Huntington Ingalls Industries Reports Fourth Quarter and 2012 Results; Posts Strong Year-Over-Year Improvement in Segment

Huntington Ingalls Industries Reports Fourth Quarter and 2012 Results; Posts
Strong Year-Over-Year Improvement in Segment Performance

  *Revenues were $1.82 billion for the fourth quarter and $6.71 billion for
    2012
  *Segment operating margin was 7.7 percent for the fourth quarter and 6.8
    percent for 2012
  *Total operating margin was 5.8 percent for the fourth quarter and 5.3
    percent for 2012
  *Diluted earnings per share was $0.98 for the quarter and $2.91 for 2012
  *Cash and cash equivalents were $1.1 billion at year-end

NEWPORT NEWS, Va., Feb. 27, 2013 (GLOBE NEWSWIRE) -- Huntington Ingalls
Industries (NYSE:HII) reported fourth quarter 2012 revenues of $1.82 billion,
up 5.1 percent from the same period last year. Segment operating income for
the fourth quarter was $140 million, compared to $127 million in the same
period last year. Total operating income for the fourth quarter was $106
million, compared to $121 million in the same period last year.
Pension-adjusted total operating income for the fourth quarter was $131
million, or 7.2 percent of revenue, compared to $118 million, or 6.8 percent
of revenue in the comparable period of 2011, which excludes the $10 million
non-cash goodwill impairment finalization adjustment. The increase was
primarily attributable to improved segment operating performance at Ingalls.

Fourth quarter diluted earnings per share was $0.98, compared to diluted
earnings per share of $1.35 in the same period of 2011. Fourth quarter
pension-adjusted diluted earnings per share was $1.30, compared to $1.25 in
the comparable period of 2011.

For the year, revenues were $6.71 billion, an increase of 2.0 percent over
2011. Segment operating income for the year was $457 million, compared to $122
million in 2011. Total operating income for the year was $358 million,
compared to $100 million in 2011. Pension-adjusted total operating income for
the year was $438 million, or 6.5 percent of revenue, compared to $413
million, or 6.3 percent of revenue in 2011, which excludes the impact of a
$290 million non-cash goodwill impairment charge in 2011.

Diluted earnings per share was $2.91 in 2012, compared to a loss of $2.05 in
2011. Pension-adjusted diluted earnings per share was $3.95 in 2012 compared
to $4.15 in 2011.

Cash provided by operating activities in the fourth quarter of 2012 was $373
million, a decrease of $101 million from the same period last year, and for
the year was $332 million, a decrease of $196 million from 2011. Cash flows in
2012 were impacted by increased pension contributions.

New business awards for 2012 were approximately $6 billion, of which $1
billion was awarded in the fourth quarter, bringing total backlog to $15.5
billion as of Dec. 31, 2012. Significant awards in 2012 included contracts for
detail design and construction of LHA-7 Tripoli and LPD-27 (unnamed), planning
efforts for the CVN-72 USS Abraham Lincoln refueling and complex overhaul
(RCOH), and continued long-lead time procurement and construction preparation
for CVN-79 John F. Kennedy.

"Since we were spun off as an independent, publicly traded company, we have
been focused on execution, retiring risk and driving improved performance and
margins at Ingalls Shipbuilding while improving performance and maintaining
stability at Newport News Shipbuilding," said Mike Petters, HII's president
and chief executive officer. "I am pleased to say that we made significant
progress in these areas in 2012 and continue on the path to achieving 9-plus
percent operating margins by 2015."

Fourth Quarter and 2012 Highlights

                   Three Months Ended            Year Ended         
                   December 31,                  December 31,       
(In millions,
except per share    2012       2011      % Change  2012     2011      % Change
amounts)
Revenues            $1,823   $1,735  5.1%      $6,708 $6,575  2.0%
Total segment       140       127      10.2%     457     122      274.6%
operating income
Segment operating   7.7%       7.3%      36 bps    6.8%     1.9%      496 bps
margin %
Adjusted segment    140       117      19.7%     457     412      10.9%
operating income^1
Adjusted segment
operating margin    7.7%       6.7%      94 bps    6.8%     6.3%      55 bps
%^1
Total operating     106       121      (12.4%)  358     100      258.0%
income
Operating margin %  5.8%       7.0%      (116 bps) 5.3%     1.5%      382 bps
Pension-adjusted
total operating     131       118      11.0%     438     413      6.1%
income^2
Pension-adjusted
operating margin    7.2%       6.8%      38 bps    6.5%     6.3%      25 bps
%^2
Net earnings (loss) 50        67       (25.4%)  146     (100)    246.0%
Diluted earnings    $0.98    $1.35   (27.4%)  $2.91  $(2.05) 242.0%
(loss) per share
Pension-adjusted
diluted earnings    $1.30    $1.25   4.0%      $3.95  $4.15   (4.8%)
per share^2
Weighted average
diluted shares      50.8      49.7              50.1    48.8     
outstanding
^1Non-GAAP metrics that exclude the impact of the non-cash goodwill impairment
in 2011. See Exhibit B for reconciliation.
^2Non-GAAP metrics that exclude the FAS/CAS Adjustment and the non-cash
goodwill impairment. See Exhibit B for reconciliation.

Fourth quarter 2012 revenues increased $88 million and full year revenues
increased $133 million from the comparable periods in 2011. Adjusted segment
operating income in the fourth quarter increased $23 million, or 19.7 percent
to $140 million. Adjusted segment operating margin for 2012 expanded 55 basis
points to 6.8 percent, compared to 6.3 percent in 2011.

Operating Segment Results

Ingalls Shipbuilding

                   Three Months               Year Ended          
                    Ended
                   December 31,               December 31,        
(In millions)       2012     2011    % Change   2012      2011      % Change
Revenues            $ 722    $ 676   6.8%       $ 2,840   $ 2,885   (1.6%)
Operating income    38      25     52.0%      97       (220)    144.1%
(loss)
Operating margin %  5.3%     3.7%    156 bps    3.4%      nm        
Adjusted operating  38      15     153.3%     97       70       38.6%
income^1
Adjusted operating  5.3%     2.2%    304 bps    3.4%      2.4%      99 bps
margin %^1
^1Non-GAAP metrics that exclude the non-cash goodwill impairment in 2011.See
Exhibit B for reconciliation.

Ingalls revenues for the fourth quarter increased $46 million, or 6.8 percent
from the same period in 2011, driven by an increase in amphibious assault
programs. The increase in amphibious assault programs for the fourth quarter
was attributable to higher sales on LHA-7 Tripoli, partially offset by lower
sales following deliveries of LPD-23 Anchorage in the third quarter of 2012
and LPD-22 USS San Diego in the fourth quarter of 2011. For the full year,
Ingalls revenues decreased by $45 million, or 1.6 percent, due to lower sales
volume in amphibious assault programs, partially offset by higher sales volume
in the Legend-class NSC program. The decrease in amphibious assault program
revenues was due to lower sales following the deliveries of LPD-23 Anchorage
and LPD-24 Arlington in 2012 and following the delivery of LPD-22 USS San
Diego in 2011, partially offset by higher sales volume on LHA-7 Tripoli,
LPD-27 (unnamed), LPD-26 John P. Murtha and LPD-25 Somerset. The increase in
revenues on the Legend-class NSC program was the result of higher sales volume
on the construction of NSC-4 Hamilton and NSC-5 Joshua James and the advance
procurement contract on NSC-6 (unnamed), partially offset by lower sales
following the delivery of NSC-3 USCGC Stratton in 2011. Surface combatants
revenues remained stable for 2012 as higher sales on the DDG-51 Arleigh
Burke-class destroyer construction program, driven by higher sales on DDG-114
Ralph Johnson, partially offset by lower sales on DDG-110 USS William P.
Lawrence delivered in 2011, and higher sales on the DDG-1000 Zumwalt-class
destroyer program, were offset by lower revenues in surface combatants support
services.

Ingalls operating income for the fourth quarter was $38 million, an increase
of $13 million over the same period in 2011. Ingalls adjusted operating income
in the fourth quarter increased by $23 million over the same period in 2011.
Ingalls operating margin was 5.3 percent for the quarter, an increase of 304
basis points over the same period in 2011 on an adjusted basis. For the year,
Ingalls operating income was $97 million, compared to a loss of $220 million
in 2011. Ingalls adjusted operating income in 2012 increased by $27 million,
or 38.6 percent, over the prior year. The increase in adjusted operating
income was primarily the result of improved overall performance and the
receipt of $7 million in resolution of a contract dispute with a private
party, partially offset by increased workers' compensation expense.

Key Ingalls program milestones for the quarter:

  *Delivered LPD-24 Arlington, the company's eighth amphibious transport dock
  *Delivered the composite deckhouse for Zumwalt (DDG-1000)
  *Christened LHA-6 America, the first in a new class of multi-purpose
    amphibious ships
  *Awarded a $54 million contract for LPD-17 USS San Antonio class life-cycle
    engineering and support services

Newport News Shipbuilding

                       Three Months Ended         Year Ended      
                       December 31,               December 31,    
(In millions)           2012      2011     % Change 2012    2011    % Change
Revenues                $ 1,122   $ 1,078  4.1%     $ 3,940 $ 3,766 4.6%
Operating income (loss) 102      102     unchg    360    342    5.3%
Operating margin %      9.1%      9.5%     (37 bps) 9.1%    9.1%    6 bps

Newport News revenues for the fourth quarter increased $44 million, or 4.1
percent, from the same period in 2011. For the full year, Newport News
revenues increased by $174 million, or 4.6 percent. For both periods, these
increases were primarily driven by higher sales volume in aircraft carrier
programs and energy and fleet support services, partially offset by lower
sales volume in submarine programs. The increase in aircraft carriers was
primarily due to higher revenues on the construction contract for CVN-78
Gerald R. Ford, the advance construction contract for CVN-79 John F. Kennedy,
the advance planning contract for the CVN-72 USS Abraham Lincoln RCOH, and the
favorable resolution of outstanding contract changes on the CVN-65 USS
Enterprise extended dry-docking selected restricted availability (EDSRA),
partially offset by lower revenues on the execution contract for the CVN-71
USS Theodore Roosevelt RCOH and an engineering contract for CVN-78 Gerald R.
Ford. Energy services revenues were higher due to maintenance services at the
Kesselring site. Fleet support revenues increased due primarily to increased
maintenance work on in-service aircraft carriers. The decrease in submarine
program revenues was the result of lower sales volume on the SSN-774
Virginia-class submarine construction program due to the timing of procurement
of production materials.

Newport News operating income for the fourth quarter was $102 million,
unchanged from the same period in 2011. Operating margin for the quarter was
9.1 percent, compared to 9.5 percent in the comparable period in 2011. The
reduction was driven primarily by finalization of the non-cash workers'
compensation expense in the fourth quarter of 2012. For the year, Newport News
operating income was $360 million, or 9.1 percent of revenue, an increase of
$18 million over 2011. The increase in operating income was primarily the
result of the increased sales volume described above, favorable performance on
the execution contract for the CVN-71 USS Theodore Roosevelt RCOH, and the
favorable resolution of outstanding contract changes on the CVN-65 USS
Enterprise EDSRA, partially offset by higher workers' compensation expense.

Key Newport News program milestones for the quarter:

  *Reached 90 percent structural completion of CVN-78 Gerald R. Ford
  *Christened and launched SSN-783 Minnesota, the 10^th Virginia-class
    submarine
  *Awarded a $143 million contract option, under a previously awarded
    contract, for work on operational and decommissioning U.S. Navy
    submarines, conversion submarines, special mission submersibles, submarine
    support facilities and related programs

Additional Information

The company recently identified errors in the valuation of one of its
post-retirement benefit plans. The errors, which relate to the valuation
methodologies associated with the company's monthly spending cap under the
plan, impacted the projected accumulated post-retirement benefit obligation in
every year since 1999. Corrections to previously issued financial results
include decreased net earnings for the three months and year ended Dec. 31,
2011, by $2 million and $6 million, respectively, which have been reflected in
this press release. The corrections had no impact on segment operating income
or cash flow for any period. The cumulative effects of these errors, which
management believes are not material to its previously issued consolidated
financial statements, will be corrected in the company's financial statements
included in its Annual Report on Form 10-K for the Fiscal Year ended Dec. 31,
2012, that the company will file with the U.S. Securities and Exchange
Commission.

The Company

Huntington Ingalls Industries (HII) designs, builds and maintains nuclear and
non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market
services for military ships around the globe. For more than a century, HII has
built more ships in more ship classes than any other U.S. naval shipbuilder.
HII also provides a wide variety of products and services to the commercial
energy industry and other government customers, including the Department of
Energy. Employing about 37,000 in Virginia, Mississippi, Louisiana and
California, its primary business divisions are Newport News Shipbuilding and
Ingalls Shipbuilding. For more information, please visit
www.huntingtoningalls.com.

The Huntington Ingalls Industries, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9418

Huntington Ingalls Industries will webcast its earnings conference call at 9
a.m. EST on Feb. 27. A live audio broadcast of the conference call and
supplemental presentation will be available on the investor relations page of
the company's website: www.huntingtoningalls.com.

Statements in this release, other than statements of historical fact,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
risks and uncertainties that could cause our actual results to differ
materially from those expressed in these statements. Factors that may cause
such differences include: changes in government and customer priorities and
requirements (including government budgetary constraints, shifts in defense
spending, and changes in customer short-range and long-range plans); our
ability to obtain new contracts, estimate our future contract costs and
perform our contracts effectively; changes in government regulations and
procurement processes and our ability to comply with such requirements; our
ability to realize the expected benefits from consolidation of our Ingalls
facilities; natural disasters; adverse economic conditions in the United
States and globally; risks related to our indebtedness and leverage; and other
risk factors discussed in our filings with the U.S. Securities and Exchange
Commission. There may be other risks and uncertainties that we are unable to
predict at this time or that we currently do not expect to have a material
adverse effect on our business, and we undertake no obligations to update any
forward-looking statements. You should not place undue reliance on any
forward-looking statements that we may make.

Exhibit A: Financial Statements

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME

                                                  Year Ended December 31
(in millions, except per share amounts)            2012     2011      2010
Sales and service revenues                                          
Product sales                                      $5,755 $5,676  $5,798
Service revenues                                   953     899      925
Total sales and service revenues                   6,708   6,575    6,723
Cost of sales and service revenues                                  
Cost of product sales                              4,827   4,794    5,042
Cost of service revenues                           802     777      789
Income (loss) from operating investments, net      18      20       19
General and administrative expenses                739     634      670
Goodwill impairment                                --      290      --
Operating income (loss)                            358     100      241
Other income (expense)                                              
Interest expense                                   (117)   (104)    (40)
Other, net                                         --      --       (2)
Earnings (loss) before income taxes                241     (4)      199
Federal income taxes                               95      96       68
Net earnings (loss)                                $146   $(100)  $131
                                                                   
Basic earnings (loss) per share                    $2.96  $(2.05) $2.68
Weighted-average common shares outstanding         49.4    48.8     48.8
                                                                   
Diluted earnings (loss) per share                  $2.91  $(2.05) $2.68
Weighted-average diluted shares outstanding        50.1    48.8     48.8
                                                                   
Net earnings (loss) from above                     $146   $(100)  $131
Other comprehensive income (loss)                                   
Change in unamortized benefit plan costs           (605)   (538)    4
Tax benefit (expense) on change in unamortized     241     208      9
benefit plan costs
Other comprehensive income (loss), net of tax      (364)   (330)    13
Comprehensive income (loss)                        $(218) $(430)  $144
                                                                   

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                            December 31
($ in millions)                                              2012     2011
Assets                                                               
Current Assets                                                       
Cash and cash equivalents                                   $1,057   $915
Accounts receivable, net                                     905     711
Inventoried costs, net                                       288     380
Deferred income taxes                                        213     232
Prepaid expenses and other current assets                    21      30
Total current assets                                         2,484   2,268
Property, Plant, and Equipment                                       
Land and land improvements                                   314     305
Buildings and leasehold improvements                         1,486   1,431
Machinery and other equipment                                1,339   1,258
Capitalized software costs                                   208     199
                                                            3,347   3,193
Accumulated depreciation and amortization                    (1,313) (1,160)
Property, plant, and equipment, net                         2,034   2,033
Other Assets                                                        
Goodwill                                                     881     881
Other purchased intangibles, net of accumulated amortization 548     567
of $391 in 2012 and $372 in 2011
Pension plan assets                                          --      64
Debt issuance costs                                          39      48
Long-term deferred tax asset                                 329     159
Miscellaneous other assets                                   77      49
Total other assets                                           1,874   1,768
Total assets                                                 $6,392   $6,069
                                                                    

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - CONTINUED

                                                              December 31
($ in millions, except share amounts)                          2012     2011
Liabilities and Stockholders' Equity                                   
Current Liabilities                                                    
Trade accounts payable                                         $ 377   $ 380
Current portion of long-term debt                              51      29
Current portion of workers' compensation liabilities           216     201
Current portion of postretirement plan liabilities             166     172
Accrued employees' compensation                                235     221
Advance payments and billings in excess of revenues            134     101
Other current liabilities                                      205     268
Total current liabilities                                      1,384   1,372
Long-term debt                                                 1,779   1,830
Other postretirement plan liabilities                          799     662
Pension plan liabilities                                       1,301   936
Workers' compensation liabilities                              403     361
Other long-term liabilities                                    59      49
Total liabilities                                              5,725   5,210
Commitments and Contingencies                                          
Stockholders' Equity                                                   
Common stock, $0.01 par value; 150 million shares authorized;
49.6 million and 48.8 million issued and outstanding as of     --      --
December 31, 2012 and 2011, respectively
Additional paid-in capital                                     1,894   1,867
Retained earnings (deficit)                                    --      (146)
Treasury Stock                                                 (1)     --
Accumulated other comprehensive income (loss)                  (1,226) (862)
Total stockholders' equity                                     667     859
Total liabilities and stockholders' equity                     $6,392   $6,069
                                                                      

HUNTINGTON INGALLS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     Year Ended December 31
($ in millions)                                       2012     2011     2010
Operating Activities                                                  
Net earnings (loss)                                   $146   $(100) $131
Adjustments to reconcile to net cash provided by                      
(used in) operating activities
Depreciation                                          165     164     160
Amortization of purchased intangibles                 19      20      23
Amortization of debt issuance costs                   9       6       --
Stock-based compensation                              41      42      --
Deferred income taxes                                 79      23      (21)
Goodwill impairment                                   --      290     --
Change in                                                             
Accounts receivable                                   (194)   17      (190)
Inventoried costs                                     116     (87)    5
Prepaid expenses and other assets                     6       (30)    2
Accounts payable and accruals                         (14)    50      205
Retiree benefits                                      (43)    132     39
Other non-cash transactions, net                      2       1       5
Net cash provided by (used in) operating activities   332     528     359
Investing Activities                                                  
Additions to property, plant, and equipment           (162)   (197)   (191)
Other investing activities, net                       --      --      2
Net cash provided by (used in) investing activities   (162)   (197)   (189)
Financing Activities                                                  
Proceeds from issuance of long-term debt              --      1,775   --
Repayment of long-term debt                           (29)    (22)    --
Debt issuance costs                                   --      (54)    --
Dividends paid                                        (5)     --      --
Repurchases of common stock                           (1)     --      --
Proceeds from stock options exercises                 7       2       --
Proceeds from issuance of note payable to former      --      --      178
parent
Repayment of notes payable to former parent and       --      (954)   (178)
accrued interest
Dividend to former parent in connection with spin-off --      (1,429) --
Net transfers from (to) former parent                 --      1,266   (170)
Net cash provided by (used in) financing activities   (28)    584     (170)
Change in cash and cash equivalents                   142     915     --
Cash and cash equivalents, beginning of period        915     --      --
Cash and cash equivalents, end of period              $1,057 $915   $--
Supplemental Cash Flow Disclosure                                     
Cash paid for income taxes                            $28    $46    $--
Cash paid for interest                                $111   $64    $16
Non-Cash Investing and Financing Activities                           
Capital expenditures accrued in accounts payable      $20    $48    $44

Exhibit B: Reconciliations

We make reference to "segment operating income," "segment operating margin,"
"adjusted segment operating income," "adjusted segment operating margin,"
"pension-adjusted total operating income," "pension-adjusted operating
margin," "pension-adjusted net earnings," and "pension-adjusted diluted
earnings per share."

Segment operating income is defined as operating income before the FAS/CAS
Adjustment and deferred state income taxes.

Segment operating margin is segment operating income as a percentage of total
sales and service revenues.

Adjusted segment operating income is defined as segment operating income as
adjusted for the impact of the goodwill impairment charge in 2011.

Adjusted segment operating margin is defined as adjusted segment operating
income as a percentage of segment sales and service revenues.

Pension-adjusted total operating income is defined as total operating income
adjusted for the impact of the goodwill impairment charge in 2011 and the
FAS/CAS Adjustment.

Pension-adjusted operating margin is defined as pension-adjusted total
operating income as a percentage of total sales and service revenues.

Pension-adjusted net earnings is defined as net income adjusted for the impact
of the goodwill impairment charge in 2011 and the tax adjusted FAS/CAS
Adjustment.

Pension-adjusted diluted earnings per share is defined as pension-adjusted net
earnings divided by the adjusted weighted-average diluted common shares
outstanding.

Segment operating income and segment operating margin are two of the key
metrics we use to evaluate operating performance because they exclude items
that do not affect segment performance. We believe adjusted segment operating
income, adjusted segment operating margin, pension-adjusted total operating
income, pension-adjusted operating margin, pension-adjusted net earnings and
pension-adjusted diluted earnings per share are also useful metrics because
they exclude non-operating items that we do not consider indicative of our
core operating performance. Therefore, we believe it is appropriate to
disclose these measures to help investors analyze our operating performance.
However, these measures are not measures of financial performance under GAAP
and may not be defined or calculated by other companies in the same manner.

Reconciliation of Segment Operating Income and Segment Operating Margin
                                                           
                                         Three Months Ended Year Ended
                                         December 31        December 31
$ in millions                             2012      2011     2012     2011
Sales and Service Revenues                                         
Ingalls                                   $722    $676   $2,840 $2,885
Newport News                              1,122    1,078   3,940   3,766
Intersegment eliminations                 (21)     (19)    (72)    (76)
Total sales and service revenues          $1,823  $1,735 $6,708 $6,575
Operating Income (Loss)                                            
Ingalls                                   $38     $25    $97    $(220)
As a percentage of revenues               5.3%      3.7%     3.4%     nm
Newport News                              102      102     360     342
As a percentage of revenues               9.1%      9.5%     9.1%     9.1%
Total Segment Operating Income (Loss)     140      127     457     122
As a percentage of revenues               7.7%      7.3%     6.8%     1.9%
Non-segment factors affecting operating                            
income
FAS/CAS Adjustment                        (25)     (7)     (80)    (23)
Deferred state income taxes              (9)      1       (19)    1
Total operating income (loss)             $106    $121   $358   $100
Interest expense                          (29)     (29)    (117)   (104)
Federal income taxes                      (27)     (25)    (95)    (96)
Total net earnings (loss)                 $50     $67    $146   $(100)
                                                                  

Reconciliation of Adjusted Segment Operating Income, Adjusted Segment
Operating
Margin, Pension-adjusted Total Operating Income and Pension-adjusted Operating
Margin
                                                             
                                         Three Months Ended   Year Ended
                                         December 31          December 31
$ in millions                             2012       2011      2012   2011
Adjusted Segment Operating Income (Loss)                           
Operating Income (Loss)                   $106     $121    $358 $100
As a percentage of revenues               5.8%       7.0%      5.3%   1.5%
Non-segment factors affecting operating                            
income
FAS/CAS Adjustment                        25        7        80    23
Deferred state income taxes              9         (1)      19    (1)
Total Segment Operating Income (Loss)     $140     $127    $457 $122
As a percentage of revenues               7.7%       7.3%      6.8%   1.9%
                                                                  
Ingalls                                   $38      $25     $97  $(220)
Adjustment for non-cash goodwill          --       (10)     --   290
impairment
Adjusted Ingalls                          38        15       97    70
As a percentage of revenues               5.3%       2.2%      3.4%   2.4%
Newport News                              102       102      360   342
As a percentage of revenues               9.1%       9.5%      9.1%   9.1%
Adjusted Segment Operating Income (Loss)  140       117      457   412
As a percentage of revenues               7.7%       6.7%      6.8%   6.3%
                                                                  
Pension-adjusted Total Operating Income                            
(Loss)
Operating Income (Loss)                   $106     $121    $358 $100
As a percentage of revenues               5.8%       7.0%      5.3%   1.5%
Adjustment for non-cash goodwill          --       (10)     --   290
impairment
FAS/CAS Adjustment                        25        7        80    23
Pension-adjusted Total Operating Income   $131     $118    $438 $413
(Loss)
As a percentage of revenues               7.2%       6.8%      6.5%   6.3%
                                                                  

Reconciliation of Pension-adjusted Net Earnings and Pension-adjusted Diluted
Earnings
per Share
                                                                            
                           Three Months Ended       Year Ended
                           December 31              December 31
$ in millions               2012         2011        2012       2011
Pension-adjusted Net                                         
Earnings (Loss)
Net Earnings (Loss)         $50        $67       $146     $(100)
Adjustment for non-cash     --         (10)       --       290
goodwill impairment
After-tax FAS/CAS           16          5          52        15
Adjustment^1
Pension-adjusted Net        66          62         198       205
Earnings (Loss)
                                                            
Per Share Amounts                                            
Weighted-Average Diluted    50.8         49.7        50.1       48.8
Shares Outstanding
Dilutive impact excluded    --         --        --       0.6
due to net loss position
Adjusted Weighted-Average
Diluted Shares              50.8         49.7        50.1       49.4
Outstanding^2
                                                            
Pension-adjusted Diluted                                     
EPS
Diluted earnings (loss) per $0.98      $1.35     $2.91    $(2.05)
share
Non-cash goodwill           --         (0.20)     --       5.94
impairment per share
After-tax FAS/CAS           0.32        0.10       1.04      0.31
Adjustment per share
Impact of Adjusted
Weighted-Average Diluted    --         --        --       (0.05)
Shares Outstanding
Pension-adjusted Diluted    $1.30      $1.25     $3.95    $4.15
EPS
                                                            
^1 Tax effected at 35% federal statutory tax rate.
^2 Adjusted diluted average common shares outstanding is a non-GAAP measure
defined as weighted average common shares outstanding plus the dilutive
effect of stock options and stock awards. This measure has been provided for
consistency and comparability of the 2011 results with earnings per share
from 2012.

CONTACT: Jerri Fuller Dickseski (Media)
         jerri.dickseski@hii-co.com
         757-380-2341
        
         Dwayne Blake (Investors)
         dwayne.blake@hii-co.com
         757-380-2104

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