SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 1997
NEWPORT NEWS SHIPBUILDING INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12385 74-1541566
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4101 Washington Avenue, Newport News, Va. 23607-2770
(Address of principal executive offices) (Zip Code)
(757) 380-2000
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. Other Events.
The information contained in the Company's News Release
of September 18, 1997, set forth as Exhibit 20.1 to this Current Report on Form
8-K, is hereby incorporated into this Item 5 by reference.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
See pages 2 through 3 of this Report.
20.1 News Release of Newport News Shipbuilding Inc. dated September 18, 1997
SIGNATURES
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.
September 18, 1997 NEWPORT NEWS SHIPBUILDING INC.
/s/ David J. Anderson
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By: David J. Anderson
Senior Vice President and Chief
Financial Officer
NEWPORT NEWS
SHIPBUILDING
[LOGO] NEWS RELEASE
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CONTACT: Chuck Wingfield-Investor Relations
(757)380-7170
NEWPORT NEWS SHIPBUILDING ANNOUNCES CHARGE
RELATING TO COMMERCIAL BUSINESS
o Loss reserve of $57 million to be established in third quarter in order
to address future risks associated with commercial shipbuilding contracts
o Third quarter EPS expected to be above break-even despite the charge
o Performance improvements in core U.S. Navy business are expected to drive
stronger earnings in 1997's fourth quarter as well as 1998
NEWPORT NEWS, VA., Secptember 18, 1997 - Newport News Shipbuilding (NYSE:
NNS) announced today actions related to its commercial shipbuilding program that
establish the framework for improved future performance. These actions include
the establishment of loss reserves totaling $57 million for the Double Eagle
product tankers, and the extension of construction and delivery schedules for
the five domestic ships under contract.
"By taking decisive action today, we are confident that the uncertainty
associated with the commercial program is now behind us," said William P.
Fricks, Chairman and Chief Executive Officer. "While commercial construction
clearly has been a challenge, it represents an important and ongoing source of
productivity improvements for our core Navy business, which will continue to
generate over 90% of our revenues and earnings for the foreseeable future.
Therefore, by addressing our commercial issues now, we believe we have cleared
the way for significantly improved financial performance in the fourth quarter
of 1997, and throughout 1998."
The impact of this charge on third quarter performance should be partially
offset by productivity improvements in the Company's core Navy business. The
introduction of commercial practices into the Company's production processes is
resulting in improved performance on aircraft carrier construction and overhaul
contracts. While the benefits of these improvements will accrue over the life of
the contracts, recognition of the cumulative benefits to date are expected to
partially offset the commercial loss. "We are very pleased with the consistently
improving performance we've seen in our core Navy business. This gives us reason
to believe that margins in the fourth quarter and beyond will exceed previously
anticipated levels," said Fricks.
The charge against third quarter earnings reflects the completion of the
design for the domestic class of ships and its impact on delivery schedules,
manning plans, and learning curve projections. Material procurement and
subcontractor costs have also experienced increases due to the substantial
design differences that exist between the international and domestic classes of
the Double Eagle product tanker.
Commenting on the Company's commercial strategy, Fricks said "We got into
the commercial business to broaden our business base and drive increased
efficiencies. We are beginning to see meaningful productivity gains as a result
of commercial practices. We also believe there is going to be an important niche
opportunity in the domestic Jones Act market. However, we will not sign any new
contracts until we are confident that they can be performed profitably."
Net of the stronger than anticipated performance in the core business, the
special charge is expected to cause earnings before interest and taxes for the
third quarter to approximate $15 million. This would result in earnings per
share (EPS) for the quarter at or near break-even, and lower than projected EPS
for the full year. However, fourth quarter performance, as well as results in
1998 and 1999, should improve notably due to the stronger underlying performance
in the Company's core business.
CAUTION WITH REGARD TO FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements. These forward-looking
statements are identified by terms such as "expected," "intended," "confident,"
"believe," "should," "would," and "anticipated." The Company's actual results
may differ materially from the results discussed in the forward-looking
statements due to unanticipated increased production costs and delayed delivery
and production schedules, inability in whole or in part to realize anticipated
productivity improvements or to implement commercial practices in the Company's
core Navy business, disruptions to materials procurement, subcontracting,
manning and cost reduction plans, or a more difficult than anticipated learning
curve.
