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

                              ---------------


                                 FORM 10-Q


          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999



                           ----------------------

                         Commission File No. 1-8461

                           ----------------------




                      GULFSTREAM AEROSPACE CORPORATION
                               P. O. Box 2206
                            500 Gulfstream Road
                        Savannah, Georgia 31402-2206
                         Telephone: (912) 965-3000
                      State of incorporation: Delaware
                   IRS identification number: 13-3554834


                             ------------------





     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[_]


     As of April 30, 1999, there 71,607,043 shares of Gulfstream  Aerospace
Corporation Common Stock outstanding.

==============================================================================

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES



                                   INDEX



                       PART I. FINANCIAL INFORMATION



                                                               Page No.
                                                               ----------

Item 1.      Consolidated Financial Statements:


                Consolidated Statements of Income
                 Three months ended March 31, 1999 and
                 1998...............................................3

                Consolidated Balance Sheets
                 March 31, 1999 and December 31,
                 1998...............................................4

                Consolidated Statement of Stockholders' Equity
                 Three months ended March 31,
                 1999...............................................5

                Consolidated Statements of Cash Flows
                 Three months ended March 31, 1999 and
                 1998...............................................6

                Notes to Consolidated Financial
                 Statements......................................  7-10


Item 2.      Management's Discussion and Analysis of Financial    11-15
                Condition and Results of Operations




                          PART II. OTHER INFORMATION

Item 1.      Legal Proceedings.....................................16

Item 2.      Changes in Securities.................................16

Item 3.      Defaults upon Senior Securities.......................16

Item 4.      Submission of Matters to a Vote of Security
                Holders............................................16

Item 5.      Other Information.....................................16

Item 6.      Exhibits and Reports on Form 8-K......................16

             Signature.............................................17

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Income
                   (In thousands, except per share data)
                                (Unaudited)




                                                   Three months ended
                                                       March 31,
                                                -------------------------
                                                   1999          1998
                                                ----------    -----------
Net revenues                                    $  625,072    $ 503,407
Cost and expenses
  Cost of sales                                    490,406      404,069
  Selling and administrative                        30,915       25,942
  Stock option compensation expense                     52          329
  Research and development                           3,268        1,945
  Amortization of intangibles and deferred
   charges                                           3,147        1,876
                                                 ------------------------
   Total costs and expenses                        527,788      434,161
                                                 ------------------------
     Income from operations                         97,284       69,246
Interest income                                        823        2,522
Interest expense                                    (5,982)      (6,999)
                                                 ------------------------
     Income before income taxes                     92,125       64,769
Income tax expense                                  33,626       24,288
                                                -------------------------
            Net income                          $   58,499    $  40,481
                                                =========================
Earnings per share:
     Basic                                      $      .81    $     .56
     Diluted                                    $      .79    $     .54
                                                =========================






See Notes to Consolidated Financial Statements.

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

                        Consolidated Balance Sheets
                     (In thousands, except share data)
                                (Unaudited)


                                                    March 31,    December
                                                      1999          31,
                                                                    1998
                                                  -------------  ------------
ASSETS

Cash and cash equivalents                          $    75,159   $    38,149
Accounts receivable (less allowance for
  doubtful accounts:  $2,426 and $2,525)               330,358       263,959
Inventories                                            752,907       729,874
Deferred income taxes                                    4,582        17,132
Prepaids and other assets                                8,104         6,494
                                                  ---------------------------
   Total current assets                              1,171,110     1,055,608

Property and equipment, net                            165,706       166,777
Tooling,  net  of  accumulated  amortization:
  $17,040 and $15,220                                   34,601        36,415
Goodwill,  net of  accumulated  amortization:
  $12,670 and $11,268                                  211,658       213,906
Other intangible assets, net                            44,146        45,414
Deferred income taxes                                   21,236        22,011
Other assets and deferred charges                       74,406        74,003
                                                  ---------------------------

Total Assets                                       $ 1,722,863   $ 1,614,134
                                                  ===========================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt                       76,047   $    75,262
Accounts payable                                       209,978       182,040
Accrued liabilities                                    177,294       170,681
Customer deposits                                      565,881       488,218
                                                  ---------------------------
   Total current liabilities                         1,029,200       916,201
Long-term debt                                         266,203       285,738
Accrued postretirement benefit cost                    117,778       115,154
Customer deposits -- long-term                          87,815        94,445
Other long-term liabilities                              6,661         6,916

Stockholders' equity
 Common stock; $.01 par value; 300,000,000
   shares authorized; shares issued:
   89,819,274 and 89,818,774                               900           898
 Additional paid-in capital                            449,607       444,301
 Retained earnings (deficit)                            57,827          (672)
 Accumulated other comprehensive income                 (2,441)       (2,441)
 Unamortized stock plan expense                              -           (52)
 Less:  Treasury stock:  18,012,856                   (290,687)     (246,354)
  and 17,244,581 shares                           ---------------------------
   Total stockholders' equity                          215,206       195,680
                                                  ---------------------------

Total Liabilities and Stockholders' Equity         $ 1,722,863   $ 1,614,134
                                                  ===========================


See Notes to Consolidated Financial Statements.

<PAGE>

<TABLE>
<CAPTION>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

               Consolidated Statement of Stockholders' Equity
                               (In thousands)
                                (Unaudited)


                                                                               Accumulated
                                                       Additional  Retained       Other      Unamortized                 Total
                                              Common   Paid-In     Earnings   Comprehensive  Stock Plan    Treasury   Stockholders'
                                               Stock   Capital     (Deficit)      Income       Expense      Stock       Equity
                                            --------------------------------------------------------------------------------------
<S>                                         <C>        <C>         <C>          <C>            <C>         <C>         <C>

 Balance as of January 1, 1999              $   898    $ 444,301   $   (672)    $ (2,441)      $   (52)   $ (246,354)  $ 195,680
 Net income                                                          58,499                                               58,499
 Other comprehensive income adjustment                                                                                         -
                                                                                                                      ------------
   Total comprehensive income                                                                                             58,499
                                                                                                                      ------------
 Amortization of stock plan expense                                                                 52                        52
 Exercise of common stock options                 2        5,306                                                 583       5,891
 Purchase of treasury stock                                                                                  (44,916)    (44,916)
                                            --------------------------------------------------------------------------------------
                                            $   900    $ 449,607   $ 57,827     $ (2,441)      $    -     $ (290,687)  $ 215,206
 Balance as of March 31, 1999               ======================================================================================
</TABLE>








         See Notes to Consolidated Financial Statements.

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

                   Consolidated Statements of Cash Flows
                               (In thousands)
                                (Unaudited)


                                                       Three months ended
                                                           March 31,
                                                     -----------------------
                                                         1999        1998
                                                      ----------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                            $ 58,499    $ 40,481
Adjustments to reconcile net income to net
    cash provided by operating activities:
  Acquisition related non-cash items                       415           -
  Depreciation and amortization                          9,657       8,292
  Postretirement benefit cost                            2,624       1,480
  Non-cash stock option compensation expense                52         329
  Deferred income taxes                                 13,325      23,662
  Other, net                                                75          86
  Change in assets and liabilities:
   Accounts receivable                                 (66,474)     35,697
   Inventories                                         (23,448)    (78,669)
   Prepaids, other assets, and deferred charges         (1,742)      3,543
   Accounts payable and accrued liabilities             34,551      14,888
   Customer deposits                                    71,033     (77,109)
   Other long-term liabilities                            (255)       (747)
                                                      ----------------------
Net Cash Provided by (Used in) Operating Activities     98,312     (28,067)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in unconsolidated affiliate                    (750)          -
Expenditures for property and equipment                 (3,618)     (3,729)
Expenditures for tooling                                    (6)       (108)
Other investing activities                                 847           -

                                                      ----------------------
Net Cash Used in Investing Activities                   (3,527)     (3,837)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of common stock options           5,891       1,996
Principal payments on long-term debt                   (18,750)    (18,750)
Purchase of treasury stock                             (44,916)    (74,579)
                                                      ----------------------
Net Cash Used in Financing Activities                  (57,775)    (91,333)

CASH AND CASH EQUIVALENTS
                                                      ----------------------
Net increase (decrease) during the period               37,010    (123,237)
Cash and cash equivalents, beginning of period          38,149     306,451
                                                      ======================
Cash and Cash Equivalents, End of Period              $ 75,159    $183,214
                                                      ======================




See Notes to Consolidated Financial Statements.

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.  BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been
prepared  by the  Company  pursuant  to the  rules  of the  Securities  and
Exchange Commission ("SEC") and, in the opinion of the Company, include all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of financial  position,  results of operations and cash
flows.  Certain information and footnote  disclosures  normally included in
financial   statements  prepared  in  accordance  with  generally  accepted
accounting principles have been condensed or omitted pursuant to SEC rules.
The  operating  results for the three  months  ended March 31, 1999 are not
necessarily  indicative  of the results to be expected  for the entire year
ended  December  31, 1999.  These  financial  statements  should be read in
conjunction  with the Consolidated  Financial  Statements and Notes thereto
for the year ended  December 31, 1998 included in the Company's 1998 Annual
Report to Stockholders.

NOTE 2.  EARNINGS PER SHARE

     Basic  earnings  per share  ("EPS")  is  computed  based on net income
divided by the weighted average common shares  outstanding.  Diluted EPS is
computed by  dividing  net income by the  weighted  average  common  shares
outstanding  plus the incremental  shares that would have been  outstanding
under stock option plans.

     The following table sets forth the reconciliation of per share data as
of:

                                                  Three months ended March
                                                            31,
                                                 ---------------------------
                                                      1999          1998
                                                 -------------  ------------
                                                       (In thousands)

Net Income                                         $   58,499    $   40,481
                                                   ============  ============

BASIC EPS
Weighted average common shares outstanding             72,450        72,533
                                                   ------------  ------------

DILUTED EPS
Incremental shares from stock options                   1,464         2,818
                                                   ------------  ------------
Weighted average common and common
   equivalent shares outstanding                       73,914        75,351
                                                   ============  ============

EARNINGS PER SHARE:
   Basic                                           $      .81    $      .56
                                                   ============  ============
   Diluted                                         $      .79    $      .54
                                                   ============  ============

<PAGE>

             GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3.  INVENTORIES

    Inventories consisted of the following at:
                                                      March 31,     December
                                                         1999          31,
                                                                       1998
                                                     ------------  -----------
                                                          (In thousands)

Work in process                                       $  387,391    $ 359,212
Raw materials                                            204,679      190,890
Vendor progress payments                                  82,070       85,605
Pre-owned aircraft                                        78,767       94,167
                                                     ------------  ----------
                                                      $  752,907    $ 729,874
                                                     ============  ==========

NOTE 4.  COMMITMENTS AND CONTINGENCIES

     In the normal  course of business,  lawsuits,  claims and  proceedings
have been or may be instituted or asserted  against the Company relating to
various  matters,  including  products  liability.  Although the outcome of
litigation cannot be predicted with certainty and some lawsuits,  claims or
proceedings  may be disposed of unfavorably to the Company,  management has
made provision for all known probable losses related to lawsuits and claims
and  believes  that the  disposition  of all  matters  which are pending or
asserted  will  not  have  a  material  adverse  effect  on  the  financial
statements of the Company.

     The Company is involved in tax audits by the Internal  Revenue Service
covering the years 1990 through 1994. The revenue  agent's  reports include
several  proposed  adjustments   involving  the  deductibility  of  certain
compensation expense,  items relating to the initial  capitalization of the
Company,  the allocation of the original purchase price for the acquisition
by the Company of the  Gulfstream  business,  including  the  treatment  of
advance  payments with respect to 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.

     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. Expenses incurred for cleanup have
not  been   significant.   Liabilities  are  recorded  when   environmental
assessments  and/or  remedial  efforts  are  probable  and the costs can be
reasonably  estimated.  The Company  believes the remainder of the Savannah
facility,  as well as other  Gulfstream  properties,  are  being  carefully
monitored and are in substantial compliance with current federal, state and
local environmental regulations.  The Company believes the liabilities,  if
any, that will result from the above environmental  matters will not have a
material adverse effect on its financial statements.

NOTE 5.  COMMON STOCK REPURCHASES

     During March 1999, the Company  established a program to repurchase up
to an additional $200 million of its common stock. The purchases have been,
and will be made from time to time in the open market or through negotiated
transactions as market conditions  warrant.  At March 31, 1999, the Company
had repurchased  960,000  shares,  at an average price of $46.79 per share,
for an aggregate amount of $44.9 million.

<PAGE>

NOTE 6.  BUSINESS SEGMENTS AND RELATED INFORMATION

     The  Company  operates in three  reportable  segments:  New  Aircraft,
Aircraft Services and Pre-Owned Aircraft.  New Aircraft is comprised of the
design,   development,   production  (including  customized  interiors  and
optional  avionics) and sale of large  business  aircraft to customers on a
worldwide  basis.   Aircraft  Services  provides  aftermarket   maintenance
services, spare parts, engine and auxiliary power unit service and overhaul
for both Gulfstream and other business  aircraft.  The Company's  Pre-Owned
Aircraft segment consists of the sale of pre-owned  Gulfstream aircraft and
other  business  aircraft  acquired  as  trade-ins  against the sale of new
aircraft to a worldwide  market.  The  accounting  policies used to develop
segment  information  correspond  to  those  described  in the  summary  of
significant  accounting  policies in Note 1 to the  Consolidated  Financial
Statements  for the year ended  December 31, 1998 included in the Company's
1998 Annual Report to  Stockholders.  Intersegment  sales and transfers are
not significant. The Company has no significant assets domiciled outside of
the United States and assets are not allocated to reportable segments.

     Gulfstream evaluates each segment's  performance based on gross profit
margins (net revenues less cost of sales) excluding inventory step-charges.
Summarized  financial  information   concerning  the  Company's  reportable
segments are shown in the following tables.  Unallocated expenses represent
expenses not directly related to the reportable segments.

                                                          Three months ended
                                                               March 31,
                                                      ------------------------
                                                           1999         1998
                                                      ------------------------
                                                            (In millions)
NET REVENUES

New Aircraft                                            $   489.4     $  386.8
Aircraft Services                                            83.1         49.9
Pre-Owned Aircraft                                           52.6         66.7
                                                      -----------   ----------
   Total Net Revenues                                   $   625.1     $  503.4
                                                      ===========   ==========


                                                          Three months ended
                                                              March 31,
                                                      ------------------------
                                                            1999         1998
                                                      ------------------------
                                                            (In millions)
SEGMENT GROSS MARGIN

New Aircraft                                            $    120.8    $   87.4
Aircraft Services                                             15.8         9.9
Pre-Owned Aircraft                                            (1.6)        2.7
                                                      ------------  ----------
  Total Segment Gross Margin                                 135.0       100.0
Unallocated expenses                                         (37.7)      (30.8)
                                                      ------------  ----------
  Income from operations                                      97.3        69.2
Interest income                                                 .8         2.6
Interest expense                                              (6.0)       (7.0)
                                                      ------------  ----------
  Income before income taxes                            $     92.1    $   64.8
                                                      ============  ==========

<PAGE>

NOTE 7.  SUBSEQUENT EVENTS

     On April 15,  1999,  the Company  entered into a new $200 million term
loan facility (the "1999 Term Loan").  The 1999 Term Loan may be drawn upon
at any  time  during  the  first  year,  and is  repayable  in  consecutive
quarterly  installments  with a  final  maturity  on  March  31,  2003,  in
aggregate amounts for each of the following years as follows,  assuming the
entire $200  million is drawn:  2000 - $25 million;  2001 - $70.9  million;
2002 - $83.3 million; 2003 - $20.8 million.  Amounts are reduced ratably if
less  than the full  amount  is  drawn.  The  Company  is  required  to pay
commitment fees of .35% per annum on the average daily  unutilized  portion
of the term loan facility for the first year. The Company may choose either
an Adjusted Base Rate interest option, which is based on the greater of the
prime rate or the  federal  funds  rate,  or LIBOR,  in each case,  plus an
applied margin. Interest rates are subject to change based on the Company's
performance  with respect to certain  financial  covenants set forth in the
term loan agreement.

     The 1999 Term Loan contains the same financial and operating covenants
as the 1996 Credit  Agreement and shares  ratably in the pledge of stock of
subsidiaries under the 1996 Credit Agreement.

     On  May  16,  1999,  the  Company  entered  into a  definitive  merger
agreement with General Dynamics  Corporation ("GD"). The agreement provides
for a business  combination between the Company and GD in which the Company
will  become a  subsidiary  of GD.  Under the terms of the  agreement,  the
holders of the Company's common stock will be issued one share of GD common
stock in  exchange  for each  share of the  Company's  common  stock,  in a
transaction  intended to qualify as a pooling of interests  for  accounting
purposes and as a tax-free  reorganization for federal income tax purposes.
On May 14, 1999, the last trading day prior to the public  announcement  of
the merger, the closing price on the New York Stock Exchange Composite Tape
of a share of GD's common  stock was $71.44.  The proposed  acquisition  is
subject to approval by both companies' shareholders,  as well as regulatory
approval and customary closing conditions. The agreement also provides that
either party may terminate the agreement if the average  trading price of a
share of GD common  stock for the fifteen  trading days ending on the fifth
trading day prior to the meeting of the Company's  stockholders  to vote on
the  agreement  is less than $63 per share.  The  proposed  acquisition  is
expected to be completed in the third quarter of 1999.

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RECENT DEVELOPMENT

     On  May  16,  1999,  the  Company  entered  into a  definitive  merger
agreement with General Dynamics  Corporation ("GD"). The agreement provides
for a business  combination between the Company and GD in which the Company
will  become a  subsidiary  of GD.  Under the terms of the  agreement,  the
holders of the Company's common stock will be issued one share of GD common
stock in  exchange  for each  share of the  Company's  common  stock,  in a
transaction  intended to qualify as a pooling of interests  for  accounting
purposes and as a tax-free  reorganization for federal income tax purposes.
On May 14, 1999, the last trading day prior to the public  announcement  of
the merger, the closing price on the New York Stock Exchange Composite Tape
of a share of GD's common  stock was $71.44.  The proposed  acquisition  is
subject to approval by both companies' shareholders,  as well as regulatory
approval and customary closing conditions. The agreement also provides that
either party may terminate the agreement if the average  trading price of a
share of GD common  stock for the fifteen  trading days ending on the fifth
trading day prior to the meeting of the Company's  stockholders  to vote on
the  agreement  is less than $63 per share.  The  proposed  acquisition  is
expected to be completed in the third quarter of 1999.

RESULTS OF OPERATIONS

     The following  discussion should be read in conjunction with the Notes
to  Consolidated   Financial  Statements  beginning  on  page  7  and  with
Management's  Discussion and Analysis of Financial Condition and Results of
Operations  (MD&A) and the audited  Consolidated  Financial  Statements and
Notes to Consolidated  Financial Statements appearing in the Company's 1998
Annual Report to Stockholders.

TOTAL COMPANY REVENUES AND GROSS MARGIN

     Total net revenues  increased by $121.7  million,  or 24.2%, to $625.1
million  in the first  quarter  of 1999 from  $503.4  million  in the first
quarter of 1998.  The increase in revenues is principally  attributable  to
the  increase in new  aircraft  deliveries.  The Company  delivered  17 new
aircraft  in the 1999 first  quarter,  versus 13 new  aircraft in the first
quarter of 1998. As a percentage  of revenues,  first quarter gross margin,
excluding pre-owned aircraft,  was 23.9%, versus 22.1% in the first quarter
of March 31, 1998.

     The following table displays net revenues and segment gross margin for
the Company's reportable segments, for the quarter ended March 31, 1999 and
1998, respectively.


                                                     Three months ended March
                                                                31,
                                                     --------------------------
                                                           1999          1998
                                                       -------------------------
                                                            (In millions)
NET REVENUES

New Aircraft                                           $    489.4    $   386.8
Aircraft Services                                            83.1         49.9
Pre-Owned Aircraft                                           52.6         66.7
                                                       ============  ===========
   Total Net Revenues                                  $    625.1    $   503.4
                                                       ============  ===========


                                                     Three months ended March
                                                                31,
                                                     --------------------------
                                                           1999          1998
                                                       -------------------------
                                                            (In millions)
SEGMENT GROSS MARGIN

New Aircraft                                           $    120.8    $    87.4
Aircraft Services                                            15.8          9.9
Pre-Owned Aircraft                                           (1.6)         2.7
                                                       ------------  -----------
   Total Segment Gross Margin                          $    135.0    $   100.0
                                                       ============  ===========

NEW AIRCRAFT

     The  Company's  New Aircraft  segment  increased  its revenues  $102.6
million,  or 26.5% to  $489.4  million  in the first  quarter  of 1999 from
$386.8  million in the first  quarter of 1998.  As  described  above,  this
increase is  attributable  to new aircraft  deliveries  resulting  from the
Company's  increasing  level of production to meet expanded product demand.
See also "Financial Contract Backlog."

     The gross  margins for New Aircraft  were $120.8  million in the first
quarter of 1999  versus  $87.4  million in the first  quarter of 1998.  The
increase in gross  margin  percentages  to 24.7% in the 1999  quarter  from
22.6% in the 1998 quarter is primarily attributable to continued reductions
in new aircraft production costs.

AIRCRAFT SERVICES

     Revenues for Aircraft Services increased 66.5% to $83.1 million in the
first quarter of 1999 from $49.9 million in the first quarter of 1998.  The
increase in revenues is attributable to the August 1998  acquisition of K-C
Aviation, as well as the Company's success in increasing market share.

     Gross  margin  percentages  for Aircraft  Services  were 19.0% for the
first quarter of 1999, relatively unchanged from 19.8% in the first quarter
of 1998. The decrease in gross margin percentage  results  principally from
lower levels of gross  margins  realized on revenues  from the acquired K-C
Aviation business.

PRE-OWNED AIRCRAFT

     The Company's Pre-Owned Aircraft segment had revenues of $52.6 million
in the first  quarter of 1999  compared  with revenues of $66.7 million for
the first  quarter of 1998.  The  decrease  in revenue is a function of the
volume of units  delivered and the mix of aircraft  sold (i.e.,  Gulfstream
IIs, IIIs, and IVs, etc.).

     Gross margins for the Pre-Owned  Aircraft segment can vary from period
to  period  depending  on the  mix of  aircraft  sold  and  current  market
conditions.  Generally, gross margins on pre-owned aircraft sales have been
at or near break-even.

     SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense
increased by $5.0 million,  or 19.2%, to $30.9 million in the first quarter
of  1999  from  $25.9  million  in the  first  quarter  of  1998,  but as a
percentage  of net revenues  decreased to 4.9% in the first quarter of 1999
from 5.2% in the first  quarter  of 1998.  The  principal  drivers  for the
increase are additional  sales and marketing  expenses  associated with the
increased sales activity, the acquisition of K-C Aviation, and the business
systems  which are being  implemented  in 1999 to  support  the  production
increases described elsewhere herein.

     RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was
$3.3 million in the first  quarter of 1999,  as compared to $1.9 million in
the first quarter of 1998.  Research and  development  expenditures in 1999
and the  near-term  future are  expected to stem  principally  from product
improvements and enhancements, rather than new aircraft development.

     AMORTIZATION  OF  INTANGIBLES  AND  DEFERRED  CHARGES.  This  non-cash
expense  includes  amortization  of goodwill  and other  intangible  assets
consisting of aftermarket  service and aftermarket product support, as well
as deferred financing charges related to the Company's pre-existing and new
bank credit  facilities.  Amortization of intangibles and deferred  charges
were $3.1 million for the first quarter of 1999 versus $1.9 million for the
first  quarter of 1998.  The  increase  in 1999 was a result of  additional
goodwill  amortization  directly  attributable  to the  acquisition  of K-C
Aviation.

     INTEREST INCOME AND EXPENSE. Interest income decreased by $1.7 million
to $0.8 million in the first quarter of 1999 from $2.5 million in the first
quarter of 1998 as a result of lower  average cash balances the Company had
invested  during the first  quarter of 1999  compared to the same period of
1998.  Interest  expense  decreased by $1.0 million to $6.0 million for the
first quarter of 1999 over the comparable  period in 1998. This decrease is
attributable  to both a decrease in average  borrowings  and lower weighted
average interest rates.

     INCOME TAXES. In the quarter ended March 31,1999, the Company recorded
an income tax provision of $33.6  million  based on an estimated  effective
tax rate of 36.5%  compared  with an income tax  provision of $24.3 million
based on an  estimated  effective  tax rate of 37.5% in the  quarter  ended
March 31, 1998.

     EARNINGS PER SHARE. The Company reported diluted earnings per share of
$0.79  for the  first  quarter  of 1999,  a 46.3%  increase  over the first
quarter of 1998 diluted earnings per share of $0.54.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  liquidity needs arise  principally from working capital
requirements,  capital  expenditures,  principal  and interest  payments on
long-term debt (including the revolving credit facility), and the Company's
share repurchase program described below. During the first quarter of 1999,
the Company relied on its available cash balances and its revolving  credit
facility to fund these needs.

     During March 1999, the Company  established a program to repurchase up
to an additional $200 million of its common stock. The purchases have been,
and will be made from time to time in the open market or through negotiated
transactions as market conditions  warrant.  At March 31, 1999, the Company
had repurchased  960,000  shares,  at an average price of $46.79 per share,
for an aggregate amount of $44.9 million.

     The Company had cash and cash  equivalents  totaling  $75.2 million at
March 31, 1999 up from $38.1 million at December 31, 1998. During the three
months ended March 31, 1999, net cash provided by operating  activities was
$98.3 million  compared with the three months ended March 31, 1998 when the
Company used $28.1  million in cash from  operations.  The increase in cash
flow  from  operations  between  periods  is  principally  a result  of the
increased level of initial deposits and progress  payments  received during
the first quarter of 1999 for new aircraft orders.

     During the quarter  ended March 31,  1999,  additions  to property and
equipment amounted to $3.6 million.  At March 31, 1999, the Company was not
committed  to the  purchase  of any  significant  amount  of  property  and
equipment. As a result of both continued production level increases and the
acquisition of K-C Aviation, the Company plans to spend approximately $30.0
million  for  property  and  equipment  in 1999.  The  Company  continually
monitors  its capital  spending  in  relation  to current  and  anticipated
business   needs.   As   circumstances   dictate,   facilities  are  added,
consolidated or modernized.

     At March 31, 1999,  borrowings  under the 1996 Credit  Agreement  were
$286.3 million.  Scheduled  repayments  remaining are $56.3 million in 1999
and $75.0 million in each of the years 2000 through 2001, and $80.0 million
in 2002.  The 1996 Credit  Agreement  contains  customary  affirmative  and
negative covenants including restrictions on the ability of the Company and
its  subsidiaries  to pay cash  dividends,  as well as financial  covenants
under which the Company must operate. As of March 31, 1999, the Company was
in compliance with the covenants of its Credit Agreement.

     On November 30, 1998,  the Company  issued notes  totaling $56 million
secured by three  pre-owned  aircraft used as core fleet in the  Gulfstream
Shares  Program.  The notes  underlying  the agreement  have  substantially
identical  terms and are repayable in consecutive  monthly  installments of
principal  commencing  December 31, 1999, with a final maturity on November
30, 2008;  aggregate principal payments for each of the following years are
as follows:  1999 - $0.3 million;  2000 through 2007 - $3.1 million; 2008 -
$30.6 million.

     On April 15,  1999,  the Company  entered into a new $200 million term
loan facility (the "1999 Term Loan").  The 1999 Term Loan may be drawn upon
at any  time  during  the  first  year,  and is  repayable  in  consecutive
quarterly  installments  with a  final  maturity  on  March  31,  2003,  in
aggregate amounts for each of the following years as follows,  assuming the
entire $200  million is drawn:  2000 - $25 million;  2001 - $70.9  million;
2002 - $83.3 million; 2003 - $20.8 million.  Amounts are reduced ratably if
less  than the full  amount  is  drawn.  The  Company  is  required  to pay
commitment fees of .35% per annum on the average daily  unutilized  portion
of the term loan facility for the first year. The Company may choose either
an Adjusted Base Rate interest option, which is based on the greater of the
prime rate or the  federal  funds  rate,  or LIBOR,  in each case,  plus an
applied margin. Interest rates are subject to change based on the Company's
performance  with respect to certain  financial  covenants set forth in the
term loan agreement.

     The 1999 Term Loan contains the same financial and operating covenants
as the 1996 Credit  Agreement and shares  ratably in the pledge of stock of
subsidiaries under the 1996 Credit Agreement.
<PAGE>
     The Company's  principal  source of liquidity both on a short-term and
long-term basis is cash flow provided from operations,  including  customer
progress payments and deposits on new aircraft orders. However, the Company
may borrow  against  the 1996  Credit  Agreement,  the 1999 Term  Loan,  or
through other  available  borrowing  vehicles to supplement  cash flow from
operations.   The  Company  believes,   based  upon  its  analysis  of  its
consolidated  financial  position,  its cash flow during the past 12 months
and its expected  results of operations in the future,  that operating cash
flow and available  borrowings  under the 1996 Credit  Agreement,  the 1999
Term Loan and other available  borrowing  vehicles will be adequate to fund
operations,  capital  expenditures,  debt service,  and the Company's share
repurchase  program for at least the next 12 months. The Company intends to
repay its remaining  indebtedness primarily with cash flow from operations.
There  can  be  no  assurance,   however,  that  future   industry-specific
developments  or general  economic  trends  will not  adversely  affect the
Company's operations or its ability to meet its cash requirements.

     As of March 31, 1999,  in  connection  with orders for 17 Gulfstream V
aircraft in the backlog, the Company has offered customers trade-in options
(which may or may not be exercised by the customer) under which the Company
will accept trade-in  aircraft  (primarily  Gulfstream IVs and IV-SPs) at a
guaranteed  minimum  trade-in  price.  Additionally,   in  connection  with
recorded sales of new aircraft,  the Company has agreed to accept pre-owned
aircraft totaling $282.4 million as of March 31, 1999.  Management believes
that the fair  market  value of all such  aircraft  exceeds  the  specified
trade-in value.

     The Company is party to an agreement with the Pension Benefit Guaranty
Corporation  (the  "PBGC")  concerning  funding  of the  Company's  defined
benefit pension plans. Pursuant to this agreement,  the Company contributed
$6.25  million in the first  quarter  1999,  and has agreed to contribute a
total  of  $25.0   million   annually  (to  be  paid   quarterly  in  equal
installments)  for 1999 and 2000 to its pension  plans,  which payments are
expected  to result in such plans being fully  funded.  The  payments to be
made  under this  agreement  were  already  part of the  Company's  overall
financial  planning,  and  therefore,  are not  expected to have a material
adverse effect on the Company's financial statements.  The funding required
under this  agreement  will not  result in any  increase  in the  Company's
annual pension expense.

FINANCIAL CONTRACT BACKLOG

     At March 31,  1999,  the Company had a financial  contract  backlog of
approximately  $3.2  billion,  representing  a total  of 47  contracts  for
Gulfstream  IV-SPs,  and 54 contracts for Gulfstream  Vs.  Including the 10
undelivered  aircraft in the Middle East Shares  contract,  which have been
excluded from the Company's  financial contract backlog,  the Company had a
total of 111 aircraft,  valued at  approximately  $3.4 billion of potential
future revenues, under contract at March 31, 1999. This excludes 18 options
valued at $0.7 billion.

     During the first  quarter of 1998,  the Company  signed a $335 million
contract  for  12  Gulfstream   IV-SPs  to  expand  its  highly  successful
Gulfstream Shares  fractional  ownership program to the Middle East region.
In 1993, the Company  established very stringent  deposit  requirements for
recording  aircraft  into its  backlog.  The  contract  for the Middle East
Shares expansion includes modestly different deposit  requirements early in
the program.  The Company has decided for the initial  phase of the program
to record these orders into  backlog when the aircraft are  delivered.  The
first green aircraft  delivery for this Program  occurred  during the third
quarter of 1998 and the second  delivery  occurred in the first  quarter of
1999.  The  remaining  10  undelivered  aircraft  are not  included  in the
Company's financial contract backlog.

     As of March 31,  1999,  the  Company  had  contracted  to  deliver  to
Executive Jet 44 Gulfstream  IV-SPs and 12 Gulfstream Vs in connection with
the North American Gulfstream Shares program plus options for additional 12
Gulfstream  Vs. Of these,  19  Gulfstream  IV-SPs are in service,  with the
remaining 49 Gulfstream  IV-SPs and  Gulfstream Vs to be delivered  through
2007.

     The Company  includes an order in financial  contract  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.

     The Company  continually  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 delivery  date,  there may be increased
uncertainty  as to changes in business  and economic  conditions  which may
affect customer cancellations.

OUTLOOK

     Based on its strong backlog and continued product demand,  the Company
has increased  production to 65 new aircraft in 1999.  With this  increased
production and continuing margin improvements, the Company expects at least
25% growth in 1999 diluted  earnings  per share to $3.75.  The Company also
expects diluted EPS in 2000 to increase by at least 15% over 1999.

YEAR 2000 READINESS

     As part of the  Company's  initiatives,  begun  in 1996,  to  increase
production  rates and co-produce the Gulfstream IV-SP and Gulfstream V, the
Company has, and continues  to,  upgrade and replace  business  systems and
facility  infrastructure.  These  initiatives  help to reduce the potential
impact of the Year 2000 issue on the Company's operations.

     In addition,  the Company has  implemented a Year 2000 Compliance Plan
designed to ensure that all other hardware, software, systems, and products
with  microprocessors  relevant to the Company's business are not adversely
affected by the Year 2000  issue.  The  Company  has  established  a formal
program office under the  leadership of a senior level  executive to manage
the assessment and  implementation  of the Plan objectives.  The program is
reviewed regularly with executive management.

     Gulfstream has reviewed all current production  components and systems
installed in the  Gulfstream  IV-SP and Gulfstream V aircraft and has found
no issues. Older aircraft which are no longer under warranty have also been
reviewed and some require minor component  modifications.  This information
has been made available to Gulfstream  operators.  Gulfstream has completed
approximately   90%  of  its  Year  2000  program  plan  for  products  and
infrastructure.  Confirmation  of  Year  2000  plans  for  all  significant
suppliers has also been completed. Supplier Year 2000 compliance monitoring
will continue through year-end 1999 and into the Year 2000.

     The  Company  currently  estimates  the total  costs of these  efforts
incurred  during  the years  1997  through  1999 to be  approximately  $3.5
million. In addition,  some non-compliant systems will be eliminated as the
Company  installs  Year 2000  compliant  software  in  connection  with its
ongoing integrated  resource planning project.  The cost of this effort has
been included in the Company's  capital  projections  discussed above under
the caption "Liquidity and Capital Resources".

     The Company does not believe that the implementation of this Year 2000
Compliance  Plan will have a  material  effect  on the  Company's  business
operations, financial condition, liquidity or capital resources. Management
of the Company believes it has an effective program in place to address the
Year  2000  issue in a  timely  manner.  As a  component  of the Year  2000
Compliance  Plan, the Company is developing  contingency  plans to mitigate
the effects of potential problems experienced by it or its key suppliers or
governmental  agencies  in  the  timely  implementation  of its  Year  2000
Compliance Plan.  Nevertheless,  since it is not possible to anticipate all
future outcomes, especially when third parties are involved, there could be
circumstances  in  which  the  Company's   operations  would  be  adversely
affected.

     The  statements  in this  section  constitute  a "Year 2000  Readiness
Disclosure" under the Year 2000 Information and Readiness Disclosure Act to
the extent provided therein.
<PAGE>
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

     Certain  statements  contained in this  "Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations,"  including the
statements  under  the  heading  "Outlook,"  as  well as  other  statements
elsewhere in this Form 10-Q,  contain  forward-looking  information.  These
forward-looking  statements are subject to risks and uncertainties.  Actual
results might differ materially from those projected in the forward-looking
statements.  Additional  information  concerning  factors  that could cause
actual  results to  materially  differ  from  those in the  forward-looking
statements  is contained in Exhibit 99.1 to the  Company's  Securities  and
Exchange Commission filings.

<PAGE>

                         PART II. OTHER INFORMATION


ITEM 1.       LEGAL PROCEEDINGS

              Not Applicable.

ITEM 2.       CHANGES IN SECURITIES

              Not Applicable.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

              Not Applicable.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

              Not Applicable.

ITEM 5.       OTHER INFORMATION

              Certain statements  contained in or incorporated by reference
              in this Form 10-Q contain forward-looking information.  These
              forward-looking   statements   are   subject   to  risks  and
              uncertainties.  Actual results might differ  materially  from
              those projected in the forward-looking statements. Additional
              information   concerning  factors  that  could  cause  actual
              results to  materially  differ  from those  contained  in the
              forward-looking   statements  is  contained  in  Exhibit  99,
              Cautionary  Statement  for  Purposes  of  the  "Safe  Harbor"
              Provisions of the Private Securities Litigation Reform Act of
              1995.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              Exhibit 2.2          Agreement   and  Plan  of  Merger  among
                                   General   Dynamics   Corporation,   Tara
                                   Acquisition  Corporation  and Gulfstream
                                   Aerospace   Corporation  dated  May  16,
                                   1999.

              Exhibit 10.51        Term Loan Agreement dated April 15, 1999
                                   among Gulfstream  Delaware  Corporation,
                                   Certain Lenders, and The Chase Manhattan
                                   Bank, as Administrative Agent.

              Exhibit 10.52        Amendment  No. 6 dated April 15, 1999 to
                                   Credit  Agreement  dated October 6, 1996
                                   among Gulfstream  Delaware  Corporation,
                                   The Chase  Manhattan Bank, and the banks
                                   and other financial institutions parties
                                   thereto.

              Exhibit 27.1         Financial Data Schedule.

              Exhibit 99.2         Press Release dated May 17, 1999.

         (b)  Report on Form 8-K

              None

<PAGE>

                                 SIGNATURE

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


Dated: May 17, 1999


                                          GULFSTREAM AEROSPACE CORPORATION



                                                    /s/ Chris A. Davis
                                    -------------------------------------------
                                                        Chris A. Davis
                                               Executive Vice President &
                                       Chief Financial & Administrative Officer
                                                     and Secretary
                                          (Principal Financial and Accounting
                                                        Officer)

<PAGE>

                                EXHIBIT INDEX


Exhibits

         Exhibit 2.2               Agreement   and  Plan  of  Merger  among
                                   General   Dynamics   Corporation,   Tara
                                   Acquisition  Corporation  and Gulfstream
                                   Aerospace   Corporation  dated  May  16,
                                   1999.

         Exhibit 10.51             Term Loan Agreement dated April 15, 1999
                                   among Gulfstream  Delaware  Corporation,
                                   Certain Lenders, and The Chase Manhattan
                                   Bank, as Administrative Agent.

         Exhibit 10.52             Amendment  No. 6 dated April 15, 1999 to
                                   Credit  Agreement  dated October 6, 1996
                                   among Gulfstream  Delaware  Corporation,
                                   The Chase  Manhattan Bank, and the banks
                                   and other financial institutions parties
                                   thereto.

         Exhibit 27.1              Financial Data Schedule.

         Exhibit 99.2              Press Release dated May 17, 1999.