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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 11-K
__________________
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12385
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
NEWPORT NEWS SHIPBUILDING INC.
401(k) Investment Plan for Salaried Employees
4101 Washington Avenue
Newport News, Virginia 23607
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607
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Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Financial Statements
As of December 31, 1999 and 1998
Together With Report of Independent Public Accountants
<PAGE>
Report of Independent Public Accountants
To Newport News Shipbuilding Inc.:
We have audited the accompanying statements of net assets available for benefits
of the Newport News Shipbuilding Inc. 401(k) Investment Plan for Salaried
Employees (the "Plan") as of December 31, 1999 and 1998, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 1999. These financial statements and the supplemental schedules
referred to below are the responsibility of the plan administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 1999, and schedule of reportable
transactions for the year ended December 31, 1999, are presented for purposes of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Vienna, VA
June 20, 2000
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Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998 1
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1999 2
Notes to Financial Statements
As of December 31, 1999 and 1998 3
Schedule of Assets Held for Investment Purposes
As of December 31, 1999 7
Schedule of Reportable Transactions
For the Year Ended December 31, 1999 8
Schedules Omitted As Not Applicable
As of and for the Year Ended December 31, 1999:
Schedule of Loans or Fixed Income Obligations
Schedule of Leases in Default or Classified as Uncollectible
Schedule of Nonexempt Transactions
</TABLE>
<PAGE>
Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Assets:
Cash $ 345,358 $ 104,150
Investments, at fair market value- 743,922,837 682,261,139
Receivables:
Employer's contributions 1,173,873 1,165,010
Participants' contributions 967,297 963,246
------------ ------------
Total Receivables 2,141,170 2,128,256
------------ ------------
Total assets 746,409,365 684,493,545
============ ============
------------ ------------
Net assets available for benefits $746,409,365 $684,493,545
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
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Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1999
<TABLE>
<S> <C>
Additions to net assets attributed to:
Investment income-
Net appreciation in fair value of investments $ 63,561,101
Interest 6,239,492
Dividends 13,873,744
Contributions-
Employer's 30,173,915
Participants' 24,237,327
Other additions 2,985,653
------------
Total additions 141,071,232
Deductions from net assets attributed to:
Benefits paid to participants 62,859,489
Conversion out 16,257,396
Administrative expenses 38,527
------------
Total deductions 79,155,412
------------
Net increase 61,915,820
Net assets available for benefits:
Beginning of year 684,493,545
------------
End of year $746,409,365
============
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Notes to Financial Statements
As of December 31, 1999 and 1998
1. Description of the Plan:
General
The Newport News Shipbuilding Inc. 401(k) Investment Plan for Salaried Employees
(the "Plan") was adopted by Newport News Shipbuilding Inc. (the "Company" or
"NNS"), effective December 16, 1996. This Plan was established as a result of
the Company being spun-off from its former parent, Tenneco Inc. ("Tenneco") on
December 11, 1996 (the "Spin-Off"). Prior to the Spin-Off, the Company's
salaried employees were participants in the Tenneco Thrift Plan (the "Former
Plan").
The Plan is intended to constitute a defined contribution 401(k) plan that
provides for tax-deferred savings and employer contributions to participants.
The Company and Merrill Lynch (the "Trustee") have executed the Newport News
Shipbuilding Inc. 401(k) Investment Plan for Salaried Employees Trust Agreement,
which provides for the investment and reinvestment of the assets of the Plan.
The Plan is administered by the Company's Benefits Committee (the "Committee").
The members of the Committee are appointed by the Company's Board of Directors
(the "Board").
Eligibility and Contributions
All salaried employees are eligible to participate in the Plan as of the first
day of any payroll period after applying for Plan participation. Participants
may elect to voluntarily contribute a percentage of their annual before-tax
compensation, not to exceed limitations imposed by the Internal Revenue Service,
through equal pay period deductions. Participant contributions can range from 1
percent to 12 percent of annual compensation. The Company will provide a
matching contribution equal to 50 percent of participant contributions, capped
at 8 percent of participant contributions. Company matching contributions are
made in the form of the Company's stock. All Plan participants, regardless of
whether they make a contribution, also receive a Company stock grant equal to 3
percent of the employee's base pay, each pay period.
Participant Accounts
Each participant's account is credited with the participant's contribution, an
allocation of the Plan's earnings or losses and Company matching contributions
each pay period. Allocations are based on the participant's account balance, as
defined in the plan document.
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Vesting
Participants hired after December 11, 1996, must have completed two years of
Company service to be vested in Company matching contributions. Forfeited
contributions are applied to reduce future Company matching contributions.
Participants hired prior to December 11, 1996, are fully vested in Company
matching contributions. All participants are fully vested in the 3 percent
stock grant and all other funds in their accounts.
Payment of Benefits
Upon termination of employment, including layoff, distributions to participants
are generally made via single lump sum payments. Participants whose account
balances exceed $5,000 (or have ever exceeded this amount at the time of a
previous distribution) have the right to defer the distribution of their account
balances until they reach the age of 70.
Investment Options
Upon enrollment in the Plan, participants may direct employee contributions in 1
percent increments in any of the nine investment funds that are selected by the
Committee.
Loans to Participants
A participant may borrow up to 50 percent of his or her account balance with a
minimum loan amount of $1,000. Loans are repayable through payroll deductions
for a period no longer than 5 years. Interest on loans to participants is
charged at a rate of prime (rate of interest charged by commercial banks on
loans to preferred customers) plus 1 percent. The interest rate at December 31,
1999 was 9.5 percent.
2. Significant Accounting Policies:
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions in determining the reported amounts of the Company's assets,
liabilities, revenue, and expenses. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
All investments are recorded at fair market value based on quoted market prices.
Purchases and sales transactions are recorded on a trade date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date.
Payment of Benefits
Benefit payments are recorded when paid.
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New Accounting Pronouncements
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position 99-3 "Accounting for
and Reporting of Certain Defined Contribution Plan Investments and Other
Disclosure Matters" (the "SOP") which eliminates the requirement for a defined
contribution plan to disclose certain information regarding participant directed
investment programs. The SOP was adopted for the 1999 financial statements and
as such, the 1998 financial statements have been reclassified to eliminate the
participant directed fund investment program disclosures.
3. Investments:
The fair market value of individual investments that represent five percent of
the Plan's net assets as of December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Money Market Fund $191,488,052 $199,821,215
NNS Fidelity Growth Company Fund 137,622,027 85,861,118
Newport News Shipbuilding Inc. Common Stock 121,432,934 92,539,126
Putnam New Opportunities Fund 89,836,356 60,498,095
Equity Index Fund 76,564,935 69,136,422
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$63,561,101 as follows:
<TABLE>
<S> <C>
Mutual Funds $ 98,132,752
Common Stock (51,359,143)
Collective Funds 16,787,492
------------
$ 63,561,101
============
</TABLE>
4. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investment as of December
31, 1999 and 1998, is as follows:
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Net Assets:
Newport News Shipbuilding Inc. Common Stock $121,432,934 $92,539,126
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
1999
------------
<S> <C>
Change in Net Assets:
Net Appreciation $(15,471,895)
Interest 187,519
Contributions 26,843,621
Other additions 175,187
Benefits paid to participants (5,837,028)
Conversion out (2,398,172)
Administrative expenses (7,275)
Interfund transfers 25,401,851
------------
$ 28,893,808
============
</TABLE>
5. Tax Status:
The Plan obtained its most recent determination letter on November 17, 1997, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code.
The Plan's administrator and the legal counsel of the Company believe that the
Plan is currently designed and being operated in compliance with requirements of
the Internal Revenue Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
6. Plan Termination:
The Company does not plan to terminate the Plan, however it has the right to do
so at any time by action of the Board. Should the Company decide to terminate
the Plan, all participants would become fully vested in their account balances.
7. Related Party Transactions:
Since the Company's common stock is an investment option, investments in this
common stock represent related party transactions. Certain plan investments are
shares of collective funds managed by the Trustee. Therefore, transactions with
these investments qualify as related-party transactions.
8. Asset Transfer:
In March 1999, the Company announced the formation of a worldwide business
partnership (AMSEC LLC) with Science Applications International Corp. ("SAIC").
The partnership employs former employees of the Company. In September 1999, 267
participants of the Company's Plan transferred account balances of $16,257,396
to the AMSEC Employees 401(k) Profit Sharing Plan.
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<PAGE>
Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Current
Identity of Issue Asset Description Cost Value
--------------------------------------------- ------------------- ---------- ------------
<S> <C> <C> <C>
U.S. Bond Index Fund* Collective Fund $ 9,615,138
Equity Index Fund* Collective Fund 76,564,935
LifePath 2000* Collective Fund 1,772,188
LifePath 2010* Collective Fund 4,016,767
LifePath 2020* Collective Fund 5,165,021
LifePath 2030* Collective Fund 3,871,396
LifePath 2040* Collective Fund 7,779,940
Money Market Fund* Collective Fund 191,488,052
Uniqmoedc Money Market Fund Collective Fund 4,045,642
Putnam New Opportunities Fund Mutual Fund Shares 89,836,356
Templeton Foreign Fund Mutual Fund Shares 14,696,890
NNS Fidelity Growth Company Fund Mutual Fund Shares 137,622,027
NNS INVESCO Value Trust Total Return Fund Mutual Fund Shares 9,467,785
Newport News Shipbuilding Inc.
Common Stock* ** Common Stock Shares 121,284,881 121,432,934
El Paso Natural Gas Company 11,688,072
Common Stock Common Stock Shares
PACTIV Corporation Common Stock Common Stock Shares 17,666,485
Tenneco Automotive Inc. Common Stock Common Stock Shares 4,090,919
Participant Loans (interest rates varied from
6.17% to 9.89% during 1999)* Participant Loans 33,102,290
------------
Total assets held for investment purposes $743,922,837
============
</TABLE>
* Represents a party-in-interest
** Represents non-participant directed investment fund
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<PAGE>
Newport News Shipbuilding Inc. 401(k) Investment
Plan for Salaried Employees
Schedule of Reportable Transactions
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Number Number Total Total Cost of
of Purchase of Sales Amount of Amount of Assets Gain
Transactions Transactions Description Purchases (a) Sales (b) Sold (Loss)
--------------- --------------- ------------------------------ --------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
404 599 Newport News Shipbuilding Inc. $107,802,234 $63,135,111 $54,157,416 $8,977,695
Common Stock* **
</TABLE>
Note: This schedule presents all transactions or series of transactions of the
same issue during the period January 1, 1999 through December 31, 1999,
in excess of 5 percent of the fair value of the Plan's assets as of the
beginning of the year for non-participant directed investment funds.
(a) Purchase price includes expenses incurred with transactions.
(b) Selling price is net of transaction expenses.
* Represents a party-in-interest
** Represents non-participant directed investment fund
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Newport News Shipbuilding Inc. Benefits Committee has caused this annual report
to be signed on its behalf by the undersigned thereunto duly authorized.
NEWPORT NEWS SHIPBUILDING INC.
401(k) INVESTMENT PLAN FOR
SALARIED EMPLOYEES
Date:_____________________________ By: /s/ Robert H. Walker
-----------------------------------
Manager, Employee Benefits
Newport News Shipbuilding Inc.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 11-K, into Newport News Shipbuilding Inc.'s
previously filed Registration Statement on Form S-8, File No. 333-30890.
ARTHUR ANDERSEN LLP
Vienna, VA
June 29, 2000
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