As filed with the Securities and Exchange Commission on February 25, 1998
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
NEWPORT NEWS SHIPBUILDING INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1358276
(State or Other 4101 Washington Avenue (I.R.S. Employer
Jurisdiction of Newport News, Virginia 23607 Identification No.)
Incorporation or (757) 380-2000
Organization)
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
-------------------------
Stephen B. Clarkson, Esq.
Vice President, General Counsel and Secretary
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607
(757) 380-3600 (Name, address,
including zip code, and telephone number, including
area code, of agent for service)
Copies to:
C. Porter Vaughan, III, Esq.
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
(804) 788-8200
-------------------------
Approximate date of commencement of the
proposed sale to the public:
As soon as practicable after this Registration
Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment, please check the following box.
[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum Amount of
Offering of Securities to Amount to be Offering Price Aggregate Offering Registration
be Registered Registered Per Share(1) Price Fee (1)
- ------------------------- ------------ ---------------- ------------------ ------------
<S> <C>
Common Stock, $.01 par value(2) 481,531 Shares $26.47 $12,746,125.57 $3,760.11
</TABLE>
- ------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) on the basis of $26.47 per share, which was
the average of the high and low prices of the Common Stock as quoted on the
New York Stock Exchange on February 18, 1998.
(2) Includes Preferred Stock Purchase Rights which, prior to the occurrence of
certain events, will not be exercisable or evidenced separately from the
Common Stock.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
P R O S P E C T U S
481,531 Shares
Newport News Shipbuilding Inc.
Common Stock
This Prospectus covers up to 481,531 shares (the "Shares") of common
stock (the "Common Stock") of Newport News Shipbuilding Inc., a Delaware
corporation (the "Company" or "Newport News"). All of the Shares being
registered are owned by Marine Midland Bank, as trustee for and on behalf of the
Continental Maritime Industries, Inc. Employee Stock Ownership Plan and Trust,
David H. McQueary, Lee E. Wilson, Carl V. Cull, Jr. and Larry E. Edwards (the
"Selling Stockholders"). The Shares may be offered from time to time by the
Selling Stockholders in transactions in the over-the-counter market, on the New
York Stock Exchange (the "NYSE") or otherwise at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. The Selling Stockholders may effect
such transactions by selling the Shares to or through brokers, dealers or agents
who may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such brokers, dealers or agents may act. See "Plan of Distribution." The
Company will not receive any of the proceeds from the sale of any of the Shares
by the Selling Stockholders.
The Common Stock is listed on the NYSE under the trading symbol "NNS."
The reported closing price on the NYSE on February 23, 1998 was $26 15/16 per
share.
See "Risk Factors" beginning on Page 4 for a discussion of certain risk
factors that should be considered in connection with an investment in the Common
Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________, 1998.
<PAGE>
PROSPECTUS SUMMARY
The following summary of certain information is qualified in its
entirety by, and should be read in connection with, the more detailed and other
information and financial statements included elsewhere in this Prospectus.
Capitalized terms used but not defined in this Prospectus Summary are defined
elsewhere in this Prospectus.
THE COMPANY
Newport News Shipbuilding Inc. ("Newport News" or the "Company") is the
largest non-government-owned shipyard in the United States. Its primary business
is the design, construction, repair, overhaul and refueling of nuclear-powered
aircraft carriers and submarines for the United States Navy. The Company
believes it currently is: (i) the only shipyard capable of building the Navy's
nuclear-powered aircraft carriers, (ii) the only non-government-owned shipyard
capable of refueling and overhauling the Navy's nuclear-powered aircraft
carriers, and (iii) one of only two shipyards capable of building
nuclear-powered submarines.
Aircraft carrier and submarine construction contracts with the U.S.
Navy have generated the majority of the Company's net sales. Overall, the
Company's core U.S. Navy business accounted for approximately 90%, 94% and 97%
of the Company's revenues for 1997, 1996 and 1995, respectively. Newport News
has built nine of the 12 active aircraft carriers in the U.S. fleet, including
all eight nuclear-powered aircraft carriers. For the last 36 years, Newport News
has been the sole designer and builder of the U.S. Navy's aircraft carriers.
Newport News currently holds contracts to build two Nimitz-class nuclear-powered
carriers, each representing approximately $2-3 billion in initial contract
revenue: the Harry S. Truman, scheduled for delivery in 1998, and the Ronald
Reagan, scheduled for delivery in 2002. Based on current U.S. Navy projections,
the Company anticipates the award in or before 2002 of a contract for the
construction of the last Nimitz-class aircraft carrier for delivery in 2009.
Under contract to the Navy, Newport News is currently performing design concept
studies for the next generation of aircraft carriers. In addition, Newport News,
as one of only two manufacturers of nuclear-powered submarines, has constructed
53 nuclear-powered submarines comprised of seven different classes. Newport News
and Electric Boat Corporation ("Electric Boat"), a wholly-owned subsidiary of
General Dynamics Corporation, have been designated by federal legislation to
build the first four of the next generation of the Navy's new nuclear attack
submarines ("NSSN's") commencing in late 1999. At the urging of the Navy, the
Company and Electric Boat have entered into a teaming agreement with respect to
the NSSN submarine construction program.
As Newport News has built all the active Nimitz-class aircraft carriers
and believes it currently is the only non-government-owned shipyard capable of
refueling and overhauling nuclear-powered aircraft carriers, the Company has had
the leading share of the refueling and overhaul market for aircraft carriers. A
Nimitz-class aircraft carrier must be refueled at approximately the midpoint of
its estimated 50-year life. The Navy often commissions a major overhaul of each
carrier to coincide with a refueling. It normally takes two years to complete a
refueling and overhaul. Currently the Company is working on the overhaul of the
USS Theodore Roosevelt (an approximately $200 million contract) and in 1998 will
begin the refueling and overhauling of the USS Nimitz (which contract could
approximate $1 billion). In addition, the Navy has announced its schedule to
begin the refueling of the USS Eisenhower in 2001, the USS Carl Vinson in 2006
and the USS Roosevelt in 2009 at an estimated cost of approximately $1 billion
each. Supported by its new Carrier Refueling Complex, the Company believes it is
well-positioned to be awarded future refueling contracts, although there can be
no assurances as to the number or value of contracts awarded.
The Company's principal executive offices are located at 4101
Washington Avenue, Newport News, Virginia 23607; telephone: (757) 380-2000.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995:
This Prospectus contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 concerning, among other
things, the Company's prospects, developments and
<PAGE>
2
business strategies for its operations, all of which are subject to risks
and uncertainties. These forward-looking statements are identified by their
use of such terms and phrases as "intend," "intends," "intended," "goal,"
"estimate," "estimates," "expect," "expects," "expected," "project,"
"projects," "projected," "projections," "plans," "anticipate,"
"anticipates," "anticipated," "should," "designed to," "foreseeable future,"
"believe," "believes" and "scheduled" and in many cases are followed by a cross
reference to "Risk Factors."
When a forward-looking statement includes a statement of the
assumptions or basis underlying the forward-looking statement, the Company
cautions that, while it believes such assumptions or basis to be reasonable and
makes them in good faith, assumed facts or basis almost always vary from actual
results, and the differences between assumed facts or basis and actual results
can be material, depending upon the circumstances. Where, in any forward-looking
statement, the Company or its management expresses an expectation or belief to
the future results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
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 under "Risk Factors" and
particularly, in cases where the forward-looking statement is followed by a
cross reference to "Risk Factors," the factors discussed in the section or
sections under "Risk Factors" that are referred to in the cross reference and
(ii) the following factors: (a) the general political, economic and competitive
conditions in the United States and other markets where the Company operates;
(b) initiatives to reduce the federal budget deficit and reductions in defense
spending; (c) reductions in the volume of U.S. Navy contracts awarded to the
Company; (d) unanticipated events affecting delivery or production schedules and
design and manufacturing processes thus impairing 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 of such reductions; (e)
changes in capital availability or costs, such as changes in interest rates,
market perceptions of the industry in which the Company operates, or securities
ratings; (f) employee workforce factors, including issues relating to collective
bargaining agreements or work stoppages; and (g) authoritative generally
accepted accounting principles or policy changes from such standard-setting
bodies as the Financial Accounting Standards Board and the Securities and
Exchange Commission (the "Commission").
3
<PAGE>
RISK FACTORS
Holders should carefully consider the risk factors described below and
elsewhere in this Prospectus prior to making a decision to purchase the Common
Stock of the Company.
Reliance on Major Customer and Uncertainty of Future Work
Reliance on Major Customer
The Company's business is primarily dependent upon the design,
construction, repair, overhaul and refueling of nuclear-powered aircraft
carriers and submarines for the U.S. Navy. The Navy accounted for approximately
90% of the Company's net sales for the year ended December 31, 1997.
Approximately 85% of the Company's backlog consisted of contracts to build,
repair or overhaul nuclear-powered aircraft carriers as of December 31, 1997.
Uncertainty of Future Work
Although U.S. Government cuts in naval shipbuilding have continued to
put pressure on the Company's backlog, the Company was successful in adding
approximately $1 billion in new work during 1997. The Company's total backlog,
however, decreased from $3.5 billion at December 31, 1996 to $2.9 billion at
December 31, 1997. Because much of the Company's business consists of
constructing aircraft carriers, which historically have been purchased by the
Navy every four to six years, the Company's backlog has typically declined
following each carrier contract, and peaked again when the Navy orders a new
aircraft carrier. The continuing effort of the U.S. Government to reduce the
federal budget deficit and the restructuring of U.S. Naval forces in the post
Cold War environment, however, will affect the level of funding for shipbuilding
programs, which can be revised at any time. The Report on the Bottom-Up Review
by the U.S. Department of Defense in 1993 stated a need for a fleet of 12
aircraft carriers (down from 15 in 1992), creating demand for a new aircraft
carrier every four to six years. The Department of Defense reiterated its
intention to maintain 12 carrier battle groups in its May 1997 Report of the
Quadrennial Defense Review. Re-evaluation of this need will continue by both
the Department of Defense and the Congress. Current Navy plans call for the
award of a contract for the construction of a new nuclear-powered aircraft
carrier ("CVN-77") beginning in or before 2002 for delivery in 2009. The Navy
has not determined whether subsequent aircraft carriers will be nuclear-powered.
If there is an eventual shift towards building smaller, non-nuclear-powered
aircraft carriers, it is possible that the Company may have to compete with
other shipyards in the future to build such aircraft carriers. Furthermore, in
response to the need for cheaper alternatives and the proliferation of "smart
weapons," it is also possible that future strategy reassessments by the
Department of Defense may result in the need for fewer aircraft carriers. The
Company is currently performing design concept studies for the next generation
of aircraft carriers, which is expected to help the Company in maintaining its
role as the Navy's only aircraft carrier builder. For the year ended December
31, 1997, aircraft carrier construction accounted for approximately 47% of the
Company's revenues. In addition, aircraft carrier programs and other government
projects can be delayed, and such delays typically cause loss of income during
the period of delay and retraining costs when work resumes. Any significant
reduction in the level of government appropriations for aircraft carrier or
other shipbuilding programs, or a significant delay of such appropriations,
could have a material adverse effect on the Company's financial condition and
results of operations.
The prospects of U.S. shipyards, including the Company, can be
materially affected by their success in securing significant U.S. Navy contract
awards. In 1987, the Company was awarded the lead design contract for the
Seawolf submarine. However, the collapse of the former Soviet Union Navy has
greatly reduced the underwater threat to U.S. and allied vessels. As a result,
there was a dramatic cutback in the Seawolf program (to three submarines), and
the Company did not construct any Seawolf submarines. Construction of the three
Seawolf submarines was awarded to Electric Boat.
The Company and Electric Boat have been designated by federal
legislation to build the first four of the next generation of the Navy's NSSN's
commencing in late 1998. The Company and Electric Boat reached an agreement in
February 1997 to cooperatively build the four NSSN's included in the President's
defense budget, as well as future procurements of NSSN's. The teaming agreement
calls for each company to construct certain
4
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portions of each submarine, with final assembly, testing, outfitting and
delivery alternating between the two yards. Electric Boat will act as the
prime contractor and lead design yard under the agreement. Future contract
awards (after the fourth ship) under this approach for the construction
of NSSN's, if made, may be determined by competitive bidding. The Company
estimates that the NSSN program could total up to 30 submarines, although no
assurances can be given as to the number of NSSN's that ultimately will be
procured and built by the Company, either alone or in cooperation with Electric
Boat.
With a substantial portion of the Company's current firm backlog
scheduled for completion in 1998 and 2002, the failure of the Company to receive
the contract for the construction of the CVN-77 on a timely basis and other
significant naval work could have a material adverse effect on the Company's
financial condition and results of operations.
Profit Recognition; Government Contracting
Similar to other companies principally engaged in long-term
construction projects, the Company recognizes profits under the percentage of
completion method of accounting, with profit recognition commencing when costs
are incurred under the contract, and loss recognition commencing immediately
upon identification of such loss without regard to percentage of completion.
Because contract profit recognition is dependent upon reliable estimates of the
costs to complete the contract, profits recognized upon completion of the
contract may be significantly less than anticipated, or the Company may incur a
loss with respect to the contract, if it proves necessary to revise cost
estimates.
Moreover, the Company's principal U.S. Government business is currently
being performed under fixed price ("FP"), fixed price plus incentive fee
("FPIF"), cost plus incentive fee ("CPIF"), and cost plus fixed fee ("CPFF")
contracts. The risk to the Company of not being reimbursed for its costs varies
with the type of contract. Under FP contracts, the contractor retains all costs
savings on completed contracts but is liable for the full amount of all
expenditures in excess of the contract price. FPIF contracts, on the other hand,
provide for cost sharing between the U.S. Government and the contractor. The
contractor's fee is increased or decreased according to a formula set forth in
the contract which generally compares the amount of costs incurred to the
contract target cost. The Government is liable for all allowable costs up to a
ceiling price. However, the contractor is responsible for all costs incurred in
excess of such contract ceiling price. In addition, FPIF contracts generally
provide for the U.S. Government to pay escalation based on published indices
relating to the shipbuilding industry in order to shift the primary risk of
inflation to the Government. Under both CPIF and CPFF contracts, generally the
contractor is only required to perform the contract to the extent the government
makes funds available. Under the former, the contractor's profit is determined
by a contractually specified formula which essentially compares allowable
incurred costs to the contract target cost. Under the latter, with few
exceptions, the fee is the same without regard to the amount of cost incurred.
The Company currently constructs aircraft carriers pursuant to FPIF
contracts, but it performs work for the U.S. Government under all of the types
of contracts described above. For example, most of its contracts for ship design
are of the cost type and some of its ship repair contracts are of the fixed
price type.
The costs of performing all such types of contracts include those for
labor, material and overhead. Therefore, unanticipated increases in any such
costs as well as delays in product delivery, poor workmanship requiring
correction, and all other factors which affect the cost of performing contracts,
many of which are long term in nature, affect the profitability of most
contracts held or anticipated by the Company.
In certain circumstances, the Company may submit Requests for Equitable
Adjustment ("REAs") to the U.S. Navy seeking adjustments to contract prices to
compensate the Company when it incurs costs for which it believes the U.S.
Government is responsible. For example, in June, 1996, the Company settled REAs
relating to U.S. Government initiated changes in the requirements for renovating
container "roll-on, roll-off" heavy armored vehicle Sealift transportation
ships. As part of the settlement, the Sealift contract was converted from a
fixed price incentive contract to a fixed price contract and the contract price
was increased. Although the Company pursues REAs and all other contractual
disputes vigorously, there is no assurance that the U.S. Navy will resolve the
REAs
5
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or any of these disputes in a manner favorable to the Company. Under U.S.
Government regulations, certain costs, including certain financing costs and
marketing expenses, are not allowable contract costs. These costs can be
substantial. The Government also regulates the methods by which all costs,
including overhead, are allocated to government contracts.
In cases where there are multiple suppliers, contracts for the
construction and conversion of U.S. Navy ships and submarines are subject to
competitive bidding. As a safeguard to anti-competitive bidding practices, the
U.S. Navy sometimes employs the concept of "cost realism," which requires that
each bidder submit information on pricing, estimated costs of completion and
anticipated profit margins. The U.S. Navy uses this and other data to determine
an estimated cost for each bidder. The U.S. Navy then re-evaluates the bids by
using the higher of the bidder's and the U.S. Navy's cost estimates.
The U.S. Government has the right to suspend or debar a contractor from
government contracting for violations of certain statutes or government
procurement regulations. See "--Government Claims and Investigations." The U.S.
Government may also unilaterally terminate contracts at its convenience with
compensation for work completed.
Competition and Regulation
The Company believes it currently is (i) the only shipyard capable of
building the Navy's nuclear-powered aircraft carriers, (ii) the only
non-government-owned shipyard capable of refueling and overhauling the Navy's
nuclear-powered aircraft carriers and (iii) one of only two U.S. shipyards
capable of building nuclear-powered submarines. However, with respect to the
market for U.S. military contracts for other types of vessels, there are
principally six major private U.S. shipyards, including the Company, that
compete for contracts to construct, overhaul or convert other types of surface
combatant vessels. Competition for these vessels is extremely intense.
Additionally the Company's products, such as aircraft carriers, submarines and
other ships, compete with each other for defense monies.
The Company is also directly dependent upon allocation of defense
monies to the U.S. Navy. In addition to competition from other shipyards, the
Company competes for project approval and funding with firms providing other
defense products and services, such as tanks and aircraft, to other branches of
the armed forces, and with other, non-defense demands on the U.S. budget.
With respect to the domestic commercial shipbuilding market, currently
the Jones Act requires that all vessels transporting products between U.S. ports
be constructed by U.S. shipyards. There are approximately 16 private U.S.
shipyards that can accommodate the construction of vessels up to 400 feet in
length, five of which the Company considers to be its direct competitors for
commercial contracts. Although there can be no guarantees, the Company has
undertaken major initiatives to reduce its cost structure and cycle times for
product development and ship delivery in an effort to develop commercial
business. To date the Company has experienced substantial losses in connection
with its first major commercial construction contracts. While the percentage of
the Company's total business for commercial shipbuilding could increase, the
Company is not at present actively pursuing additional commercial shipbuilding
contracts. The U.S. Navy has historically been and for the foreseeable future is
expected to continue to be the Company's primary customer.
The Company faces competition in the engineering, planning and design
market from other companies which provide lower cost engineering support
services and are located closer to the Washington, D.C. area. The Company has
established a Carrier Innovation Center for the development of the Navy's next
generation of aircraft carriers. The Company believes the Carrier Innovation
Center will offset the geographic and cost advantages of its competitors. There
can be no assurance, however, that the Company will be the successful bidder on
future U.S. Navy engineering work, including new aircraft carrier research and
development funding.
6
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Substantial Leverage
As of December 31, 1997, the Company, on a consolidated basis, had
outstanding $578 million of total indebtedness, and stockholders' equity of $275
million, with an additional $128 million available for borrowing under a senior
credit facility (the "Senior Credit Facility"), consisting of $125 million for
advances and letters of credit and $3 million for standby letters of credit.
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock including the following: (i) the
Company's ability to obtain financing in the future for working capital, capital
expenditures and general corporate purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal and interest on its indebtedness; and (iii) the high degree
of leverage may limit the Company's ability to react to changes in the industry,
make the Company more vulnerable to economic downturns and limit its ability to
withstand competitive pressures.
The Company's ability to service its debt obligations will depend upon
its future operating performance, which will be affected by prevailing economic
conditions and financial and business factors, many of which are beyond the
Company's control. If the Company cannot generate sufficient cash flow from
operations to meet its obligations, then the Company may be required to attempt
to restructure or refinance its debt, raise additional capital or take other
actions such as selling assets or reducing or delaying capital expenditures.
There can be no assurance, however, that any of such actions could be effected
on satisfactory terms, if at all, or would be permitted by the terms of the
Company's credit and contractual arrangements.
The Company's credit arrangements contain restrictive covenants that,
among other things, limit the Company's ability to incur additional
indebtedness, create liens and make investments and capital expenditures. The
Senior Credit Facility requires the Company to comply with certain financial
ratios and tests, under which the Company is required to achieve certain
financial and operating results. The Company's ability to meet these financial
ratios and tests may be affected by events beyond its control, and there can be
no assurance that they will be met. In the event of a default under the Senior
Credit Facility, the lenders thereunder may terminate their lending commitments
and declare the indebtedness immediately due and payable. There can be no
assurance that the Company would have sufficient assets to pay indebtedness then
outstanding thereunder and under the Company's other credit arrangements.
Government Claims and Investigations
More than 90% of the Company's sales involve contracts entered into
with the U.S. Government. These contracts are subject to possible termination
for the convenience of the U.S. Government, to audit and to possible adjustments
affecting both cost-type and fixed price type contracts. Like many government
contractors, the Company has received audit reports that recommend that certain
contract prices be reduced, or costs allocated to government contracts be
disallowed, to comply with various government regulations. Some of these audit
reports involve substantial amounts. The Company has made adjustments to its
contract prices and the costs allocated to government contracts in those cases
in which it believes such adjustments are appropriate. In addition, various
governmental agencies may at any time be conducting various other investigations
or making specific inquiries concerning the Company. The Company is currently
engaged in discussions on several cost accounting and other matters the likely
resolution of which, management believes, will not have a material adverse
effect on the Company's financial position or results of operations.
Collective Bargaining Agreements
At the end of 1997, the Company had approximately 18,400 workers, of
whom approximately 55% were covered by collective bargaining agreements with
various unions. The Company has entered into four collective bargaining
agreements covering nearly all of the Company's approximately 10,300 hourly
employees. The agreement with the United Steelworkers of America covers
approximately 9,600 employees and expires April 4, 1999. The agreement with
the United Plant Guard Workers of America and its Amalgamated Local No. 451
covers approximately 100 employees and expires February 11, 2001. The other
agreements cover appoximately 300 employees and expire by 2001. Although the
Company
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believes that its relationships with these unions are good, there can be no
assurance that the Company will not experience labor disruptions associated
with the collective bargaining agreements.
Environmental Matters
The Company is subject to various federal, state and local
environmental laws and regulations that impose limitations on the discharge of
pollutants into the environment and establish standards for the transportation,
storage and disposal of toxic and hazardous wastes. Stringent fines and
penalties may be imposed for non-compliance and certain environmental laws
impose joint and several "strict liability" for remediation of spills and
releases of oil and hazardous substances rendering a person liable for
environmental damage, without regard to negligence or fault on the part of such
person. Such laws and regulations may expose the Company to liability for the
conduct of or conditions caused by others, including, without limitation, its
former parent, or for acts of the Company which are or were in compliance with
all applicable laws at the time such acts were performed.
The nature of shipbuilding operations requires the use of hazardous
materials. The Company's shipyard also generates significant quantities of
wastewater which it treats before discharging pursuant to various permits. In
order to handle these materials, the shipyard has an extensive network of
above-ground and underground storage tanks, some of which have leaked and
required remediation in the past. In addition, the extensive handling of these
materials sometimes results in spills on the shipyard and occasionally in the
adjacent James River. The shipyard also has extensive waste handling programs
which it maintains and, periodically, must close in accordance with applicable
regulations. The cumulative cost of these normal operations are not expected to
have a material adverse effect on the Company's financial condition or results
of operations.
USE OF PROCEEDS
Proceeds from the sale of the Shares will be received directly
by the Selling Stockholders. See "Selling Stockholders."
SELLING STOCKHOLDERS
The Selling Stockholders own the Shares as follows:
<TABLE>
<CAPTION>
Amount of Shares Time Period
Owned Position with Continental Position Held
Name and to be Offered Maritime Industries, Inc.1
- -------------------------- --------------------- ----------------------------------------------- ---------------
<S> <C>
Marine Midland Bank(2) 381,296
David H. McQueary 52,086 Vice President 5/90-4/95
Director and President 4/95-present
Lee E. Wilson 16,610 General Counsel 8/86-present
Secretary 6/88-present
Executive Vice President 4/95-present
Director 4/95-12/97
Carl V. Cull, Jr. 14,930 Chief Financial Officer 10/90-present
Treasurer, Vice President 4/95-present
Director 4/95-12/97
Larry D. Edwards 12,757 Vice President 10/97-present
Kim M. Zeledon 3,852 Former Vice President 4/95-5/97
</TABLE>
___________________
1. The Company acquired Continental Maritime Industries, Inc. on
December 18, 1997 (the "Acquisition"). The Selling Stockholders received the
Shares pursuant to the Acquisition and were granted
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registration rights with respect to the shares pursuant to a Registration
Agreement dated December 18, 1997 between the Company and the Selling
Stockholders (the "Registration Agreement").
2. Trustee, Continental Maritime Industries, Inc. Employee Stock
Ownership Plan and Trust
The Shares are being registered pursuant to the terms of the
Registration Agreement. The Company has agreed to bear the expenses in
connection with the registration of the Shares and to maintain the effectiveness
of the Registration Statement until the Selling Stockholders have sold all of
the Shares or have disposed of the Shares pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act").
PLAN OF DISTRIBUTION
The Selling Stockholders, or their pledgees, donees, transferees or
other successors in interest, may sell their Shares in public transactions from
time to time through brokers, dealers or agents or through privately negotiated
transactions. The distribution of the Shares may be effected from time to time
in one or more transactions (which may involve crosses or block transactions)
(i) in the over-the-counter market, (ii) on the NYSE, (iii) in transactions
otherwise than in the over-the-counter market or (iv) through the writing of
options on the securities (whether such options are listed on an options
exchange or otherwise). Any of such transactions may be effected at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices. If the Selling
Stockholders effect such transactions by selling Shares to or through brokers,
dealers or agents, such brokers, dealers or agents may receive compensation in
the form of discounts, concessions or commissions from the Selling Stockholders
or commissions from purchasers of Shares for whom they may act as agent (which
discounts, concessions or commissions as to particular brokers, dealers or
agents might be in excess of those customary in the types of transactions
involved). The Selling Stockholders and any brokers, dealers or agents that
participate in the distribution of the Shares might be deemed to be underwriters
and any profit on the sale of Shares by them and any discounts, concessions or
commission received by any such brokers, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. The Company
will not receive any of the proceeds from the sale of any of the Shares by the
Selling Stockholders.
At the time a particular offer of Shares is made, a Prospectus
Supplement, to the extent required, will be distributed which will set forth the
aggregate amount of Shares being offered, the names of the Selling Stockholders,
the purchase price, the amount of expenses of the offering and the terms of the
offering, including the name or names of any brokers, dealers or agents, any
discounts, commissions and other items constituting compensation from the
Selling Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.
Under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and applicable rules and regulations promulgated thereunder, any person
engaged in a distribution of any of the Shares may not simultaneously engage in
market making activities with respect to the Shares for a period, depending upon
certain circumstances, of either two days or nine days prior to the commencement
of such distribution. In addition and without limiting the foregoing, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations promulgated thereunder, including without
limitation Regulation M (Rules 100-106), which provisions may limit the timing
of purchases and sales of any of the Shares by the Selling Stockholders.
Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed brokers or dealers. In addition,
in certain states the Shares may not be sold unless the Shares have been
registered or qualify for sale in such state or an exemption from registration
or qualification is available and is complied with.
All of the foregoing may affect the marketability of she Shares and the
ability of broker-dealers to engage in market-making activities with respect to
the Shares.
9
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed
upon for the Company by Stephen B. Clarkson, Esq., Vice President, General
Counsel and Secretary of the Company.
EXPERTS
The audited financial statements incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accounts, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Restated Certificate of Incorporation and Amended and
Restated By-laws provide that the Company shall, to the full extent permitted by
the law of the State of Delaware, indemnify its directors and officers.
Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Registrant has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
AVAILABLE INFORMATION
Newport News is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information filed by Newport News may be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices:
Seven World Trade Center, 13th Floor, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and copies
of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, such material can also be obtained from the
Commission's Web site at http://www.sec.gov. Newport News' Common Stock is
traded on the NYSE under the symbol "NNS."
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act for the offering of the Securities made by
this Prospectus. This Prospectus, filed as part of the Registration Statement,
does not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information about the Company
and the Securities offered pursuant to this Prospectus, refer to the
Registration Statement and the exhibits and schedules thereto, all of which may
be inspected without charge or copied at the Commission's offices (at the
locations described above) and copies of which may be obtained at prescribed
rates from the Public Reference Section of the Commission (at the locations
described above). Statements made in this Prospectus about the contents of any
contract, agreement or document are not necessarily complete and in each
instance reference is made to the copy of such contract, agreement or document
filed as an exhibit to the Registration Statement and each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the Commission by the
Company and are hereby incorporated by reference into this Prospectus: (i)
Newport News' Annual Report on Form 10-K for the fiscal year ended December 31,
1996, (ii) Newport News Quarterly Reports on Form 10-Q for the quarters ended
March 23, 1997, June 22, 1997 and September 21, 1997, all filed pursuant to
Section 13 or 15(d) of the Exchange Act, (iii) Newport News' Current Reports on
Form 8-K dated February 12, 1998, December 22, 1997, December 11, 1997, October
15, 1997, September 19, 1997, April 1, 1997, February 27, 1997 and February 5,
1997, and (iv) the description of Newport News' Common Stock contained in
Newport News' Registration Statement on Form S-4, as
10
<PAGE>
amended, dated as of January 23, 1997 and filed with the Commission pursuant
to Section 12 of the Exchange Act. All other documents filed by Newport News
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
this offering shall be deemed to be incorporated by reference herein and shall
be deemed to be a part hereof from the date of filing of such reports and
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Newport News will provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated by reference into this Prospectus, other than certain exhibits to
such documents. Requests for such copies should be directed to: Investor
Relations, Newport News Shipbuilding Inc., 4101 Washington Avenue, Newport News,
Virginia 23607 (telephone: (757) 380-2000).
11
<PAGE>
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, or any Selling
Stockholder. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, to any person in any jurisdiction in which such
offer or solicitation is not authorized, or in which the person making such
offer or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any date
subsequent to the date hereof.
TABLE OF CONTENTS
Page
Prospectus Summary..................................2
The Company.........................................2
Risk Factors........................................4
Use of Proceeds.....................................8
Selling Stockholders................................8
Plan of Distribution................................9
Legal Matters......................................10
Experts............................................10
Disclosure of Commission Position on
Indemnification for Securities Act Liabilities...10
Available Information..............................10
Incorporation of Certain Information by Reference..10
NEWPORT NEWS SHIPBUILDING INC.
481,531 Shares
Common Stock
PROSPECTUS
____________ __, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be borne by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby other than underwriting discounts and commissions. No
portion of such expenses are to be borne by the Selling Stockholders. All
expenses other than the SEC registration fee and the NYSE listing fee are
estimated.
SEC registration fee........................................ $3,760.11
---------
Accounting fees and expenses................................ 5,000.00
---------
Legal fees and expenses..................................... 7,000.00
---------
Miscellaneous............................................... 1,500.00
---------
Total.................................................. 17,260.11
=========
Item 15. Indemnification of Directors and Officers.
The Registrant's Restated Certificate of Incorporation and Amended and
Restated By-laws provide that the Registrant shall, to the full extent permitted
by the law of the State of Delaware, as amended from time to time, indemnify its
directors and officers.
Section 145 of the General Corporation Law of the State of Delaware
(the "GCL") permits a corporation to indemnify its directors and officers
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by a third party if such directors or
officers acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit and only with respect to a matter
as to which they shall have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interest of the corporation, except
that no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine upon application that defendant
officers or directors are reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Section 102(b) (7) of the GCL provides that a corporation may eliminate
or limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for willful
or negligent conduct in paying dividends or repurchasing stock out of other than
lawfully available funds or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
The Company maintains insurance against liabilities under the
Securities Act for the benefit of its officers and directors.
<PAGE>
Item 16. Exhibits.
EXHIBIT INDEX
Exhibit
Number Description
_______ ___________
4.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-4, dated January 23, 1997 as
amended (Registration No. 333-20285).
4.2 By-laws of the Company, Amended and Restated as of January 30,
1998 (incorporated by reference to Exhibit 3.1 of the Company's
Current Report on Form 8-K dated February 12, 1998).
4.3 Specimen Certificate of the Company's Common Stock
(incorporated by reference to the Company's Registration
Statement on Form 10 dated October 30, 1996, as amended
(Registration No. 1-12385).
4.4 Rights Agreement dated as of December 11, 1996 between the
Company and First Chicago Trust Company of New York, as Rights
Agent (incorporated by reference to the Company's Registration
Statement on Form S-8 dated February 27, 1997 (Registration No.
333-22503).
4.5 Amendment No. 1 to Rights Agreement, dated as of March 25, 1997
(incorporated by reference to the Company's Current Report on
Form 8-K, dated April 1, 1997).
4.6 Amendment No. 2 to Rights Agreement, dated as of October 9,
1997 (incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 21, 1997).
5.1 Opinion of Stephen B. Clarkson, Esq. regarding the legality of
the securities being registered.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Stephen B. Clarkson, Esq. (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; and
<PAGE>
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Newport News, Virginia,
on February 24, 1998.
NEWPORT NEWS SHIPBUILDING INC.
By: /s/ William P. Fricks
-------------------------
William P. Fricks
Chairman of the Board, President and Chief
Executive Officer
<PAGE>
POWER OF ATTORNEY
Each of the directors and/or officers of Newport News Shipbuilding Inc.
whose signature appears below hereby appoints Stephen B. Clarkson, Esq. and
David J. Anderson as his attorneys-in-fact to sign in his name and behalf, in
any and all capacities stated below and to file with the Securities and Exchange
Commission, any and all amendments, including post-effective amendments to this
registration statement, making such changes in the registration statement as
appropriate, and generally to do all such things in their behalf in their
capacities as officers and directors to enable Newport News Shipbuilding Inc. to
comply with the provisions of the Securities Act of 1933, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C>
/s/ William P. Fricks
- ------------------------ Chairman of the Board, President and February 24, 1998
William P. Fricks Chief Executive Officer
/s/ David J. Anderson
- ------------------------ Senior Vice President and Chief February 24, 1998
David J. Anderson Financial Officer
/s/ Thomas J. Bradburn
- ------------------------ Vice President-Finance and Corporate February 25, 1998
Thomas J. Bradburn Controller
- ------------------------ Director _______________, 1998
Dr. William R. Harvey
/s/ Stephen R. Wilson
- ------------------------ Director February 25, 1998
Stephen R. Wilson
/s/ Leon A. Edney
- ------------------------ Director February 24, 1998
Leon A. Edney, Admiral (Ret.)
/s/ Dr. Joseph J. Sisco
- ------------------------ Director February 25, 1998
Dr. Joseph J. Sisco
/s/ Gerald L. Baliles
- ------------------------ Director February 24, 1998
Hon. Gerald L. Baliles
- ------------------------ Director _______________, 1998
Dana G. Mead
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Stephen B. Clarkson, Esq. regarding the legality of
the securities being registered.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Stephen B. Clarkson, Esq. (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
February 25, 1998
The Board of Directors
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607
Newport News Shipbuilding Inc.
Registration Statement on Form S-3
Gentlemen:
As General Counsel of Newport News Shipbuilding Inc., a Delaware
corporation (the "Company"), I have acted as counsel to the Company in
connection with its Registration Statement on Form S-3 as filed with the
Securities and Exchange Commission on the date hereof (the "Registration
Statement"), with respect to 481,531 shares of the Company's Common
Stock, $.01 par value per share, (the "Shares"), that are proposed to be
offered and sold as described in the Registration Statement. The Shares
include Preferred Stock Purchase Rights which, prior to the occurrence
of certain events, will not be exercisable or evidenced separately from
the certificates representing the Shares.
In rendering this opinion, I have relied upon, among other things, my
examination of such records of the Company and certificates of its
officers and of public officials as I have deemed necessary.
Based upon the foregoing and the further qualifications stated below, I
am of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware; and
2. The 481,531 Shares covered by the Registration Statement have
been duly authorized and are legally issued, fully paid and
non-assessable.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to
the statement made in reference to me under the caption "Legal Matters"
in the Registration Statement.
Very truly yours,
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 31, 1997,
included in Newport News Shipbuilding Inc.'s Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Washington, D.C.
February 25, 1998
