What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 155 added, 82 removed, 375 unchanged (39% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

Three Months Ended June 30 Six Months Ended June 30

(in millions, except per share amounts) 2024 2023 2024 2023

7 unchanged sentences

Income from operating investments, net 11 4 23 16

Other income and gains (losses), net ( 1 ) ( 1 )

Other income and gains, net 1 1 — —

General and administrative expenses 255 238 487 458

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

($ in millions) March 31, 2024 December 31, 2023

($ in millions) June 30, 2024 December 31, 2023

Current Assets

35 unchanged sentences

150,000,000 shares authorized;

53,709,837 shares issued and 39,509,640 shares outstanding as of March 31, 2024, and 53,595,748 shares issued and 39,618,880 shares outstanding as of December 31, 2023

53,710,514 shares issued and 39,260,208 shares outstanding as of 2024, and 53,595,748 shares issued and 39,618,880 shares outstanding as of 2023

Additional paid-in capital 2,029 2,045

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

Six Months Ended June 30

($ in millions) 2024 2023

1 unchanged sentence

Net earnings $ 326 $ 259

Adjustments to reconcile to net cash used in operating activities

Adjustments to reconcile net cash provided by (used in) operating activities:

Depreciation 106 110

Amortization of purchased intangibles 54 64

Amortization of debt issuance costs 2 2

Provision for expected credit losses ( 3 ) —

Other non-cash transactions, net 2 14

Stock-based compensation 7 18

Deferred income taxes ( 28 ) ( 62 )

Loss (gain) on investments in marketable securities ( 8 ) ( 8 )

Gain on investments in marketable securities ( 11 ) ( 12 )

Accounts receivable ( 239 ) ( 149 )

4 unchanged sentences

Retiree benefits ( 57 ) ( 36 )

Other non-cash transactions, net 3 2

Net cash used in operating activities ( 202 ) ( 9 )

Net cash provided by (used in) operating activities ( 211 ) 73

Investing Activities:

3 unchanged sentences

Investment in affiliates — ( 24 )

Proceeds from equity method investments — 61

Other investing activities, net — 1

14 unchanged sentences

Supplemental Cash Flow Disclosure

Cash paid for income taxes (net of refunds) $ 157 $ 172

Cash paid for interest $ 51 $ 51

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

Three Months Ended March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

($ in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Balance as of December 31, 2022 $ 1 $ 2,022 $ 4,276 $ ( 2,211 ) $ ( 599 ) $ 3,489

Balance as of March 31, 2023 $ 1 $ 2,024 $ 4,354 $ ( 2,220 ) $ ( 596 ) $ 3,563

Net earnings — — 130 — — 130

4 unchanged sentences

Treasury stock activity — — — ( 7 ) — ( 7 )

Balance as of June 30, 2023 $ 1 $ 2,030 $ 4,434 $ ( 2,227 ) $ ( 592 ) $ 3,646

Balance as of March 31, 2024 $ 1 $ 2,038 $ 4,855 $ ( 2,349 ) $ ( 419 ) $ 4,126

Net earnings — — 173 — — 173

Dividends declared ($ 1.30 per share)

— — ( 51 ) — — ( 51 )

Stock-based compensation — ( 9 ) — — — ( 9 )

Other comprehensive income, net of tax — — — — 4 4

Treasury stock activity — — — ( 65 ) — ( 65 )

Balance as of June 30, 2024 $ 1 $ 2,029 $ 4,977 $ ( 2,414 ) $ ( 415 ) $ 4,178

Six Months Ended June 30, 2024 and 2023

($ in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Balance as of December 31, 2022 $ 1 $ 2,022 $ 4,276 $ ( 2,211 ) $ ( 599 ) $ 3,489

5 unchanged sentences

Treasury stock activity — — — ( 16 ) — ( 16 )

Balance as of March 31, 2024 $ 1 $ 2,038 $ 4,855 $ ( 2,349 ) $ ( 419 ) $ 4,126

Balance as of June 30, 2023 $ 1 $ 2,030 $ 4,434 $ ( 2,227 ) $ ( 592 ) $ 3,646

Balance as of December 31, 2023 $ 1 $ 2,045 $ 4,755 $ ( 2,286 ) $ ( 422 ) $ 4,093

Net earnings — — 326 — — 326

Dividends declared ($ 2.60 per share)

— — ( 102 ) — — ( 102 )

Stock-based compensation — ( 16 ) ( 2 ) — — ( 18 )

Other comprehensive income, net of tax — — — — 7 7

Treasury stock activity — — — ( 128 ) — ( 128 )

Balance as of June 30, 2024 $ 1 $ 2,029 $ 4,977 $ ( 2,414 ) $ ( 415 ) $ 4,178

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

14 unchanged sentences

For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year.

Additionally, certain prior year amounts have been reclassified to conform to the current year presentation.

These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report on Form 10-K").

7 unchanged sentences

The Company maintains multiple grantor trusts to fund certain non-qualified pension plans.

These trusts were valued at $ 226 million and $ 220 million as of March 31, 2024, and December 31, 2023, respectively, and are presented within miscellaneous other assets within the unaudited condensed consolidated statements of financial position.

These trusts were valued at $ 227 million and $ 220 million as of June 30, 2024, and December 31, 2023, respectively, and are presented within miscellaneous other assets within the unaudited condensed consolidated statements of financial position.

These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy.

The estimated fair values of the Company's total long-term debt (including current portion), excluding finance lease liabilities, as of March 31, 2024, and December 31, 2023, were $ 2,178 million and $ 2,309 million, respectively.

The estimated fair values of the current portion of the Company's long-term debt, excluding finance lease liabilities, were $ 84 million and $ 229 million as of March 31, 2024, and December 31, 2023, respectively.

The estimated fair values of the Company's total long-term debt (including current portion), excluding finance lease liabilities, as of June 30, 2024, and December 31, 2023, were $ 2,081 million and $ 2,309 million, respectively.

The estimated fair values of the current portion of the Company's long-term debt, excluding finance lease liabilities, were $ 492 million and $ 229 million as of June 30, 2024, and December 31, 2023, respectively.

The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 of the fair value hierarchy.

Debt - In January 2024, the Company prepaid the remaining balance of $ 145 million on its term loan due August 19, 2024.

For further information on the Company's debt, see the Company's 2023 Annual Report on Form 10-K.

ACCOUNTING STANDARDS UPDATES

13 unchanged sentences

Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws.

For the three months ended March 31, 2024, the Company repurchased 223,329 shares at an aggregate cost of $ 63 million, including $ 1 million of accrued excise tax.

For the three months ended March 31, 2023, the Company repurchased 39,325 shares at an aggregate cost of $ 9 million.

For the six months ended June 30, 2024, the Company repurchased 473,438 shares at an aggregate cost of $ 128 million, including $ 1 million of accrued excise tax.

For the six months ended June 30, 2023, the Company repurchased 75,849 shares at an aggregate cost of $ 16 million.

The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position.

Dividends - The Company paid cash dividends totaling $ 51 million and $ 49 million for the three months ended March 31, 2024 and 2023, respectively.

Dividends - The Company paid cash dividends totaling $ 102 million and $ 99 million for the six months ended June 30, 2024 and 2023, respectively.

Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings.

The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $ 419 million and $ 422 million as of March 31, 2024, and December 31, 2023, respectively.

The changes in accumulated other comprehensive loss by component for the three months ended March 31, 2024 and 2023, were as follows:

The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $ 415 million and $ 422 million as of June 30, 2024, and December 31, 2023, respectively.

The changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2024 and 2023, were as follows:

($ in millions) Benefit Plans Other Total

Balance as of March 31, 2023 $ ( 596 ) $ — $ ( 596 )

Amounts reclassified from accumulated other comprehensive loss

Amortization of prior service cost 1

Tax expense for items of other comprehensive income ( 1 ) — ( 1 )

Net current period other comprehensive income 4 — 4

Balance as of June 30, 2023 $ ( 592 ) $ — $ ( 592 )

Balance as of March 31, 2024 $ ( 419 ) $ — $ ( 419 )

Amounts reclassified from accumulated other comprehensive loss

Amortization of prior service cost 1

Net current period other comprehensive income 4 — 4

Balance as of June 30, 2024 $ ( 415 ) $ — $ ( 415 )

($ in millions) Benefit Plans Other Total

Balance as of December 31, 2022 $ ( 599 ) $ — $ ( 599 )

4 unchanged sentences

Net current period other comprehensive income 7 — 7

Balance as of March 31, 2023 $ ( 596 ) $ — $ ( 596 )

Balance as of June 30, 2023 $ ( 592 ) $ — $ ( 592 )

Balance as of December 31, 2023 $ ( 422 ) $ — $ ( 422 )

4 unchanged sentences

Net current period other comprehensive income 7 — 7

Balance as of March 31, 2024 $ ( 419 ) $ — $ ( 419 )

Balance as of June 30, 2024 $ ( 415 ) $ — $ ( 415 )

1 These accumulated comprehensive loss components are included in the computation of net periodic benefit cost.

Employee Pension and Other Postretirement Benefits.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023, was $ 2 million and $ 1 million, respectively.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the three months ended June 30, 2024 and 2023, was less than $ 1 million and $ 1 million, respectively.

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the six months ended June 30, 2024 and 2023, was $ 2 million.

EARNINGS PER SHARE

Basic and diluted earnings per common share were calculated as follows:

Three Months Ended

Three Months Ended June 30 Six Months Ended June 30

(in millions, except per share amounts) 2024 2023 2024 2023

5 unchanged sentences

Earnings per share - diluted $ 4.38 $ 3.27 $ 8.25 $ 6.49

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.4 million Restricted Performance Stock Rights ("RPSRs") and 0.1 million Restricted Stock Rights ("RSRs") for the three months ended March 31, 2024, and 0.5 million RPSRs for the three months ended March 31, 2023.

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.4 million Restricted Performance Stock Rights ("RPSRs") and 0.1 million Restricted Stock Rights ("RSRs") for each of the three and six months ended June 30, 2024, and 0.5 million RPSRs for each of the three and six months ended June 30, 2023.

Disaggregation of Revenue

1 unchanged sentence

product versus service type, customer type, contract type, and major program.

The Company believes that this level of disaggregation provides investors with information to evaluate the Company’s financial performance and provides the Company with information to make capital

allocation decisions in the most appropriate manner.

The Company believes that this level of disaggregation provides investors with information to evaluate the Company’s financial performance and provides the Company with information to make capital allocation decisions in the most appropriate manner.

For more information on the Company's contracts, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's 2023 Annual Report on Form 10-K.

The following tables present revenues on a disaggregated basis:

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

6 unchanged sentences

Commercial — 1 1 — 2

State and local government agencies — — 1 — 1

Intersegment 1 1 33 ( 35 ) —

7 unchanged sentences

Sales and service revenues $ 712 $ 1,535 $ 765 $ ( 35 ) $ 2,977

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

15 unchanged sentences

Sales and service revenues $ 664 $ 1,509 $ 645 $ ( 31 ) $ 2,787

Three Months Ended

Six Months Ended June 30, 2024

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

Product sales $ 1,217 $ 2,439 $ 57 $ — $ 3,713

Service revenues 147 528 1,394 — 2,069

Intersegment 3 2 64 ( 69 ) —

Sales and service revenues $ 1,367 $ 2,969 $ 1,515 $ ( 69 ) $ 5,782

Customer Type

Federal $ 1,364 $ 2,966 $ 1,447 $ — $ 5,777

Commercial — 1 3 — 4

State and local government agencies — — 1 — 1

Intersegment 3 2 64 ( 69 ) —

Sales and service revenues $ 1,367 $ 2,969 $ 1,515 $ ( 69 ) $ 5,782

Contract Type

Firm fixed-price $ 2 $ 4 $ 167 $ — $ 173

Fixed-price incentive 1,216 1,600 5 — 2,821

Cost-type 146 1,363 1,192 — 2,701

Time and materials — — 87 — 87

Intersegment 3 2 64 ( 69 ) —

Sales and service revenues $ 1,367 $ 2,969 $ 1,515 $ ( 69 ) $ 5,782

Six Months Ended June 30, 2023

($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total

Product sales $ 1,138 $ 2,518 $ 52 $ — $ 3,708

Service revenues 98 496 1,159 — 1,753

Intersegment 5 1 58 ( 64 ) —

Sales and service revenues $ 1,241 $ 3,015 $ 1,269 $ ( 64 ) $ 5,461

Customer Type

Federal $ 1,236 $ 3,014 $ 1,189 $ — $ 5,439

Commercial — — 22 — 22

Intersegment 5 1 58 ( 64 ) —

Sales and service revenues $ 1,241 $ 3,015 $ 1,269 $ ( 64 ) $ 5,461

Contract Type

Firm fixed-price $ 2 $ 2 $ 159 $ — $ 163

Fixed-price incentive 1,139 1,653 1 — 2,793

Cost-type 95 1,359 943 — 2,397

Time and materials — — 108 — 108

Intersegment 5 1 58 ( 64 ) —

Sales and service revenues $ 1,241 $ 3,015 $ 1,269 $ ( 64 ) $ 5,461

Three Months Ended June 30 Six Months Ended June 30

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Surface combatants and coast guard cutters 297 287 597 540

Other 2 3 5 4

Total Ingalls 712 664 1,367 1,241

8 unchanged sentences

Sales and service revenues $ 2,977 $ 2,787 $ 5,782 $ 5,461

As of March 31, 2024, the Company had $ 48.4 billion of remaining performance obligations.

As of June 30, 2024, the Company had $ 48.5 billion of remaining performance obligations.

The Company expects to recognize approximately 35 % of its remaining performance obligations as revenue through 2025, an additional 30 % through 2027, and the balance thereafter.

1 unchanged sentence

The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share:

Three Months Ended

Three Months Ended June 30 Six Months Ended June 30

($ in millions, except per share amounts) 2024 2023 2024 2023

1 unchanged sentence

Effect on diluted earnings per share $ 0.48 $ 0.41 $ 0.51 $ 0.58

For the three months ended March 31, 2024, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three months ended March 31, 2024, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

Cumulative catch-up revenue adjustments for the three months ended March 31, 2023, included a favorable adjustment of $ 15 million on a contract at the Company's Newport News segment, which increased diluted earnings per share by $ 0.30 .

Cumulative catch-up revenue adjustments for the three months ended March 31, 2023, included an unfavorable adjustment of $ 14 million on a contract at the Company's Newport News segment, which decreased diluted earnings per share by $ 0.28 .

The Company’s multi-year shipbuilding contracts with the U.S.

Government are routinely modified as the result of unpriced change orders arising in the ordinary course of business.

These anticipated changes are accounted for as contract modifications when the scope of the work has been approved and it is probable that the price will be approved.

The Company recognizes variable consideration included in the transaction price for a modified contract to the extent the Company believes a significant reversal of revenue is not probable.

For the three months ended June 30, 2024, cumulative catch-up revenue adjustments included a favorable adjustment of $ 28 million for contract adjustments and incentives on the refueling and complex overhaul ("RCOH") of USS John C.

Stennis (CVN 74) at the Company's Newport News segment.

For the six months ended June 30, 2024, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2024, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

Contract Balances

1 unchanged sentence

Net contract assets were comprised as follows:

($ in millions) March 31, 2024 December 31, 2023

($ in millions) June 30, 2024 December 31, 2023

Contract assets $ 1,694 $ 1,537

1 unchanged sentence

Net contract assets $ 808 $ 474

The Company’s net contract assets increased $ 251 million from December 31, 2023, to March 31, 2024, primarily resulting from an increase in contract assets related to revenue on certain U.S.

The Company’s net contract assets increased $ 334 million from December 31, 2023, to June 30, 2024, primarily as a result of an increase in contract assets related to revenue on certain U.S.

Navy contracts.

For the three months ended March 31, 2024, the Company recognized revenue of $ 641 million related to its contract liabilities as of December 31, 2023.

For the three months ended March 31, 2023, the Company recognized revenue of $ 551 million related to its contract liabilities as of December 31, 2022.

For the three and six months ended June 30, 2024, the Company recognized revenue of $ 283 million and $ 924 million, respectively, related to its contract liabilities as of December 31, 2023.

For the three and six months ended June 30, 2023, the Company recognized revenue of $ 122 million and $ 673 million, respectively, related to its contract liabilities as of December 31, 2022.

SEGMENT INFORMATION

The following table presents segment results for the three months ended March 31, 2024 and 2023:

Three Months Ended

The following table presents segment results for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30 Six Months Ended June 30

($ in millions) 2024 2023 2024 2023

18 unchanged sentences

The following table presents the Company's assets by segment:

($ in millions) March 31, 2024 December 31, 2023

($ in millions) June 30, 2024 December 31, 2023

Ingalls $ 1,715 $ 1,619

3 unchanged sentences

Total assets $ 11,310 $ 11,215

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended March 31, 2024 and 2023, were 16.8 % and 20.9 %, respectively.

The lower effective tax rate differed from the federal statutory corporate income tax rate of 21% for the three months ended March 31, 2024, primarily due to research and development tax credits and income tax benefits associated with stock award settlement activity.

The Company's unrecognized tax benefits increased by $ 2 million during the three months ended March 31, 2024.

As of March 31, 2024, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and

penalties, were liabilities of $ 100 million.

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended June 30, 2024 and 2023, were 19.9 % and 23.1 %, respectively.

For the six months ended June 30, 2024 and 2023, the Company's effective income tax rates on earnings from operations were 18.5 % and 22.0 %, respectively.

The lower effective tax rate for each of the three and six months ended June 30, 2024, was primarily attributable to a taxable gain associated with the sale of the Company’s interest in the Titan joint venture recorded in 2023.

For the three months ended June 30, 2024, the Company’s effective tax rate differed from the federal statutory corporate income tax rate of 21 % primarily due to research and development tax credits.

For the six months ended June 30, 2024, the Company’s effective tax rate differed from the federal statutory corporate income tax rate primarily due to research and development tax credits and income tax benefits associated with stock award settlement activity.

The Company's unrecognized tax benefits increased by $ 2 million and $ 4 million during the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $ 102 million.

Assuming a sustainment of these tax positions, a reversal of $ 79 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods.

The potential decrease in unrecognized tax benefits in the next 12 months due to the potential lapse of the statute of limitations, as described in Note 12 of the Company’s 2023 Annual Report on Form 10-K, decreased from $ 17 million to $ 5 million as a result of an extension of the statute of limitations during the second quarter of 2024.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense.

For the three months ended March 31, 2024, interest resulting from the unrecognized tax benefits noted above increased income tax expense by $ 1 million.

For the three and six months ended June 30, 2024, interest resulting from the unrecognized tax benefits noted above increased income tax expense by $ 2 million and $ 3 million, respectively.

Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities and the tax expense or benefit associated with changes in unrecognized state tax benefits in the relevant period.

3 unchanged sentences

The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations.

Pursuant to Financial Accounting Standards Board Accounting Standards Codification 450 - "Contingencies," the Company has accrued for losses associated with investigations, claims, and litigation when, and to the extent that, loss amounts related to the investigations, claims, and litigation are probable and can be reasonably estimated.

Pursuant to FASB Accounting Standards Codification 450 - "Contingencies," the Company has accrued for losses associated with investigations, claims, and litigation when, and to the extent that, loss amounts related to the investigations, claims, and litigation are probable and can be reasonably estimated.

The actual losses that might be incurred to resolve such investigations, claims, and litigation may be higher or lower than the amounts accrued.

3 unchanged sentences

The lawsuit names several HII companies, among other companies, as defendants.

The named plaintiffs generally allege that the defendant companies have adhered to a “gentlemen’s agreement” that prohibits any defendant from actively recruiting naval engineers from other defendants.

The named plaintiffs generally allege that the defendant companies have adhered to a “gentlemen’s agreement” that prohibits any defendant from actively recruiting naval engineers from

other defendants.

The complaint seeks class certification, treble damages, and any other relief to which the plaintiffs are entitled.

12 unchanged sentences

In some instances, partial or full insurance coverage is available for the Company's liabilities.

The costs to resolve these cases during the three months ended March 31, 2024 and 2023, were not material individually or in the aggregate.

The costs to resolve these cases during the six months ended June 30, 2024 and 2023, were not material individually or in the aggregate.

The Company’s estimate of asbestos-related liabilities is subject to uncertainty because such liabilities are influenced by many variables that are inherently difficult to predict.

6 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs.

Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements and contract modifications in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs.

These estimates are based upon management's best assessment of the underlying causal events and circumstances and recognized to the extent of expected recovery based upon contractual entitlements and the probability of successful negotiation with the customer.

2 unchanged sentences

These accruals do not include any litigation costs related to environmental matters, nor do they include amounts recorded as asset retirement obligations.

Management estimates that as of March 31, 2024, the probable estimable future cost for environmental remediation was not material.

Although management cannot predict whether new information gained as remediation progresses or the Company incurs additional remediation obligations will materially affect the estimated liability accrued, management does not believe that future remediation expenditures will have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

Management estimates that as of June 30, 2024, the probable estimable future cost for environmental remediation was not material.

Although management cannot predict whether new information gained as remediation progresses or the Company incurs

additional remediation obligations will materially affect the estimated liability accrued, management does not believe that future remediation expenditures will have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

Financial Arrangements - In the ordinary course of business, HII uses letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support the Company's self-insured workers' compensation plans.

As of March 31, 2024, the Company had $ 12 million in issued but undrawn letters of credit and $ 360 million of surety bonds outstanding.

As of June 30, 2024, the Company had $ 11 million in issued but undrawn letters of credit and $ 360 million of surety bonds outstanding.

Government Claims - From time to time, the U.S.

4 unchanged sentences

Although the Company believes that the resolution of any of these matters will not have a material effect on its consolidated financial position, results of operations, or cash flows, it cannot predict the ultimate outcome of these matters.

Other Matters - The Company has been in negotiations with a Mission Technologies customer since January 2023 to address issues related to a manufacturing contract, and the parties reached an agreement to settle the matter.

Other Matters - The Company was in negotiations with a Mission Technologies customer beginning January 2023 to address issues related to a manufacturing contract, and the parties settled the matter in May 2024.

The Company has recorded losses relating to the contract that were not material to the Company's consolidated financial position, results of operations, or cash flows.

7 unchanged sentences

The Company provides eligible employees defined benefit pension plans, defined contribution benefit plans, and other postretirement benefit plans.

The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2024 and 2023, were as follows:

Three Months Ended

Pension Benefits Other Benefits

The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the three and six months ended June 30, 2024 and 2023, were as follows:

Three Months Ended June 30 Six Months Ended June 30

Pension Benefits Other Benefits Pension Benefits Other Benefits

($ in millions) 2024 2023 2024 2023 2024 2023 2024 2023

6 unchanged sentences

Net periodic benefit (income) cost $ ( 19 ) $ ( 10 ) $ 2 $ 3 $ ( 37 ) $ ( 20 ) $ 4 $ 5

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the three months ended March 31, 2024 and 2023:

Three Months Ended

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30

($ in millions) 2024 2023

5 unchanged sentences

Total contributions $ 24 $ 21

As of March 31, 2024, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2024.

As of June 30, 2024, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2024.

STOCK COMPENSATION PLANS

During the three months ended March 31, 2024 and 2023, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the three months ended March 31, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 288.33 .

During the six months ended June 30, 2024 and 2023, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the six months ended June 30, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 288.33 .

These rights are subject to cliff vesting on December 31, 2026.

For the three months ended March 31, 2023, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 215.20 .

For the six months ended June 30, 2023, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $ 214.92 .

These rights are subject to cliff vesting on December 31, 2025.

All of the RPSRs are subject to the achievement of performance-based targets at the end of the respective vesting periods and will ultimately vest between 0 % and 200 % of grant date value.

Restricted Stock Rights - For the three months ended March 31, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 288.33 .

Compensation Restricted Stock Rights - For the six months ended June 30, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 288.26 .

These rights vest 33 1/3% upon each of the first, second, and third anniversaries of the grant date.

No compensation RSRs were granted for the three months ended March 31, 2023.

Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to ensure business continuity.

For the three months ended March 31, 2024, the Company granted approximately 1,200 retention RSRs at a weighted average share price of $ 288.53 , with cliff vesting one to two years from the grant date.

For the three months ended March 31, 2023, the Company granted approximately 5,000 retention RSRs at a weighted average share price of $ 211.66 , with cliff vesting two to three years from the grant date.

No compensation RSRs were granted for the six months ended June 30, 2023.

Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company.

For the six months ended June 30, 2024, the Company granted approximately 1,200 retention RSRs at a weighted average share price of $ 288.53 , with cliff vesting one to two years from the grant date.

For the six months ended June 30, 2023, the Company granted approximately 7,400 retention RSRs at a weighted average share price of $ 210.90 , with cliff vesting two to three years from the grant date.

The Company also received transfers of stock awards from employees in satisfaction of tax withholding obligations associated with the vesting of stock awards during the period.

Because the stock awards are surrendered in lieu of payments of cash to settle tax obligations and the stock is not issued, the Company does not account for these transfers as treasury stock.

The following table summarizes the status of the Company's outstanding stock awards as of March 31, 2024:

The following table summarizes the status of the Company's outstanding stock awards as of June 30, 2024:

(in thousands) Weighted-Average

2 unchanged sentences

Total stock awards 550 $ 221.69 1.2

Compensation Expense

The Company recorded stock-based compensation for the value of awards granted to Company employees and non-employee members of the board of directors of $ 14 million and $ 12 million for the three months ended March 31, 2024 and 2023, respectively.

The Company recorded tax benefits related to stock awards of $ 3 million and $ 2 million for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized tax benefits associated with the issuance of stock in settlement of stock awards of $ 8 million and $ 3 million for the three months ended March 31, 2024 and 2023, respectively.

Unrecognized Compensation Expense

As of March 31, 2024, the Company had $ 21 million of unrecognized compensation expense associated with RSRs granted in 2024, 2023, and 2022, which will be recognized over a weighted average period of approximately 1.8 years, and $ 51 million of unrecognized compensation expense associated with RPSRs granted in 2024, 2023, and 2022, which will be recognized over a weighted average period of 1.6 years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements