• Revenues were $462 million, up from $423 million in the third quarter of 1997.
• Earnings before interest and taxes increased to $43 million, up from $16 million; EPS was $0.46 per share, meeting consensus estimates.
• Newport News and Electric Boat were awarded a $4.2 billion contract to build the Virginia class New Attack Submarine.
• Newport News receives planning contract for future carriers and Defense Department endorses large deck and nuclear power for CVX.

NEWPORT NEWS, Va., October 16, 1998 – Newport News Shipbuilding (NYSE: NNS) today reported revenues of $462 million and net earnings of $17 million, or $0.46 per diluted share, for the third quarter of 1998. This compares favorably to the prior year’s third quarter when revenues were $423 million and net earnings were $1 million, or $0.04 per diluted share.

"I am extremely pleased with the company’s third quarter performance. We’ve demonstrated another quarter of strong operating results," said Chairman and Chief Executive Officer William P. Fricks. "These numbers illustrate the stability of our programs – with Carrier Construction, Overhaul and Repair, and Engineering all reporting solid results. And even more importantly, we have dramatically strengthened our long term outlook with the New Attack Submarine contract, the planning contract for CVN 77, and the endorsement of CVX 78 to be large deck and nuclear powered."

Newport News posted strong third quarter revenues of $462 million, which compare favorably to last year’s third quarter when revenues were $423 million. Increased activity on the complex overhaul and refueling of the aircraft carrier USS Nimitz drove the revenue improvement. The first in her class of what will eventually be ten ships, Nimitz arrived on May 30 and will remain at the yard for approximately 35 months.

Third quarter operating earnings of $43 million increased from $16 million in the prior year. Adjusting for one time items associated with the commercial program, last year’s third quarter operating earnings would have been approximately $38 million.

On September 30, Newport News and Electric Boat finalized a $4.2 billion contract with the U.S. Navy to build the New Attack Submarine, now known as the Virginia class. Newport News and Electric Boat will co-produce the first four vessels, with each shipyard constructing certain selected sections of each submarine. The teaming arrangement ensures Newport News’ continued participation in this key defense program, while providing the Navy with technology advancements and significant cost efficiencies.

In October, the Defense Acquisition Board (DAB) endorsed the Navy’s concept for the next generation aircraft carrier as a large deck, nuclear powered platform. Evolving over a series of ships, future carriers will incorporate emerging design and technology advances to improve operational capabilities while lowering life cycle costs. Newport News, with almost 40 years of experience in the design and construction of large deck, nuclear powered aircraft carriers, is in a unique position to produce this strategic weapons platform for the Navy.

Additionally, the DAB endorsement was a critical requirement for construction funding of the Virginia Advanced Shipbuilding Carrier Integration Center. This facility, which will receive approximately $100 million in funding from the Commonwealth of Virginia, will act as an advanced research center to develop new technologies for the future carrier fleet.

During the third quarter, Newport News was awarded a contract by the U.S. Navy for advanced procurement and construction of the next Nimitz class carrier, CVN 77. This contract, valued at approximately $45 million, includes three options that bring the total value of the contract amount to $190 million. CVN 77 will act as the transition ship for the future generation of aircraft carriers. The fiscal year 1999 federal defense budget also includes $110 million in funding for research and development for future carrier design.

At the end of the third quarter, Newport News’ backlog stood at $3 billion. With the award of the New Attack Submarine contract, the company’s total backlog increased to over $5 billion. "The strength of our backlog will provide steady revenues, while our recent operating initiatives, including the application of lessons learned from the commercial business, implementation of new systems, and planning and scheduling improvements, should also contribute to continued margin expansion," said Fricks.

Newport News Shipbuilding designs and constructs nuclear powered aircraft carriers and submarines for the U.S. Navy and provides life-cycle maintenance services for ships in the Navy fleet. The company employs 18,100 people and has annual revenues of approximately $1.8 billion.