<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               _________________

                                   FORM 10-K

           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                      OR

    [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                  For the transition period from          to

                        Commission file number  1-12385

                               _________________

                        NEWPORT NEWS SHIPBUILDING INC.
            (Exact name of registrant as specified in its charter)

Delaware                                               74-1541566
--------                                               ----------
State or Other Jurisdiction of                         IRS Employer
Incorporation or Organization                          Identification No.

4101 Washington Avenue, Newport News, Virginia         23607
----------------------------------------------         -----
Address of Principal Executive Offices                 Zip Code

       Registrant's Telephone Number, Including Area Code (757) 380-2000
                                                          --------------

                               _________________

          Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of Each Exchange
Title of Each Class                                      on Which Registered
-------------------                                    -----------------------
Common Stock, $0.01 Par Value                          New York Stock Exchange
(and associated Preferred Stock Purchase Rights)       Chicago Stock Exchange

          Securities registered pursuant to Section 12(g) of the Act:
                                     None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X     No ____
                                        -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K.  [X]

The aggregate market value of the voting stock held by nonaffiliates of the
registrant was $ 841 million at February 1, 2000.

32,321,796 shares of the registrant's Common Stock and associated preferred
stock purchase rights were outstanding at February 1, 2000.

                     DOCUMENTS INCORPORATED BY REFERENCE:

Part III incorporates information from certain portions of the registrant's
definitive Proxy Statement in connection with its Annual Meeting of Stockholders
to be held on May 18, 2000.
<PAGE>

                                    PART I

ITEM 1.  BUSINESS

The Company is the largest non-government-owned shipyard in the U.S., as
measured by each of revenues, size of facilities, and number of employees.  Its
primary business is the design, construction, repair, maintenance, overhaul, and
refueling of nuclear-powered aircraft carriers and submarines for the U.S. Navy.
The Company believes it currently is: (i) the only shipyard capable of building
the U.S. Navy's nuclear-powered aircraft carriers, (ii) the only non-government-
owned shipyard capable of refueling and overhauling the U.S. Navy's nuclear-
powered aircraft carriers, and (iii) one of only two shipyards capable of
building the U.S. Navy's nuclear-powered submarines.  Since its inception in
1886, the Company has developed a preeminent reputation through the construction
of naval ships and commercial vessels.

In March 1999, the Company announced the formation of a worldwide business
partnership with Science Applications International Corp. ("SAIC"). The
partnership is a new limited liability company ("LLC") comprised of SAIC's
subsidiary, AMSEC, and the Company's life cycle engineering department. The new
organization is named AMSEC LLC and has created a low cost fleet services
organization capable of providing logistics and life cycle services for aircraft
carriers, submarines, surface combatants, and amphibious and auxiliary ships
from 20 locations, including every major U.S. Navy port. The new organization
employs approximately 1,500 former employees of AMSEC and the Company. The
Company owns 45% and SAIC 55% of the new organization.

U.S. Navy contracts for aircraft carrier and submarine construction and carrier
refuelings and overhauls have generated the majority of the Company's revenues.
Overall, the Company's U.S. Navy business accounted for approximately 98%, 92%,
and 94% of the Company's revenues for 1999, 1998, and 1997, respectively.
Newport News Shipbuilding has built 10 of the 12 active aircraft carriers in the
U.S. fleet, including all nine nuclear-powered aircraft carriers.  For the last
39 years, Newport News Shipbuilding has been the sole designer and builder of
the U.S. Navy's aircraft carriers.

On December 11, 1996, in connection with a corporate reorganization, the
Company's former parent and its subsidiaries undertook and completed various
intercompany transfers and distributions designed to restructure, divide, and
separate their then existing businesses, assets, liabilities, and operations so
that, among other things, the shipbuilding business of the Company's former
parent ("Shipbuilding Business") would be owned by the Company.  The former
parent subsequently distributed (the "spinoff") pro rata to holders of the
parent company's common stock all of the outstanding common stock of the
Company.

Unless the context otherwise requires, as used herein, the term "Company"
refers: (i) for periods prior to the spinoff to Newport News Shipbuilding and
Dry Dock Company ("Newport News"), a Virginia corporation, and certain other
subsidiaries through which the former parent conducted its Shipbuilding Business
during such periods, and (ii) for periods after the spinoff, to Newport News
Shipbuilding Inc. ("NNS"), a Delaware corporation, and its consolidated
subsidiaries, including Newport News.

For a summary of the Company's revenues and operating earnings by classes of
products and service, see Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

CONSTRUCTION

Construction activities generated approximately 38%, 45%, and 55% of revenues
for the years ended December 31, 1999, 1998, and 1997, respectively.  In recent
history, the Company has principally been engaged in designing, constructing,
overhauling, and repairing aircraft carriers and submarines for the U.S. Navy,
and the Company's strategy is to improve this focus on its core business while
growing its U.S. Navy fleet maintenance, repair, and support business.

In June 1998, the Company delivered Harry S. Truman, marking the completion of
the eighth Nimitz-class nuclear-powered aircraft carrier built by the Company.
Currently, the Company is constructing Ronald Reagan, the ninth Nimitz-class
carrier, scheduled for delivery in 2003.  Long-lead funding for an additional
Nimitz-class aircraft carrier,  CVN 77, the last in its class, was originally
scheduled to begin in 2000, with full funding for the construction of the


<PAGE>

carrier slated for 2002.  The Company proposed accelerating funding as a means
of reducing the acquisition cost of the carrier, and Congress responded by
providing approximately $49 million in 1998 and $125 million in 1999 for the
program.  Full funding for CVN 77 is expected to be approved by Congress in
2000.

As part of its continuing efforts to provide value and attract future work, the
Company established its Innovation Center ("Center") in 1996.  The Center
provides a state-of-the-art venue for design and systems solutions to reduce
both acquisition and life-cycle costs of vessels.  The Center seeks to develop
the most innovative and cost-effective designs for future aircraft carriers and
submarines built at the Company.  The Center also seeks to provide an optimum
setting for integrated product and process development teams.

In June 1998, the Commonwealth of Virginia approved $98 million in funding for
the Company to construct and operate the Virginia Advanced Shipbuilding and
Carrier Integration Center ("VASCIC").  VASCIC will serve as the focal point for
the Company to advance the integration of systems, promote the application of
emerging technology into current and future carriers, and position the Company
as the technology and design leader for the next class of nuclear-powered
aircraft carriers, CVNX.  VASCIC will enhance and promote the quality and
competitiveness of Virginia's shipbuilding industry through testing and
integration development projects, research, and training of workers in the
shipbuilding industry.

The Company is currently performing design concept studies for the next
generation of aircraft carriers, CVNX, to follow the Nimitz-class.  The first
aircraft carrier in this new class, CVNX1 is expected to be awarded in 2006.  In
September 1998, the Defense Acquisition Board announced that future aircraft
carriers will be large-deck and nuclear.  Because of its position as the only
shipyard capable of building the U.S. Navy's nuclear-powered aircraft carriers,
the Company believes it is in a strong competitive position to be awarded these
contracts, although no assurances can be given that it will receive any award,
that the project will not be delayed, or that the project will be funded by
Congress.

The Company is also one of two U.S. manufacturers of U.S. Navy nuclear-powered
submarines. The Company has constructed 53 nuclear-powered submarines, including
39 fast attack submarines and 14 of the larger, fleet ballistic missile
submarines.  The Company delivered its final Los Angeles-class submarine in
August 1996.

At the urging of the U.S. Navy, the Company and Electric Boat Corporation
("Electric Boat"), a wholly-owned subsidiary of General Dynamics Corporation,
reached an agreement in February 1997 to cooperatively build the first four new
nuclear attack submarines of the Virginia class ("NSSNs") included in the
President's defense budget.  The teaming agreement calls for each company to
construct certain portions of each submarine, with final assembly, testing,
outfitting, and delivery alternating between the two yards.  Electric Boat is
the prime contractor and lead designer under the agreement.  In September 1997,
Congress approved the Company's teaming arrangement for co-production of the
first four NSSNs as part of the 1998 fiscal year defense authorization and
appropriations processes.  The teaming arrangement ensures the Company's early
and ongoing participation in this important program.  In September 1998, under
the teaming arrangement, the Company aided in the negotiation of a $4.2 billion
contract for co-production of the first four NSSNs.   Design, development, and
planning work took place over the course of 1998, with the Company initiating
significant NSSN construction in early 1999.  The Company estimates that the
NSSN program could total up to 30 submarines, although no assurances can be
given as to the number of NSSNs that ultimately will be procured and built by
the Company, either alone or in cooperation with Electric Boat.

As part of a strategy introduced in the early 1990's to add to its core U.S.
Navy business, the Company pursued orders for products and services from
commercial customers.  From 1994 to 1996, the Company entered into fixed price
contracts to construct a total of nine Double Eagle product tankers.  In March
1998, the Company announced changes in its commercial shipbuilding business that
resulted in only six ships being built.  All six ships have been delivered, and
the Company withdrew from this market in the middle of 1999.

FLEET SERVICES

The Company provides ongoing maintenance for the U.S. Navy's vessels through
overhaul, refueling, and repair work, representing approximately 49%, 39%, and
29% of revenues for the years ended December 31, 1999, 1998, and 1997,
respectively.  The Company possesses unique expertise in servicing nuclear naval
systems, and believes it is the only

<PAGE>

non-government-owned shipyard presently capable of refueling nuclear-powered
aircraft carriers. The Company has had a leading share of the market in aircraft
carrier refueling and overhauls.

In an effort to enhance the Company's operations in this area, the Company
completed its Consolidated Refueling Facility ("CRF") at a cost of approximately
$20 million in early 1997.  The CRF supports the Company's Naval refueling
program by, among other things, consolidating refueling operations from 13
different facilities throughout the Company.  The CRF is a 58,000 square-foot
complex consisting of production, warehousing, and training areas.

The Company also began planning and construction of a $26 million Radiological
Support Facility ("RSF") in late 1997.  Scheduled for completion in 2000, the
RSF will relocate radiological support activities from 23 sites in the shipyard
to a single facility.  The facility will house a liquid waste treatment plant,
various laboratory functions, and capabilities for handling
hazardous/radioactive material.

Aircraft carrier work is generally assigned by the U.S. Navy based on the type
of work, location, and cost.  In May 1998, the Company began refueling work on
the Nimitz, the first refueling of a Nimitz-class aircraft carrier.  Each
Nimitz-class aircraft carrier will be refueled once in its 50-year life.  The
Company estimates that up to ten Nimitz-class aircraft carriers could be
refueled over the next 30 to 40 years, although no assurances can be given as to
the number of Nimitz-class carriers that will be refueled and that the Company
will receive any award.  In July 1998, the Company finished the yearlong
overhaul and repair of the USS Theodore Roosevelt. The Company also completes
Post Shake-Down Availabilities ("PSA") on carriers and submarines, consisting of
repairs and maintenance after original delivery of a vessel to the U.S. Navy.
PSA work on the aircraft carrier Harry S. Truman was completed during 1999.

During 1999, the Company completed the final major phase of the inactivation of
the USS Narwhal, a one-of-a-kind fast attack nuclear submarine.  The Company
also completed a number of short-duration government and commercial ship repair
jobs in 1999.

In December 1997, the Company completed its acquisition of Continental Maritime
Industries, Inc. ("CMI"), a ship repair yard in San Diego, California engaged in
repair programs for the U.S. Navy's West Coast fleet.  The acquisition is a key
component of the Company's long-term strategy to broaden its base of services to
the U.S. Navy.  In addition to providing an immediate presence in San Diego, the
U.S. Navy's primary homeport on the West Coast, CMI offers the Company an
experienced management team that has a successful track record in the West Coast
ship repair and fleet support markets.  In April 1999, the Company completed the
first Planned Incremental Availability ("PIA") for the John C. Stennis at its
homeport in San Diego, California.

ENGINEERING

The Company provides engineering, planning, and design services primarily to the
U.S. Navy, representing approximately 12%, 15%, and 15% of revenues for the
years ended December 31, 1999, 1998, and 1997, respectively.  The Company
maintains a stable level of funded engineering support services for the U.S.
Navy, which includes new aircraft carrier research and development, reactor
plant planning, and aircraft carrier and submarine engineering support.  The
Company is a leader in aircraft carrier design, performing a majority of the
ship integration and related design development work for the Naval Sea Systems
Command. U.S. Navy shipyards, however, have historically received design
contracts for the non-nuclear portions of the aircraft carriers.  The Company
has been able to apply its engineering capabilities in a variety of projects for
the U.S. Navy, including being the lead design yard and planning yard for the
Los Angeles-class submarine and lead design yard for the Seawolf-class
submarine.

COMPETITION

The reduced level of shipbuilding activity by the U.S. Navy during the past
decade has resulted in fewer contracts and workforce reductions in the industry,
but little infrastructure consolidation.  The general result has been fewer
contracts awarded to the same fixed number of large shipyards.  Based on the
President's 2000 budget, in the Company's opinion, the number of programs
currently planned by the U.S. Navy over the next several years will remain
steady or increase slightly.

<PAGE>

The Company believes an existing government-owned U.S. West Coast shipyard could
refuel nuclear-powered carriers if it made substantial investments in its
facilities, personnel, and training.  An existing government-owned U.S. East
Coast shipyard is presently involved in nuclear refueling, overhauling, and de-
activation of Los Angeles-class submarines.  With respect to the market for U.S.
military contracts for other types of vessels, there are principally six major
private U.S. shipyards, including the Company, that compete for contracts to
construct, overhaul, repair or convert other types of vessels.

In addition to competition from other shipyards, the Company competes for
project approval and funding with firms providing other defense products and
services, such as tanks and aircraft, to other branches of the armed forces, and
with other, non-defense demands on the U.S. budget.  The Company also competes
in the engineering, planning, and design market with other companies that
provide engineering support services.

GOVERNMENT CONTRACTING, CLAIMS, AND INVESTIGATIONS

More than 95% of the Company's sales involve contracts entered into with the
U.S. Government.  The Company's principal U.S. Government business is currently
performed under fixed price ("FP"), fixed price plus incentive fee ("FPIF"),
cost plus incentive fee ("CPIF"), and cost plus fixed fee ("CPFF") contracts.
The risk to the Company of not being reimbursed for its costs varies with the
type of contract. Under FP contracts, the contractor retains all cost savings on
completed contracts, but is liable for the full amount of all expenditures in
excess of the contract price. FPIF contracts, on the other hand, provide for
cost sharing between the U.S. Government and the contractor. The contractor's
fee is increased or decreased according to a formula set forth in the contract,
which generally compares the amount of cost incurred to the contract target
cost. The U.S. Government is liable for all allowable costs up to a ceiling
price. Under CPIF contracts, the contractor's profit is determined by a
contractually specified formula, which essentially compares allowable incurred
costs to the contract target cost. Under CPFF contracts, with few exceptions,
the fee is the same without regard to the amount of cost incurred. The Company
currently constructs aircraft carriers pursuant to FPIF contracts and submarines
pursuant to CPIF contracts, but it performs work for the U.S. Government under
all of the types of contracts described above.

Contracting with the U.S. Government may also result in the Company filing
Requests for Equitable Adjustments ("REA") in connection with its contracts.
REA's represent claims against the U.S. Government for changes in the original
contract requirements and resulting delays and disruption in contract
performance.  In December 1999, the Company issued four REA's claiming
entitlement to certain allowable costs as a result of the impact to the
Company's performance due to a labor force strike.  Management does not believe
the final negotiation of the REA's will have a material impact on the financial
position, results of operations, or cash flows of the Company.

The U.S. Government has the right to suspend or debar a contractor from
government contracting for violations of certain statutes or government
procurement regulations.  The U.S. Government may also unilaterally terminate
contracts at its convenience with compensation for work completed.

As a general practice within the defense industry, the Defense Contact Audit
Agency (the "DCAA") and other government agencies continually review the cost
accounting and other practices of government contractors, including the Company,
conduct other investigations, and make specific inquiries.  In the course of
those reviews and investigations, cost accounting and other issues are
identified, discussed and settled, or resolved through legal proceedings.

As with other government contractors, the U.S. Government has from time to time
recommended that certain of the Company's contract prices be reduced, or costs
allocated to its government contracts be disallowed.  Some of these
recommendations involve substantial amounts.  In the past, as a result of such
audits and other investigations and inquiries, the Company has on occasion made
adjustments to its contract prices and the costs allocated to its government
contracts.

The Company is currently involved in several such audits and other investigative
proceedings with the U.S. Government.  Although the eventual outcome of these
audits and investigations cannot be determined at this time, management
believes, based on current information, that the ultimate resolution of these
matters will not have a


<PAGE>

material adverse effect on the financial condition, results of operations, or
cash flows of the Company (See Note 13 - "Commitments and Contingencies" to the
Consolidated Financial Statements of the Company).

REGULATION

The Company is subject to stringent environmental laws and regulations in all
jurisdictions in which it operates. Management of the Company believes that the
Company is in substantial compliance with all applicable environmental laws and
regulations.  Historically, environmental compliance costs incurred by the
Company have not been material. Like all of its U.S. competitors, the Company
will be required to upgrade its air emission control facilities pursuant to
recently drafted regulations under the Clean Air Act Amendments of 1990.  These
regulations call for a phased-in compliance program so that the Company will
continue to incur such costs through 2000.  Environmental compliance costs for
the year ended December 31, 1999 were not material to the Company's financial
position, results of operations, or cash flows.  Although there can be no
assurances, management does not believe that future environmental compliance
costs will have a material adverse effect on the Company's financial position,
results of operations, or cash flows.

The Nuclear Regulatory Commission, the Department of Energy and the Department
of Defense regulate and control various matters relating to nuclear materials
handled by the Company. Subject to certain requirements and limitations, the
Company's government contracts generally provide for indemnity by the U.S.
Government for any loss arising out of or resulting from certain nuclear risks
(See also "Government Contracting, Claims, and Investigations" on pages 4 and
5).

BACKLOG

The Company's funded backlog at December 31, 1999 and 1998 was $3.2 billion and
$3.9 billion, respectively.  Backlog levels can change and U.S. Government
contracts can be unilaterally terminated for the convenience of the U.S.
Government at any time with compensation for work completed.  More than 97% of
the Company's backlog at December 31, 1999 continued to be U.S. Navy-related.
Additions anticipated in 2000 include additional funding for the third and
fourth Virginia-class attack submarine construction contracts, as well as an
expected contract award for the next Nimitz-class aircraft carrier, CVN 77.
There can be no assurance, however, that such awards will materialize or will
not be delayed or modified due to uncertainties inherent in the legislative and
contract negotiation processes.  The portion of 1999's backlog expected to
remain at December 31, 2000 is $1.6 billion.

MATERIALS AND SUPPLIES

All major materials, parts, and components for the Company's products are
currently available in adequate supply from domestic and/or foreign sources.
Through the cost escalation provisions contained in some of its U.S. Government
contracts, the Company is generally protected from increases in its material
costs to the extent that the increases in the Company's costs are in line with
industry indices.  In connection with its government contracts, the Company is
required to procure certain materials and component parts from supply sources
approved by the U.S. Government. The Company has not generally been dependent
upon any single-supply source; however, due largely to the consolidation of the
defense industry, there are currently several components for which there is only
one supplier. The Company believes that these sole source suppliers as well as
its overall supplier base are adequate to meet its foreseeable future needs.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to operating costs and expenses as
incurred. The amounts charged during the years ended December 31, 1999, 1998,
and 1997 were $9 million, $24 million, and $38 million, respectively.  Under
current regulations, research and development costs can be charged to the U.S.
Government as allowable overhead allocated across all of the Company's
contracts. The actual amount of research and development costs allowed

<PAGE>

to pass through U.S. Navy contracts is reviewed annually. Additionally, research
and development costs can also be directly funded by the U.S. Government through
specific contracts. These contracts produce quantifiable deliverables for the
U.S. Navy, for example, certain research and development projects on aircraft
carriers. Such research and development costs incurred under specific customer
contracts during the years ended December 31, 1999, 1998, and 1997 were $33
million, $57 million, and $38 million, respectively.

EMPLOYEES

At the end of 1999, the Company had approximately 17,300 employees, of whom
approximately 51% were covered by collective bargaining agreements with various
unions.  The Company has entered into three collective bargaining agreements
covering nearly all of the Company's approximately 8,850 hourly employees.  A
new agreement with the United Steelworkers of America that covers approximately
8,700 employees was ratified on July 30, 1999.  This agreement ended a strike
that began when the Company's previous labor agreement expired on April 4, 1999.
Management believes that the financial terms of the new contract will not have a
material impact on the financial position or results of operation of the
Company.  The other agreements cover approximately 150 employees and expire by
2001.

CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This Annual Report on Form 10-K contains forward-looking statements concerning,
among other things, the Company's prospects, anticipated developments and
business strategies. These forward-looking statements are identified by terms
such as "intends," "estimates," "expects," "projects," "anticipates," "goal,"
"plan," "should," "believes," "assumed" and "scheduled." The Company's actual
results may differ materially from the results discussed in these forward-
looking statements. Factors that might cause such a difference include (i) the
factors discussed above in this Item 1, Item 2, Item 3 and in Notes 2, 10, and
13 to the Company's Consolidated Financial Statements, (ii) the factors
addressed in Management's Discussion and Analysis of Financial Condition and
Results of Operations, and (iii) the following factors: (a) general U.S. and
international political, economic and competitive conditions; (b) initiatives to
reduce the federal budget, including further reductions in defense spending, or
the failure of anticipated increases in defense spending to materialize in whole
or in part; (c) reductions in the number or size of U.S. Navy contracts awarded
to the Company; and (d) unanticipated events affecting delivery and production
schedules or design and manufacturing processes, which could impair the
Company's efforts to deliver its products on time or to reduce production costs
and cycle time or realize in a timely manner some or all of the benefits, if
any, of such reductions.

ITEM 2.  PROPERTIES

The Company's principal facilities are located in Newport News, Virginia on
approximately 550 acres owned by the Company at the mouth of the James River.
Its facilities include seven graving docks, a floating dry dock, two outfitting
berths, five outfitting piers, a module outfitting facility, and various other
shops.  Dry Dock 12 is the largest in the Western Hemisphere, and has been
extended to 662 meters.  Dry Dock 12 is serviced by a 900 metric ton capacity
gantry crane that spans the dry dock and work platen.  The Company believes that
substantially all of its productive assets are, in general, well maintained, in
good operating condition, considered adequate for present needs, and, as
supplemented by planned construction, expected to remain adequate for the near
future.

ITEM 3.  LEGAL PROCEEDINGS

The information set forth in Item 1 under the caption "Government Contracting,
Claims and Investigations" appearing on pages 4 and 5, and in Note 13 -
"Commitments and Contingencies - Government Contracting and - Significant
Estimates" to the Consolidated Financial Statements of the Company appearing on
pages 39 through 40, of this Annual Report on Form 10-K is incorporated herein
by reference in response to this item.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


<PAGE>

ITEM 4.1  EXECUTIVE OFFICERS OF THE REGISTRANT

The information as to executive officers of the Company, set forth in Item 10,
appearing on page 45 of this Annual Report on Form 10-K, is hereby incorporated
in this Item 4.1 by reference.

                                    PART II

ITEM 5.   MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The common stock, par value $.01 per share (the "Common Stock"), of the Company
is listed on the New York and Chicago Stock Exchanges.  Options in the Company's
stock are traded on the American Stock Exchange.

The following table reflects the range of high and low selling prices of the
Company's common stock by accounting quarter for 1999 and 1998 based on selling
prices as reported by the New York Stock Exchange.

                                                              1999
                                                    ----------------------
                                                       High         Low
                                                    ----------  ----------
     First Quarter............................      $ 34        $ 27
     Second Quarter...........................        34  1/4     25 11/16
     Third Quarter............................        32 15/16    29  7/16
     Fourth Quarter...........................        33          24  3/4

                                                              1998
                                                    ----------------------
                                                       High         Low
                                                    ----------  ----------
     First Quarter............................      $ 28 3/4     $ 22 1/2
     Second Quarter...........................        28 3/4       25 1/4
     Third Quarter............................        27 7/8       23 1/4
     Fourth Quarter...........................        33 7/16      25 3/8

Dividends of $5.6 million were paid on the common stock during each of 1999 and
1998, respectively.  As of December 31, 1999, the Company had 32,582,596 shares
of common stock outstanding.  As of February 1, 2000, there were approximately
35,000 holders of record of common stock. The Company's long-term debt
obligations contain certain customary restrictive covenants, including a
limitation on the payment of dividends (See Note 7 - "Long-Term Debt and
Financing Arrangements" to the Consolidated Financial Statements of the
Company).

ITEM 6.   SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                 ----------------------------------------------
                                                 1999(a)    1998(a)    1997(a)    1996     1995
                                                 -------    -------    -------    ----     ----
<S>                                              <C>        <C>        <C>       <C>      <C>
Millions, except per share data
STATEMENTS OF EARNINGS DATA:
Revenues......................................    $1,863     $1,862    $1,707    $1,870   $1,756
                                                  ======     ======    ======    ======   ======
Net earnings (loss)...........................    $   97     $   66    $  (48)   $   55   $   73
                                                  ======     ======    ======    ======   ======
Net earnings  (loss) per common share (b)
  Basic.......................................    $ 2.83     $ 1.91    $(1.39)   $ 1.60      N/A
                                                  ======     ======    ======    ======   ======
  Diluted.....................................    $ 2.72     $ 1.85    $(1.39)   $ 1.60      N/A
                                                  ======     ======    ======    ======   ======
</TABLE>

<PAGE>

<TABLE>
<S>                                             <C>        <C>        <C>        <C>      <C>
BALANCE SHEET DATA:
Total assets..................................  $1,512     $1,600     $1,515     $1,535   $1,427
                                                ======     ======     ======     ======   ======
Long-term obligations (c).....................  $  525     $  591     $  548     $  596   $  292
                                                ======     ======     ======     ======   ======
Cash dividends declared per common share (d)..  $  .16     $  .16     $  .16        N/A      N/A
                                                ======     ======     ======     ======   ======
</TABLE>

(a)  For a discussion of significant items affecting comparability of the
     financial information as of and for the years ended December 31, 1999,
     1998, and 1997, see Item 7 - "Management's Discussion and Analysis of
     Financial Condition and Results of Operations."

(b)  Basic net earnings (loss) per common share is based on net earnings (loss)
     divided by the weighted average number of common shares outstanding for the
     years ended December 31, 1999, 1998, 1997, and the period from December 12,
     1996 through December 31, 1996. Since the Company was a wholly-owned
     subsidiary prior to December 12, 1996, there are no comparable results for
     prior periods (See Note 1 - "Basis of Presentation and Description of
     Business" to the Consolidated Financial Statements of the Company).

(c)  Amounts prior to 1996 represent debt allocated to the Company from its
     former parent (See Note 1 - "Basis of Presentation and Description of
     Business" to the Consolidated Financial Statements of the Company).
     Historical amounts for 1999, 1998, 1997 and 1996 represent obligations of
     the Company as a separate public entity.

(d)  Cash dividends declared per common share were four cents per share for each
     quarter in 1999, 1998 and 1997.  Since the Company was a wholly-owned
     subsidiary prior to December 12, 1996, there are no comparable results for
     prior periods (See Note 1 - "Basis of Presentation and Description of
     Business" to the Consolidated Financial Statements of the Company).

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following review of the results of operations and financial condition of the
Company should be read in conjunction with the Consolidated Financial Statements
and related notes contained herein.  In order to more effectively match
revenues, costs, and profits with operating segments, certain amounts for 1998
and 1997 have been reclassified to conform with the 1999 presentation.

The U.S. Navy accounted for approximately 98% of the Company's revenues in 1999,
92% in 1998, and 94% in 1997.  One-third of the Company's principal U.S. Navy
business is currently being performed under firm fixed price or fixed price
incentive contracts, which wholly or partially cause the risk of construction
costs that exceed the contract target cost to be borne by the Company.  The
accompanying table summarizes the percentage of revenues by contract type.

<TABLE>
<CAPTION>
                                                 For the Year Ended December 31,
---------------------------------------------------------------------------------
Contract Type                                       1999       1998      1997
---------------------------------------------------------------------------------
<S>                                                 <C>        <C>       <C>
Firm Fixed Price/Fixed Price Incentive........        33%        50%       61%
Cost Based....................................        67         50        39
                                                    ----       ----      ----

Total.........................................       100%       100%      100%
                                                    ====       ====      ====
</TABLE>

The Company reports revenues and profits on its long-term contracts using the
percentage-of-completion method of accounting, determined on the basis of
incurred costs to estimated final total costs. Anticipated losses on contracts
are reported when first identified by the Company. The performance of contracts
usually extends over several years, requiring periodic reviews and revisions of
estimated final contract prices and costs. The effect of revisions to estimates
is included in earnings in the period the revisions are made.





<PAGE>

1999 COMPARED TO 1998

RESULTS OF OPERATIONS

                                        For the Year Ended December 31,
-------------------------------------------------------------------------
Revenues                                      1999           1998
-------------------------------------------------------------------------
Millions
Construction..........................       $  710         $  839
Fleet Services........................          913            724
Engineering...........................          228            286
Related Businesses & Other............           12             13
                                             ------         ------

Total.................................       $1,863         $1,862
                                             ======         ======

The Company's 1999 revenues of $1.86 billion are slightly ahead of 1998. The
1999 revenues, as detailed in the following discussion of operations, are driven
by higher volume in Fleet Services, offset by lower volume in Construction and
Engineering.

Construction - The $129 million decrease in revenues is primarily due to lower
carrier construction and commercial shipbuilding activity.  The lower carrier
construction activity is due to the delivery of the aircraft carrier Truman in
June 1998, as well as lower volume on the aircraft carrier Reagan.  The lower
commercial shipbuilding revenue reflects the delivery of the sixth and final
commercial product tanker in June 1999.  These decreases are partially offset by
increased construction activity on the Virginia class of nuclear attack
submarines, as well as planning activity on CVN 77, the transition ship to the
next class of aircraft carriers.

Fleet Services - The $189 million increase in revenues is due to higher levels
of refueling and overhaul activity on the aircraft carrier Nimitz.  Other
improvements were generated by post-delivery work on the aircraft carrier Truman
and limited overhaul work on the aircraft carrier Enterprise.  These increases
are partially offset by the delivery of the aircraft carrier Roosevelt in July
1998 after successful completion of an extended dry-docking selected restricted
availability ("EDSRA").

Engineering - Revenues decreased $58 million in 1999.  The majority of the
decrease is attributable to reduced activity associated with submarine
engineering programs.

Related Businesses & Other - Revenues from Related Businesses & Other was
consistent with 1998 levels.

                                        For the Year Ended December 31,
-------------------------------------------------------------------------
Operating Earnings                            1999           1998
-------------------------------------------------------------------------
Millions
Construction..........................       $  102         $  87
Fleet Services........................           85            70
Engineering...........................           15            19
Related Businesses & Other............           16            (1)
                                             ------         -----
Total.................................       $  218         $ 175
                                             ======         =====

Operating earnings of $218 million in 1999 substantially exceeded reported
performance in 1998.  The 1999 operating earnings included non-recurring gains
of $25 million consisting of a break-up fee and option proceeds associated with
the termination of a planned merger with Avondale Industries, Inc. and the
settlement of insurance claims on construction contracts.  Excluding these one-
time items, operating earnings are $193 million reflecting a 10% increase over
1998 operating earnings of $175 million.

Construction - The $15 million increase in operating earnings is primarily
attributable to $10 million in non-recurring gains related to insurance claim
settlements on construction contracts, as well as lower period costs associated
with the completion of the Double Eagle product tanker construction program.
These increases are partially offset by lower construction activity on the
aircraft carriers Truman and Reagan.

Fleet Services - The $15 million increase in operating earnings is primarily due
to higher levels of refueling and overhaul activity on the aircraft carrier
Nimitz.  Other improvements were generated by PSA work on the aircraft carrier


<PAGE>

Truman and planning work on the aircraft carrier Eisenhower. These improvements
are partially offset by the re-delivery of the aircraft carrier Roosevelt in
July 1998.

Engineering - The $4 million decrease in operating earnings for Engineering work
primarily reflects reduced activity associated with submarine engineering
programs.

Related Businesses & Other - The majority of the $17 million increase is a
result of $15 million of non-recurring gains related to a break-up fee and
option proceeds associated with the termination of a planned merger with
Avondale Industries, Inc.

LIQUIDITY AND CAPITAL RESOURCES

                                               For the Year Ended December 31,
--------------------------------------------------------------------------------
Cash Flows                                           1999          1998
--------------------------------------------------------------------------------
Millions
Net cash provided by operating activities....       $ 174         $   3
Capital expenditures.........................         (29)          (26)
Other investing cash flows...................         (15)          (10)
                                                    -----         -----

Subtotal.....................................         130           (33)
Financing activities.........................        (131)           33
                                                    -----         -----

Net increase in cash and cash equivalents....       $  (1)        $   -
                                                    =====         =====

Net Cash Provided by Operating Activities - The $171 million increase in the
1999 comparative cash flows from operating activities is primarily due to a
reduction in working capital, as well as improved earnings as discussed above in
"1999 compared to 1998 - Results of Operations, Operating Earnings."  The
reduction in working capital is due to normal timing fluctuations with respect
to billings, accounts receivable collections, the recognition of contract costs,
and the payment of trade accounts payable.  Additionally, 1999 reflects lower
tax payments as compared to 1998 due to the recognition in 1998 of income
previously deferred for tax purposes on the contract for the aircraft carriers
Stennis and Truman.

Capital Expenditures - Capital expenditure increases in 1999 are attributable to
the continuation of strategic capital improvement programs, such as the
construction of a dedicated refueling complex to support carrier and submarine
refueling and overhaul activities.

Other Investing Cash Flows - Other investing cash flow activities in 1999 relate
to a $13 million investment in AMSEC LLC.  The Company owns 45% of this new low-
cost fleet services organization.  In addition, the Company also made $2 million
of net investments related to its equity ownership interest in five vessel-
owning limited liability companies which now own and operate five commercial
product tankers delivered by the Company.  The Company currently owns
approximately 24% of these limited liability companies.  The 1998 investing
activities primarily relate to investments in the five vessel-owning limited
liability companies.

Financing Activities - In 1999, the Company received $23 million from issuances
of stock.  These funds, as well as those generated from operations, enabled the
Company to pay off long-term debt, reduce revolver borrowings, purchase company
stock on the open market, and pay an annual dividend of sixteen cents per share.
In 1998, the Company received $79 million of net proceeds from borrowing
activities and $9 million from issuances of stock.  These proceeds were utilized
to purchase company stock, pay off long-term debt, and pay dividends.

Capital Requirements and Resources - The Company requires that adequate working
capital be available at all times.  While construction and conversion contracts
provide for progress payments, they generally require extensive investment in
contracts in process because of contract progress payment retentions and change
orders.  Retentions, generally due upon completion or acceptance of the
contracted work, amounted to $11 million as of December 31, 1999.  Change
orders, which make up an appreciable portion of the Company's work, sometimes
require extended periods of negotiation during which time the expended funds are
not available for other uses.  In addition, the Company estimates that
expenditures aggregating approximately $21 million will be required after
December 31, 1999 to

<PAGE>

complete planned projects for which substantial commitments have been made. It
is anticipated that the Company will utilize cash generated from operations or
borrowings under existing credit facilities to meet these commitments.

On November 4, 1996, the Company entered into a $415 million senior credit
facility ("Credit Agreement") which includes a $215 million six-year revolving
credit facility, of which $125 million may be used for advances and letters of
credit and $90 million may be used for standby letters of credit.  This Credit
Agreement contains customary financial and restrictive covenants which limit
borrowing capacity under the credit facility.  As of December 31, 1999, the
Company had used $14 million of the credit facility for standby letters of
credit and utilized $32 million of the $125 million for advances (See Note 7 -
"Long-Term Debt and Financing Arrangements" to the Consolidated Financial
Statements of the Company).

On June 9, 1998, the Company entered into a $75 million 364-Day Revolving Credit
Facility. This facility expired on June 8, 1999. (See Note 7 - "Long-Term Debt
and Financing Arrangements" to the Consolidated Financial Statements of the
Company).

In June 1998, the Commonwealth of Virginia ("the State") approved $98 million in
funding, comprised of $58 million for the Company to construct and $40 million
for the Company to operate the Virginia Advanced Shipbuilding and Carrier
Integration Center ("VASCIC"). The cost to build VASCIC approximates $58
million, which equals the planned construction funding amount from the State.
The Company has no legal obligation to complete the building should the State
not provide full construction funding as contemplated under passed legislation.
The State has funded $21 million to date on this project, which is expected to
be completed in the third quarter of 2001.

Off-Balance Sheet Financing Arrangements - The Company has certain off-balance
sheet financing arrangements in the form of long-term operating leases and
service agreements (See Note 13 - "Commitments and Contingencies" to the
Consolidated Financial Statements of the Company).

INTEREST AND INCOME TAXES

Interest expense is principally generated from the Company's senior notes and
term loan (See Note 7 - "Long-Term Debt and Financing Arrangements" to the
Consolidated Financial Statements of the Company). Expense for 1999 is lower
than the previous year due to lower revolver borrowings.

The effective tax rates for 1999 and 1998 are approximately 41% and 42%,
respectively. The difference between the Company's effective tax rate in 1999 as
compared to the U.S. federal statutory rate of 35% is principally due to state
income taxes and miscellaneous permanent differences for tax.

OTHER MATTERS

Year 2000 Planning and Preparation

Newport News Shipbuilding Inc. has not experienced any production delays as a
result of Y2K compliance initiatives. Expenditures, including consulting fees
and expenses, have so far totaled approximately $4 million since inception of
the Company's Year 2000 effort in 1994. The areas addressed in the Company's
Year 2000 Plan have since been revisited and verified, including supplier and
vendor compliance. No unbudgeted expenditures are expected to occur in the
future.

1998 COMPARED TO 1997

RESULTS OF OPERATIONS

                                           For the Year Ended December 31,
----------------------------------------------------------------------------
Revenues                                        1998            1997
----------------------------------------------------------------------------
Millions
Construction..........................         $  839          $  940
Fleet Services........................            724             501

<PAGE>

Engineering...........................            286             250
Related Businesses & Other............             13              16
                                               ------          ------

Total.................................         $1,862          $1,707
                                               ======          ======

The Company's revenues increased 9.1% during 1998, improving to $1.86 billion
from $1.71 billion. The higher revenue level, as detailed in the following
discussion of operations, was driven by Fleet Services and Engineering.

Construction - The $101 million decrease in revenues is primarily attributable
to lower carrier construction activity due to the delivery of the aircraft
carrier Truman in June 1998. Revenues are also lower since the second of two
Sealift conversion vessels was delivered in May 1997. These decreases are
partially offset by increased construction activity on the aircraft carrier
Reagan and the Virginia class of nuclear attack submarines.

Fleet Services - The $223 million increase in revenues is due to higher levels
of refueling and overhaul activity on the aircraft carrier Nimitz, which arrived
at the shipyard in May 1998. Other improvements are generated by increased
commercial and government ship repair activity, incremental planning work on the
submarine Narwhal inactivation, and contributions from the Company's wholly-
owned subsidiary, Continental Maritime Industries, Inc. ("CMI"), which was
acquired in December 1997. These increases are partially offset as a result of
the delivery of the aircraft carrier Roosevelt in July 1998 after successful
completion of the extended dry-docking selected restricted availability
("EDSRA").

Engineering - Revenues improved $36 million in 1998, increasing to $286 million
from $250 million in 1997. The majority of the increase is attributable to
higher levels of activity on aircraft carrier design, the Virginia class of
attack submarine, nuclear engineering, and submarine research and development.
Engineering work on Seawolf and Los Angeles class submarines decreased during
the year due to the maturity of these programs.

Related Businesses & Other - Revenues from Related Businesses & Other decreased
$3 million in 1998. The lower  level of activity is due to miscellaneous
services for such items as valve and pump repair and consulting and technical
services.

                                             For the Year Ended December 31,
-----------------------------------------------------------------------------
Operating Earnings                                1998           1997
-----------------------------------------------------------------------------
Millions
Construction..............................       $  87          $ (94)
Fleet Services............................          70             55
Engineering...............................          19             20
Related Businesses & Other................          (1)             -
                                                 -----          -----

Total.....................................       $ 175          $ (19)
                                                 =====          =====

Operating earnings of $175 million in 1998 substantially exceeded reported
performance in 1997, when $207 million of net additional charges against
operating earnings on the Double Eagle product tanker construction program
resulted in a reported operating loss of $19 million for the total Company. In
addition to the year-over-year gains associated with stability in the commercial
tanker program, increases were also generated through higher levels of Fleet
Services and changes in the estimated future recoverability of postretirement
and postemployment benefits costs under the Company's backlog of government
contracts. Partially offsetting these increases is the decline in income from
the June 1998 delivery of the aircraft carrier Truman and provisions for
government contract and other matters.

Construction - The $181 million increase in operating earnings is primarily
attributable to the charges recorded in 1997 on the Double Eagle product tanker
construction program. This increase is partially offset by lower construction
activity on the aircraft carrier Truman, which was delivered in June 1998.
Contributions from construction activity on the aircraft carrier Reagan are
comparable for the two years.

Fleet Services - The $15 million increase in operating earnings is due to higher
levels of refueling and overhaul activity on the aircraft carrier Nimitz,
increased commercial and government ship repair activity, incremental planning
work on

<PAGE>

the submarine Narwhal inactivation, and contributions from CMI. These increases
are partially offset as a result of the delivery of the aircraft carrier
Roosevelt in July 1998 after successful completion of EDSRA work.

Engineering - Operating earnings for Engineering work are consistent between the
two years.

Related Businesses & Other - Amounts are not material to either period.

LIQUIDITY AND CAPITAL RESOURCES

                                               For the Year Ended December 31,
-------------------------------------------------------------------------------
Cash Flows                                           1998           1997
-------------------------------------------------------------------------------
Millions
Net cash provided by operating activities...        $   3          $ 105
Capital expenditures........................          (26)           (31)
Other investing cash flows..................          (10)            (3)
                                                    -----          -----

Subtotal....................................          (33)            71
Financing activities........................           33            (69)
                                                    -----          -----

Net increase in cash and cash equivalents...        $   -          $   2
                                                    =====          =====

Net Cash Provided by Operating Activities - The $102 million decrease in the
1998 comparative cash flows from operating activities is due to an increased
investment in working capital, partially offset by higher operating earnings
discussed above in "1998 Compared to 1997 - Results of Operations, Operating
Earnings."  The increase in working capital is caused by normal timing
fluctuations with respect to billings, accounts receivable collections, the
recognition of contract costs, and the payment of trade accounts payable.
Additionally, 1998 reflects higher tax payments due to the recognition of income
previously deferred for tax purposes on the contract for the aircraft carriers
Stennis and Truman.

Capital Expenditures - The decrease in capital expenditures in 1998 as compared
to 1997 is attributable to higher expenditures in 1997 related to the completion
of major capital improvement programs, such as the development of a state-of-
the-art automated steel cutting and fabrication facility.

Other Investing Cash Flows - The 1998 and 1997 investing activities primarily
relate to investments in five vessel-owning limited liability companies in
partnership with a U.S. shipping firm, which will own and operate five
commercial product tankers built by the Company.  The Company delivered three of
the ships during the fourth quarter of 1998. The remaining two ships were
delivered in 1999.

Financing Activities - In 1998, the Company received $79 million of net proceeds
from borrowing activities and $9 million from issuance of stock.  These proceeds
were utilized to purchase company stock, pay off long-term debt, and pay
dividends.  In 1997, the Company received $21 million from the issuance of
stock.  These funds, as well as those generated from operations, enabled the
Company to pay off long-term debt, purchase Company stock on the open market for
employee benefit plans and treasury stock, and pay an annual dividend of sixteen
cents per share.

INTEREST AND INCOME TAXES

Interest expense is principally generated from the Company's senior notes and
term loan (See Note 7 - "Long-Term Debt and Financing Arrangements" to the
Consolidated Financial Statements of the Company). Expense for 1998 is higher
than the previous year due to a settlement with the U.S. Government related to
the former parent's retirement

<PAGE>

plan (See Note 10 - "Employee Benefit Plans - Pension Benefits" to the
Consolidated Financial Statements of the Company).

The effective tax rates for 1998 and 1997 are approximately 42% and 35%,
respectively.  The difference between the Company's effective tax rate in 1998
as compared to the U.S. federal statutory rate of 35% is principally due to
state income taxes and miscellaneous permanent differences for tax.

CHANGES IN ACCOUNTING PRINCIPLES

During 1998, the Company adopted Financial Accounting Standards Board statement
("FAS") No. 130, "Reporting Comprehensive Income". FAS No. 130 establishes
standards for reporting and the display of comprehensive income and its
components in a full set of general purpose financial statements. The Company
did not have any material comprehensive income required to be reported in 1998.

During 1998, the Company adopted  FAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information".  FAS No. 131 establishes standards for
reporting information about operating segments in annual consolidated financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders (See Note 15 - "Reportable Segments" to
the Consolidated Financial Statements of the Company).

In December 1997, the AICPA issued Statement of Position ("SOP") 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments".  The SOP provides, among other things, that an entity recognize a
liability for the present value of estimated future guaranty-fund and other
insurance-related assessments.  As the Company has ceded certain workers'
compensation claims to a second-injury fund administered by the U.S. Department
of Labor and is subject to an annual assessment, the Company elected early
adoption of SOP 97-3 in 1998.  The adoption of SOP 97-3 did not have a material
impact on the Company's financial position, results of operations, or cash
flows.

During the fourth quarter of 1998, the Company adopted FAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits".  FAS No. 132
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures required in the past (See
Note 10 - "Employee Benefit Plans" to the Consolidated Financial Statements of
the Company).

RECENTLY ISSUED STANDARDS

In June 1998, the Financial Accounting Standards Board issued FAS No. 133, (as
amended by FAS No. 137) "Accounting for Derivative Instruments and Hedging
Activities".  This statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value.  FAS No. 133 requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. FAS No. 133 is effective for
fiscal years beginning after June 20, 2000.  The Company engages in minimal
derivative activity and therefore the adoption of this new standard is not
expected to have a material impact on the Company's financial position, results
of operations, or cash flows.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's short-term investment portfolio and the debt
outstanding under the Credit Agreement (See Note 7 - "Long-Term Debt and
Financing Arrangements" and Note 8 - "Financial Instruments" to the Consolidated
Financial Statements of the Company).


<PAGE>

The maturity, credit quality, and security class of the Company's short-term
investment portfolio are limited by both the Credit Agreement and the Company's
investment policy.  The Company limits default risk by investing in only the
safest and highest credit quality securities limited to the following: direct
obligations of the United States of America including any governmental entity or
agency, commercial paper with a rating of A-1/P-1 or better, certificates of
deposit issued by major financial institutions, repurchase agreements
collateralized 102% by the aforementioned securities, and money market funds
rated AAAm by Standard & Poors.  As stated in its policy, the Company is averse
to principal loss and ensures the safety and preservation of its invested funds
by limiting default risk and market risk.  Additionally, the Company's
investment policy guidelines limit the credit exposure to any one issue, issuer,
and type of instrument.  The Company's Credit Agreement limits the maturity of
investments held in the Company's portfolio to one year or less.

The Company's policy is to manage interest rate risk associated with its
outstanding debt obligations through the use of a combination of fixed and
floating rate debt.  With the exception of the Company's Term Loans and
Revolving Credit Facilities (See Note 7 - "Long-Term Debt and Financing
Arrangements" to the Consolidated Financial Statements of the Company), all
other outstanding debt obligations are fixed.  As of December 31, 1999,
approximately 73% of the Company's outstanding debt was fixed-rate debt.
Interest rate swaps may be used to adjust interest exposure when appropriate,
based upon market conditions.  Additionally, the Company may use interest rate
CAPs to limit the interest rate risk on its floating-rate debt.  All of the
Company's outstanding debt obligations are denominated in U.S. Dollars.  As of
December 31, 1999, the Company had no interest-rate derivative contracts
outstanding.

Foreign Currency Risk

Although the majority of the Company's transactions are in U.S. Dollars, the
Company periodically enters into foreign currency forward exchange contracts to
hedge certain specific transactions associated with the purchase of raw
materials and machinery denominated in a foreign currency.  The purpose of
entering into these hedge transactions is to minimize the impact of foreign
currency fluctuations on the results of operations.  Such contracts generally
mature in one year or less and the cost of replacing these contracts in the
event of nonperformance by counter parties is not significant.  Unrealized gains
and losses on these contracts are deferred and recognized in the results of
operations in the period in which the hedged transaction is consummated.  The
Company does not enter into foreign currency contracts for trading purposes.  As
of December 31, 1999, the Company had no foreign currency contracts outstanding.

<PAGE>

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                                                                                          <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants...................................................    18
Consolidated Statements of Earnings for each of the three years in the
     period ended December 31, 1999........................................................    19
Consolidated Balance Sheets as of December 31, 1999 and 1998...............................    20
Consolidated Statements of Cash Flows for each of the three years in the
     period ended December 31, 1999........................................................    21
Statements of Changes in Consolidated Stockholders' Equity for each of the three years in
     the period ended December 31, 1999....................................................    22
Notes to Consolidated Financial Statements.................................................    23
</TABLE>

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Newport News Shipbuilding Inc.:

We have audited the accompanying consolidated balance sheets of Newport News
Shipbuilding Inc. (a Delaware corporation) as of December 31, 1999 and 1998, and
the related consolidated statements of earnings, cash flows, and changes in
stockholders' equity for the three years ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Newport News
Shipbuilding Inc. as of December 31, 1999 and 1998, and the results of its
operations and cash flows for the three years ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.


                                              ARTHUR ANDERSEN LLP

Vienna, Virginia

February 1, 2000

<PAGE>

                         NEWPORT NEWS SHIPBUILDING INC.

                      CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                           ----------------------------------------------
                                                              1999              1998             1997
                                                           -----------       -----------      -----------
<S>                                                        <C>               <C>              <C>
Millions (Except Shares and Per Share Amounts)
Revenues.................................................  $     1,863           $ 1,862          $ 1,707
Operating Costs and Expenses.............................       (1,661)           (1,687)          (1,729)
Other Income (Expense), net..............................           16                 -                3
                                                           -----------       -----------      -----------

Operating Earnings (Loss)................................          218               175              (19)
  Interest Expense, net of interest capitalized..........          (54)              (61)             (55)
                                                           -----------       -----------      -----------

Earnings (Loss) Before Income Taxes......................          164               114              (74)
(Provision) Benefit  for Income Taxes....................          (67)              (48)              26
                                                           -----------       -----------      -----------

Net Earnings (Loss)......................................  $        97       $        66      $       (48)
                                                           ===========       ===========      ===========

Weighted Average Number of Common Shares Outstanding
 Basic...................................................   34,115,713        34,677,706       34,741,818
                                                           ===========       ===========      ===========
 Diluted.................................................   35,451,766        35,794,090       34,741,818
                                                           ===========       ===========      ===========

Net Earnings (Loss) Per Common Share
 Basic...................................................  $      2.83       $      1.91      $     (1.39)
                                                           ===========       ===========      ===========
 Diluted.................................................  $      2.72       $      1.85      $     (1.39)
                                                           ===========       ===========      ===========

Dividends Declared Per Common share......................  $       .16       $       .16      $       .16
                                                           ===========       ===========      ===========
</TABLE>


The accompanying notes are an integral part of these consolidated statements of
                                   earnings.


                        NEWPORT NEWS SHIPBUILDING INC.




<PAGE>

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                           ----------------
Millions (Except Shares and Per Share Amounts)                              1999     1998
                                                                           -------  -------
<S>                                                                        <C>      <C>
ASSETS
Current Assets
Cash and Cash Equivalents................................................  $    2   $    3
Accounts Receivable......................................................      93      143
Contracts in Process.....................................................     317      334
Inventory................................................................      55       52
Deferred Income Taxes....................................................     108      116
Other Current Assets.....................................................      17       12
                                                                           ------   ------

Total Current Assets.....................................................     592      660
                                                                           ------   ------

Noncurrent Assets
Property, Plant, and Equipment, net......................................     716      763
Other Assets.............................................................     204      177
                                                                           ------   ------

Total Noncurrent Assets..................................................     920      940
                                                                           ------   ------

                                                                           $1,512   $1,600
                                                                           ======   ======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade Accounts Payable...................................................  $   88   $  129
Short-Term Debt..........................................................      29       38
Postretirement Benefits..................................................     124      122
Other Accrued Liabilities................................................     205      229
                                                                           ------   ------

Total Current Liabilities................................................     446      518
                                                                           ------   ------

Noncurrent Liabilities
Long-Term Debt...........................................................     525      591
Deferred Income Taxes....................................................     233      235
Other Long-Term Liabilities..............................................      35       24
                                                                           ------   ------

Total Noncurrent Liabilities.............................................     793      850
                                                                           ------   ------

Commitments and Contingencies (See Note 13)

Stockholders' Equity
Common Stock, $.01 par value -
  authorized 70,000,000 shares; issued 35,290,652 shares at
  December 31, 1999, and 35,286,386 shares at December 31, 1998..........       1        1
Paid-In Capital..........................................................     264      276
Retained Earnings / ( Deficit )..........................................      84       (7)
Unearned/Deferred Compensation...........................................      (3)      (4)
Stock Employee Compensation Trust (SECT) - shares held of 2,661,926 and
  1,022,177 at December 31, 1999 and December 31, 1998, respectively.....     (73)     (34)
                                                                           ------   ------
Total Stockholders' Equity...............................................     273      232
                                                                           ------   ------

                                                                           $1,512   $1,600
                                                                           ======   ======

The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>

<PAGE>

                         NEWPORT NEWS SHIPBUILDING INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                                           --------------------------
                                                             1999     1998     1997
                                                           --------  -------  -------
<S>                                                        <C>       <C>      <C>
Millions
Cash Flows from Operating Activities:
Net Earnings (Loss)......................................    $  97    $  66    $ (48)
Adjustments to Reconcile Net Earnings (Loss) to
  Net Cash Provided (Used) by Operating Activities -
     Depreciation and Amortization.......................       66       62       68
     Deferred Income Taxes...............................        6      (30)     (38)
     Loss on Asset Dispositions..........................       10       17        -
     (Gain) Loss On Equity Investments...................       (1)       1        1
     Changes in Components of Working Capital -
       Decrease (Increase) in -
          Accounts Receivable............................       50       (7)      53
          Contracts in Process...........................       17      (75)     133
          Inventory......................................       (3)      (8)       1
          Other Current Assets...........................       (5)       -       (6)
       Increase (Decrease) in -
          Trade Accounts Payable.........................      (41)     (22)      23
          Other Accrued Liabilities......................      (24)      27      (14)
     Other, net..........................................        2      (28)     (68)
                                                             -----    -----    -----
Net Cash Provided by Operating Activities................      174        3      105
                                                             -----    -----    -----

Cash Flows from Investing Activities:
Capital Expenditures.....................................      (29)     (26)     (31)
Other....................................................      (15)     (10)      (3)
                                                             -----    -----    -----
Net Cash Used by Investing Activities....................      (44)     (36)     (34)
                                                             -----    -----    -----

Cash Flows from Financing Activities:
(Decrease) Increase in Revolving Credit Facilities, net..      (49)      79      (24)
Payments on Long-Term Debt...............................      (26)     (29)     (28)
Issuance of Common, Treasury and SECT Shares.............       23        9       21
Purchase of Common Stock.................................      (77)     (29)     (32)
Dividends Paid on Common Stock...........................       (6)      (5)      (6)
Other....................................................        4        8        -
                                                             -----    -----    -----
Net Cash (Used) Provided by Financing Activities.........     (131)      33      (69)
                                                             -----    -----    -----

Net (Decrease) Increase in Cash and Cash Equivalents.....       (1)       -        2
Cash and Cash Equivalents at Beginning of Period.........        3        3        1
                                                             -----    -----    -----

Cash and Cash Equivalents at End of Period...............    $   2    $   3    $   3
                                                             =====    =====    =====

Cash Paid During the Period for Income Taxes.............    $  52    $  78    $   8
                                                             =====    =====    =====

Cash Paid During the Period for Interest.................    $  55    $  55    $  54
                                                             =====    =====    =====


The accompanying notes are an integral part of these consolidated statements of cash flows.
</TABLE>


<PAGE>

                        NEWPORT NEWS SHIPBUILDING INC.

          STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                              Retained     Unearned/
                                                 Common Stock       Paid-In   Earnings/    Deferred               Treasury Stock
                                               -------------------                                              -------------------
                                                Shares       Par    Capital   (Deficit)  Compensation    SECT     Shares     Amount
                                               ----------  -------  --------  ---------  -------------  ------  ----------  --------
<S>                                            <C>         <C>      <C>       <C>        <C>            <C>     <C>         <C>
Millions, except for shares

Balance - January 1, 1997                      34,297,451   $    1   $  245    $   (14)    $        -   $    -           -   $    -
Net Loss                                                -        -        -        (48)             -        -           -        -
Cash Dividends Paid - Common Stock                      -        -        -         (6)             -        -           -        -
Performance Share Grants                                -        -        5          -              -        -           -        -
Purchase of Common Stock                                -        -        -          -              -        -   1,448,743      (32)
Issuance of Common, Treasury, and SECT Shares     651,212        -        2          -              -        -  (1,364,674)      30
Unearned ESOP/Deferred Compensation                     -        -        4          -             (4)       -           -        -
                                               ----------  -------   ------    -------   ------------   ------  ----------   ------
Balance - December 31, 1997                    34,948,663        1      256        (68)            (4)       -      84,069       (2)
Net Earnings                                            -        -        -         66              -        -           -        -
Cash Dividends Paid - Common Stock                      -        -        -         (5)             -        -           -        -
Performance Share Grants                                -        -        8          -              -        -           -        -
Purchase of Common Stock                                -        -        -          -              -      (25)    178,443       (4)
Issuance of Common, Treasury, and SECT Shares     337,723        -        7          -              -       (4)   (262,512)       6
Adjustment of SECT to Market Value                      -        -        5          -              -       (5)          -        -
                                               ----------  -------   ------    -------   ------------   ------  ----------   ------
Balance - December 31, 1998                    35,286,386        1      276         (7)            (4)     (34)          -        -
Net Earnings                                            -        -        -         97              -        -           -        -
Cash Dividends Paid - Common Stock                      -        -        -         (6)             -        -           -        -
Performance Share Grants                                -        -        4          -              -        -           -        -
Purchase of Common Stock                                -        -        -          -              -      (77)          -        -
Issuance of Common and SECT Shares                  4,266        -       (4)         -              -       27           -        -
Unearned ESOP/Deferred Compensation                     -        -       (1)         -              1        -           -        -
Adjustment of SECT to Market Value                      -        -      (11)         -              -       11           -        -
                                               ----------  -------   ------    -------   ------------   ------  ----------   ------
Balance - December 31, 1999                    35,290,652   $    1   $  264    $    84     $       (3)  $  (73)          -   $    -
                                               ==========  =======   ======    =======   ============   ======  ==========   ======
</TABLE>

The accompanying notes are an integral part of these statements of changes in
consolidated stockholders' equity.

<PAGE>

                        NEWPORT NEWS SHIPBUILDING INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Basis of Presentation

Newport News Shipbuilding Inc. became an independent, publicly traded company on
December 12, 1996.  Previously, on December 11, 1996, in connection with a
corporate reorganization, the Company's former parent and its subsidiaries
undertook and completed various intercompany transfers and distributions
designed to restructure, divide, and separate their then existing businesses,
assets, liabilities, and operations so that, among other things,  the
shipbuilding business of the former parent ("Shipbuilding Business") would be
owned by the Company (as defined below).  The former parent subsequently
distributed (the "spinoff") pro rata to holders of the parent company's common
stock all of the outstanding common stock of the Company.

Unless the context otherwise requires, as used herein, the term "Company"
refers:  (i) for periods prior to the spinoff to Newport News Shipbuilding and
Dry Dock Company, a Virginia corporation, and certain other subsidiaries through
which its former parent conducted its Shipbuilding Business during such periods,
and (ii) for periods after the spinoff, to Newport News Shipbuilding Inc., a
Delaware corporation, and its consolidated subsidiaries, including Newport News
Shipbuilding and Dry Dock Company.  Prior to the spinoff, all of the outstanding
common stock of the Company was owned directly or indirectly by the former
parent.

Investments in 20% to 50% owned companies where the Company has the ability to
exert significant influence over operating and financial policies are carried at
cost plus equity in undistributed earnings since the date of acquisition.
Earnings recognized and distributions received from equity method investees were
not significant during any of the periods presented in the accompanying
consolidated financial statements.  All significant intercompany transactions
and balances have been eliminated.

Description of Business

The Company is the largest non-government-owned shipyard in the United States.
Its principal business is designing, constructing, repairing, overhauling, and
refueling nuclear-powered aircraft carriers and submarines for the U.S. Navy.
The Company's largest single customer is the U.S. Navy.  Revenues from contracts
with the U.S. Navy were $1.8 billion (98%), $1.7 billion (92%) and $1.6 billion
(94%), in 1999, 1998, and 1997, respectively.

2. SUMMARY OF ACCOUNTING POLICIES

Risks and Uncertainties

Newport News Shipbuilding Inc., which is principally engaged in supplying
defense-related products and services to the U.S. Government, is subject to
certain business risks specific to the industry.  Sales to the U.S. Government
may be affected by changes in procurement policies, budget considerations,
changing concepts of national defense, political developments abroad, and other
factors.  The Department of Defense ("DoD") budgets have been subject to
increasing pressure resulting in uncertainty as to the future effects of DoD
budget cuts.  The Company has nonetheless maintained a steady backlog of
contracts with its primary customer, the U.S. Navy.  These factors lead
management to believe that there is a high probability that the Company's
current major defense program initiatives will continue.


Use of Estimates


<PAGE>

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions in determining the reported amounts of the Company's assets,
liabilities, revenues, and expenses.  Reference is made to the "Revenue
Recognition" section of this footnote and Notes 10 and 13 for additional
information on certain estimates included in the Company's consolidated
financial statements.  Actual results may differ from estimates.

Classification

The Company's construction contracts range in duration up to a period of eight
years from the signing of the contract until delivery. Because of the varying
nature of the Company's operating cycle, and consistent with industry practice,
assets and liabilities relating to long-term contracts are classified as
current, although a portion of these amounts is not expected to be realized or
paid within one year (See Note 3).

Reclassifications

In order to more effectively match revenues, costs, and profits with operating
segments, certain amounts for 1998 and 1997 have been reclassified to conform
with the 1999 presentation.

Revenue Recognition

The Company reports revenues and profits on its long-term contracts using the
percentage-of-completion method of accounting, determined on the basis of total
costs incurred to date to estimated final total costs.  Anticipated losses on
contracts are reported when first identified by the Company.  Costs on long-term
contracts in process represent recoverable costs incurred for production,
allocable overhead, and, where appropriate, general and administrative expenses.
The performance of contracts usually extends over several years, requiring
periodic reviews and revisions of estimated final contract revenues, costs, and
profits during the terms of the contracts. The effect of these revisions to
estimates is included in earnings in the period the revisions are made. Revenue
arising from the claims process is not recognized either as income or as an
offset against a potential loss until it can be reliably estimated and its
realization is probable.

General and Administrative Expenses

General and administrative expenses of $304 million, $294 million, and $263
million in 1999, 1998, and 1997, respectively, are included in the "Operating
Costs and Expenses" caption in the accompanying consolidated statements of
earnings.  General and administrative expenses related to commercial products
and services essentially under commercial terms and conditions are expensed as
incurred.  Such charges amounted to $4 million, $22 million, and $31 million for
1999, 1998, and 1997, respectively.

Research and Development Costs

Research and development costs are charged to "Operating Costs and Expenses" as
incurred. The amounts charged to operations during the years ended December 31,
1999, 1998, and 1997 were $9 million, $24 million, and $38 million,
respectively.

Income Taxes

The Company utilizes the asset and liability method of accounting for income
taxes whereby it recognizes deferred tax assets and liabilities for the future
tax consequences of temporary differences between the tax basis of assets and
liabilities and their reported amounts in the consolidated financial statements.
Deferred tax assets are reduced by a valuation allowance when, based upon
management's estimates, it is more likely than not that a portion of the
deferred tax assets will not be realized in a future period. No deferred tax
valuation allowances were recorded by the Company as of December 31, 1999 and
1998.

Cash and Cash Equivalents

<PAGE>

The Company considers highly-liquid investments with an original maturity of
three months or less when purchased to be cash equivalents.

Accounts Receivable and Contracts In Process

Only amounts billed and currently due from customers are included in the
"Accounts Receivable" caption in the accompanying consolidated balance sheets.
Recoverable costs and accrued earnings related to long-term contracts on which
revenue has been recognized, but for which billings have not been made to the
customer, are included in the "Contracts in Process" caption (See Note 3).  No
significant allowance for doubtful accounts existed as of December 31, 1999 and
1998.

Inventory

Inventory principally consists of raw materials and supplies which have not been
allocated to specific contracts. Inventory is stated at the lower of cost or
market. Substantially all inventory is costed using the "last-in, first-out"
method. If the first-in, first-out or average cost method of inventory
accounting had been used by the Company for all inventory, inventory would have
been approximately $8 million and $6 million higher as of December 31, 1999 and
1998, respectively.

Property, Plant, and Equipment, net

Property, plant, and equipment is carried at cost, net of accumulated
depreciation. The Company provides for depreciation on a straight-line basis in
amounts which, in the opinion of management, are adequate to allocate the cost
of depreciable assets over their estimated useful lives. Estimated useful lives
for significant classes of assets are as follows:

     Buildings.....................................    30 to 60 years
     Machinery and equipment.......................     8 to 45 years

Total depreciation and amortization expense was $66 million, $62 million, and
$68 million for 1999, 1998, and 1997, respectively. Depreciation expense is
included as a component of "Operating Costs and Expenses" in the consolidated
statements of earnings.

Interest capitalized during 1999, 1998, and 1997 was not material.

Stock-Based Compensation

The Company utilizes several stock-based compensation plans as an incentive to
its employees (See Note 11).  Pursuant to these plans, the Company may grant
stock options, restricted stock, performance shares, stock appreciation rights,
stock equivalent units, and dividend equivalent awards.  Stock options are
generally awarded with exercise prices equal to the fair value of the Company
stock on the date of grant.  As such, the Company does not record compensation
expense with respect to the award of such stock options.  All other awards
generally result in the Company recognizing a pro rata portion of compensation
expense based on the vesting period of the award. The compensation expense
recognized generally varies based on the amount by which the current fair value
of the award exceeds the exercise price, if any, of such award.

Stockholders' Equity

At December 31, 1999, the Company had authorized (a) 70 million shares of Common
Stock, $.01 par value, of which 35.3 million were issued and 32.6 million were
outstanding, along with associated preferred stock purchase rights, (b) 10
million shares of preferred stock, $.01 par value, none of which had been
issued, and (c) 700,000 shares of Series A Participating Cumulative Preferred
Stock, $.01 par value, none of which had been issued.

Changes in Accounting Principles

<PAGE>

During 1998, the Company adopted Financial Accounting Standards Board statement
("FAS") No. 130, "Reporting Comprehensive Income".  FAS No. 130 established
standards for reporting and the display of comprehensive income and its
components in a full set of general purpose consolidated financial statements.
The Company does not have any material comprehensive income required to be
reported in 1999 or 1998.

During 1998, the Company adopted  FAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information".  FAS No. 131 established standards for
reporting information about operating segments in annual consolidated financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders (See Note 15).

In December 1997, the AICPA issued Statement of Position ("SOP") 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments".  The SOP provides, among other things, that an entity recognize a
liability for the present value of estimated future guaranty-fund and other
insurance-related assessments.  As the Company has ceded certain workers'
compensation claims to a second-injury fund administered by the U.S. Department
of Labor and is subject to an annual assessment, the Company elected to early
adopt SOP 97-3 in 1998.  The adoption of SOP 97-3 did not have a material impact
on the Company's financial position, results of operations, or cash flows.

During the fourth quarter of 1998, the Company adopted FAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits".  FAS No. 132
standardized the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures required in the past (See
Note 10).

Risk Management Activities

The Company periodically utilizes foreign currency contracts to hedge its
exposure to changes in foreign currency exchange rates for firm purchase
commitments. Unrealized gains and losses on these contracts are deferred and
recognized in the results of operations in the period in which the hedged
transaction is consummated.  Cash receipts or payments related to these
financial instruments are classified consistent with the cash flows from the
transactions being hedged.  As of December 31, 1999, the Company had no foreign-
exchange derivative contracts outstanding.

Foreign Currency Translation

Consolidated financial statements of equity investments in international
entities are translated into U.S. Dollars using the exchange rate at each
balance sheet date for assets and liabilities and the weighted-average exchange
rate for each applicable period for amounts included in the consolidated
statements of earnings.  The amount of cumulative translation adjustments is not
material.



Stock Employee Compensation Trust (SECT)

In December 1997, the Company established a SECT to fund a portion of its
obligations arising from its various employee compensation and benefit plans.
The Company issued shares to the SECT from treasury stock and the SECT engages
in open market purchases. The SECT has a twenty year life.  As of December 31,
1999, the SECT held 2.7 million shares of the Company's common stock.

Equity Investments

In March 1999, the Company announced the formation of a worldwide business
partnership with Science Applications International Corp. ("SAIC"). The
partnership is a new limited liability company ("LLC") comprised

<PAGE>

of SAIC's subsidiary, AMSEC, and the Company's life cycle engineering
department. The new organization is named AMSEC LLC and has created a low cost
fleet services organization capable of providing logistics and life cycle
services for aircraft carriers, submarines, surface combatants, and amphibious
and auxiliary ships from 20 locations, including every major U.S. Navy port. The
new organization employs approximately 1,500 former employees of AMSEC and the
Company. The Company owns 45% and SAIC 55% of the new organization.

3. CONTRACTS IN PROCESS

Contracts in process consist of the following:

                                                     December 31,
                                                  -----------------
                                                    1999      1998
                                                  -------   -------
Millions
Contract costs and estimated profits............  $ 3,311   $ 2,310
Other costs.....................................       85        66
Less advances and progress payments.............   (3,079)   (2,042)
                                                  -------   -------
                                                  $   317   $   334
                                                  =======   =======

Contracts in process includes production costs and related overhead, including
general and administrative expenses allocable to U.S. Government contracts, net
of progress payments of $3.1 billion and $2.0 billion as of December 31, 1999
and 1998, respectively.  Other costs include amounts recorded under Generally
Accepted Accounting Principles ("GAAP") that are not currently allocable to
contracts, such as a portion of the Company's postretirement and postemployment
benefits, and SOP 97-3 workers' compensation related costs.  These costs have
been deferred because their recognition under government contracts is considered
probable based on existing backlog.  If the level of backlog in the future does
not support the continued deferral of these costs, profitability of the
Company's remaining contracts could be affected.  Also included in other costs
are provisions established for certain government contract and other matters.
Approximately $11 million and $22 million of retainages included in contracts in
process, as of December 31, 1999 and 1998, respectively, are not expected to be
billed and collected within one year.

4. PROPERTY, PLANT, AND EQUIPMENT, NET

The major classes of property, plant, and equipment are as follows:

                                                    December 31,
                                                  ----------------
                                                   1999     1998
                                                  -------  -------
Millions
Land and improvements...........................  $   28   $   26
Buildings and improvements......................   1,152    1,154
Machinery and equipment.........................     420      428
                                                  ------   ------
     Property, plant, and equipment at cost.....   1,600    1,608
Less accumulated depreciation...................    (884)    (845)
                                                  ------   ------
     Net property, plant, and equipment.........  $  716   $  763
                                                  ======   ======
5. ACQUISITION

On December 18, 1997, the Company acquired all of the outstanding capital stock
of Continental Maritime Industries, Inc. ("CMI"), a ship repair yard in San
Diego, California.  The acquisition was accounted for as a purchase, and
accordingly, the results of operations of CMI for the period from the date of
the acquisition through December 31, 1999 are included in the accompanying
consolidated statements of earnings.  The purchase price was allocated to assets
and liabilities based on estimated fair values at the date of acquisition.  At
closing, as defined in the agreement and plan of reorganization, CMI was
acquired through the issuance of 497,031 shares of the Company's common stock.
The excess of purchase price over the fair value of net tangible assets acquired
of  $3.9 million was recorded as goodwill and is being amortized over 15 years.

6. DETAIL OF OTHER ACCRUED LIABILITIES

<PAGE>

Other accrued liabilities consist of the following:

                                                           December 31,
                                                       ------------------
                                                         1999      1998
                                                       --------  --------
Millions
Billings in excess of costs and profits............    $      -  $     62
Workers' compensation..............................          79        57
Postemployment benefits............................          55        52
Employee payroll and benefits......................          21        35
Other..............................................          50        23
                                                       --------  --------
                                                       $    205  $    229
                                                       ========  ========


7. LONG-TERM DEBT AND FINANCING ARRANGEMENTS

Long-Term Debt

A summary of long-term debt obligations of the Company at December 31, 1999 and
1998 is set forth in the following table:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                ------------------
     Millions                                                     1999      1998
                                                                --------  --------
     <S>                                                        <C>       <C>
     8.625% Senior Notes due December 1, 2006                   $   200   $   200
     9.25% Senior Subordinated Notes due December 1, 2006           200       200
     Term Loan due November 4, 2002                                 118       145
     Bank Notes due April 30, 2002                                    2         3
     Six Year Revolving Credit Facility due November 4, 2002         32        71
     Revolving Credit Facility due June 1, 2000                       -         -
     364 - Day Revolving Credit Facility due June 9, 1999             -        10
     Note for Real Property                                           2         -
     Less Current Maturities                                        (29)      (38)
                                                                --------  --------
                                                                $   525   $   591
                                                                ========  ========
</TABLE>

Senior and Senior Subordinated Notes

On November 26, 1996, the Company issued $200 million of 8.625% Senior Notes and
$200 million of 9.25% Senior Subordinated Notes which both pay interest semi-
annually. The Company is obligated to repay these notes on December 1, 2006.

Senior Credit Facility

On November 4, 1996, the Company entered into a $415 million senior credit
facility (the "Senior Credit Facility") consisting of a $200 million six-year
amortizing term loan (the "Term Loan") and a $215 million six-year revolving
credit facility (the "Six Year Revolving Credit Facility").  The Term Loan will
amortize in 24 quarterly installments, commencing March 31, 1997, with an annual
aggregate payment amount of $27.5 million in each of 1997 through 2001, and
$62.5 million in 2002.  Of the Six Year Revolving Credit Facility, $125 million
may be used for advances and letters of credit and $90 million may be used only
for standby letters of credit. Generally, each of the Company's present and
future subsidiaries having consolidated assets exceeding $10 million, excluding
foreign subsidiaries and NNS Tanker Holding Corporation (each, a "Guarantor" and
collectively, the "Guarantors") guarantee the Senior Credit Facility.
Borrowings under the Senior Credit Facility were secured by perfected liens

<PAGE>

on substantially all of the Company's and the Guarantors' assets (except CMI).
The security interest in the collateral was released as the Company met specific
financial and other conditions at the end of the second quarter of 1999.

Term Loan

The interest rates on the Term Loan vary based on the one, two, three, six,
nine, and twelve month LIBOR plus 1.125% or a base rate.  The base rate is
defined as the higher of prime (as defined in the credit facility) or the
federal funds rate plus 0.5%.  The weighted-average Term Loan interest rate at
December 31, 1999 was 7.10%.

Bank Notes

The Company also has bank notes maturing through April 30, 2002 totaling $2
million.  These notes are secured by the consolidated assets of CMI and its
subsidiary, and at December 31, 1999, accrued interest at a rate of 7.32%.  The
aggregate maturities applicable to the outstanding bank notes are approximately
$1 million in 2000 through 2001 with a small remainder due in 2002.

Revolving Credit Facilities

<TABLE>
<CAPTION>
                                             Committed Credit Facility
                                      -------------------------------------------
Millions                                Term     Commitments  Utilized  Available
                                      ---------  -----------  --------  ---------
<S>                                   <C>        <C>          <C>       <C>
(As of December 31, 1999)
Six Year Revolving Credit Facility    1996-2002         $215       $46       $169
Revolving Credit Facility             1998-2000            3         -          3
</TABLE>

The Six Year Revolving Credit Facility requires the payment of commitment fees
of .3% on the unused portion of the credit facility.  The interest rate for the
Six Year Revolving Credit Facility can vary as described above with respect to
the Term Loan.  The weighted-average six year revolver interest rate at December
31, 1999 was 8.24%.  At December 31, 1999, $14 million was utilized for standby
letters of credit and $32 million was borrowed to fund operating needs.

Interest would have been calculated at the rate of 8.50% if a Revolving Credit
Facility balance had existed on December 31, 1999.

On June 9, 1998, the Company entered into a $75 million 364-day revolving credit
facility ("364-Day Revolving Credit Facility"). This facility expired on June 8,
1999.  The commitments under this facility were to be used for general corporate
purposes.  Generally, each of the Company's present and future subsidiaries
having consolidated assets exceeding $10 million, excluding foreign subsidiaries
and NNS Tanker Holding Corporation (each, a "Guarantor" and collectively, the
"Guarantors") guaranteed the facility.  Borrowings under the facility were
secured by perfected liens on substantially all of the Company's and the
Guarantors' assets (except CMI).  The security interest in the collateral was to
be released if the Company met specific financial and other conditions.  The
364-Day Revolving Credit Facility required the payment of commitment fees of
 .275% on the unused portion of the credit facility.  The interest rate for the
364-Day Revolving Credit Facility could have varied as described above with
respect to the Term Loan.  The weighted-average 364-day revolver interest rate
at December 31, 1998 was 6.08%. Amounts borrowed in 1998 under the 364-Day
Revolving Credit Facility of $10 million were used to fund operations of the
Company.

Note for Real Property

On March 23, 1999, the Company entered into a $2.3 million contract to purchase
a parcel of real property in Newport News, Virginia.  Payments of $0.4 million
will be made annually for three years and $0.28 million for the next four years.
The note will be paid in full in 2005.

<PAGE>

Debt Covenants and Restrictions

The Senior Credit Facility, Senior Notes, Senior Subordinated Notes, and Bank
Notes contain customary covenants, including financial ratios and limitations on
dividend payments, share repurchases, indebtedness, liens, and corporate
transactions.  The Company is in compliance with all applicable covenants and
restrictions.

8. FINANCIAL INSTRUMENTS

The carrying amount and estimated fair values of the Company's financial
instruments by class are as follows:

<TABLE>
<CAPTION>
                                                               December 31,
                                                  ------------------------------------
                                                         1999              1998
                                                  -----------------  -----------------
                                                  Carrying    Fair   Carrying    Fair
                                                   Amount    Value    Amount    Value
                                                  ---------  ------  ---------  ------
    <S>                                           <C>        <C>     <C>        <C>
    Millions
     Asset (liability) instruments:
       Cash and cash equivalents                     $   2   $   2      $   3   $   3
       Accounts receivable                              93      93        143     143
       Trade accounts payable                          (88)    (88)      (129)   (129)
       Debt (including current maturities)
          Senior and Senior Subordinated Notes        (400)   (399)      (400)   (423)
          Term Loan                                   (118)   (118)      (145)   (145)
          Bank Notes                                    (2)     (2)        (3)     (3)
          Six Year Revolving Credit Facility           (32)    (32)       (71)    (71)
          364-Day Revolving Credit Facility              -       -        (10)    (10)
          Note for Real Property                        (2)     (2)         -       -
</TABLE>

The fair value of cash and cash equivalents, accounts receivable, and accounts
payable in the above table was considered to be the same as, or determined not
to be materially different from, the carrying amount.  The fair value of short-
term and long-term debt reflected in the December 31, 1999 and 1998 balance
sheets are based on the market value of debt with the same or similar maturities
and interest rates.

The Company periodically utilizes foreign currency contracts to hedge certain
specific foreign currency transactions, principally the purchase of raw
materials and machinery denominated in a foreign currency.  Such contracts
generally mature in one year or less and the cost of replacing these contracts
in the event of nonperformance by counterparties is not significant.  At
December 31, 1999 and 1998, the Company had no significant foreign currency
contracts outstanding.

9. INCOME TAXES

The effective tax rates for 1999, 1998, and 1997 were approximately 41%, 42%,
and 35%, respectively. The differences between the Company's effective tax rate
in 1999 and 1998 as compared to the U.S. federal statutory rate of 35% are
principally due to state income taxes and miscellaneous permanent differences
for tax.

The Company's earnings before income taxes were principally domestic for all
years presented in the accompanying consolidated financial statements. Following
is a comparative analysis of the components of the (provision) benefit for
income taxes:




<PAGE>

<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                                            ---------------------------------
                                                                              1999        1998        1997
                                                                            ---------   ---------   ---------
<S>                                                                          <C>         <C>         <C>
Millions
Current-
     Federal.........................................................     $      (58)  $     (62)  $     (12)
     State...........................................................             (4)        (10)          -
                                                                           ---------   ---------   ---------
       Total Current Tax Provision...................................            (62)        (72)        (12)
                                                                           ---------   ---------   ---------

Deferred-
     Federal.........................................................             (3)         23          33
     State...........................................................             (2)          1           5
                                                                           ---------   ---------   ---------
       Total Deferred Tax (Provision) Benefit........................             (5)         24          38
                                                                           ---------   ---------   ---------

Total Income Tax (Provision) Benefit.................................      $     (67)  $     (48)  $      26
                                                                           =========   =========   =========
</TABLE>

The following is a reconciliation of income taxes computed using the statutory
U.S. federal income tax rate (35% for all years presented) to the (provision)
benefit for income taxes reflected in the consolidated statements of earnings:

<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                           ---------------------------------
                                                                              1999        1998        1997
                                                                           ---------   ---------   ---------
<S>                                                                        <C>         <C>         <C>
Millions
Tax expense computed at the statutory U.S. federal income tax rate..       $     (57)  $     (40)  $      26
State and local taxes on income, net of federal benefit.............              (7)         (4)          3
Permanent differences...............................................              (3)         (4)         (3)
                                                                           ---------   ---------   ---------
                                                                           $     (67)  $     (48)  $      26
                                                                           =========   =========   =========
</TABLE>

Under FAS No. 109, deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.  Actual tax
liabilities are lower than tax expense reflected above for 1999 and 1998 by $2
million and $6 million, respectively, as a result of the stock option deduction
benefits recorded as a credit to stockholders' equity.  The 1999 amount was
offset by a $3 million settlement associated with the Company's former parent.
The components of the Company's net deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           ---------------------
                                                                              1999        1998
                                                                           ---------   ---------
<S>                                                                        <C>         <C>
Millions
Deferred tax assets-
     Long-term shipbuilding contracts...............................       $      28   $      44
     Postretirement benefits........................................               9          14
     Postemployment benefits........................................              15          12
     Accrued vacation...............................................               7           5
     Workers' compensation..........................................              10           3
     Other..........................................................              43          43
                                                                           ---------   ---------
       Total deferred tax assets....................................             112         121
                                                                           ---------   ---------
</TABLE>

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           ---------------------
                                                                              1999        1998
                                                                           ---------   ---------
<S>                                                                        <C>         <C>
Deferred tax liabilities-
     Tax over book depreciation.....................................       $     153   $     165
     Pension........................................................              51          49
     Other..........................................................              33          26
                                                                           ---------   ---------
       Total deferred tax liabilities...............................             237         240
                                                                           ---------   ---------

Net deferred tax liabilities........................................       $     125   $     119
                                                                           =========   =========
</TABLE>


<PAGE>

10. EMPLOYEE BENEFIT PLANS

The Company provides defined pension benefits and postretirement benefits to
employees.  The following is a reconciliation of the benefit obligations, plan
assets, and funded status of the Company's plans:

<TABLE>
<CAPTION>
                                                                                                   Other
                                                               Pension Benefits             Postretirement Benefits
                                                          --------------------------      --------------------------
Change in benefit obligation  (in millions)                   1999          1998             1999           1998
                                                          -----------    -----------      -----------    -----------
<S>                                                       <C>            <C>              <C>            <C>
Benefit obligation - beginning of period                  $       476    $       357      $       194    $       194
Service costs                                                      39             30                3              2
Interest costs                                                     32             27               15             15
Actuarial (gains) losses                                          (57)            70              124              1
Benefits paid                                                     (11)           (10)             (20)           (18)
Plan amendments                                                     -             (1)              (4)             -
Business combination/divestitures                                  (6)             -                -              -
Curtailments/settlements                                            1              1                -              -
Initial benefit obligation for new plans                            -              2                -              -
                                                          -----------    -----------      -----------    -----------

Benefit obligation - end of period                        $       474    $       476      $       312    $       194
                                                          ===========    ===========      ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                   Other
                                                               Pension Benefits             Postretirement Benefits
                                                          --------------------------      --------------------------
Change in plan assets (in millions)                          1999           1998             1999           1998
                                                          -----------    -----------      -----------    -----------
<S>                                                       <C>            <C>              <C>            <C>
Fair value of plan assets - beginning of period           $       448    $       410      $         -    $         -
Actual return on plan assets                                       64             17                -              -
Employer contributions                                             33             31                -              -
Benefits paid                                                     (11)           (10)               -              -
Business combination/divestitures                                  (2)             -                -              -
                                                          -----------    -----------      -----------    -----------

Fair value of plan assets - end of period                 $       532    $       448      $         -    $         -
                                                          ===========    ===========      ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                   Other
                                                               Pension Benefits             Postretirement Benefits
                                                          --------------------------      --------------------------
Funded status reconciliation (in millions)                    1999           1998             1999          1998
                                                          -----------    -----------      -----------    -----------
<S>                                                       <C>            <C>              <C>            <C>
Funded status of the plans                                $        58    $       (28)     $      (312)   $      (194)
Contribution adjustment                                            11              8                -              -
Unrecognized net actuarial (gains)/losses                         (21)            61              237             80
Unrecognized prior service costs                                   75             85              (49)            (8)
Unrecognized transition obligation                                (16)           (20)               -              -
                                                          -----------    -----------      -----------    -----------

Prepaid (accrued) benefit costs                           $       107    $       106      $      (124)   $      (122)
                                                          ===========    ===========      ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 Other
                                                        Pension Benefits                Postretirement Benefits
                                              -------------------------------    -------------------------------
Assumptions at December 31,                      1999       1998       1997         1999       1998       1997
                                              ---------  ---------  ---------    ---------  ---------  ---------
<S>                                           <C>        <C>        <C>          <C>        <C>        <C>
Discount rate                                     7.50%      6.75%      7.50%        7.50%      6.75%      7.50%
Expected return on plan assets                   10.00%     10.00%     10.00%         N/A        N/A        N/A
</TABLE>


<PAGE>

Rate of compensation increase     3.68%   4.50%  4.40%  3.68%  4.50%  4.40%

Net periodic pension and other postretirement benefit costs include the
following components:

<TABLE>
<CAPTION>
                                                                                  Other
                                              Pension Benefits           Postretirement Benefits
                                       ----------------------------    ----------------------------
Millions                                 1999      1998      1997        1999      1998      1997
                                       --------  --------  --------    --------  --------  --------
<S>                                    <C>       <C>       <C>         <C>       <C>       <C>
Service cost                           $    39   $    30   $    25     $     3   $     2   $     2
Interest cost                               32        27        20          15        15        14
Expected return on plan assets             (43)      (37)      (30)          -         -         -
Amortization of transition assets           (3)       (3)       (4)          -         -         -
Amortization of prior service costs          8         8         8          (5)       (3)       (4)
Amortization of loss                         4         1         -           8         5         4
                                       -------   -------   -------     -------   -------   -------

Net periodic cost                      $    37   $    26   $    19     $    21   $    19   $    16
                                       =======   =======   =======     =======   =======   =======
</TABLE>

Pension Benefits

The Company has various defined benefit plans which cover substantially all of
its hourly and salaried employees. The hourly plan benefits are based primarily
on service with the Company as an hourly employee.  The salaried plan benefits
are based on years of participation and final average compensation. The
Company's funding policies are to contribute to the plans amounts necessary to
satisfy the funding requirements of federal laws and regulations. Plan assets
consist principally of listed equity and fixed income securities.

Certain salaried employees of the Company participated in the former parent's
retirement plan ("FPRP") prior to the spinoff.  In connection with the spinoff,
the Company's former parent became the sole sponsor of the FPRP.  The benefits
accrued by Company employees in the FPRP were frozen as of December 31, 1996,
and the Company's former parent amended the FPRP to provide that all benefits
accrued through that day by Company employees were fully vested, non-
forfeitable, and the responsibility of the Company's former parent.

Assets of one plan may not be utilized to pay benefits of other plans.
Additionally, the pension cost has been recorded based upon certain actuarial
estimates.  These estimates are subject to revision in future periods given new
facts or circumstances.  The net prepaid pension cost at December 31, 1999 is
composed of a $139 million prepaid hourly pension plan asset and a $32 million
accrued salaried pension plan liability.  The net balance at December 31, 1998
represents a $124 million prepaid hourly pension plan asset and an $18 million
accrued salaried pension plan liability.

The Company measures pension costs according to independent actuarial
valuations.  The projected unit credit actuarial cost method is used to
determine pension cost for financial accounting purposes consistent with the
provisions of FAS No. 87, "Employers' Accounting for Pensions."  Unrecognized
prior service obligations are being amortized on a straight-line basis over the
average remaining estimated service period of employees expected to receive
benefits under the plans.

Other Postretirement Benefits

The Company has postretirement health care and life insurance plans which cover
its employees who meet certain eligibility requirements.  For salaried
employees, the plans cover employees retiring from the Company on or after
attaining age 55 who have had at least 10 years of service with the Company
after attaining age 45.  For hourly employees, the postretirement benefit plans
generally cover employees who retire pursuant to one of the Company's

<PAGE>

hourly employee retirement plans. All of these benefits may be subject to
deductibles, copayment provisions, and other limitations, and the Company has
reserved the right to modify these benefits. The Company's postretirement
benefit plans are funded on a pay-as-you-go basis.

The initial weighted average assumed health care cost trend rate used in
determining the 1999 accumulated postretirement benefit obligation was 8.5%,
gradually declining to 5% in 2006 and remaining at that level thereafter.  The
initial weighted average assumed health care cost trend rate used in determining
the 1998 accumulated postretirement benefit obligation was 8%, declining to 5%
in 2006 and remaining at that level thereafter.

Increasing the assumed health care cost trend rate by one percentage point in
each year would increase accumulated postretirement benefit obligations by
approximately $19 million in 1999 and $7 million in 1998 and 1997. It would
also increase the aggregate of the service cost and interest cost components
of the net periodic postretirement benefit cost by approximately $1 million
in 1999, 1998, and 1997.

The accrued postretirement benefits cost has been recorded based upon certain
actuarial estimates.  These estimates are subject to revision in future periods
given new facts or circumstances.

401(k) Plans

The Company sponsors the Newport News Shipbuilding Savings (401(k)) Plan for
Union Eligible Employees (the "Savings Plan") for certain of its hourly
employees.  Contributions are made to the Savings Plan by participants, with the
Company providing for administration of the Savings Plan.

Subsequent to the spinoff, the Company established the Newport News Shipbuilding
Inc. 401(k) Investment Plan for Salaried Employees ("Salaried Plan").  Beginning
in 1997, the Company matched one half of the first 8% of a participant's
contribution in either cash or Common Stock at the Company's discretion.  In
addition, the Company contributes a fixed percentage of each salaried employee's
salary per pay period in either cash or Common Stock, also at the Company's
discretion.  The expense related to this plan was $24 million for 1999 and $22
million for 1998.  The Company has authorized 10,400,000 shares of Common Stock
for possible Salaried Plan contributions.  Company employees as of the spinoff
are fully vested in future matching contributions; otherwise, matching
contributions will vest after two years of service as defined in the Salaried
Plan.

ESOP

CMI (See Note 5) maintains a leveraged Employee Stock Ownership Plan ("ESOP")
for substantially all of its employees.  CMI makes annual contributions to the
ESOP equal to the ESOP's debt service.  The ESOP Series A Preferred stock shares
initially were pledged as collateral for its debt.  The ESOP Series A Preferred
stock was exchanged for the Company's common stock concurrent with the
acquisition of CMI.  As the debt is repaid, shares are released from collateral
and allocated to active employees based on the proportion of debt service paid
in the year.  As shares are released from collateral, CMI reports compensation
expense equal to the current market price of the shares.  ESOP compensation
expense was immaterial for the period subsequent to the acquisition in 1997 and
for 1999 and 1998.  The ESOP shares on December 31, 1999 were as follows:

Allocated shares                                               302,916
Unallocated shares                                              35,598
                                                            ----------

Total ESOP shares                                              338,514
                                                            ==========

Fair value of unallocated shares at December 31, 1999       $  978,945
                                                            ==========

11.  STOCK COMPENSATION PLANS

<PAGE>

The Company established the Newport News Shipbuilding Inc.  Employee Stock
Purchase and Accumulation Plan ("Employee Stock Purchase Plan") to provide
eligible employees of the Company an opportunity to purchase shares of the
Company at a 15% discount, not to exceed $21,250 in payroll deductions per
employee per calendar year.  The Employee Stock Purchase Plan became effective
January 1, 1998, as an amended and restated version of a predecessor plan, the
Newport News Shipbuilding Inc. 1997 Employee Stock Purchase Plan.  The Employee
Stock Purchase Plan authorizes a maximum aggregate of 2,600,000 shares to be
issued under the plan.  Of these shares, 1,450,000 shares have been approved for
issuance by the shareholders.  The remaining 1,150,000 shares will not be issued
under the plan until shareholder approval is sought and obtained.  The Company
plans to seek approval for the issuance of up to an additional 200,000 shares
under the Employee Stock Purchase Plan at its 2000 Annual Meeting of
shareholders.  During 1999, employees purchased approximately 160,000 shares
under the Employee Stock Purchase Plan.

The Company established the Newport News Shipbuilding Inc. Stock Ownership Plan
("Stock Ownership Plan") for the benefit of officers and key employees.  At the
Company's discretion, restricted stock, performance shares, stock options, stock
appreciation rights, stock equivalent units and dividend equivalents can be
granted to eligible employees pursuant to this plan.  The Company has authorized
5,250,000 shares of Common Stock for issuance under this plan.  In 1999,
approximately 61,000 stock options were granted. Further, approximately 258,000
performance shares, stock incentive grants, and restricted shares were awarded
in 1999.  As of December 31, 1999, approximately 508,000 shares remained
available for issuance under this plan.

The Company established the 1997 Stock Plan for Directors of Newport News
Shipbuilding Inc. ("1997 Stock Plan for Directors").  Under the plan as
originally adopted, one-half of the annual retainer of non-employee directors is
to be paid in restricted stock.  In addition, non-employee directors receive an
initial grant of 2,000 stock options and 1,000 shares of restricted stock upon
joining the Board of Directors, and an annual grant of 1,000 stock options.  The
1997 Stock Plan for Directors was amended, effective December 15, 1998, to
increase the annual grant of stock options to 2,000, and to make 50% of the
first $25,000 of the annual retainer payable in restricted stock and any annual
retainer amounts in excess of $25,000 payable in either restricted stock or
cash, as determined by the Compensation Committee.  The Company has authorized
75,000 shares for issuance under the plan.  During 1999, approximately 14,000
stock options and 3,100 shares of restricted stock were granted under the plan.
As of December 31, 1999, nearly 24,000 shares remained available for issuance.
The Company plans to seek approval for issuance of up to an additional 125,000
shares under the 1997 Stock Plan for Directors at its 2000 Annual Meeting of
Shareholders.

The Company established stock option plans for its active hourly employees
("Hourly Option Plans") to provide eligible employees of the Company an
opportunity to purchase shares of the Company.  The Company authorized 1,100,000
shares of Common Stock for issuance under the Hourly Option Plans.  During 1997,
approximately 985,000 stock options were granted under the plans.  As of
December 31, 1999 approximately 939,000 stock options originally issued under
the plans remained outstanding.

The Company established the Newport News Shipbuilding Inc. 1998 Stock Incentive
Plan ("1998 Stock Incentive Plan"), effective October 12, 1998.  The Company, at
its discretion, may select any employee of the Company for an award of
restricted stock, performance shares, or stock options under the Plan.  In
addition, the 1998 Stock Incentive Plan assumed the obligations of the Hourly
Option Plans.  The options granted under the Hourly Option Plans continue to be
exercisable subject to the same terms and conditions as prescribed by those
plans.  The Company has authorized 4,000,000 shares for issuance under the 1998
Stock Incentive Plan.  This authorization includes 1,000,000 of the shares
originally reserved for issuance under the Hourly Options Plans and reflects the
transfer of the stock options previously granted under those plans to the 1998
Stock Incentive Plan.  In 1999, approximately 441,000 stock options were granted
under the plan.  Further, approximately 131,000 performance shares, stock
incentive grants, and restricted shares were awarded in 1999.  As of December
31, 1999, approximately 2,531,000 shares remained available for issuance under
this plan.

Stock options and restricted shares applicable to the plans above vest in
accordance with vesting periods set forth in the governing award agreements and
plan documents.  The performance shares vest after specified periods and after
attaining certain performance measures, both of which vary with each grant.

<PAGE>

Stock option activity and exercise prices for the Stock Ownership Plan, the 1997
Stock Plan for Directors, and the 1998 Stock Incentive Plan are summarized as
follows:

<TABLE>
<CAPTION>
                                              For the year ended December 31,
                                            ----------------------------------
                                               1999        1998        1997
                                            ----------  ----------  ----------
   <S>                                      <C>         <C>         <C>
   Number of shares under stock options:
   Outstanding at beginning of year         3,667,243   3,562,663           -
       Converted                                    -           -   2,143,979
       Granted                                515,900     629,663   1,871,350
       Exercised                             (378,104)   (467,833)   (391,678)
       Options canceled                       (78,116)    (57,250)    (60,988)
                                            ---------   ---------   ---------

   Outstanding at end of year               3,726,923   3,667,243   3,562,663
                                            ---------   ---------   ---------

   Exercisable at end of year               1,681,694   1,254,328     983,975
                                            =========   =========   =========

<CAPTION>
                                              For the year ended December 31,
                                            ----------------------------------
                                              1999         1998         1997
                                            --------     --------     --------
   <S>                                      <C>          <C>          <C>
   Weighted average exercise price:
   Outstanding at beginning of year         $  19.12     $  17.54     $      -
       Converted                                   -            -        14.65
       Granted                                 32.39        24.85        20.21
       Exercised                               15.57        14.78        14.87
       Options canceled                        23.64        19.39        14.99

   Outstanding at end of year                  21.22        19.12        17.54

   Exercisable at end of year                  15.90        14.63        14.89
</TABLE>

                          Number           Weighted Average
    Range of          Outstanding at          Remaining         Weighted Average
Exercise Prices     December 31, 1999      Contractual Life      Exercise Price
---------------     -----------------      ----------------     ----------------
$ 12.95 - 19.88         1,714,026              6.1 years             $ 14.72
$ 24.81 - 27.68         1,507,627              7.9 years               24.87
$ 30.63 - 32.44           505,270              9.0 years               32.39
                        ---------
                        3,726,923              7.2 years               21.22
                        =========


                         Number
    Range of         Exercisable at        Weighted Average
Exercise Prices     December 31, 1999       Exercise Price
---------------     -----------------      ----------------

<PAGE>

  $ 12.95 - 19.88         1,479,818          $ 14.68
  $ 24.81 - 27.68           201,876            24.85
                          ---------
                          1,681,694            15.90
                          =========

In 1996, the Company adopted the disclosure-only option of FAS No. 123,
"Accounting for Stock-Based Compensation," for its stock option plans.  As of
December 31, 1996, the Company's employees held certain options in stock of the
former parent that were converted to the Company's Common Stock in early 1997
(See Note 14).  For 1999, 1998, and 1997 had the compensation costs for stock
options and the Employee Stock Purchase Plan been determined based on the fair
value at the grant dates for awards under these plans consistent with the method
of FAS No. 123, the Company's net income and basic net income per share would
have been reduced to the pro forma amounts indicated below:

                                                        December  31,
                                               ------------------------------

                                                 1999       1998       1997
                                                 ----       ----       ----
Millions
Net Earnings (Loss)
  As reported...............................   $    97    $    66    $   (48)
  Pro forma.................................        92         60        (53)
Basic Net Earnings (Loss) per share
  As reported...............................   $  2.83    $  1.91    $ (1.39)
  Pro forma.................................      2.70       1.74      (1.53)
Diluted Net Earnings (Loss) per share
  As reported...............................   $  2.72    $  1.85    $ (1.39)
  Pro forma.................................      2.59       1.69      (1.53)

All options issued by the Company were issued at the estimated fair value in
effect at the date of issuance, vest ratably over the applicable vesting period,
and expire ten years after the grant date with the exception of one plan under
which the options vest two years after the award date.  The fair value for
options granted in 1999, 1998, and 1997 are estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used:
dividend yield of .49%, .48%, and .66% in 1999, 1998, and 1997, respectively;
expected volatility of 25% in 1999, 1998, and 1997; risk-free interest rates
ranging from 4.7% to 5.2% in 1999, 4.6% to 5.4% in 1998, and 5.7% to 6.5% in
1997; and, expected life of one year after the vesting period for 1999, 1998,
and 1997.  The assumptions used for the fair value of the employee purchase
rights from the  Employee Stock Purchase Plan are the same as above with the
exception that the dividend yield calculated at the date of grant is .60% and
1.09% for 1999 and 1997, respectively, and the average life of each purchase
right was assumed to be 90 days for the three years.

12.  EARNINGS PER COMMON SHARE

Basic earnings per common share is computed by dividing net earnings by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings per share is calculated based on the basic weighted average
number of common shares outstanding, plus additional shares representing stock
distributable under stock-based plans computed using the treasury stock method.
Because 1997 results reflect a loss, basic and diluted earnings per share are
calculated based on the same weighted average number of shares outstanding.

<TABLE>
<CAPTION>
                                                        For the year ended 1999
                                                  ---------------------------------
                                                     Net                 Per Share
                                                   Earnings    Shares      Amount
                                                  ----------  --------  -----------
<S>                                               <C>         <C>       <C>
Millions, except for shares and per share data
Basic Earnings per Share
</TABLE>

<PAGE>

<TABLE>
<S>                                               <C>         <C>          <C>
Income available to common stockholders           $    97     34,115,713   $   2.83
                                                                           ========
Stock Options and Other Common
 Stock Equivalents                                      -      1,336,053
                                                  -------     ----------
Diluted Earnings per Share
Income available to common stockholders           $    97     35,451,766   $   2.72
                                                  =======     ==========   ========
</TABLE>

<TABLE>
<CAPTION>
                                                        For the year ended 1998
                                                  ------------------------------------
                                                      Net                   Per Share
                                                   Earnings     Shares       Amount
                                                  ----------  ----------   -----------
<S>                                               <C>         <C>          <C>
Millions, except for shares and per share data
Basic Earnings per Share
Income available to common stockholders            $     66   34,677,706     $   1.91
                                                                             ========
Stock Options and Other Common
 Stock Equivalents                                        -    1,116,384
                                                   --------   ----------
Diluted Earnings per Share
Income available to common stockholders            $     66   35,794,090     $   1.85
                                                   ========   ==========     ========
</TABLE>

13.  COMMITMENTS AND CONTINGENCIES

Government Contracting

As a general practice in the defense industry, the Defense Contract Audit Agency
("DCAA") and other government agencies continually review the cost accounting
and other practices of government contractors, including the Company, conduct
other investigations, and make specific inquiries.  In the course of those
reviews and investigations, cost accounting and other issues are identified,
discussed and settled, or resolved through legal proceedings.  In some cases,
recognition of the inherent uncertainties and costs of litigation may cause
management to decide to settle a matter.

As with other government contractors, the U.S. Government has from time to time
recommended that certain of the Company's contract prices be reduced, or costs
allocated to its government contracts be disallowed.  Some of these
recommendations involve substantial amounts.  In the past, as a result of such
audits and other investigations and inquiries, the Company has on occasion
agreed to adjustments to its contract prices and the costs allocated to its
government contracts.  The Company is currently involved in several such audits
and other investigative proceedings with the U.S. Government.  The Company is
also engaged in settlement discussions on certain matters and has filed a
lawsuit concerning specific cost accounting issues.

As previously reported, the DCAA conducted a post-award audit of the contract to
build the aircraft carrier Reagan.  In April 1998, the DCAA issued its official
audit report ("Audit Report") in which it concluded that the cost or pricing
data supplied by the Company to the U.S. Navy was not current, accurate, and
complete and, therefore, projected labor and overhead costs were overstated for
the Reagan contract.  Accordingly, the DCAA recommended to the U.S. Navy's
contracting officer that the contract price for Reagan be reduced by
approximately $135 million.  After giving consideration to the cost sharing
provisions in the contract, the proposed price reduction could generate an
operating income adjustment of approximately $47 million over the life of the
contract.

The Company disagrees with the conclusions of the Audit Report and the DCAA's
recommendation to the contracting officer.  Management believes that the Company
has substantial and meritorious grounds on which to contest any action by the
U.S. Navy seeking to reduce the Reagan contract price and intends to pursue its
defenses in response to any attempt by the U.S. Navy to make such a reduction.
Management believes that the final

<PAGE>

resolution of this matter will not have a material impact on the financial
position, results of operations, or cash flows of the Company.

In addition to the DCAA audit, a civil investigation, also focused on the cost
or pricing data that the Company supplied to the U.S. Navy in connection with
the Reagan contract, is being conducted jointly by the Department of Defense,
the Department of Justice, the U.S. Attorney's Office for the Eastern District
of Virginia, and the Naval Criminal Investigative Service.  Management believes
the Company complied with all applicable laws.

During the first quarter of 1999, the Company received a letter from the U.S.
Navy Supervisor of Shipbuilding forwarding a DCAA final audit report questioning
approximately $83 million of costs allocated to U.S. Government contracts as
Independent Research and Development ("IR&D").  The letter requested additional
comments regarding why NNS considers its existing cost accounting practice to be
compliant with the Cost Accounting Standards.  The Company provided such
comments in the second quarter of 1999.  Based on the Company's present
understanding of the claims the U.S. Government might assert, and defenses
believed to be available in connection with this issue, management believes that
the final resolution of this matter will not have a material impact on the
financial position, results of operations, or cash flows of the Company.

Significant Estimates

From 1994 to 1996, the Company entered into fixed price contracts to construct a
total of nine Double Eagle product tankers.  The first of the nine ships was
delivered at the end of September 1997. In March 1998, the Company announced an
exit strategy for both the program and market that resulted in only five of the
remaining eight undelivered ships being built.  The final ship was delivered in
June of 1999.  The Company recorded charges against earnings of approximately
$207 million, net of previously established reserves of $57 million, in 1997.
As of December 31, 1998 the cumulative provision for losses recorded on
undelivered ships was approximately $80 million.

Litigation

The Company is both a plaintiff and defendant in matters of varying nature
related to the normal conduct of its business. In the opinion of management, the
outcome of these proceedings should not have a material adverse effect on the
financial position, results of operations, or cash flows of the Company.

Capital Commitments

The Company estimates that expenditures aggregating approximately $21 million
will be required after December 31, 1999, to complete facilities and projects
authorized at such date.

Lease Commitments

The Company holds certain equipment under long-term operating leases. Future
minimum lease payments under existing noncancelable operating leases as of
December 31, 1999, are as follows:

                   Year                   Payment
                ----------              -----------
                   2000                 $17 million
                   2001                  14 million
                   2002                   9 million
                   2003                   6 million
                   2004                   7 million
                Thereafter                4 million
                                        -----------
                                        $57 million
                                        ===========

Rent expense recognized for the years ended December 31, 1999, 1998, and 1997,
was $12 million, $19 million, and $11 million, respectively.

<PAGE>

Other Commitments

The Company's commitments under long-term service agreements for hardware,
software, and related services as of December 31, 1999 are as follows:

                   Year                    Payment
                ----------              ------------
                   2000                 $ 28 million
                   2001                   43 million
                   2002                   43 million
                   2003                   22 million
                   2004                   17 million
                Thereafter                10 million
                                        ------------
                                        $163 million
                                        ============

14. TRANSACTIONS WITH FORMER PARENT COMPANY

Employee Benefits

Certain employees of the Company participated in the employee stock ownership
and employee stock purchase plans offered by its former parent prior to the
spinoff.  The employee stock ownership plan provided for grants of a variety of
awards, including stock options and restricted stock to officers and key
employees of the Company.  The employee stock purchase plan allowed employees to
purchase common stock of its former parent at a 15% discount subject to certain
thresholds.  In connection with the spinoff, all options held by employees of
the Company were canceled as of December 11, 1996 and were replaced in January
1997 with approximately 2.1 million options granted under the Newport News
Shipbuilding Inc. Stock Ownership Plan (See Note 11).

Certain employees of the Company also participated in a pension plan provided by
its former parent. Reference is made to Note 10 for a further discussion of the
Company's pension plan.

Ancillary Agreements

In order to assist in the orderly transition of the Company to a separate,
publicly held company, the former parent modified, amended or entered into
certain contractual agreements with the Company in 1996.  Such agreements
include a tax sharing agreement, an employee benefits agreement, an insurance
agreement, an administrative services agreement, and other ancillary agreements.

15. REPORTABLE SEGMENTS

The Company adopted FAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information", during 1998. FAS No. 131 established standards for
reporting information about operating segments in annual consolidated financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders.  It also established standards for
related disclosures about products and services, and geographic areas.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance.  The operating segments are
managed separately because each operating segment represents a strategic
business unit that offers different products and services.

The Company's reportable operating segments include three areas involving U.S.
Naval and commercial ships: (i) Construction; (ii) Fleet Services; and (iii)
Engineering.  Revenues from contracts with the U.S. Navy represent approximately
98%, 92%, and 94% of the Company's consolidated revenues for the years ended
December 31,

<PAGE>

1999, 1998, and 1997, respectively. Essentially all reportable segments operate
out of the Company's facilities located in Newport News, Virginia.

The Company's reportable operating segments represent strategic initiatives
supporting the entire lifecycle of U.S. Navy ships - Construction, Fleet
Services, and Engineering, as well as a logical linking of similar contracts
based on funding provisions.  Engineering contracts generally receive funding on
an annual basis, Fleet Services contracts typically span between one month to
two years, and Construction contracts generally span a period of two or more
years.  The reportable segments are managed separately because each business has
differing customer requirements based on the nature of the services provided.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies.  The Company evaluates performance
based on profit or loss from operations before income taxes and interest, not
including nonrecurring gains and losses.  A brief description of each reportable
operating segment follows:

Construction

Currently, the Company's major construction efforts include the aircraft carrier
Ronald Reagan, and the new attack submarine construction program (the Virginia
class).

Fleet Services

The Company provides ongoing maintenance for the U.S. Navy's vessels through
overhauling, refueling, and repair work.  The Company possesses unique expertise
in servicing nuclear naval systems, and believes it currently is the only non-
government-owned shipyard capable of refueling nuclear-powered aircraft
carriers.  Additionally, the Company provides repair services for commercial
vessels.

Engineering

The Company provides engineering planning and design services primarily for U.S.
Government customers.  The Company maintains a stable level of funded
engineering support contracts for the U.S. Navy.  Support services provided by
the Company include: new aircraft carrier research and development, aircraft
carrier non-nuclear overhaul planning, reactor plant engineering, aircraft
carrier engineering support, and training and logistics.  The Company is a
leader in aircraft carrier design, accounting for the majority of ship
integration and related design development for the Naval Sea Systems Command
("NAVSEA").

Information about Operating Earnings and Assets
For the Year Ended December 31, (in millions)

<TABLE>
<CAPTION>
                                                              Fleet        All
                                             Construction   Services   Engineering   Others (1)    Total
                                             ------------   --------   -----------   ----------   -------
<S>                                          <C>            <C>        <C>           <C>          <C>
1999
----
Revenues................................        $  710       $  913      $  228        $   12     $ 1,863
Segment Operating Earnings..............           102           85          15            16         218
Segment Assets at December 31, 1999(2)..           190          164          40            16         410

1998
----
Revenues................................        $  839       $  724      $  286        $   13     $ 1,862
Segment Operating Earnings..............            87           70          19            (1)        175
Segment Assets at December 31, 1998(2)..           265          160          26            26         477

1997
----
Revenues................................        $  940       $  501      $  250        $   16     $ 1,707
Segment Operating Earnings..............           (94)          55          20             -         (19)
Segment Assets at December 31, 1997(2)..           182          140          50            23         395
</TABLE>

<PAGE>

1.   Other business activities include valve and pump repair and technical
     services, equity investments, and corporate activities. Other operating
     earnings for 1999 primarily relate to non-recurring gains associated with a
     break-up fee and option proceeds associated with the termination of a
     planned merger with Avondale Industries, Inc.

2.   As the Company has a fully integrated production facility, its fixed assets
     are commingled and not identified with specific profit centers. Therefore,
     segment assets consist only of accounts receivable ("A/R") and contracts in
     process ("CIP") balances applicable to identified segments.

A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is as follows:

Reconciliation of Segment Information to Consolidated Amounts
For the Year Ended December 31, (in millions)


<TABLE>
<CAPTION>
                                                                              1999          1998           1997
                                                                             -------       -------       --------
<S>                                                                          <C>           <C>           <C>
Revenues
--------
Total revenues for reportable segments...................................    $ 1,851       $ 1,849       $  1,691
Other revenues...........................................................         12            13             16
                                                                             -------       -------       --------
 Total consolidated revenues.............................................    $ 1,863       $ 1,862       $  1,707
                                                                             =======       =======       ========

Operating Earnings
------------------
Total operating earnings for reportable segments.........................    $   202       $   176       $    (19)
Other operating earnings.................................................         16            (1)             -
                                                                             -------       -------       --------
 Total consolidated operating earnings...................................    $   218       $   175       $    (19)
                                                                             =======       =======       ========

Assets
------
Total A/R and CIP for reportable segments................................    $   394       $   451       $    372
Other unallocated A/R and CIP............................................         16            26             23
Other unallocated amounts................................................      1,102         1,123          1,120
                                                                             -------       -------       --------
 Total consolidated assets...............................................    $ 1,512       $ 1,600       $  1,515
                                                                             =======       =======       ========
</TABLE>

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         Earnings               Net Earnings
                                                           Operating      Before       Net        Per Share
                                                                                               --------------
Millions (except share amounts)                  Revenues  Earnings    Income Taxes  Earnings  Basic  Diluted
                                                 --------  ---------   ------------  --------  -----  -------
<S>                                              <C>       <C>         <C>           <C>       <C>    <C>
1999
1st Quarter....................................    $  430     $   44       $     32    $   18  $ .52   $  .50
2nd Quarter....................................       444         72             60        35    .99      .95
3rd Quarter....................................       451         47             34        20    .60      .58
4th Quarter....................................       538         55             38        24    .71      .69


1998
1st Quarter....................................    $  397     $   40       $     27    $   16  $ .46   $  .44
2nd Quarter....................................       466         42             28        16    .46      .45
3rd Quarter....................................       462         43             29        17    .47      .46
4th Quarter....................................       537         50             30        17    .52      .50
</TABLE>

17.  SUBSEQUENT EVENTS

Share Repurchase Programs

On February 1, 2000, the Company announced a $100 million share repurchase
program adding to a $100 million buyback plan authorized in June of 1999. The
new plan will be implemented over the 2000-2001 time period and will be
accomplished through open market and privately negotiated transactions. The
Company has purchased 3.4 million shares at a cost of $100 million completing
the June 1999 authorization.

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth a list of the executive officers of Newport News
Shipbuilding Inc. at March 1, 2000.  During the preceding five years each such
officer has served with the Company since the dates indicated below.  Unless
otherwise indicated all offices held are with the Company.

<TABLE>
<CAPTION>
                                                                            Effective
Name (Age at December 31, 1999)     Offices Held                            Date of Term
-------------------------------     ------------                            ------------
<S>                              <C>                                         <C>
William P. Fricks(55)..........  Chairman and Chief Executive Officer        May 1998
</TABLE>

<PAGE>

<TABLE>
<S>                              <C>                                                      <C>
                                 Chairman, President, and Chief Executive Officer         January 1997
                                 President and Chief Executive Officer                    November 1995
                                 President and Chief Operating Officer                    September 1994
Thomas C. Schievelbein(46).....  Executive Vice President - Chief Operating Officer       March 1999
                                 Vice President - Human Resources and Administration      January 1995
                                 Vice President - Strategy and Naval Program Development  January 1994
                                 Vice President - Naval Marketing                         March 1993
Stephen B. Clarkson(62)........  Vice President - General Counsel and Secretary           January 1991
William G. Cridlin, Jr.(53)....  Vice President and General Manager - Submarines          July 1998
                                 Vice President - Marketing                               January 1995
                                 Vice President - Commercial Shipbuilding                 April 1992
Alfred Little, Jr.(53).........  Vice President - Human Resources and EH&S                July 1996
C. Michael Petters(40).........  Vice President and General Manager - Aircraft Carriers   July 1998
                                 Vice President - Aircraft Carriers                       December 1997
                                 Director - Carrier Program                               January 1995
Charles P. Wingfield, Jr.(46)..  Vice President and Controller                            July 1998
                                 Director - Operations Finance                            May 1998
                                 Director - Corporate Finance                             September 1996
                                 Controller & Treasurer                                   January 1995
D. R. Wyatt(41)................  Treasurer                                                September 1996
                                 Assistant Treasurer                                      August 1995
                                 Manager - Finance                                        April 1989
</TABLE>

Each of the executive officers of the Company has been continuously engaged in
the business of the Company, its affiliates or predecessor companies during the
past five years except for:

<TABLE>
<CAPTION>
Name                Previous Employment and Office Held     Period
----                -----------------------------------     ------
<S>                 <C>                                     <C>
Alfred Little, Jr.  Sun Company, Inc.
                    Vice President - Human Resources        1992 to 1996
</TABLE>

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this Item is included under the caption
"Compensation of Directors," and under the caption "Executive Compensation," of
the Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission in connection with its 2000 Annual Meeting of Shareholders,
which information is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is included under the caption "Security
Ownership of Certain Beneficial Owners and Management," of the Company's
definitive Proxy Statement to be filed with the Securities and Exchange
Commission in connection with its 2000 Annual Meeting of Shareholders, which
information is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is included under the caption "Certain
Transactions," of the Company's definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with its 2000 Annual Meeting of
Shareholders, which information is incorporated herein by reference.


                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  1.   Consolidated Financial Statements

          Consolidated Financial Statements required by this Item have been
          included in Item 8. Refer to the "Index to Consolidated Financial
          Statements" set forth in Item 8.

     2.   Financial Statement Schedules

          No financial statement schedules are submitted because they are either
          not applicable, not required, or not material.

     3.   Exhibits - See Index on pages 48 to 51.

(b)  Reports on Form 8-K

     During the fourth quarter of the year ended December 31, 1999, the Company
     filed one Current Report on Form 8-K reporting the resignation on December
     10, 1999 of David J. Anderson as Senior Vice President and Chief Financial
     Officer.

<PAGE>

                                  SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934, NEWPORT NEWS SHIPBUILDING INC., A DELAWARE CORPORATION, HAS DULY
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.

                                   NEWPORT NEWS SHIPBUILDING INC.

Date: March 23, 2000              By:    /s/ William P. Fricks
     ----------------                  --------------------------------
                                               William P. Fricks
                                               Chairman and
                                               Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
                                  SIGNATURE                        TITLE
                                  ---------                        -----
<S>                       <C>                                  <C>
                                                               Chairman and
Date: March 23, 2000      /s/ William P. Fricks                Chief Executive Officer
      ---------------     -----------------------------
                              William P. Fricks

                                                               Vice President and
Date: March 23, 2000      /s/ Charles P. Wingfield, Jr.        Controller (Principal
      ---------------     ---------------------------------    Financial Officer)
                              Charles P. Wingfield, Jr.

Date: March 23, 2000      /s/ Gerald L. Baliles                Director
      ---------------     ---------------------------------
                              Hon. Gerald L. Baliles

Date: March 23, 2000      /s/ Leon A. Edney                    Director
      ---------------     ---------------------------------
                              Leon A. Edney, Admiral (Ret.)

Date: March 23, 2000      /s/ Dr. William R. Harvey            Director
      ---------------     ---------------------------------
                              Dr. William R. Harvey

Date: March 23, 2000      /s/ Charles A. Bowsher               Director
      ---------------     ---------------------------------
                              Hon. Charles A. Bowsher

Date: March 23, 2000      /s/ Dr. Joseph J. Sisco              Director
      ---------------     ---------------------------------
                              Dr. Joseph J. Sisco

Date: March 23, 2000      /s/ Stephen R. Wilson                Director
      ---------------     ---------------------------------
                              Stephen R. Wilson
</TABLE>

<PAGE>

                                 EXHIBIT INDEX


EXHIBIT
NUMBER              DESCRIPTION
------              -----------

3.1       Restated Certificate of Incorporation of the Company dated as of
          December 11, 1996. (Incorporated herein by reference to the Company's
          Registration Statement on Form S-4 dated January 23, 1997, as amended
          (Registration No. 333-20285)).
3.2       Amended and Restated By-laws of the Company dated as of October 12,
          1998. (Incorporated herein by reference to the Company's Current
          Report on Form 8-K, filed on January 22, 1999 (File No. 1-12385)).
4.1       Specimen Certificate of the Company's Common Stock. (Incorporated
          herein by reference to the Company's Registration Statement on Form 10
          dated October 30, 1996, as amended (Registration No. 1-12385)).
4.2       Form of Rights Agreement dated as of June 10, 1998, between the
          Company and First Chicago Trust Company of New York, as Rights Agent.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form 8A dated June 10, 1998, (File No. 001-12385)).
4.3       Form of Certificate of Voting Powers, Designations, Preferences and
          Relative Participating, Optional and Other Special Rights and
          Qualifications, Limitations or Restrictions of Series A Participating
          Cumulative Preferred Stock of the Company. (Attached as Exhibit A to
          the Rights Agreement incorporated herein by reference as Exhibit 4.2
          hereto).
4.4       Form of Right Certificate. (Attached as Exhibit B to the Rights
          Agreement incorporated herein by reference as Exhibit 4.2 hereto).
4.5       Certificate of Elimination of Newport News Shipbuilding Inc.'s Series
          A Participating Junior Preferred Stock. (filed in connection with the
          expiration of the Company's previous Rights Agreement), dated June 4,
          1998. (Incorporated herein by reference to the Company's Registration
          Statement on Form 8A dated June 10, 1998, (File No. 001-12385)).
4.6       Form of Senior Note issued on March 13, 1997 including Guarantees.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form S-4 dated January 23, 1997, as amended (Registration
          No. 333-20285)).
4.7       Form of Senior Subordinated Note issued on March 13, 1997 including
          Guarantees. (Incorporated herein by reference to the Company's
          Registration Statement on Form S-4 dated January 23, 1997, as amended
          (Registration No. 333-20285)).
4.8       Senior Note Indenture dated as of November 26, 1996. (Incorporated
          herein by reference to the Company's Registration Statement on Form
          S-4 dated January 23, 1997, as amended (Registration No. 333-20285)).
4.9       Senior Subordinated Note Indenture dated as of November 26, 1996.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form S-4 dated January 23, 1997, as amended (Registration
          No. 333-20285)).
4.10      First Supplemental Senior Note Indenture dated as December 11, 1996.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form S-4 dated January 23, 1997, as amended (Registration
          No. 333-20285)).
4.11      First Supplemental Senior Subordinated Note Indenture dated as of
          December 11, 1996. (Incorporated herein by reference to the Company's
          Registration Statement on Form S-4 dated January 23, 1997, as amended
          (Registration No. 333-20285)).

<PAGE>

10.1      Distribution Agreement dated as of November 1, 1996 among Tenneco
          Inc., New Tenneco Inc. and the Company. (Incorporated herein by
          reference to the Company's Registration Statement on Form S-4 dated
          January 23, 1997, as amended (Registration No. 333-20285)).
10.2      Amendment No. 1 to Distribution Agreement dated as of December 11,
          1996 by and among Tenneco Inc., New Tenneco Inc. and the Company.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form S-4 dated January 23, 1997, as amended (Registration
          No. 333-20285)).
10.3      Amended and Restated Agreement and Plan of Merger, dated as of June
          19, 1996, among El Paso Natural Gas Company, El Paso Merger Company
          and Tenneco Inc. (Incorporated herein by reference to the Company's
          Registration Statement on Form S-4 dated January 23, 1997, as amended
          (Registration No. 333-20285)).
10.4      Debt and Cash Allocation Agreement, dated as of December 11, 1996
          among Tenneco Inc., New Tenneco Inc. and the Company. (Incorporated
          herein by reference to the Company's Registration Statement on Form
          S-4 dated January 23, 1997, as amended (Registration No. 333-20285)).
10.5      Benefits Agreement, dated as of December 11, 1996 among Tenneco Inc.,
          New Tenneco Inc. and the Company. (Incorporated herein by reference to
          the Company's Registration Statement on Form S-4 dated January 23,
          1997, as amended (Registration No. 333-20285)).
10.6      Insurance Agreement, dated as of December 11, 1996 among Tenneco Inc.,
          New Tenneco Inc. and the Company. (Incorporated herein by reference to
          the Company's Registration Statement on Form S-4 dated January 23,
          1997, as amended (Registration No. 333-20285)).
10.7      Tax Sharing Agreement, dated as of December 11, 1996 among Tenneco
          Inc., the Company, New Tenneco Inc. and El Paso Natural Gas Company.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form S-4 dated January 23, 1997, as amended (Registration
          No. 333-20285)).
10.8      First Amendment to the Tax Sharing Agreement, dated as of December 11,
          1996 among Tenneco Inc., the Company, New Tenneco Inc., and El Paso
          Natural Gas Company. (Incorporated herein by reference to the
          Company's Registration Statement on Form S-4 dated January 23, 1997,
          as amended (Registration No. 333-20285)).
10.9      Subcontract EB-96-2100-010 between the Company and Electric Boat
          Corporation, a subsidiary of General Dynamics, Inc., concerning the
          construction of four Virginia Class attack submarines for the U.S.
          Navy (without schedules, appendices or exhibits thereto). Incorporated
          by reference to the Company's Annual Report on Form 10-K for the year
          ended December 1998 (File No. 1-12385).
10.10     Award/Contract N00024-95-C-2106, issued by Naval Sea Systems Command
          to Newport News Shipbuilding for Aircraft Carrier CVN-76.
          (Incorporated herein by reference to the Company's Registration
          Statement on Form 10 dated October 30, 1996, as amended (Registration
          No. 1-12385)).
10.11     Employment agreement dated February 4, 1999, between the Company and
          William P. Fricks Chairman and Chief Executive Officer of the Company.
          (Incorporated by reference to the Company's Annual Report on Form 10-K
          for the year ended December 1998 (File No. 1-12385)).
10.12     Employment Agreement between the Company and Mr. Thomas C.
          Schievelbein, Executive Vice President - Chief Operating Officer of
          the Company, dated June 1, 1998. (Incorporated herein by reference to
          the Company's Quarterly Report on Form 10-Q for the quarter ended June
          21, 1998 (File No. 1-12385)).
10.13     Newport News Shipbuilding Inc. Stock Ownership Plan. (Incorporated
          herein by reference to the Company's Annual Report on Form 10-K for
          the year ended December 31, 1996 (File No. 1-12385)).
10.14     Amendment No. 1 to Newport News Shipbuilding Inc. Stock Ownership
          Plan, effective as of July 1, 1997. (Incorporated herein by reference
          to the Company's Quarterly Report on Form 10-Q for the quarter ended
          September 21, 1997 (File No. 1-12385)).
10.15     Amendment No. 2 to Newport News Shipbuilding Inc. Stock Ownership
          Plan, effective as of October 8, 1997. (Incorporated herein by
          reference to the Company's Quarterly Report on Form 10-Q for the
          quarter ended September 21, 1997 (File No. 1-12385)).
10.16     Amendment No. 3 to Newport News Shipbuilding Inc. Stock Ownership
          Plan, effective as of May 16, 1997. (Incorporated herein by reference
          to the Company's Quarterly Report on Form 10-Q for the quarter ended
          September 21, 1997 (File No. 1-12385)).

<PAGE>

10.17     1997 Stock Plan for Directors of Newport News Shipbuilding Inc. and
          First Amendment. (Incorporated herein by reference to the Company's
          Annual Report on Form 10-K for the year ended December 31, 1996 (File
          No. 1-12385)).
10.18     Amendment No. 2 to 1997 Stock Plan for Directors of Newport News
          Shipbuilding Inc., effective as of October 9, 1997. (Incorporated
          herein by reference to the Company's Quarterly Report on Form 10-Q for
          the quarter ended September 21, 1997 (File No. 1-12385)).
10.19     Third Amendment to the 1997 Stock Plan for Directors of Newport News
          Shipbuilding Inc. (Incorporated by reference to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1998 (File No.
          1-12385)).
10.20     Deferred Compensation Plan for Non-employee Directors. (Incorporated
          herein by reference to the Company's Annual Report on Form 10-K for
          the year ended December 31, 1996 (File No. 1-12385)).
10.21     First Amendment to Newport News Shipbuilding Inc. Deferred
          Compensation Plan for Non-employee Directors. (Incorporated by
          reference to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1998 (File No. 1-12385)).
10.22     Deferred Compensation Plan. (Incorporated herein by reference to the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1996 (File No. 1-12385)).
10.23     First Amendment to the Newport News Shipbuilding Inc. Deferred
          Compensation Plan, effective December 15, 1998. (Incorporated by
          reference to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1998 (File No. 1-12385)).
10.24*    Second Amendment to Newport News Shipbuilding Inc. Deferred
          Compensation Plan (effective 9/1/99).
10.25*    Third Amendment to Newport News Shipbuilding Inc. Deferred
          Compensation Plan (effective 12/14/99).
10.26*    First Amendment to Newport News Shipbuilding Inc. Annual Incentive
          Plan (effective 1/1/00).
10.27     Newport News Shipbuilding Inc. Change in Control Severance Benefit
          Plan for Key Executives as amended and restated effective March 23,
          1999. (Incorporated by reference to the Company's Annual Report on
          Form 10-K for the year ended December 31, 1998 (File No. 1-12385)).
10.28     Contract (N00024-94-C-2105) between the Company and the United States
          Navy for work necessary to prepare and make ready for the refueling,
          overhaul, alteration, repair, and maintenance of the USS Nimitz (CVN
          68) and its reactor plants (without schedules, appendices or exhibits
          thereto). (Incorporated by reference to the Corporation's Quarterly
          Report on Form 10-Q for the quarter ended June 21, 1998 (File No.
          1-12385)).
10.29     Modification No. P00016 of Contract (N00024-94-C-2105), effective
          April 16, 1998, between the Company and the United States Navy
          (without schedules, appendices or exhibits thereto). (Incorporated by
          reference to the Company's Quarterly Report on Form 10-Q for the
          quarter ended June 21, 1998 (File No. 1-12385)).
10.30     Agreement and Plan of Merger dated as of January 19, 1999, among the
          Company, Ares Acquisition Corporation, a wholly-owned subsidiary of
          the Company, and Avondale Industries, Inc. (Incorporated herein by
          reference to the Company's Current Report on Form 8-K, filed on
          January 22, 1999 (File No. 1-12385)).
10.31     Parent Stock Option Agreement dated as of January 19, 1999, between
          the Company and Avondale Industries, Inc. (Incorporated herein by
          reference to the Company's Current Report on Form 8-K, filed on
          January 22, 1999 (File No. 1-12385)).
10.32     Company Stock Option Agreement dated as of January 19, 1999, between
          Avondale Industries, Inc. and the Company (Incorporated herein by
          reference to the Company's Current Report on Form 8-K, filed on
          January 22, 1999 (File No. 1-12385)).
10.33     Newport News Shipbuilding Inc. Retirement Benefit Restoration Plan,
          effective as of January 1, 1998. (Incorporated by reference to the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1998 (File No. 1-12385)).
10.34     Newport News Shipbuilding Inc. Supplemental Executive Retirement Plan.
          (Incorporated by reference to the Company's Annual Report on Form 10-K
          for the year ended December 31, 1998 (File No. 1-12385)).

<PAGE>

10.35  First Amendment to Newport News Shipbuilding Inc. Retirement Benefit
       Restoration Plan. (Incorporated by reference to the Company's Annual
       Report on Form 10-K for the year ended December 31, 1998 (File No. 1-
       12385)).

10.36  Newport News Shipbuilding Inc. 1998 Stock Incentive Plan. (Incorporated
       herein by reference to the Company's Registration Statement on Form S-8
       filed on October 19, 1998 (Registration No. 333-65877)).

10.37* Contract (N00024-98-C-2107) between the Company and the U.S. Navy for
       work necessary to prepare for the alterations, repairs, maintenance and
       routine work on the USS DWIGHT D. EISENHOWER (CVN 69) and its reactor
       plants (without schedules, appendices or exhibits thereto).

10.38* Modification No. P00005 of Contract (N00024-98-C-2107) effective February
       12, 1999, between the Company and the U.S. Navy (without schedules,
       appendices or exhibits thereto).

10.39* Modification No. P00012 of Contract (N00024-98-C-2107) effective January
       21, 2000, between the Company and the U.S. Navy (without schedules,
       appendices or exhibits thereto).

21.1*  Subsidiaries of the Registrant.
24.1*  Powers of Attorney.
27.1*  Financial Data Schedule.

* Filed herewith.


Exhibits 10.11, 10.12, 10.13, 10.14, 10.15, 10.16, 10.17, 10.18, 10.19, 10.20,
10.21, 10.22, 10.23, 10.24, 10.25, 10.26, 10.27, 10.33, 10.34, 10.35, and 10.36
hereto constitute management contracts or compensatory plans or arrangements
within the meaning of Item 14(a)(3) of Form 10-K.