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Newport News Shipbuilding

Newport News Shipbuilding, which became an independent company 11 December 1996, is the largest non-government-owned shipyard in the United States, as measured by each of revenues, size of facilities, and number of employees. Its primary business is the design, construction, repair, overhaul and refueling of nuclear-powered aircraft carriers and submarines for the US Navy. Revenues from contracts with the US Navy were $1,600 million (94%), $1,753 million (94%), and $1,697 million (97%) in 1997, 1996, and 1995, respectively. The company is currently the only shipyard building the Navy's nuclear-powered aircraft carriers, the only non-government-owned shipyard refueling and overhauling the Navy's nuclear-powered aircraft carriers, and one of only two shipyards building nuclear-powered submarines. Since its inception in 1886, the Company has developed a preeminent reputation through the construction of 264 naval ships and 543 commercial vessels.

Newport News Shipbuilding Inc., a Delaware corporation, began stand alone operations on December 12, 1996. Previously, on December 11, 1996, in connection with a corporate spinoff reorganization, Tenneco Inc. [the company's former parent] and its subsidiaries completed various intercompany transfers separate existing businesse operations so that the shipbuilding business would be a separate company. Tenneco Inc. subsequently distributed pro rata to holders of Tenneco's common stock all of the outstanding common stock of Newport News Shipbuilding.

Aircraft carrier and submarine construction contracts with the US Navy have generated the majority of the company's revenues. Overall, the company's US Navy business accounted for approximately 94%, 94%, and 97% of the company's revenues for 1997, 1996, and 1995, respectively. Newport News built nine of the 12 active aircraft carriers in the US fleet, including all eight nuclear-powered aircraft carriers. For the last 36 years, Newport News has been the sole designer and builder of the US Navy's aircraft carriers.

The company is the only non-government-owned shipyard presently engaged in refueling nuclear-powered aircraft carriers. Aircraft carrier work is generally assigned by the U.S. Navy based on the type of work, location, and cost. The company finished the overhaul and repair of the USS Dwight D. Eisenhower in early 1997. In late 1997, overhaul and repair work was completed on the USS Enterprise, and in the third quarter of 1998, similar work will be completed on the USS Theodore Roosevelt. The company also completes "Post Shake-Down Availabilities" on carriers and submarines, consisting of repairs and maintenance after original delivery of a vessel to the US Navy.

The company completed its Consolidated Refueling Facility ("CRF") at a cost of approximately $20 million in early 1997. The CRF supports the Company's Naval refueling program by consolidating refueling operations from 13 different facilities throughout the Company. The CRF is a 58,000 square-foot complex consisting of production, warehousing, and training areas. The company also began planning and construction of a $26 million Radiological Support Facility ("RSF") in late 1997. Scheduled for completion in 2000, the RSF will relocate radiological support activities from 23 sites in the shipyard to a single facility.

Newport News is also one of two US manufacturers of nuclear-powered submarines. The company has constructed 53 nuclear-powered submarines, including 39 attack submarines and 14 of the larger, fleet ballistic missile submarines. Newport News delivered its final Los Angeles-class submarine on August 15, 1996.

At the urging of the US Navy, Newport News and Electric Boat reached an agreement in February 1997 to cooperatively build the first four new nuclear attack submarines ("NSSNs"). The teaming agreement calls for each company to construct certain 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 designer under the agreement.

Newport News expanded its overhaul work in 1994 with its first contract to overhaul a guided missile destroyer, the USS Thorn. The company has completed a series of destroyer repair jobs since that time. In the first quarter of 1997, the Company completed its first overhaul of an Aegis-class ship, the USS Monterey.

The company also completed the complex conversion of the second of two container ships to roll-on, roll-off heavy armored vehicle Sealift transportation ships for the US Navy. The first ship was delivered in August 1996 and the second ship was delivered in May 1997. As part of a strategy introduced in the early 1990's to add to its core US Navy business, the company pursued orders for products and services from commercial customers.

The company's principal facilities are located in Newport News, Virginia on approximately 550 acres owned by the Company at the mouth of the James River. Its facilities include seven graving docks, a floating dry dock, two outfitting berths, five outfitting piers, a module outfitting facility, and various other shops. Dry Dock 12 is the largest in the Western Hemisphere, and has recently been extended to 662 meters. Dry Dock 12 is serviced by a 900 metric ton capacity gantry crane that spans the dry dock and work platen.

In December 1997, Newport News completed its acquisition of Continental Maritime Industries, Inc. ("CMI"), a ship repair yard in San Diego, California engaged in repair programs for the US Navy's West Coast fleet. The acquisition is a key component of the company's long-term strategy to broaden its base of services to the Navy.

At the end of 1997, the Company had approximately 18,400 employees, of whom approximately 55% were covered by collective bargaining agreements with various unions.

On 22 January 1999 Newport News Shipbuilding and Avondale Industries notified the Department of Justice (DoJ) Antitrust Division of their proposed merger.

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