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NEWPORT NEWS, Va., July 18, 2000 –
Newport News Shipbuilding (NYSE: NNS) today reported
net earnings of $24 million, or $0.74 per diluted share,
for the second quarter of 2000. EBIT for the quarter
was $54 million, up from an adjusted $47 million in
last year’s second quarter.
"The second quarter results represent
a continuation of the successful track record we’ve
established," commented Chairman and Chief Executive
Officer William P. Fricks. "This marks the tenth
consecutive quarter the Company has reported substantial
EPS growth, building on our commitment to deliver consistent
and improving financial performance."
Second Quarter Results
Newport News posted second quarter revenues
of $532 million versus $444 million in the same period
in 1999, reflecting gains in all business segments.
The Construction segment led the advance as revenues
climbed to $227 million from $164 million. Increased
construction work on the aircraft carrier Ronald
Reagan and the Virginia-class submarines,
coupled with advanced procurement on CVN 77, accounted
for the higher volume. Additionally, Engineering revenues
of $80 million reflected a $19 million gain over last
year as this segment benefited from design work on a
new propulsion plant for the next class of aircraft
carriers.
EBIT in the quarter rose to $54 million
from an adjusted $47 million in the second quarter of
1999. Volume gains across all segments and higher margins
in Fleet Services drove the improvement. The higher
margins in Fleet Services, and continued strength in
the Construction segment, contributed to the Company
achieving operating margins in excess of 10% for the
sixth straight quarter.
Free cash flow for the quarter of $13
million brought year-to-date cash flow to $77 million.
The second quarter free cash flow reflected the payment
of over $60 million in interest and taxes. The Company
also repurchased 850 thousand shares of its stock during
the quarter, bringing year-to-date repurchases to more
than two million shares at a cost of approximately $61
million.
Second Quarter Highlights
During the quarter a Newport News-led
industry team was selected by the DD 21 Gold Team to
provide the preliminary design of an electric drive
propulsion system. The Gold Team will incorporate Newport
News’ Permanent Magnet Motor technology into its initial
system design proposal for the U.S. Navy’s next generation
surface combatant. Selection of the winning design is
anticipated in the second quarter of 2001.
Newport News also redelivered the guided
missile cruiser USS Gettysburg in the second
quarter following a successful ten-month overhaul. The
work performed included upgrades to the Aegis weapons
systems, installation of new generators, and modernization
of berthing spaces. The ship returned to its homeport
in Mayport, Florida following a successful sea trial.
Program Update
Aircraft carrier construction activity
remains focused on Ronald Reagan, which
is nearly two-thirds complete. Reagan will be
christened in the first quarter of 2001 with delivery
scheduled for early 2003. Complementing work on Reagan
is the initiation of construction of CVN 77, the final
Nimitz-class carrier. This work is being accomplished
under an advanced planning contract, with full funding
of the carrier anticipated by the end of the year. Submarine
construction is also continuing to accelerate, as substantial
progress is being achieved on both Virginia and
Texas, the lead ships of the class.
Activity in Fleet Services was robust
as well with the refueling and overhaul of the carrier
Nimitz and the advanced planning and procurement
for the Eisenhower refueling comprising the majority
of the workload. Nimitz will be redelivered to
the Navy in May 2001 with Eisenhower arriving
that same month to begin its three-year refueling and
overhaul. Further supporting the aircraft carrier fleet,
Newport News received a contract for the planning and
execution of the carrier USS John C. Stennis
overhaul scheduled to begin in October 2000 at its home
port of San Diego, California. Additionally, in the
submarine maintenance arena, the Company participated
in the overhaul of USS Newport News and the refueling
and overhaul of USS San Francisco.
"Our key programs are progressing
well," said Fricks. "Construction activity
should continue to be strong with the ramp-up of new
aircraft carrier and submarine programs. And we continue
to view Fleet Services as a growth area. The Company’s
unique capabilities and strategic partnerships position
the company to support the fleet’s growing maintenance
requirements."
* * * * * * * *
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 $2.0 billion.
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This news release contains forward-looking
statements concerning, among other things, the Company’s
prospects, expectations and business objectives and
strategies. These forward-looking statements are identified
by terms and phrases such as "intends," "estimates,"
"expects," "projects," "anticipates,"
"goal," "target," "plan,"
"should," "believes," "assumed,"
"continuing" and "scheduled." Readers
are cautioned that these statements are based on assumptions
that are subject to risks and uncertainties. No assurance
can be given that the Company’s actual results will
not differ materially from the results discussed in
these statements. Factors that might cause such a difference
include, but that are not limited to, those discussed
in the Company’s 1999 Annual Report to Stockholders
and in Item 1 of the Company’s most recently filed Form
10-K (under the caption "Government Contracting,
Claims and Investigations") and in Note 13 ("Commitments
and Contingencies - Government Contracting and – Significant
Estimates") and Note 3("Commitments and Contingencies
– Government Contracting") to the Consolidated
Financial Statements of the Company contained in its
most recently filed Forms 10-K and 10-Q, respectively.
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