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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 108 added, 92 removed, 438 unchanged (31% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

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

7 unchanged sentences

Income from operating investments, net 12 9 35 25

Other income and gains, net 1 1 — —

General and administrative expenses 252 253 739 711

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

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

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

Current Assets

45 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30

Nine Months Ended September 30

($ in millions) 2024 2023

1 unchanged sentence

Net earnings $ 427 $ 407

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

Adjustments to reconcile net cash provided by operating activities:

Depreciation 160 163

10 unchanged sentences

Retiree benefits ( 84 ) ( 55 )

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

Net cash provided by operating activities 2 408

Investing Activities:

11 unchanged sentences

Net borrowings on commercial paper 396 —

Debt issuance costs ( 7 ) —

Dividends paid ( 154 ) ( 149 )

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

Three Months Ended June 30, 2024 and 2023

Three Months Ended September 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 March 31, 2023 $ 1 $ 2,024 $ 4,354 $ ( 2,220 ) $ ( 596 ) $ 3,563

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

Net earnings — — 148 — — 148

4 unchanged sentences

Treasury stock activity — — — ( 21 ) — ( 21 )

Balance as of September 30, 2023 $ 1 $ 2,038 $ 4,532 $ ( 2,248 ) $ ( 590 ) $ 3,733

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

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

Net earnings — — 101 — — 101

4 unchanged sentences

Treasury stock activity — — — ( 35 ) — ( 35 )

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

Six Months Ended June 30, 2024 and 2023

Balance as of September 30, 2024 $ 1 $ 2,037 $ 5,026 $ ( 2,449 ) $ ( 412 ) $ 4,203

Nine Months Ended September 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

6 unchanged sentences

Treasury stock activity — — — ( 37 ) — ( 37 )

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

Balance as of September 30, 2023 $ 1 $ 2,038 $ 4,532 $ ( 2,248 ) $ ( 590 ) $ 3,733

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

5 unchanged sentences

Treasury stock activity — — — ( 163 ) — ( 163 )

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

Balance as of September 30, 2024 $ 1 $ 2,037 $ 5,026 $ ( 2,449 ) $ ( 412 ) $ 4,203

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

24 unchanged sentences

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

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 were valued at $ 235 million and $ 220 million as of September 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 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 estimated fair values of the Company's total long-term debt (including current portion), excluding finance lease liabilities, as of September 30, 2024, and December 31, 2023, were $ 2,146 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 $ 496 million and $ 229 million as of September 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 September 2024, the Company amended and restated its existing $ 1.5 billion credit facility, increasing the capacity thereunder to $ 1.7 billion and extending the maturity date for five years from signing (the “ Second Amended and Restated Revolving Credit Facility ”).

The Second Amended and Restated Revolving Credit Facility has a variable interest rate on outstanding borrowings based on the Secured Overnight Financing Rate (“SOFR”) plus an interest spread based upon the Company’s credit rating, which may vary between 1.225 % and 2.100 % .

The Second Amended and Restated Revolving Credit Facility also has a commitment fee on unutilized amounts based on the Company’s credit rating, which may vary between 0.125 % and 0.300 % .

The Second Amended and Restated Revolving Credit Facility includes a letter of credit sub-facility of $ 300 million .

As of September 30, 2024 , the Company had not drawn on the Second Amended and Restated Revolving Credit Facility.

Based on the Company’s current credit rating, the interest rate spread on drawn amounts would be 1.475 % and the commitment fee would be 0.200 % .

The Second Amended and Restated Revolving Credit Facility contains customary affirmative and negative covenants and events of default, as well as a financial covenant based on a maximum total leverage ratio.

Each of the Company's existing and future material wholly owned domestic subsidiaries, except those that are specifically designated as unrestricted subsidiaries, are and will be guarantors under the Second Amended and Restated Revolving Credit Facility.

Additionally, in September 2024, the Company's borrowing capacity under its commercial paper program increased from $ 1 billion to $ 1.7 billion.

ACCOUNTING STANDARDS UPDATES

1 unchanged sentence

Improvements to Reportable Segment Disclosures.

The new guidance requires new tabular and narrative segment disclosures of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations.

The new guidance is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements and related disclosures.

The new guidance requires, among other things, segment disclosures of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations.

The new guidance is effective on a retrospective basis for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company does not expect the new guidance to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2 unchanged sentences

The new guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements and related disclosures.

Other accounting pronouncements issued but not effective until after December 31, 2024, are not expected to have a material impact on the Company's consolidated financial position, results of operations, and cash flows.

The Company plans to early adopt the new guidance on a retrospective basis for the annual reporting period ending December 31, 2024, and does not expect the new guidance to have a material impact on its consolidated financial statements.

STOCKHOLDERS' EQUITY

1 unchanged sentence

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

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.

For the nine months ended September 30, 2024, the Company repurchased 607,841 shares at an aggregate cost of $ 163 million, including $ 1 million of accrued excise tax.

For the nine months ended September 30, 2023, the Company repurchased 175,555 shares at an aggregate cost of $ 37 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 $ 102 million and $ 99 million for the six months ended June 30, 2024 and 2023, respectively.

Dividends - The Company paid cash dividends totaling $ 154 million and $ 149 million for the nine months ended September 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 $ 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:

The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $ 412 million and $ 422 million as of September 30, 2024, and December 31, 2023, respectively.

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

($ in millions) Benefit Plans Other Total

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

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

Amounts reclassified from accumulated other comprehensive loss

Amortization of prior service cost 1

Amortization of net actuarial loss 1

Tax expense for items of other comprehensive income ( 2 ) — ( 2 )

Net current period other comprehensive income 2 — 2

Balance as of September 30, 2023 $ ( 590 ) $ — $ ( 590 )

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

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

Amounts reclassified from accumulated other comprehensive loss

Amortization of prior service cost 1

Amortization of net actuarial loss 1

Tax expense for items of other comprehensive income ( 2 ) — ( 2 )

Net current period other comprehensive income 3 — 3

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

Balance as of September 30, 2024 $ ( 412 ) $ — $ ( 412 )

($ in millions) Benefit Plans Other Total

5 unchanged sentences

Net current period other comprehensive income 9 — 9

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

Balance as of September 30, 2023 $ ( 590 ) $ — $ ( 590 )

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

4 unchanged sentences

Net current period other comprehensive income 10 — 10

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

Balance as of September 30, 2024 $ ( 412 ) $ — $ ( 412 )

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 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.

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

The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the nine months ended September 30, 2024 and 2023, was $ 4 million.

EARNINGS PER SHARE

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

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

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

5 unchanged sentences

Earnings per share - diluted $ 2.56 $ 3.70 $ 10.81 $ 10.18

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.

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 nine months ended September 30, 2024, and 0.4 million RPSRs for each of the three and nine months ended September 30, 2023.

Disaggregation of Revenue

4 unchanged sentences

The following tables present revenues on a disaggregated basis:

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

6 unchanged sentences

Commercial — — 2 — 2

State and local government agencies — — 1 — 1

Intersegment 2 — 34 ( 36 ) —

7 unchanged sentences

Sales and service revenues $ 664 $ 1,412 $ 709 $ ( 36 ) $ 2,749

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

6 unchanged sentences

Commercial — — 7 — 7

State and local government agencies — — 1 — 1

Intersegment 1 2 30 ( 33 ) —

7 unchanged sentences

Sales and service revenues $ 711 $ 1,453 $ 685 $ ( 33 ) $ 2,816

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

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

16 unchanged sentences

Sales and service revenues $ 2,031 $ 4,381 $ 2,224 $ ( 105 ) $ 8,531

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

6 unchanged sentences

Commercial — — 29 — 29

State and local government agencies — — 1 — 1

Intersegment 6 3 88 ( 97 ) —

7 unchanged sentences

Sales and service revenues $ 1,952 $ 4,468 $ 1,954 $ ( 97 ) $ 8,277

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

($ in millions) 2024 2023 2024 2023

13 unchanged sentences

Sales and service revenues $ 2,749 $ 2,816 $ 8,531 $ 8,277

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

As of September 30, 2024, the Company had $ 49.4 billion of remaining performance obligations.

The Company expects to recognize approximately 30 % 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 June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

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

5 unchanged sentences

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.

For the three and nine months ended September 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 months ended September 30, 2024, cumulative catch-up revenue adjustments included unfavorable adjustments of $ 34 million on Block IV of the Virginia class (SSN 774) submarine program, $ 14 million on the refueling and complex overhaul ("RCOH") of USS John C.

Stennis (CVN 74), and $ 16 million on the construction of Enterprise (CVN 80) and Doris Miller (CVN 81) at the Company's Newport News segment.

For the nine months ended September 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 nine months ended September 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 nine months ended September 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) June 30, 2024 December 31, 2023

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

Contract assets $ 1,714 $ 1,537

1 unchanged sentence

Net contract assets $ 971 $ 474

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.

The Company’s net contract assets increased $ 497 million from December 31, 2023, to September 30, 2024, primarily as a result of the timing of billings across programs on certain U.S.

Navy contracts.

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.

For the three and nine months ended September 30, 2024, the Company recognized revenue of $ 6 million and $ 930 million, respectively, related to its contract liabilities as of December 31, 2023.

For the three and nine months ended September 30, 2023, the Company recognized revenue of $ 5 million and $ 678 million, respectively, related to its contract liabilities as of December 31, 2022.

SEGMENT INFORMATION

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

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

Three Months Ended September 30 Nine Months Ended September 30

($ in millions) 2024 2023 2024 2023

18 unchanged sentences

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

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

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

Ingalls $ 1,652 $ 1,619

3 unchanged sentences

Total assets $ 11,082 $ 11,215

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.

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended September 30, 2024 and 2023, were 9.8 % and 21.7 %, respectively.

For the nine months ended September 30, 2024 and 2023, the Company's effective income tax rates on earnings from operations were 16.6 % and 21.9 %, respectively.

The lower effective tax rate for the three months ended September 30, 2024, was primarily attributable to current and prior period research and development tax credits recorded in the current period.

The lower effective tax rate for the nine months ended September 30, 2024, was primarily attributable to current and prior period research and development tax credits recorded in the current period and to a taxable gain associated with the sale of the Company’s interest in an unconsolidated ship repair and specialty fabrication joint venture recorded in 2023.

For each of the three and nine months ended September 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 current and prior periods.

The Company's unrecognized tax benefits increased by $ 5 million and $ 9 million during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $ 107 million.

Assuming a sustainment of these tax positions, a reversal of $ 83 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 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.

For the three and nine months ended September 30, 2024, interest resulting from the unrecognized tax benefits noted above increased income tax expense by $ 1 million and $ 4 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.

6 unchanged sentences

The Company has also provided footnote disclosure for matters for which a material loss is reasonably possible but a reserve has not been accrued because the likelihood of a material loss is not probable.

Antitrust Complaint - On October 6, 2023, a class action antitrust lawsuit was filed against the Company and other defendants in the U.S.

Antitrust Complaint - In October 2023, a class action antitrust lawsuit was filed against the Company and other defendants in the U.S.

District Court for the Eastern District of Virginia.

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.

The District Court dismissed the lawsuit against all defendants in April 2024.

The District Court dismissed the lawsuit against all defendants in April 2024, and the plaintiffs have appealed the District Court dismissal to the Fourth Circuit Court of Appeals.

COVID Insurance Claim - In September 2020, the Company filed a complaint against 32 reinsurers in the Superior Court, State of Vermont, Franklin Unit, seeking a judgment declaring that the Company's business interruption and other losses associated with COVID-19 are covered by the Company's property insurance program.

8 unchanged sentences

Any suspension or debarment would have a material effect on the Company because of its reliance on government contracts.

Asbestos Related Claims - HII and its predecessors-in-interest are defendants in a longstanding series of cases that have been and continue to be filed in various jurisdictions around the country, wherein former and current employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII.

During the third quarter, the Company identified certain quality issues involving noncompliance with welding procedures at Newport News.

The Company has commenced an investigation and disclosed the matter to the U.S.

The Company is working with its U.S.

Navy customer to evaluate the full extent of the matter and its potential impact on operations.

Based upon the early stage of the Company’s investigation, the Company cannot at this time predict or reasonably estimate the outcome of this matter, including its financial impact.

employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII.

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

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 costs to resolve these cases during the nine months ended September 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 and contract modifications 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, 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.

The Company believes its outstanding customer settlements will be resolved without material impact to its financial position, results of operations, or cash flows.

The Company believes its outstanding customer settlements, claims, and requests for equitable adjustment will be resolved without material negative impact to its financial position, results of operations, or cash flows.

Environmental Matters - The estimated cost to complete environmental remediation is accrued when it is probable that the Company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by another environmental agency, and the related costs can be estimated by management.

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 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.

Management estimates that as of September 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 June 30, 2024, the Company had $ 11 million in issued but undrawn letters of credit and $ 360 million of surety bonds outstanding.

As of September 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 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.

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

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

The Company previously disclosed an issue regarding the degree of corrosion of certain steel plates used to fabricate Friedman (NSC 11).

6 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 and six months ended June 30, 2024 and 2023, were as follows:

Three Months Ended June 30 Six Months Ended June 30

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

Three Months Ended September 30 Nine Months Ended September 30

Pension Benefits Other Benefits Pension Benefits Other Benefits

7 unchanged sentences

Net periodic benefit (income) cost $ ( 18 ) $ ( 10 ) $ 3 $ 2 $ ( 55 ) $ ( 30 ) $ 7 $ 7

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

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

Nine Months Ended September 30

($ in millions) 2024 2023

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Total contributions $ 36 $ 32

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

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

STOCK COMPENSATION PLANS

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 .

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

Restricted Performance Stock Rights - For the nine months ended September 30, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $ 288.26 .

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

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 .

For the nine months ended September 30, 2023, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $ 215.13 .

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.

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 .

Compensation Restricted Stock Rights - For the nine months ended September 30, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $ 287.91 .

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 six months ended June 30, 2023.

No compensation RSRs were granted for the nine months ended September 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.

For the nine months ended September 30, 2024, the Company granted approximately 2,200 retention RSRs at a weighted average share price of $ 281.01 , with cliff vesting one to two years from the grant date.

For the nine months ended September 30, 2023, the Company granted approximately 9,400 retention RSRs at a weighted average share price of $ 213.37 , 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 June 30, 2024:

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

(in thousands) Weighted-Average

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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