<PAGE>

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

                        ------------------------------

                                   FORM 10-Q

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

                 FOR THE QUARTERLY PERIOD ENDED JUNE 17, 2001

                                      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    23607-2770
----------------------------------------------    ----------
Address of Principal Executive Offices            Zip Code

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

                        ------------------------------

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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

Common Stock, par value $.01 per share: 35,397,728 shares outstanding and
associated preferred stock purchase rights as of July 13, 2001.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>                                                                                                        <C>
Part I--Financial Information
     Newport News Shipbuilding Inc.
         Consolidated Statements of Earnings ........................................................        2
         Consolidated Balance Sheets.................................................................        4
         Consolidated Statements of Cash Flows.......................................................        5
         Notes to Consolidated Financial Statements..................................................        6
         Management's Discussion and Analysis of Financial Condition and Results of Operations.......        9

Part II--Other Information
     Item 1. Legal Proceedings.......................................................................       12
     Item 2. Changes in Securities and Use of Proceeds...............................................        *
     Item 3. Defaults Upon Senior Securities.........................................................        *
     Item 4. Submission of Matters to a Vote of Security Holders.....................................       12
     Item 5. Other Matters...........................................................................       13
     Item 6. Exhibits and Reports on Form 8-K........................................................       13
</TABLE>



*No response to this item is included herein for the reason that it is
inapplicable or the answer to such item is negative.


THIS QUARTERLY REPORT ON FORM 10-Q SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000.

                                       1
<PAGE>

                                    PART I

                             FINANCIAL INFORMATION

                        NEWPORT NEWS SHIPBUILDING INC.

                      CONSOLIDATED STATEMENTS OF EARNINGS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                              Quarter Ended
                                                       ----------------------------
                                                         June 17,        June 18,
                                                           2001            2000
                                                       ------------    ------------
<S>                                                    <C>             <C>
Millions (Except Shares and Per Share Amounts)

Revenues ...........................................   $        576    $        532
Operating Costs and Expenses .......................           (525)           (478)
Other Income (Expense), net ........................             (2)             --
                                                       ------------    ------------

Operating Earnings .................................             49              54
Interest Expense, net of interest capitalized ......            (13)            (14)
                                                       ------------    ------------

Earnings Before Income Taxes .......................             36              40
Provision for Income Taxes .........................            (15)            (16)
                                                       ------------    ------------

Net Earnings .......................................   $         21    $         24
                                                       ============    ============

Weighted Average Number of Common Shares Outstanding

     Basic .........................................     29,548,228      30,919,234
                                                       ============    ============
     Diluted .......................................     31,370,125      32,290,845
                                                       ============    ============

Net Earnings Per Common Share

     Basic .........................................   $        .73    $        .77
                                                       ============    ============
     Diluted .......................................   $        .69    $        .74
                                                       ============    ============
Dividends Declared Per Common Share ................   $        .04    $        .04
                                                       ============    ============
</TABLE>



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

                                       2
<PAGE>

                                    PART I

                             FINANCIAL INFORMATION

                        NEWPORT NEWS SHIPBUILDING INC.

                      CONSOLIDATED STATEMENTS OF EARNINGS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                       ----------------------------
                                                         June 17,         June 18,
                                                           2001             2000
                                                       ------------    ------------
<S>                                                    <C>             <C>
Millions (Except Shares and Per Share Amounts)

Revenues ...........................................   $      1,061    $      1,001
Operating Costs and Expenses .......................           (959)           (901)
Other Income (Expense), net ........................             (2)              1
                                                       ------------    ------------

Operating Earnings .................................            100             101
Interest Expense, net of interest capitalized ......            (24)            (25)
                                                       ------------    ------------

Earnings Before Income Taxes .......................             76              76
Provision for Income Taxes .........................            (31)            (31)
                                                       ------------    ------------

Net Earnings .......................................   $         45    $         45
                                                       ============    ============

Weighted Average Number of Common Shares Outstanding

     Basic .........................................     29,587,750      31,506,944
                                                       ============    ============
     Diluted .......................................     31,381,271      32,737,629
                                                       ============    ============

Net Earnings Per Common Share

     Basic .........................................   $       1.53    $       1.42
                                                       ============    ============
     Diluted .......................................   $       1.44    $       1.36
                                                       ============    ============
Dividends Declared Per Common Share ................   $        .08    $        .08
                                                       ============    ============
</TABLE>

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

                                       3
<PAGE>

                        NEWPORT NEWS SHIPBUILDING INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    June 17,     December 31,
                                                                      2001          2000
                                                                   ----------    ------------
                                                                  (Unaudited)     (Audited)
<S>                                                               <C>             <C>
Millions (Except Share Amounts)
ASSETS
Current Assets
Cash and Cash Equivalents ....................................       $    46        $     3
Accounts Receivable ..........................................           116            135
Contracts in Process .........................................           329            265
Inventory ....................................................            48             50
Deferred Income Taxes ........................................           101             90
Other Current Assets .........................................            19             13
                                                                     -------        -------
Total Current Assets .........................................           659            556
                                                                     -------        -------
Noncurrent Assets
Property, Plant and Equipment, net ...........................           671            692
Other Assets .................................................           234            228
                                                                     -------        -------
Total Noncurrent Assets ......................................           905            920
                                                                     -------        -------
                                                                     $ 1,564        $ 1,476
                                                                     =======        =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade Accounts Payable .......................................       $    76        $    51
Short-Term Debt ..............................................            38             29
Postretirement Benefits ......................................           137            134
Other Accrued Liabilities ....................................           303            223
                                                                     -------        -------
Total Current Liabilities ....................................           554            437
                                                                     -------        -------
Noncurrent Liabilities
Long-Term Debt ...............................................           447            498
Deferred Income Taxes ........................................           246            245
Other Long-Term Liabilities ..................................            38             38
                                                                     -------        -------
Total Noncurrent Liabilities .................................           731            781
                                                                     -------        -------
Commitments and Contingencies (See Note 3)

Stockholders' Equity
Common Stock, $.01 par value -
   authorized 70,000,000 shares; issued 35,399,967 shares at
   June 17, 2001 and 35,352,730 shares at December 31, 2000...             1              1
Paid-In Capital ..............................................           434            384
Retained Earnings ............................................           210            168
Unearned Compensation ........................................            (1)            (1)
Stock Employee Compensation Trust (SECT)  - shares held of
   5,866,096 and 5,655,695 at June 17, 2001 and
   December 31, 2000, respectively ...........................          (365)          (294)
                                                                     -------        -------
Total Stockholders' Equity ...................................           279            258
                                                                     -------        -------
                                                                     $ 1,564        $ 1,476
                                                                     =======        =======
</TABLE>

   The accompanying notes are an integral part of these consolidated balance
                                    sheets.

                                       4
<PAGE>

                        NEWPORT NEWS SHIPBUILDING INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

                                                          Six Months Ended
                                                        ---------------------
                                                         June 17,   June 18,
                                                           2001      2000
                                                        ---------  ---------
Millions
Cash Flows from Operating Activities:
Net Earnings ......................................       $  45      $  45
Adjustments to Reconcile Net Earnings to
     Net Cash Provided by Operating Activities -
         Depreciation and Amortization ............          27         28
         Deferred Income Taxes ....................         (10)        (4)
         Loss on Asset Disposition ................           1          5
         (Gain) on Equity Investments .............          (2)        (2)
         Changes in Components of Working Capital -
           Decrease (Increase) in -
              Accounts Receivable .................          21        (26)
              Contracts in Process ................         (64)        42
              Inventory ...........................           2         (2)
              Other Current Assets ................          (6)         2
           Increase (Decrease) in -
              Trade Accounts Payable ..............          25        (26)
              Accrued Liabilities and Other .......          83         26
         Other, net ...............................           1         (1)
                                                          -----      -----
Net Cash Provided by Operating Activities .........         123         87
                                                          -----      -----

Cash Flows from Investing Activities:
Capital Expenditures ..............................          (7)        (6)
Other .............................................           -         (4)
                                                          -----      -----
Net Cash Used by Investing Activities .............          (7)       (10)
                                                          -----      -----

Cash Flows from Financing Activities:
(Decrease) Increase in Revolving Credit Facility ..         (34)         6
Payments on Short-Term Debt .......................          (8)        (8)
Purchase of Common Stock ..........................         (10)       (60)
Stock Options Exercised ...........................         (16)        (5)
Dividends Paid ....................................          (3)        (3)
Other .............................................          (2)         -
                                                          -----      -----

Net Cash Used by Financing Activities .............         (73)       (70)
                                                          -----      -----
Net Increase in Cash and Cash Equivalents .........          43          7
Cash and Cash Equivalents at Beginning of Period ..           3          2
                                                          -----      -----
Cash and Cash Equivalents at End of Period ........       $  46      $   9
                                                          =====      =====
Cash Paid During the Period for Income Taxes ......       $   -      $  37
                                                          =====      =====
Cash Paid During the Period for Interest ..........       $  24      $  27
                                                          =====      =====

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

                                       5
<PAGE>

                        NEWPORT NEWS SHIPBUILDING INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1. BASIS OF PREPARATION

Unless the context otherwise requires, the term "Company" refers to Newport News
Shipbuilding Inc. ("NNS") and its consolidated subsidiaries. Although certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations, the Company believes
that the disclosures included herein are adequate to make the information
presented not misleading. Operating results for the three and six month periods
ended June 17, 2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001. These unaudited financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.

2. EARNINGS PER 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 period.
Diluted earnings per common share is computed assuming the terms and conditions
for the contingent shares and common stock options were met and converted on
June 17, 2001 and June 18, 2000, respectively.

The Company established a Stock Employee Compensation Trust ("SECT") in 1997 to
fund a portion of its obligations arising from various employee compensation
plans. The Company issued shares to the SECT from treasury stock and the SECT
engages in open market purchases. As of June 17, 2001, the SECT held 5.9 million
shares of the Company's common stock, which are not considered outstanding in
computing earnings per share.

3. 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 Ronald 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.

                                       6
<PAGE>

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 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. In June 2000, the Department of Defense Inspector
General's Office issued a subpoena to the Company for certain records pertaining
to this matter. The Company is in the process of responding to that subpoena.
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.

Litigation

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

4. REPORTABLE SEGMENTS

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 one month to three
years, and Construction contracts generally span a period of two or more years.
The reportable segments are managed separately because each business has
different customer requirements based on the nature of the services provided.
The Company evaluates performance based on profit or loss from operations before
interest and income taxes, not including nonrecurring gains and losses.

Information about Revenues and Operating Earnings
For the Quarters Ended June 17, 2001 and June 18, 2000, respectively (in
millions)

<TABLE>
<CAPTION>
                                                                 Fleet                             All
                                               Construction    Services        Engineering     Others (2)   Total
                                               ------------    --------        -----------     ----------   -----
<S>                                            <C>             <C>             <C>             <C>          <C>
2001
----
Revenues....................................     $     273      $     212       $     87       $      4    $    576
Segment Operating Earnings - reported.......            28             18              5             (2)         49
Segment Operating Earnings - adjusted (1)...            32             20              5              1          58

2000
----
Revenues....................................     $     227      $     219       $     80       $      6    $    532
Segment Operating Earnings..................            27             22              4              1          54
</TABLE>

1.   Adjusted segment operating earnings exclude the transaction costs
     associated with the proposed acquisition of the Company by General Dynamics
     Corporation.

2.   Other business activities include valve and pump repair and technical
     services, equity investments, and corporate activities.

                                       7
<PAGE>

Information about Revenues and Operating Earnings
For the Six Months Ended June 17, 2001 and June 18, 2000, respectively (in
millions)

<TABLE>
<CAPTION>
                                                                 Fleet                            All
                                               Construction    Services        Engineering     Others (2)   Total
                                               ------------    --------        -----------     ----------   -----
<S>                                            <C>             <C>             <C>             <C>         <C>
2001
----
Revenues....................................     $     504      $     397       $    154       $      6    $  1,061
Segment Operating Earnings - reported.......            55             38              9             (2)        100
Segment Operating Earnings - adjusted (1)...            59             40              9              1         109

2000
----
Revenues....................................     $     433      $     411       $    148       $      9    $  1,001
Segment Operating Earnings..................            51             39              9              2         101
</TABLE>

1.   Adjusted segment operating earnings exclude the transaction costs
     associated with the proposed acquisition of the Company by General Dynamics
     Corporation.

2.   Other business activities include valve and pump repair and technical
     services, equity investments, and corporate activities.

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 Revenues and Operating Earnings to Consolidated
Amounts For the Quarters Ended June 17, 2001 and June 18, 2000, respectively (in
millions)

<TABLE>
<CAPTION>
                                                                                2001         2000
                                                                             ---------    ---------
<S>                                                                          <C>          <C>
Revenues
--------
Total revenues for reportable segments...................................    $     572    $     526
Other revenues...........................................................            4            6
                                                                             ---------    ---------
         Total consolidated revenues.....................................    $     576    $     532
                                                                             =========    =========

Operating Earnings
------------------
Total operating earnings for reportable segments.........................    $      51    $      53
Other operating earnings.................................................           (2)           1
                                                                             ---------    ---------
         Total consolidated operating earnings...........................    $      49    $      54
                                                                             =========    =========
</TABLE>

Reconciliation of Segment Revenues and Operating Earnings to Consolidated
Amounts
For the Six Months Ended June 17, 2001 and June 18, 2000, respectively (in
millions)

<TABLE>
<CAPTION>
                                                                                2001         2000
                                                                             ---------    ---------
<S>                                                                          <C>          <C>
Revenues
--------
Total revenues for reportable segments...................................    $   1,055    $     992
Other revenues...........................................................            6            9
                                                                             ---------    ---------
         Total consolidated revenues.....................................    $   1,061    $   1,001
                                                                             =========    =========

Operating Earnings
------------------
Total operating earnings for reportable segments.........................    $     102    $      99
Other operating earnings.................................................           (2)           2
                                                                             ---------    ---------
         Total consolidated operating earnings...........................    $     100    $     101
                                                                             =========    =========
</TABLE>

                                       8
<PAGE>

Information about Assets (in millions)

<TABLE>
<CAPTION>
                                                                Fleet                             All
                                               Construction    Services        Engineering     Others (1)   Total
                                               ------------    --------        -----------     ----------   -----
<S>                                            <C>             <C>             <C>             <C>          <C>
June 17, 2001...............................     $   229       $    152         $     56       $      8    $   445

December 31, 2000...........................         236            122               30             12        400
</TABLE>

1.   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.


Reconciliation of Segment Assets to Consolidated Amounts (in millions)

<TABLE>
<CAPTION>
                                                                              June 17,              December 31,
                                                                                2001                    2000
                                                                            -----------             ------------
<S>                                                                        <C>                      <C>
Assets
------
Total A/R and CIP for reportable segments................................    $     437                $       388
Other unallocated A/R and CIP............................................            8                         12
Other unallocated amounts................................................        1,119                      1,076
                                                                             ---------                -----------
         Total consolidated assets.......................................    $   1,564                $     1,476
                                                                             =========                ===========
</TABLE>


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

BUSINESS OVERVIEW

The Company's primary business is the design, construction, repair, overhaul and
refueling of nuclear-powered aircraft carriers and submarines for the U.S. Navy.
The Company also provides ongoing fleet services for other U.S. Navy vessels
through work in overhauling, lifecycle engineering, and repair. The U.S.
Government accounted for approximately 98% of the Company's revenues for the
quarterly periods ended June 17, 2001 and June 18, 2000.

RESULTS OF OPERATIONS
                                     For the Second Quarter Ended
--------------------------------------------------------------------------------
                                         2001          2000
--------------------------------------------------------------------------------
Millions
Revenues............................   $  576        $   532
Operating Earnings..................       49             54


Revenues for the second quarter of 2001 increased $44 million to $576 million
compared with the same period in 2000. The revenue improvement was primarily
attributable to gains in the Construction and Engineering segments, which were
partially offset by lower Fleet Services volume. Construction revenues reflected
increased activity on the Virginia-class submarine program and the Nimitz-class
aircraft carrier, CVN 77. The majority of the Engineering segment increase was
attributable to growth in propulsion plant design work on the next generation of
aircraft carriers, CVNX. Fleet Services revenues decreased due to lower Nimitz
refueling and overhaul, ship repair, and fleet maintenance activities, partially
offset by increased activity on the Eisenhower refueling and overhaul.

                                       9
<PAGE>

Second quarter 2001 operating earnings of $49 million included $9 million of
transaction costs associated with the proposed acquisition of the Company by
General Dynamics Corporation. Excluding these one-time items, operating earnings
were $58 million and reflected an increase of 7% over 2000 second quarter
operating earnings of $54 million. These gains were primarily attributable to
Construction and Engineering volume gains, partially offset by lower Fleet
Services activity.


                                               For the Six Months Ended
--------------------------------------------------------------------------------
                                                    2001          2000
--------------------------------------------------------------------------------
Millions
Revenues.......................................   $ 1,061       $ 1,001
Operating Earnings.............................       100           101


Revenues for the first six months of 2001 increased $60 million to $1,061
million compared with the same period in 2000. The increased revenue was the
result of Construction and Engineering volume gains, which were partially offset
by lower Fleet Services activity. Construction gains were primarily attributable
to increased activity on the Virginia-class submarine program and the
Nimitz-class aircraft carrier, CVN 77. The Engineering increase was primarily
attributable to propulsion plant design work on the next generation of aircraft
carriers, CVNX. Fleet Services revenues decreased due to lower Nimitz refueling
and overhaul, ship repair, and fleet maintenance activities, partially offset by
increased activity on the Eisenhower refueling and overhaul.

Operating earnings of $100 million for the first six months of 2001 included $9
million of transaction costs associated with the proposed acquisition of the
Company by General Dynamics Corporation. Excluding these one-time items, first
half operating earnings were $109 million and reflected an increase of 8% over
the first half 2000 operating earnings. This increase was primarily driven by
Construction and Engineering volume gains and improved Fleet Services margins,
partially offset by lower Fleet Services volume. In addition, the Company
reached a final agreement with the Navy regarding the simplification of its
overhead allocation system. The final agreement amends a preliminary
understanding reached between the parties during the third quarter of 2000. The
reallocation of costs between programs resulted in increased revenues and
operating earnings in the Fleet Services segment of approximately $3 million,
with corresponding decreases in the Construction segment. Overall, there was no
material impact on first half revenues, operating earnings, or cash flows of the
Company.


The Company's funded backlog was $6.3 billion at June 17, 2001, substantially
all of which was U.S. Navy-related.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

The following table reflects the summarized components of the Company's cash
flows for the periods indicated:

                                                        For the Six Months Ended
--------------------------------------------------------------------------------
                                                          2001          2000
--------------------------------------------------------------------------------
Millions
Net cash provided by operating activities............   $   123        $    87
Capital expenditures.................................        (7)            (6)
Other investing cash flows...........................         -             (4)
                                                        -------        -------

Subtotal.............................................       116             77
Financing activities.................................       (73)           (70)
                                                        -------        -------

Net increase in cash and cash equivalents............   $    43        $     7
                                                        =======        =======

                                       10
<PAGE>

NET CASH PROVIDED BY OPERATING ACTIVITIES

The $36 million increase in 2001's comparative cash flows from operating
activities was primarily due to a decrease in working capital, as well as lower
income tax and interest payments. The decrease in working capital was due to
normal timing fluctuations with respect to billings, accounts receivable
collections, the recognition of contract costs, and the payment of trade
accounts payable.


OTHER INVESTING CASH FLOWS

Other investing cash flow activities in 2000 primarily relate to a $5 million
equity investment in AMSEC LLC, partially offset by a $1 million dividend
received from Abu Dhabi Ship Building.

FINANCING ACTIVITIES

The financing activities for the period ended June 17, 2001 reflect the purchase
of Company stock on the open market, pay-down of revolver debt, payments on
short-term debt, outlays for exercised stock options, and the payment of two
quarterly dividends of four cents per share. The 2000 financing activities
relate primarily to the purchase of Company stock, increased revolver
borrowings, payments on short-term debt, outlays for exercised stock options,
and the payment of two quarterly dividends of four cents per share.



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


There were no material changes with respect to this item from the disclosure
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.

RECENTLY ISSUED STANDARDS

In June 1998, the Financial Accounting Standards ("FAS") 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 on 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 did
not have a material impact on the Company's financial position, results of
operations, or cash flows.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No.101, Revenue Recognition in Financial Statements (SAB 101), which,
among other guidance, clarifies certain conditions to be met in order to
recognize revenue. In June 2000, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101B, which delayed the implementation of SAB 101
until the fourth quarter of fiscal years beginning after December 15, 1999. The
implementation of SAB 101 did not have a material impact on the Company's
financial position, results of operations, or cash flows.

                                       11
<PAGE>

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

This Quarterly Report on Form 10-Q contains forward-looking statements
concerning, among other things, the Company's prospects, developments and
business strategies. These forward-looking statements are identified by terms
such as "projections," "intends," "estimates," "expects," "projects,"
"anticipates," "goal," "plan," "should," "could," "believes," "assumed," and
"scheduled." The Company's actual results may differ materially from the results
discussed in the forward-looking statements. Factors that might cause such a
difference include (i) the factors discussed in Note 3 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 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.


                                    PART II

                               OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

Reference is made to Note 3, "Commitments and Contingencies" to the Company's
Consolidated Financial Statements contained herein, which is incorporated in
this Item 1 of Part II by reference.

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

On May 18, the Company held its 2001 Annual Meeting of Stockholders. Three
proposals were presented to the stockholders for their approval. The outcome of
the voting on the three proposals was as follows:

1. Proposal for the re-election of two Class II directors to hold office until
   2004.

     Nominee                  For          Withheld
   -------------         -------------     --------
   Leon A. Edney           31,843,064       508,069
   Dr. Joseph J. Sisco     31,680,157       670,976

2. Proposal to increase by 400,000 the number of shares available for issuance
   under the Newport News Shipbuilding Employee Stock Purchase and Accumulation
   Plan and amendment of such plan to change its expiration date from December
   31, 2001 to December 31, 2006.

        For               Against          Abstain           Broker Non-Votes
   ------------          ---------        ---------          ----------------
    31,447,030            747,358          156,745                None

3. Proposal to ratify the appointment by the Board of Directors of Arthur
   Andersen LLP as the Company's independent public accountants for 2001.

        For               Against          Abstain          Broker Non-Votes
   ------------          ---------        ---------         ----------------
    31,812,751            364,541          173,841                None

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<PAGE>

ITEM 5.  OTHER MATTERS.

Proposed Acquisition of Newport News Shipbuilding Inc. by General Dynamics
Corporation and the Subsequent Northrop Grumman Corporation Offer to Newport
News Shipbuilding Inc.

In April 2001, the Boards of Directors of Newport News Shipbuilding Inc. and
General Dynamics Corporation ("General Dynamics") approved and each company
executed a definitive agreement that provides for the acquisition of Newport
News Shipbuilding by General Dynamics. The acquisition is to be accomplished
through a cash tender offer for all of Newport News Shipbuilding's publicly held
outstanding shares at a price of $67.50 per share. The tender offer is subject
to the tendering of a majority of the Newport News Shipbuilding shares, U.S.
regulatory clearance, and other customary closing conditions.

In May 2001, Northrop Grumman Corporation commenced an offer to acquire the
entire common equity interest in Newport News Shipbuilding for Northrop Grumman
common stock and cash. That offer, which is more fully described in a prospectus
that accompanied the offer is designed to have a value of $67.50 per share
subject to the limitations on the amount of Northrop Grumman stock and cash to
be issued, and provides that each Newport News Shipbuilding stockholder will be
able to elect to receive, for all his or her Newport News Shipbuilding shares,
cash or Northrop Grumman shares subject to the election and proration procedures
and limitations described in the prospectus. This offer is subject to a number
of conditions, including Newport News Shipbuilding terminating the agreement
with General Dynamics and entering into an agreement with Northrop Grumman and
U.S. regulatory clearance.

In June 2001, the Board of Directors of Newport News Shipbuilding considered
both the General Dynamics and Northrop Grumman offers. The Board unanimously
affirmed its prior recommendation that the shareholders of Newport News
Shipbuilding accept the General Dynamics offer and stated that it was unable to
take a position with respect to the Northrop Grumman offer until it had obtained
additional information regarding the position of the Department of Defense and
the Department of Justice with respect to both the General Dynamics offer and
the Northrop Grumman offer.

Reviews of both offers are ongoing by the Departments of Defense and Justice.
Newport News Shipbuilding can give no assurances as to whether either offer will
be approved and, unless such approval is obtained, neither transaction will be
consummated.

Potential Sale of Equity Investment

The Company is engaged in negotiations concerning the potential sale of some or
all of the Company's equity investment in Abu Dhabi Ship Building to a third
party. No definitive sales agreement has been reached and no assurances can be
given whether these negotiations will ultimately lead to an agreement for the
sale of all or any portion of such investment or whether the necessary approval
by the Government of the United Arab Emirates of such a sale will be obtained.

Share Repurchase Programs

On February 1, 2001, the Company announced a $100 million share repurchase
program. The new plan is a follow-on to previous programs under which the
Company purchased 5.7 million shares at a cost of $187 million since the middle
of 1999. The Company has suspended any share purchases under the new plan in
light of the agreement with General Dynamics.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Exhibit Number:

Exhibit 10.1      Amendment to Newport News Shipbuilding Inc. Employee Stock
                  Purchase & Accumulation Plan.

Exhibit 10.2      Fifth Amendment to Newport News Shipbuilding Inc. Deferred
                  Compensation Plan.

                                       13
<PAGE>

Exhibit 10.3      Sixth Amendment to Newport News Shipbuilding Inc. Deferred
                  Compensation Plan.

Exhibit 10.4      First Amendment to Newport News Shipbuilding Inc. Change in
                  Control Severance Benefit Plan for Key Executives.

Exhibit 10.5      Second Amendment to Newport News Shipbuilding Inc. Change in
                  Control Severance Benefit Plan for Key Executives.

Exhibit 10.6      First Amendment to Newport News Shipbuilding Inc. Supplemental
                  Executive Retirement Plan.

Exhibit 10.7      Second Amendment to Newport News Shipbuilding Inc. Retirement
                  Benefit Restoration Plan.

Exhibit 10.8      Third Amendment to Newport News Shipbuilding Inc. Retirement
                  Benefit Restoration Plan.

Exhibit 10.9      Second Amendment to Newport News Shipbuilding Inc. Annual
                  Incentive Plan.

Exhibit 10.10     Second Amendment to Newport News Shipbuilding Inc. Deferred
                  Compensation Plan for Non-employee Directors.

Exhibit 10.11     Second Amendment to the Trust Agreement for Newport News
                  Shipbuilding Inc. Benefits Protection Plans.

Exhibit 10.12     Third Amendment to the Trust Agreement for Newport News
                  Shipbuilding Inc. Benefits Protection Plans.

Exhibit 10.13     Contract N00024-98-C-2107, Contract for Accomplishment of the
                  Refueling and Complex Overhaul (RCOH) of the USS DWIGHT D.
                  EISENHOWER (CVN 69) - Contract Modification P00019.

Reports on Form 8-K:

Date of Filing                          Subject
--------------                          -------

April 24, 2001    Agreement and Plan of merger among General Dynamics
                  Corporation, Grail Acquisition Corporation, a wholly owed
                  subsidiary of General Dynamics Corporation, and Newport News
                  Shipbuilding Inc.

                                       14
<PAGE>

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

                               Newport News Shipbuilding Inc.


                                         By:   /s/ Charles S. Ream
                                             -------------------------

                                             Senior Vice President and
                                             Chief Financial Officer

Date:  July 17, 2001

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