• Quarterly revenues were $469 million, an increase of $39 million from the first quarter of 1999.
• EBIT of $47 million drove net earnings of $21 million, representing a 17 percent improvement compared to the same period last year.
• Diluted earnings per share (EPS) of $0.63 for the quarter increased 26 percent over first quarter 1999 EPS of $0.50.
• Free cash flow for the quarter of $64 million used to fund the repurchase of 1.3 million shares and debt repayment of $30 million.

NEWPORT NEWS, Va., April 24, 2000 – Newport News Shipbuilding (NYSE: NNS) today reported net earnings of $21 million, or $0.63 per diluted share, for the first quarter of 2000. Earnings before interest and taxes (EBIT) for the quarter were $47 million, up from EBIT of $44 million in last year’s first quarter.

"This was an impressive quarter for Newport News," commented Chairman and Chief Executive Officer William P. Fricks. "We delivered significant earnings gains and generated exceptional free cash flow. Moreover, our future programs are receiving broad support in the Pentagon and the Congress. The combination of our consistent and strengthening financial performance on existing contracts, and the revenue and earnings potential provided by future programs, puts us on track for an outstanding year."

Newport News posted first quarter revenues of $469 million versus $430 million in the same period in 1999. This revenue growth was attributable to gains in the Construction and Engineering segments. Construction revenues improved $25 million to $206 million as a result of advance planning work on the next aircraft carrier (CVN 77), and increased activity on the Virginia-class submarine program. Engineering revenues of $68 million advanced $27 million largely due to development work on the propulsion plant for the next generation of aircraft carriers. While revenues in the Construction and Engineering segments exhibited growth, the Fleet Services segment revenues of $192 million were slightly lower than last year because of the reallocation of resources to construction programs as the refueling and overhaul of the carrier Nimitz enters its final stages.

EBIT in the quarter rose to $47 million from $44 million in the first quarter of 1999. The volume gains in the Construction and Engineering segments together with the improved Construction margin contributed to the increase in EBIT. The Company’s operating margin of 10.1% represents the fifth consecutive quarter that double digit margins have been achieved.

Free cash flow totaled $64 million for the quarter, reflecting the strong pre-tax earnings as well as the ongoing contributions of the Company’s cash management team. The substantial free cash flow allowed the Company to complete the $100 million June 1999 share repurchase authorization, and initiate repurchases under the new $100 million authorization approved by the Board of Directors in February 2000. The Company repurchased approximately 1.3 million shares during the quarter and reduced its debt outstanding by $30 million.

Newport News concluded a nine-month competition held to select the Warfare Systems Integrator for CVN 77 in January. By expanding the prime contractor role to include management of this process, which was previously performed by the Navy, the Company will add approximately $500 million to the value of the construction contract. Further strengthening the CVN 77 program, the Navy awarded a $100 million contract modification for advance planning and procurement of long lead items for the ship. The CVN 77 contract is expected to be awarded during the fourth quarter of 2000. This carrier, the last of the Nimitz-class, will serve as the bridge to the next generation of aircraft carriers. Newport News is currently designing the propulsion plant for the next class of carriers.

Also during the quarter, the Navy awarded a contract modification valued at approximately $200 million for the advance planning and procurement for the complex refueling and overhaul of the aircraft carrier Dwight D. Eisenhower, increasing the total value of that contract to more than $400 million. Eisenhower is scheduled to arrive in mid 2001 and will be the second Nimitz-class aircraft carrier to be refueled at Newport News. Newport News is currently completing the refueling and overhaul of the carrier Nimitz and will redeliver the ship to the Navy in May 2001.

"These contract awards represent the initial steps in our plan to double our funded backlog," said Fricks. "Specifically, the construction contract for CVN 77, the construction contract for the next Virginia-class submarine, and the refueling and overhaul contract for Eisenhower should all be added to our backlog by the second quarter of 2001. This will push our backlog above $7 billion, and will add to our long term revenue and earnings visibility."

With respect to contract deliveries, Newport News completed the 13-month defueling and decommissioning effort of the submarine Narwhal during the first quarter. Newport News also redelivered the carrier Enterprise following a six-month overhaul. Enterprise’s next scheduled maintenance will take place in 2002.

Newport News Shipbuilding designs and constructs nuclear powered aircraft carriers and submarines for the U.S. Navy and provides lifecycle services for ships in the Navy fleet. The Company employs about 17,200 people, and has revenues of approximately $1.9 billion.