NEWPORT NEWS SHIPBUILDING REPORTS 1996 RESULTS

• · Annual revenues for 1996, at $1.87 billion, were up 6% compared to 1995
• · Earnings before interest and taxes were $140 million, down from 1995 due to the end of the LA class submarine construction program and losses on commercial tankers and conversion work
• · Annual earnings per share were $1.60, or $1.36 after pro forma interest expense
• · The business base, reflected in backlog of orders, ended the year at $3.5 billion
• · NNS was successfully launched as a new public company effective December 12, 1996

January 31, 1997, NEWPORT NEWS, Va. -- Newport News Shipbuilding (NYSE: NNS) today reported earnings before interest and taxes of $23 million for the fourth quarter of 1996, compared with $35 million in last year's fourth quarter. Revenue for the quarter declined 7% to $433 million from $466 million. For the year, earnings before interest and taxes were $140 million, compared with $160 million in 1995. Revenue increased 6% to $1.87 billion from $1.76 billion last year.

Newport News Shipbuilding was spun off from Tenneco Inc. effective December 12, 1996. Using the 34.3 million shares distributed in conjunction with the spin-off, reported earnings per share were $.09 for the quarter and $1.60 for the year. These figures reflect allocated interest expense from the company's former parent through November 25, 1996, and actual interest expense from November 26 through December 31, 1996. Adjusting the results using pro forma interest expense (assuming Newport News' current debt was outstanding from January 1 to December 31, 1996), earnings per share were $1.36.

"1996 was a year of transition for Newport News," said William P. Fricks, Chairman and Chief Executive Officer. "We continued our transition from a shipyard performing primarily nuclear work to one that is broader-based; we temporarily transitioned out of submarine construction; and we successfully transitioned to an independent, publicly traded company."

Fourth Quarter Results

The decline in fourth quarter earnings was due to the conclusion of the Los Angeles-class submarine construction program in August 1996, partially offset by increased earnings on overhaul and repair work comprised mainly of the overhaul of the aircraft carrier Eisenhower and planning contracts for future overhauls of the carriers Theodore Roosevelt and Nimitz. Earnings for the fourth quarter included $11 million in charges related to increased estimated final costs on product tanker contracts, and $5 million of professional fees and administrative costs associated with the spin-off of NNS from Tenneco. These charges were partially mitigated by increased volume in the overhaul segment.

The decrease in revenue in the fourth quarter was primarily attributable to the conclusion of the Los Angeles-class submarine construction program and to declining conversion work on Sealift vessels, a program which is nearing completion. These variances were partially offset by increased activity on carrier overhaul and repair work.

Annual Results

Earnings before interest and taxes for 1996 of $140 million were $20 million below 1995 due mostly to declines in construction earnings which were not completely offset by significant year-over-year gains in earnings from overhaul and repair. The decline in construction income of $51 million was due to losses in the company's commercial tanker program and to increased costs on Sealift conversion work. Additionally, 1996 earnings were lower due to the conclusion of the Los Angeles-class submarine construction program. Repair and overhaul income increased $43 million, driven by the Eisenhower overhaul contract and the Roosevelt and Nimitz planning contracts. Income from engineering was consistent with the prior year.

The growth in revenue from 1995 to 1996 was due to commercial construction activities and substantially increased overhaul and repair work. These increases were partly offset by the completion of the Los Angeles-class submarine program and lower revenue from Sealift conversion work.

1996 Accomplishments Highlighted by Spin-Off

The company's spin-off from Tenneco was completed successfully on December 12, 1996. "While the strategies we established as part of Tenneco remain substantially intact, being an independent company provides us with additional focus and urgency," said Fricks. "With our strong business base and dedicated and skilled work force, we expect to deliver solid earnings and strong cash flow. Payoffs from our strategic capital investments and process innovation initiatives should also be reflected in our bottom-line performance."

Newport News christened its eighth Nimitz-class nuclear-powered aircraft carrier, Harry S. Truman, in September 1996. Continuing the company's outstanding performance on carrier construction contracts, Truman remains on track for the scheduled delivery in June 1998. Newport News delivered its last two Los Angeles-class submarines during 1996, Greeneville in January and Cheyenne in August. Newport News also delivered the first of two Sealift conversions, Gordon, in the third quarter of 1996. The second ship, Gilliland, is more than 90% complete as it nears its second quarter delivery date.

Additional strategic investments were made in the company's Automated Steel Factory and in its Carrier Refueling Complex in 1996. The extension of Dry Dock #12, the largest dry dock in the western hemisphere, was also completed last year.

Strong Backlog Supports 1997 Outlook

"1996 represented both significant challenges and the opening of new opportunities," said Fricks. "Strength in our core business provides a solid base on which to build in 1997. We are beginning the year with a $3.5 billion backlog, 85% of which is made up of aircraft carrier construction and overhaul. Coupled with our strategic initiatives, and the recent award of the Arsenal Ship design, this provides us with the momentum necessary to support our financial and operating goals for 1997."