And with that, I'd like to turn the call over to our Chairman and Chief Executive Officer, Jay Johnson.Jay L. Johnson Thank you, Amy, and good morning, everyone. Let me start by noting that today mark the 60th anniversary of General Dynamics' listing on the New York Stock Exchange. Generations of employees have helped to make this great corporation successful over the past 6 decades. Our exceptional people continues to drive GD through their innovation, operational excellence and commitment to continuous improvement. I am proud to be their CEO. Before speaking to the quarter, I want to address the current defense budget environment. On the fourth quarter call in January, I mentioned the potential for complications to 2012 budget execution from the combination of upcoming elections, the likelihood of another continuing resolution and the threat of sequestration. These potential complications have indeed revealed themselves to us in the first quarter, particularly in our shorter cycle IS&T business, as looming budget cuts negatively influenced Department of Defense and federal government acquisition activities. While it's still early in the year, we're in no position to know the full effect of these complications on the year. The anxiety over these issues will almost certainly escalate, as we move into the summer months and the election campaigns roll into high gear. Washingtonians are seemingly unified in their belief that sequestration will not happen as currently legislated, although no one can explain how avoiding the severe cut will be achieved. In recent weeks, Pentagon leadership has reiterated that no plans are in place to deal with sequestration, while stating that they expect further guidance from the Office of Management and Budget this summer on how to begin planning. This will certainly spawn increased rhetoric and speculation, as details emerge on how cuts will be administered, making it even more difficult to overcome our customers' reticence to commit resource [ph].
In the midst of this uncertainty or the "fog bank," as I often refer to it, the FY '13 budget has begun the Congressional approval process. While there are some puts and takes across our portfolio, as you would expect, there were no real surprises for General Dynamics in this budget request, and we were generally pleased with the support for our shipbuilding and technical communications program. As expected, the future disposition of Stryker and Abrams programs will be the subject of ongoing discussions with all stakeholders.As we look to the rest of the year and much of our portfolio, contracts are in hand, and we're on our way to achieving our expectations. In other parts of our portfolio, particularly our short cycle IS&T products and services, risks remain. We are doing everything we can to jumpstart the expenditure of previously appropriated funds. And with this as prologue, let's talk about the quarter. Revenues in the first quarter were $7.6 billion, down from the first quarter of last year due to lower defense revenues, particularly in IS&T. Operating earnings were $860 million, leading to company-wide operating margins of 11.3%. Net earnings were $564 million, which resulted in earnings per share of $1.57 on a fully diluted basis. Revenues, earnings and operating margins were negatively impacted by $67 million of non-cash, other period adjustments recorded at Combat Systems' European subsidiary European Land Systems, ELS. In total, the corrections at ELS reduce the company's fully diluted earnings per share by $0.13 in the quarter. These adjustments were not a function of program performance, but rather were related to shortcomings in our accounting department at ELS. Following a thorough analysis, we determined that certain transactions were not properly reflected in prior periods. The corrections have been made and the underlying causes remedied. Free cash flow after capital expenditures, totaled $324 million or 57% of earnings from continuous -- continuing operations, better than last year's first quarter.
In terms of capital deployment, we repurchased 1.4 million of our shares in the first quarter and acquired an FBO at Houston Hobby Airport, the fifth most active U.S. business aviation airport to further expand Aerospace's service network. We also invested $90 million into our businesses to include the continuation of a $500 million, 7-year program to ensure Gulfstream's Savannah campus is sized to accommodate an expanding global customer base. And in March, our board increased the dividend to 8.5%, the 15th increase in as many years.Read the rest of this transcript for free on seekingalpha.com