NEWPORT NEWS SHIPBUILDING REPORTS FIRST QUARTER RESULTS

• First quarter revenues were $403 million, with earnings before interest and taxes of $35 million
  
• Earnings per share for the quarter were $0.38, exceeding the consensus estimate of $0.36 per share
  
• Operating cash flow for the quarter was $68 million
  
• Core business strategies were advanced by the announcement of the New Attack Submarine teaming agreement

April 18, 1997, Newport News Shipbuilding (NYSE: NNS) today reported net earnings of $13 million, or $0.38 per share, for the first quarter of 1997. This compares favorably to the consensus estimate for the quarter of $0.36 per share. (Comparable 1996 pro forma earnings per share were $0.43.) Earnings before interest and taxes were $35 million, compared with $41 million in last year's first quarter. Revenues for the quarter were $403 million versus $438 million a year ago.

First Quarter Results

First quarter earnings before interest and taxes (EBIT) were $35 million, with Construction contributing almost 70 percent of the earnings. Despite the strength in Construction, total company EBIT declined $6 million when compared to last year. The decline was mostly attributable to lower Overhaul & Repair volume associated with the delivery of Eisenhower in January of this year. EBIT margins were 8.8 percent, up from 7.5 percent reported for the full year of 1996, helping to drive the favorable earnings per share performance.

Revenues for the quarter of $403 million were $35 million less than the level reported for the same period in 1996. Aircraft carrier and commercial ship construction volume grew over last year's level, but overall Construction revenues dropped from $260 million last year to $242 million in the first quarter of 1997 due to the absence of submarine construction activity. This added to the decline experienced in Overhaul & Repair revenues, where the $22 million drop from $130 million to $108 million was primarily caused by the Eisenhower delivery.

Operating cash flow during the first quarter was very strong, totaling $68 million. This reflects the impact of timing of receipts on major programs, as well as the Company's focus on working capital performance.

Core Business Strengthened

The first quarter was highlighted by important developments in Newport News' core business. In the submarine program, NNS and General Dynamics' Electric Boat Corporation agreed to coproduce the U.S. Navy's New Attack Submarine (NSSN). And in the carrier program, Newport News proposed "Smart Buy," a procurement strategy for the next Nimitz-class carrier. Under the Smart Buy program, a portion of CVN-77 funding currently budgeted for 2002 would be incrementally funded in fiscal years 1998 through 2001. This advance funding is expected to reduce the cost of the carrier by an estimated $600 million by ensuring a strong supplier base and preserving essential shipbuilding skills that would otherwise be lost during the construction gap between Ronald Reagan (CVN-76) and CVN-77.

"The strength of our core business was advanced by a number of significant events during the quarter," said William P. Fricks, Chairman and Chief Executive Officer. "In February, our long-term participation in the New Attack Submarine construction program was virtually assured with the signing of a teaming agreement between Newport News and Electric Boat. While the agreement still requires Congressional approval, we believe that coproduction of the NSSN provides important benefits for the Navy, including superior technology and significant cost savings. For Newport News, the agreement provides for earlier participation in the program than we had planned, and confirms our long-term involvement in submarine construction.

"We also believe there are strong prospects in our aircraft carrier construction business," Fricks continued. "We are now pursuing advance funding of the final Nimitz-class carrier, CVN-77, through a program we call Smart Buy. This proposal will substantially reduce construction costs, freeing up funds for other major programs. Like the teaming arrangement for coproduction of the NSSN, the Smart Buy proposal represents a common sense, cost-effective response to tightening defense budgets."

Complementing recent developments in the aircraft carrier and submarine construction businesses, overhaul and repair projects continue to generate positive results. In January, Newport News completed a comprehensive overhaul of the nuclear-powered aircraft carrier Eisenhower after compressing the project at the customer's request from the originally scheduled 24 months to 18 months. "Despite the shortened schedule, our internal work process enhancements, combined with the outstanding efforts of both Newport News employees and the ship's crew, allowed us to redeliver the ship to the Navy ahead of schedule," said Fricks.

The delivery of Eisenhower was followed by the arrival of the carrier Enterprise in February. Over the next four months, Enterprise will receive upgrades to its radar capabilities, deck elevators, and other major systems. As the designated phased maintenance shipyard for Enterprise, Newport News expects to perform overhaul and repair work on a regular basis over the life of the ship. In addition to ongoing repairs to Enterprise, the carrier Roosevelt is scheduled to arrive for a year-long overhaul in June 1997.

Newport News also announced in the first quarter that the first Double Eagle tanker would be sold to Mobil Oil Corporation for use in the domestic trade. This sale places an NNS ship into the domestic Jones Act tanker market, and provides the Company with a visible presence in the fleet of a high quality U.S. customer. The first Double Eagle is scheduled to be delivered to Mobil in September, with the remaining eight tankers under contract scheduled to be constructed and delivered to their respective customers through 1999.

…Performance on Track

"This was our first full quarter as an independent company, and the developments during the quarter should provide a strong foundation for quarter-to-quarter improvement," said Fricks. "With the signing of the submarine teaming agreement, the CVN-77 Smart Buy proposal, good contributions from overhaul and repair projects, and stability in our commercial program, we look forward to solid results for the remainder of 1997."

Newport News Shipbuilding Inc.
Consolidated Statement of Earnings (Unaudited)

Dollars in Millions, Except Per Share Amounts

First Quarter

* Adjusted EPS reflects interest expense as if the Company's new debt structure had been in place on January 1, 1996.

Newport News Shipbuilding Inc.
Revenues and Operating Income by Activity (Unaudited)
Dollars in Millions

First Quarter