
                   Avenue Corporation d/b/a Gulfstream Aerospace. (Incorporated herein by reference to Exhibit 10.12 of
                   Registrant's Registration Statement on Form S-1, No. 333-09897.)

     10.13   Form of Lease Agreements, dated January 1, 1994 between Immuebles El Vigia, S.A., and Interiores Aeros,
                   S.A. De C.V. (Incorporated herein by reference to Exhibit 10.13 of Registrant's Registration Statement on
                   Form S-1, No. 333-09897.)
 
     10.14   Lease Agreement, dated May 1, 1996, between Immuebles El Vigia, S.A., and Interiores Aeros, S.A. De C.V.
                   (Incorporated herein by reference to Exhibit 10.14 of Registrant's Registration Statement on Form S-1,
                   No. 333-09897.)
 
     10.15   Sublease Agreement, dated June 1, 1992, between Brunswick and Glynn County Development Authority and
                   Gulfstream Aerospace Corporation. (Incorporated herein by reference to Exhibit 10.15 of Registrant's
                   Registration Statement on Form S-1, No. 333-09897.)
 
     10.16   Credit Agreement, dated as of October 16, 1996, among Gulfstream Delaware Corporation, The Chase
                   Manhattan Bank, and the banks and other financial institutions parties thereto (including guaranty and
                   pledge agreement). (Incorporated herein by reference to Exhibit 10.1 of Registrant's Quarterly Report on
                   Form 10-Q for the quarter ended September 30, 1996.)
 
     10.17   Registration Rights Agreement, among Gulfstream Aerospace Corporation, Gulfstream Delaware Corporation,
                   Gulfstream Partners, Gulfstream Partners II, L.P., and MBO-IV. (Incorporated herein by reference to
                   Exhibit 10.17 of Registrant's Registration Statement on Form S-1, No. 333-09897.)
 
     10.18   Repurchase Agreement, dated as of May 15, 1996, between Gulfstream Aerospace Corporation and MBO-IV.
                   (Incorporated herein by reference to Exhibit 10.18 of Registrant's Registration Statement on Form S-1,
                   No. 333-09897.)
 
     10.19   Repurchase Agreement, dated as of August 8, 1996, between Gulfstream Aerospace Corporation and MBO-IV.
                   (Incorporated herein by reference to Exhibit 10.19 of Registrant's Registration Statement on Form S-1,
                   No. 333-09897.)
 
     10.20   Amendment No. 1 to Sublease Agreement, dated May 23, 1996, by and between Brunswick and Glynn County
                   Development Authority and Gulfstream Aerospace Corporation. (Incorporated herein by reference to Exhibit
                   10.20 of Registrant's Registration Statement on Form S-1, No. 333-09897.)
 
     10.21   Amendment No. 2 to Sublease Agreement, dated May 25, 1996, by and between Brunswick and Glynn County
                   Development Authority and Gulfstream Aerospace Corporation. (Incorporated herein by reference to Exhibit
                   10.21 of Registrant's Registration Statement on Form S-1, No. 333-09897.)
 
     10.22   Agreement, effective August 9, 1996, between Gulfstream Aerospace Technologies and the International
                   Union, United Automobile, Aerospace and Agricultural Implement Workers of America Local #2130.
                   (Incorporated herein by reference to Exhibit 10.22 of Registrant's Registration Statement on Form S-1,
                   No. 333-09897.)
 
     10.23   Lease Agreement, dated as of August 27, 1996, between Long Beach Million Air, Inc. and Gulfstream
                   Aerospace Corporation. (Incorporated herein by reference to Exhibit 10.23 of Registrant's Registration
                   Statement on Form S-1, No. 333-09897.)
 
      11.1   Computation of Earnings per Common Share. *
 
</TABLE>
                                     31

<PAGE>

<TABLE>
<CAPTION>
   Exhibit                                                  Description
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

      13.1   Annual Report to Stockholders for fiscal year ended December 31, 1996. (The 1996 Annual Report, except
                   for those portions thereof which are expressly incorporated by references in this
                   Annual Report on Form 10-K, is being furnished for the information of the Commission and is not to be
                   deemed "filed" as part of the Form 10-K.) *
 
      21.1   Subsidiaries of the Company (Incorporated herein by reference to Exhibit 21.1 of Registrant's
                   Registration Statement on Form S-1, No. 333-09827.)
 
      27.1   Financial Data Schedule. *
 
      99.1   Cautionary Statement for Purpose of the "Safe Harbor" Provisions of The Private Securities Litigation
                   Reform Act of 1995. (Incorporated herein by reference to Exhibit 99.1 of Registrant's Quarterly Report on
                   Form 10-Q for the quarter ended September 30, 1996.)
</TABLE>
 
------------------------
 
A  Management contract or compensatory plan.
 
*   Filed herewith.
 
                                      32