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 SEPTEMBER 20, 1998

                                       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:  35,286,386  shares  and  associated
preferred stock purchase rights as of October 15, 1998.


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


                                                                                                           PAGE
                                                                                                           ----
<S>     <C>

Part I--Financial Information
     Newport News Shipbuilding Inc.
         Consolidated Statements of Earnings - Third Quarter.........................................        2
         Consolidated Statements of Earnings - Nine Months...........................................        3
         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.......................................................................       13
     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.....................................        *
     Item 5. Other Information.......................................................................        *
     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, 1997.

                                       1

<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

                         NEWPORT NEWS SHIPBUILDING INC.

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                         Quarter Ended
                                                                           ----------------------------------------
                                                                              September 20,         September 21,
                                                                                  1998                  1997
                                                                           ------------------    ------------------
<S>     <C>

Millions (Except Shares and Per Share Amounts)

Revenues...............................................................       $        462          $        423
Operating Costs and Expenses...........................................               (419)                 (409)
Other Income (Expense), net............................................                  -                     2
                                                                              ------------          ------------

Operating Earnings.....................................................                 43                    16
Interest Expense, net of interest capitalized..........................                (14)                  (14)
                                                                              ------------          ------------

Earnings Before Income Taxes...........................................                 29                     2
Provision for Income Taxes.............................................                (12)                   (1)
                                                                              ------------          ------------


Net Earnings...........................................................       $         17          $          1
                                                                              ============          ============



Weighted Average Number of Common Shares Outstanding

     Basic.............................................................         34,564,034            34,907,846

     Diluted...........................................................         35,571,649            35,768,708

Net Earnings Per Common Share


     Basic.............................................................       $        .47          $        .05
                                                                              ============          ============

     Diluted...........................................................       $        .46          $        .04
                                                                              ============          ============

Dividends Declared Per Common Share....................................       $        .04          $        .04
                                                                              ============          ============
</TABLE>




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

                                       2

<PAGE>

                         NEWPORT NEWS SHIPBUILDING INC.

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                           ----------------------------------------
                                                                              September 20,         September 21,
                                                                                  1998                  1997
                                                                           ------------------    ------------------
Millions (Except Shares and Per Share Amounts)
<S>   <C>
Revenues...............................................................       $      1,325          $      1,276
Operating Costs and Expenses...........................................             (1,200)               (1,190)
Other Income (Expense), net............................................                  -                     2
                                                                              ------------          ------------

Operating Earnings.....................................................                125                    88
Interest Expense, net of interest capitalized..........................                (41)                  (40)
                                                                              ------------          ------------

Earnings Before Income Taxes...........................................                 84                    48
Provision for Income Taxes.............................................                (35)                  (20)
                                                                              ------------          ------------


Net Earnings...........................................................       $         49          $         28
                                                                              ============          ============



Weighted Average Number of Common Shares Outstanding

     Basic.............................................................         34,810,940            34,715,221

     Diluted...........................................................         35,900,260            35,349,136

Net Earnings Per Common Share


     Basic.............................................................       $       1.39          $        .82
                                                                              ============          ============

     Diluted...........................................................       $       1.35          $        .80
                                                                              ============          ============

Dividends Declared Per Common Share....................................       $        .12          $        .12
                                                                              ============          ============
</TABLE>

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

                                       3
<PAGE>

                         NEWPORT NEWS SHIPBUILDING INC.

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           September 20,            December 31,
                                                                                1998                    1997
                                                                         -----------------       ------------------
<S>   <C>
Millions (Except Share Amounts)
ASSETS
Current Assets
Cash and Cash Equivalents..............................................      $       -               $       3
Accounts Receivable....................................................            125                     136
Contracts in Process...................................................            258                     210
Inventory..............................................................             71                      44
Deferred Income Taxes..................................................            124                      50
Other Current Assets...................................................             12                      12
                                                                             ---------               ---------

Total Current Assets...................................................            590                     455
                                                                             ---------               ---------

Noncurrent Assets
Property, Plant and Equipment, net.....................................            762                     816
Other Assets...........................................................            212                     205
                                                                             ---------               ---------

Total Noncurrent Assets................................................            974                   1,021
                                                                             ---------               ---------


                                                                             $   1,564               $   1,476
                                                                             =========               =========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade Accounts Payable.................................................      $     112               $     151
Short-Term Debt........................................................             38                      30
Accrued Liabilities and Other..........................................            264                     175
                                                                             ---------               ---------

Total Current Liabilities..............................................            414                     356
                                                                             ---------               ---------

Noncurrent Liabilities
Long-Term Debt.........................................................            575                     548
Deferred Income Taxes..................................................            192                     199
Postretirement Benefits................................................            107                     107
Other Long-Term Liabilities............................................             68                      83
Commitments and Contingencies (See Note 3).............................
                                                                             ---------               ---------

Total Noncurrent Liabilities...........................................            942                     937
                                                                             ---------               ---------

Stockholders' Equity
Common Stock, $.01 par value -
     authorized 70,000,000 shares; issued 35,286,386 shares at
     September 20,1998, and 34,948,663 shares at December 31, 1997.....              1                       1
Paid-In Capital........................................................            262                     256
Accumulated Deficit....................................................            (23)                    (68)
Unearned Compensation..................................................            (32)                     (4)
Treasury Stock (zero shares at September 20,1998 and
     84,069 shares at December 31, 1997)...............................              -                      (2)
                                                                             ---------               ---------
Total Stockholders' Equity.............................................            208                     183
                                                                             ---------               ---------


                                                                             $   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)
<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                           ----------------------------------------
                                                                              September 20,         September 21,
                                                                                  1998                  1997
                                                                           ------------------    ------------------
<S>  <C>
Millions
Cash Flows from Operating Activities:
Net Earnings  ...........................................................       $   49               $    28
Adjustments to Reconcile Net Earnings to
     Net Cash Provided by Operating Activities -
         Depreciation and Amortization...................................           48                    51
         Deferred Income Taxes...........................................          (81)                    9
         Loss on Equity Investments......................................            1                     -
         Changes in Components of Working Capital -
           Decrease (Increase) in -
              Accounts Receivable........................................           11                    73
              Contracts in Process.......................................          (48)                  (20)
              Inventory .................................................          (27)                    4
              Other Current Assets.......................................           (1)                   (3)
           Increase (Decrease) in -
              Trade Accounts Payable.....................................          (39)                  (11)
              Accrued Liabilities and Other..............................           90                    31
         Other, net......................................................            4                   (27)
                                                                                ------               -------
Net Cash Provided by Operating Activities................................            7                   135
                                                                                ------               -------

Cash Flows from Investing Activities:
Capital Expenditures.....................................................           (9)                  (16)
Other....................................................................           (5)                   (3)
                                                                                ------               -------
Net Cash Used by Investing Activities....................................          (14)                  (19)
                                                                                ------               -------

Cash Flows from Financing Activities:
Net Increase (Decrease) in Revolving Credit Facility.....................           41                   (24)
Increase in Short-Term Debt..............................................            7                     -
Payments on Long-Term Debt...............................................          (15)                  (21)
Proceeds from Issuance of Common Stock...................................            8                     9
Treasury Stock Purchases.................................................          (36)                    -
Proceeds from Issuance of Treasury Stock.................................            3                     -
Disbursements for Employee Stock Plans...................................            -                    (4)
Dividends Paid...........................................................           (4)                   (4)
                                                                                ------               -------
Net Cash Provided (Used) by Financing Activities.........................            4                   (44)
                                                                                ------               -------

Net Increase in Cash and Cash Equivalents................................           (3)                   72
Cash and Cash Equivalents at Beginning of Period.........................            3                     1
                                                                                ------               -------


Cash and Cash Equivalents at End of Period...............................       $    -               $    73
                                                                                ======               =======

Cash Paid During the Period for Income Taxes.............................       $   20               $     1
                                                                                ======               =======

Cash Paid During the Period for Interest.................................       $   32               $    32
                                                                                ======               =======
</TABLE>

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.  The Company is  reporting  quarterly  results on an
accounting-month basis consistent with the prior year. Operating results for the
three and nine  month  periods  ended  September  20,  1998 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1998. 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, 1997. In the opinion
of the Company's  management,  the unaudited  financial  statements  contain all
adjustments  (consisting only of normal recurring accruals) necessary for a fair
presentation.

2. EARNINGS PER SHARE

In 1997, the Company adopted Statement of Financial Accounting Standards ("FAS")
No. 128,  "Earnings per Share".  Basic earnings per common share was computed by
dividing net earnings by the weighted  average  number of shares of common stock
outstanding  during the period.  Diluted  earnings per common share was computed
assuming the terms and  conditions  for the  contingent  shares and common stock
options were met and  converted on September  20, 1998 and  September  21, 1997,
respectively.

3. COMMITMENTS AND CONTINGENCIES

Government Contracting

As a general  practice within 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.

As with  many  government  contractors,  the  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,  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.  The Company is also engaged
in such settlement  discussions and has filed a lawsuit  concerning certain cost
accounting issues.

The Company and its former parent have received  letters from the DCAA inquiring
about certain  aspects of the spinoff,  including the  disposition of the former
parent's  retirement plan (the "FPRP"),  which covers salaried  employees of the
Company. In the event there is a determination that an amount is due to the U.S.
Government related to the FPRP, the Company and its former parent will share the
obligation for such amount, plus the amount of related defense expenses,  in the
ratio of 20% and 80%, respectively.

                                       6

<PAGE>




                         NEWPORT NEWS SHIPBUILDING INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                                   (UNAUDITED)

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 they concluded that the cost or pricing
data supplied by the Company to the Navy was not current, accurate, and complete
and, therefore,  that projected labor and overhead costs were overstated for the
Reagan contract.  Accordingly,  the DCAA  recommended to the Navy's  contracting
officer that the contract price for Reagan be reduced.

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
Navy  seeking  to reduce  the Reagan  contract  price and  intends to pursue its
defenses to any attempt by the Navy to make such a reduction.

In addition to the DCAA audit, a civil  investigation,  also focused on the cost
or pricing  data that the Company  supplied to the 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 second  quarter,  the Company  received a draft audit report from the
DCAA  questioning  costs  allocated  and  billed  to  government   contracts  as
Independent Research and Development ("IR&D").  The Company has responded to the
DCAA by communicating its disagreement with the draft audit report's conclusions
and recommendations.

Although the  ultimate  outcome of these issues  cannot be  predicted,  should a
successful claim be made in any such matter,  it could entail an amount material
to the Company's financial position and results of operations; however, based on
the Company's  present  understanding of the claims the Government might assert,
together with the sharing  arrangement with its former parent in connection with
the FPRP,  and defenses  believed to be available in connection  with the Reagan
contract matter,  management believes that the final resolution of these matters
will  not have a  material  impact  on the  financial  position  or  results  of
operations  of the Company.  Management  continues to assess the IR&D matter and
believes,  based on current  information,  that it would be premature to express
any opinion as to whether or not the eventual outcome may have a material impact
on the financial position or results of operations of the Company.


                                       7

<PAGE>



                         NEWPORT NEWS SHIPBUILDING INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                                   (UNAUDITED)

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 of 1998, the Company  announced
a  revised  strategy  for this  program  that  will  result  in only five of the
remaining  eight ships being built,  after which the Company will  withdraw from
the market.  As of September  20, 1998 and December  31,  1997,  the  cumulative
provision for losses  recorded on  undelivered  ships is in the range of $320 to
$325 million.  The Company intends to continue to review this program at the end
of each  quarter.  There can be no  assurance  that the  estimate of costs to be
incurred on these  contracts will not be revised at that time based on the facts
then known to the Company.

The first two of the five remaining  ships were delivered  shortly after the end
of the third quarter. Work is substantially complete on one of the now remaining
three ships which is on schedule to be  delivered  in 1998,  while the final two
ships should be delivered by the middle of 1999.

Litigation

The Company is a 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  should not have a material adverse effect on the financial position
or results of operations of the Company.

                                       8
<PAGE>



                         NEWPORT NEWS SHIPBUILDING INC.

           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  maintenance  for other U.S.  Navy  vessels
through  work in  overhauling,  life cycle  engineering,  and  repair.  The U.S.
Government accounted for approximately 94% and 90% of the Company's revenues for
the periods ended September 20, 1998 and September 21, 1997, respectively.

Results of Operations

                                           For the Third Quarter Ended
--------------------------------------------------------------------------------
                                              1998          1997
--------------------------------------------------------------------------------
Millions
Revenues...........................          $  462        $   423
Operating Earnings.................              43             16

Revenues  for the third  quarter of 1998  increased  $39 million to $462 million
compared  with the same  period in 1997.  The  improvement  is  attributable  to
increased work on the refueling and overhaul of the aircraft carrier Nimitz,  as
well  as  increased  engineering  activity  on  the  new  attack  submarine  and
contributions  from  the  Company's  new  wholly-owned  subsidiary,  Continental
Maritime Industries, Inc. ("CMI"). The growth in revenue was partially offset by
the decline in carrier construction  stemming from the June 1998 delivery of the
aircraft  carrier  Truman and a decrease in Overhaul and Repair  activity on the
aircraft carrier Roosevelt.

Third quarter 1998 operating  earnings increased $27 million over the prior year
third quarter  primarily due to improved  Overhaul and Repair volume  associated
with the carrier Nimitz as mentioned above and the recognition of certain events
in 1997. In the third quarter of 1997,  operating earnings reflected a charge to
increase  loss reserves for Double Eagle product  tankers,  partially  offset by
improvements in the carrier  construction  area and improved  recoverability  of
postretirement   and   postemployment   benefits  expense  under  the  Company's
government contracts.

                                        For the Nine Months Ended
--------------------------------------------------------------------------------
                                            1998          1997
--------------------------------------------------------------------------------
Millions
Revenues............................       $1,325        $ 1,276
Operating Earnings..................          125             88

Revenues  for the first  nine  months of 1998  increased  $49  million  to $1.33
billion  compared with the 1997 period  primarily  due to improved  Overhaul and
Repair and submarine  engineering  activity,  as well as contributions from CMI.
These increases were partially offset by lower construction  activity due to the
delivery of the carrier Truman and the commercial product tanker program nearing
completion.

Operating  earnings for the first nine months of 1998 increased $37 million over
the prior year  primarily  due to  variations  in the revenue mix and 1997 third
quarter   events  as  described   above.   Year-to-date   results  also  reflect
approximately  $20  million  of  expenses   associated  with  restructuring  the
Company's interest in five vessel-owning  limited liability companies as part of
its  commercial  exit  strategy.   These  expenses  were  offset  by  previously
established reserves resulting in no net impact to the Company.

The Company's backlog was $3.0 billion at September 20, 1998,  substantially all
of which was U.S. Navy-related.

                                       9

<PAGE>



                         NEWPORT NEWS SHIPBUILDING INC.

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


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 Nine Months Ended
--------------------------------------------------------------------------------
                                                            1998          1997
--------------------------------------------------------------------------------
Millions
Net cash provided by operating activities...............  $    7        $   135
Capital expenditures....................................      (9)           (16)
Other investing cash flows..............................      (5)            (3)
                                                          -------        -------
          
Subtotal................................................      (7)            116
Financing activities....................................        4           (44)
                                                          -------        -------


Net (decrease) increase in cash and cash equivalents....  $   (3)        $    72
                                                          =======        =======


NET CASH PROVIDED BY OPERATING ACTIVITIES

The $128  million  decrease  in 1998's  comparative  cash flows  from  operating
activities  is primarily due to an increased  investment in working  capital and
higher income tax payments,  partially  offset by higher  operating  earnings as
compared to the prior year.  The increase in working  capital as compared to the
prior  year is due to normal  timing  fluctuations  with  respect  to  billings,
accounts  receivable  collections,   and  the  recognition  of  contract  costs.
Additionally, 1998 reflects higher tax payments due to the recognition of income
previously  deferred  for tax  purposes  on the  aircraft  carriers  Stennis and
Truman.  The higher operating earnings are attributable to the factors discussed
above in "Results of Operations."

CAPITAL EXPENDITURES

The $7 million  decrease in capital  expenditures for the period ended September
20, 1998  compared to the period ended  September  21, 1997 is  attributable  to
expenditures  related to capital improvement programs completed in 1997, 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, three of which
are under construction by the Company. The first two ships were delivered by the
Company shortly after the end of the third quarter.

FINANCING ACTIVITIES

For the nine months ended  September 20, 1998, the Company  borrowed funds under
its revolving  credit  facilities.  These proceeds were partially  offset by the
purchase  of Company  stock,  payments  on  long-term  debt,  and the payment of
quarterly  dividends of four cents per share.  The financing  activities in 1997
reflect the receipt of $9 million from the  issuance of common stock  related to
the  Company's  benefit  plans,  payments on the revolving  credit  facility and
long-term  debt,  the purchase of Company  stock on the open market for employee
benefit plans, and the payment of quarterly dividends of four cents per share.


                                       10
<PAGE>



                         NEWPORT NEWS SHIPBUILDING INC.

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

YEAR 2000

The  Company  continues  to  evaluate  the  potential  impact of the "Year 2000"
problem  on its  systems  and  operations.  A Year 2000 plan has been  developed
addressing  Year  2000  awareness,  specific  problem  identification,  risk and
potential  impact  assessment  (including  the  risk  and  potential  impact  of
noncompliance  by  the  Company's   suppliers,   subcontractors  and  customers,
including  the  United  States  Navy),  resource  allocation,  remediation  work
required, and a completion timetable.

The Company's Year 2000 analysis and remediation plan is dual faceted,  focusing
on both  information  technology  ("IT")  systems  as well as  imbedded,  non-IT
systems  that are  integral to specific  operating  and support  functions.  The
Company  is  also   installing   new  hardware  and  software  as  part  of  the
implementation  of its new shared  data  environment  which is  expected to help
mitigate potential Year 2000 problems.

An  oversight  committee  consisting  of members of senior  management  has been
established.  An outside consultant completed a study in July 1998 of the non-IT
component of the Company's  Year 2000  exposure.  The results of that study have
been reported to senior management.

The Company's Year 2000 effort began at the end of 1994 with the  identification
and remediation of systems using long lead-time  dates.  Such work was completed
in the  middle of 1996.  Remediation  of the  Company's  critical  IT systems is
expected to be completed in the fourth  quarter,  with  comprehensive,  off-site
integration  tests of the corrected  systems  scheduled for the first quarter of
1999.  It is  currently  anticipated  that  remediation  and  testing  of non-IT
systems,  and  certain IT systems  that will be  replaced,  will be  finished by
mid-year 1999.

Remediation work and systems testing will be accomplished using a combination of
existing internal Company resources and outsourcing and will be funded with cash
generated from operations or existing credit facilities. Expenditures, including
consulting fees and expenses, have so far totaled approximately $2 million since
the  inception  of the  Company's  Year 2000  effort in 1994.  Approximately  $1
million has been  expended in 1998.  It is currently  projected  that  aggregate
expenditures  for both IT and non-IT systems  remediation and testing will total
approximately  $5 to  $10  million,  although,  based  on  the  results  of  the
consultant's study and the Company's  continuing risk assessment and remediation
planning,  the budget in the  non-IT  area  continues  to be  developed  and may
undergo future  adjustment as more systems functions  requiring  remediation are
identified, ranked as to criticality, and appropriate resources are allocated.

In addition to addressing its own computer systems, the Company has surveyed and
continues to work with its principal  subcontractors,  suppliers,  and customers
(including  the U.S.  Navy) to  promote  their Year 2000  compliance,  as it may
impact on the  financial  position  or results  of  operations  of the  Company.
Nevertheless, the Company does not control, and can give no assurances as to the
substance  or success of the Year 2000  compliance  efforts of such  independent
third parties.

Management  believes that the Company will successfully  implement its Year 2000
remediation  plan on schedule and will be Year 2000 compliant  before the end of
1999. Nevertheless, management believes that there is a risk that certain of its
principal customers, subcontractors, suppliers, and others on whom the Company's
finances  and  operations  depend to a large  extent will  experience  Year 2000
problems  that could affect the  financial  position or results of operations of
the Company.


                                       11
<PAGE>



                         NEWPORT NEWS SHIPBUILDING INC.

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

Without intending to be exhaustive,  these risks include the potential inability
of key  subcontractors  and suppliers to correctly or timely  provide  necessary
services,  materials, and components for the Company's operations; the inability
of its customers to timely or correctly process and pay the Company's  invoices;
the inability of lenders,  lessors,  or other sources of the Company's necessary
capital and liquidity to make funds available to the Company when required;  and
the inability of computer  systems  service  providers to maintain the Company's
essential  systems due to excessive demand for their services from other clients
experiencing unanticipated or more severe than anticipated Year 2000 problems.

In case the Company does  experience  severe Year 2000  financial  and operating
problems,  notwithstanding its efforts to avoid or mitigate problems inherent in
its  own  computer  systems  or  the  adverse  effects  of  Year  2000  problems
experienced by third parties on whom it is  substantially  reliant,  the Company
is developing appropriate  contingency  plans.

Although  no  assurances  can  be  given,  based  on the  information  presently
available to it,  management  does not expect the overall costs of the Company's
efforts to correct the Year 2000 problems inherent in its IT and non-IT systems,
or a failure by some of its  suppliers,  subcontractors  and customers to timely
anticipate  and correct their Year 2000  computer  systems  problems,  to have a
material  effect on the  financial  position or the results of operations of the
Company.

As  implementation  of the Company's Year 2000 remediation plan progresses,  and
more  information  becomes  available to it, the Company expects to periodically
reassess the content of, as well as its strategy  for  implementing,  that plan.
There can be no assurance that the currently estimated costs of implementing its
Year 2000  remediation  plan or the currently  estimated impact of the Year 2000
problem on the Company's  financial  position and results of operations will not
be revised at that time based on the facts then known to the Company.

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 their
use  of  such   terms  as   "intends,"   "estimates,"   "expects,"   "projects,"
"anticipates,"  "should,"  "believes"  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  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 political,
economic  and  competitive  conditions;  (b)  initiatives  to reduce the federal
budget deficit and further reductions in defense spending; (c) reductions in the
volume of U.S. Navy contracts awarded to the Company;  (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;  and (e) unanticipated
events  affecting  the  Company's  efforts  and the  efforts  of its  suppliers,
subcontractors,  and customers  (including the U.S. Navy) to timely correct Year
2000 problems  inherent in essential  computer  systems,  which could impair the
Company's  operations or the ability of its customers to timely pay for products
and services provided.

                                       12
<PAGE>



                                     PART II

                                OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

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


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

Exhibit 27.1      Financial Data Schedule


During the third quarter,  the Company did not file any current  reports on Form
8-K.


                                       13
<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  David J. Anderson
                                          ------------------
                                          Senior Vice President and
                                          Chief Financial Officer

Date:  November 4, 1998