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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
Savings (401(k)) Plan for Union Eligible 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 Savings (401(k)) Plan
For Union Eligible Employees
Financial Statements
As of December 31, 1999 and 1998
Together With Report of Independent Public Accountants
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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 Savings (401(k)) Plan for Union Eligible
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 schedule
referred to below are the responsibility of the plan administrator. Our
responsibility is to express an opinion on these financial statements and
schedule 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, is presented for purposes of
additional analysis and is not a required part of the basic financial statements
but is 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 schedule has 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 Savings (401(k)) Plan
For Union Eligible 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
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 Reportable Transactions
Schedule of Nonexempt Transactions
</TABLE>
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Newport News Shipbuilding Savings (401(k)) Plan
For Union Eligible Employees
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Assets:
Investments, at fair market value- $24,456,751 $19,863,470
Receivables-
Participants' contributions 75,192 191,038
Interest 3,703 3,412
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Total Receivables 78,895 194,450
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Total assets 24,535,646 20,057,920
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Liabilities:
Management fees payable 11,435 4,293
Other liabilities 248,547 79,769
----------- -----------
Net assets available for benefits $24,275,664 $19,973,858
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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Newport News Shipbuilding Savings (401(k)) Plan
For Union Eligible 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 $2,390,178
Interest 63,117
------------
Total investment income 2,453,295
Participant contributions 2,783,045
------------
Total additions 5,236,340
------------
Deductions from net assets attributed to:
Benefits paid to participants 927,393
Administrative Expenses 7,141
------------
Total deductions 934,534
------------
Net increase 4,301,806
Net assets available for plan benefits:
Beginning of year 19,973,858
------------
End of year $24,275,664
============
</TABLE>
The accompanying notes are an integral part of this statement.
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Newport News Shipbuilding Savings (401(k)) Plan
For Union Eligible Employees
Notes to Financial Statements
As of December 31, 1999 and 1998
1. Description of the Plan:
General
The Newport News Shipbuilding Savings (401(k)) Plan for Union Eligible Employees
(the "Plan"), was adopted on July 1, 1992, by Newport News Shipbuilding Inc.
(the "Company" or "NNS"). The Plan is intended to constitute a defined
contribution 401(k) plan that provides for tax-deferred savings for
participants. The Company and First Union National Bank (the "Trustee") have
executed the Newport News Shipbuilding Savings (401(k)) Plan 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 union employees with at least 90 days of continuous service are eligible to
participate in the Plan. Participants may elect to voluntarily contribute a
percentage of their annual before-tax compensation, not to exceed IRS-imposed
limitations, through equal pay period deductions. Contributions can range from 1
percent to 15 percent of annual compensation.
Participant Accounts
Each participant's account is credited with the participant's contribution and
an allocation of the Plan's earnings or losses. Allocations are based on the
participant's account balance, as defined in the plan document. Participants are
immediately vested 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 $3,500 (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 62.
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Investment Options
Upon enrollment in the Plan, participants may direct their contributions in 1
percent increments in any of the eight investment options that are selected by
the Committee. Participants may change their investment options on a daily
basis.
Loans to Participants
A participant may borrow up to 50 percent of his or her account balance with a
minimum loan amount of $500. Loans are repayable through payroll deductions for
a period no longer than 4 1/2 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 rates at December 31,
1999 and 1998, were 9.5 percent and 8.75 percent, respectively.
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 settlement date basis.
Interest income is recorded on the accrual basis.
Payment of Benefits
Benefit payments are recorded when paid.
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.
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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>
December 31
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
Evergreen U. S. Treasury Money Market Fund $ 4,890,308 $ 4,273,280
First Union Enhanced Stock Market Fund 13,420,117 10,691,815
Fidelity U.S. Bond Index Fund 1,712,181 1,904,976
Newport News Shipbuilding Inc. Common Stock 1,116,783 991,643
Participant Loans 1,348,899 863,921
</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
$2,390,178 as follows:
<TABLE>
<S> <C>
Mutual Funds $ 2,736,389
Common Stock (346,211)
-----------
$ 2,390,178
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</TABLE>
4. Tax Status:
The Plan obtained its most recent determination letter on March 6, 1996, 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.
5. Plan Termination:
The Company does not plan to terminate the Plan, however it has the right to do
so at any time, subject to a basic labor agreement, by action of the Board.
6. Administrative Expenses:
The Trustee's fees, the expenses of administration of the trust and the expenses
incidental to the operation and management of the Plan are paid by the Company.
These fees totaled $69,376 and $69,757 in 1999 and 1998, respectively.
Investment management and similar fees directly related to the return to
participants on amounts invested in the various investment funds are charged
against the Plan's funds as other payments.
7. Related Party Transactions:
The Plan includes the Company's stock as an investment option. Therefore, any
investments in the Company's stock represent related party transactions. Certain
Plan
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investments are shares of a mutual fund managed by the Trustee. Therefore, these
transactions qualify as related-party transactions.
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Newport News Shipbuilding Savings (401(k)) Plan
For Union Eligible Employees
Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Fair
Identity of Issue Asset Description Value
------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Evergreen Treasury Money Market Fund Mutual Fund Shares $ 4,890,308
First Union Enhanced Stock Market Fund* Mutual Fund Shares 13,420,117
Fidelity U.S. Bond Index Fund Mutual Fund Shares 1,712,181
Evergreen Foundation Fund Mutual Fund Shares 332,144
Evergreen Fund Mutual Fund Shares 295,794
Evergreen U.S. Government Fund Mutual Fund Shares 83,231
Evergreen Omega Fund Mutual Fund Shares 1,034,173
Tenneco Pact Common Stock Shares 101,830
Tenneco Inc. Common Stock Common Stock Shares 53,145
Newport News Shipbuilding Inc. Common Stock* Common Stock Shares 1,116,783
El Paso Natural Gas Company Common Stock Common Stock Shares 68,146
Participant Loans (interest rates varied from 7% to 10%
during 1999)* Participant Loans 1,348,899
------------
Total assets held for investment purposes $ 24,456,751
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</TABLE>
* Represents a party-in-interest
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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
SAVINGS (401(k)) PLAN FOR UNION
ELIGIBLE EMPLOYEES
Date: __________________________ By: Robert H. Walker
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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 Statements on Form S-8, File Nos. 333-63231
ARTHUR ANDERSEN LLP
Vienna, VA
June 29, 2000
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