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Item 7. Management’s Discussion and Analysis

2026-02-05 compared with 2025-02-06 · 189 added, 175 removed, 462 unchanged (44% of the section changed)

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The following discussion should be read along with the audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K along with the other sections of this Form 10-K, including Item 1A.

"Risk Factors."

Risk Factors, as well as Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2024.

Business Environment

We continue to see uncertainty in the economy, our industry, and our company.

Our customers, suppliers and subcontractors continue to face challenges, and our results for the year were adversely affected by significant challenges relating to labor availability, our supply chain, and inflation, among other challenges.

The United States political and economic environment in 2025 has been shaped by renewed national emphasis on industrial resilience, defense readiness, and maritime strength.

However, against a backdrop of heightened geopolitical tension and domestic policy realignment, we continue to see uncertainty in the economy, our industry, and our company.

Our customers, suppliers, and subcontractors continue to face challenges.

We cannot predict how long these challenges will continue, whether these challenges will change over time, or whether our actions to address these challenges will be successful.

Political and Economic Environment – The November 2024 elections, which resulted in Republican control of the executive and legislative branches, has resulted in a range of policy changes both domestically and internationally as Republicans seek to reorient U.S.

The new Administration has employed, and is expected to continue to employ, executive actions and other methods, including regulations and policy proposals that impact trade, tax, immigration, energy policies, and other areas.

The debt ceiling is expected to continue to be an area of considerable debate.

High debt levels may impose fiscal constraints on many policy objectives, complicating efforts to deliver on promises made during the elections.

Domestically, we expect that national debt levels, inflationary pressures, gross domestic product growth, among other considerations, could impact U.S.

budgets and priorities, including with respect to discretionary spending.

While monthly inflation rates have declined since peaking at 9.1% in June of 2022, rising military personnel and operations and maintenance costs continue to pressure the Pentagon’s investment portfolio buying power.

average inflationary conditions continue over the long-term, additional resources may be required to address contract and labor cost growth.

Global supply chain and labor markets continue to experience high levels of disruption, causing significant materials and parts shortages, including raw material, microelectronics and commodity shortages, as well as delivery delays, labor shortages, and price increases.

The labor market continues to present significant challenges for our Company, our industry, and the supply chain.

Political and Economic Environment – The political and economic landscape of the United States in 2025 has been characterized by policy realignment and a complex macroeconomic environment.

The Trump Administration (the "Administration") has pursued a renewed emphasis on domestic production, trade protectionism, and deregulation, particularly across the energy, manufacturing, and technology sectors.

Heightened political polarization and intermittent fiscal disputes, including a historic 43-day funding lapse, have underscored the challenges of policy continuity and long-term fiscal planning.

Despite these disruptions, defense spending continues to benefit from strong bipartisan support, with consensus around the need to maintain U.S.

technological superiority and military readiness amid rising global security challenges.

The Administration’s “America First” economic and security agenda has accelerated efforts to repatriate critical manufacturing and expand production capacity.

Policy initiatives have prioritized procurement reform, domestic

sourcing mandates, and investment incentives to stimulate innovation in advanced defense technologies, including hypersonics, cyber defense, artificial intelligence, and space systems.

Economically, the United States continues to experience inflationary pressures and elevated interest rates.

The economic and policy environment remains fluid, with the main variables revolving around tariffs and immigration.

Fiscal conditions remain constrained, with federal debt exceeding 120% of GDP, highlighting the imbalances within the broader economy.

For the defense sector, these macroeconomic conditions have resulted in mixed impacts.

While higher borrowing costs and input inflation have placed pressure on working capital and contract execution, strong defense demand and federal funding have continued to support revenue stability across the industrial base.

Increased emphasis on domestic sourcing and production security has also stimulated capital investment in U.S.

manufacturing facilities and supplier networks.

Supply chain realignment remains a central theme in 2025.

Continued global disruptions and tariff adjustments have encouraged U.S.

defense firms to diversify supplier networks, enhance vertical integration, and invest in advanced manufacturing technologies.

Federal programs aimed at supporting small and mid-tier suppliers have further reinforced the broader defense ecosystem.

The labor market continues to present challenges for our company, our industry, and the supply chain.

Our ability to increase throughput and meet production schedules is directly impacted by labor availability and performance.

We monitor labor market conditions and trends and work to mitigate the effects of labor challenges through a variety of measures.

Challenges in the labor market are addressed through targeted talent acquisition, partnerships with community colleges, apprentice school sourcing and recruiting, workforce succession planning, and initiatives to retain current employees.

Labor shortages and retention also are impacting our supply chain, resulting in longer lead times for materials, parts, and other supplies.

Our supply chain has been impacted further by delivery delays, raw material shortages and price increases caused by continued inflationary pressures.

Labor shortages and retention are also impacting our supply chain, resulting in longer lead times for materials, parts, and other supplies.

Our supply chain has been impacted further by delivery delays, raw materials shortages, and price increases caused by continued inflationary pressures.

The shipbuilding defense industry is unique in many ways.

It is heavily capital and skilled labor intensive.

It is both capital- and skilled labor-intensive.

Navy, a large single customer with many needs and requirements, dominates the industry's customer base and is served by a fragile supplier base that has trended toward exclusive providers.

The DoD continues to adjust its procurement practices and streamline acquisition organizations and processes in an ongoing effort to reduce costs, gain efficiencies, and enhance program management and control.

The Department continues to adjust its procurement practices and streamline acquisition organizations and processes in an ongoing effort to reduce costs, gain efficiencies, and enhance program management and control.

Additionally, the U.S.

Navy must compete with other national priorities, including other defense activities, non-defense discretionary spending, and entitlement programs, for a share of federal budget funding.

While the impact to our business resulting from these developments remains uncertain, they could have a material impact on current programs, as well as new business opportunities with the DoD.

Defense Spending Environment – On March 11, 2024, the Biden Administration proposed a Fiscal Year (FY) 2025 budget request of $849.8 billion for the DoD, consistent with the discretionary funding cap for defense approved by Congress under the Financial Responsibility Act (“FRA”) of 2023.

Additionally, the FRA included a sequestration mechanism to incentivize Congress to enact regular, full-year appropriations legislation instead of relying on continuing resolutions ("CR").

Although the Federal government is operating under a CR through March 14, 2025, sequestration would not be enforced until April 30, 2025 and would be reversed upon the enactment of full-year appropriations.

The emergency national security supplemental funding legislation enacted during fiscal year 2025 is not subject to the FRA budget caps.

The House and Senate reached a compromise agreement on the National Defense Authorization Act ("NDAA") for fiscal year 2025 in December 2024.

Overall, the fiscal year 2025 NDAA authorizes $883.7 billion in national security spending, including $849.9 billion for the Pentagon, consistent with the spending caps directed in the FRA.

The compromise legislation supports our shipbuilding priorities with a total authorization of $32.7 billion for shipbuilding programs, including procurement authorization of the Travis Manion (LPD 33) Flight II amphibious ship, one Virginia class (SSN 774) submarine, three Arleigh Burke class (DDG 51) destroyers and the RCOH of USS Harry S.

Truman (CVN 75).

Additionally, the fiscal year 2025 NDAA supports the amphibious warship bundle contract signed in 2024 by authorizing advanced procurement funding for LPD 34 (unnamed), LPD 35 (unnamed), and Helmand Province (LHA 10).

Both House and Senate appropriations bills have passed out of committee, and the House defense appropriations bill has been approved by the full House.

The House defense appropriations bill funds the Defense Department within the spending caps in the 2023 debt limit deal and supports the President’s budget request by funding one Virginia class (SSN 774) submarine, two Arleigh Burke class (DDG 51) destroyers, one LPD Flight II amphibious ship, and one CVN RCOH.

The Senate Appropriations Committee added approximately $21 billion in emergency funding not subject to the FRA caps and included fiscal year 2025 funding for three Arleigh Burke class (DDG 51) destroyers, one Virginia class (SSN 774) submarine, one LPD Flight II amphibious ship, one CVN RCOH, one FFG-62 frigate, and advanced procurement funding for an additional Arleigh Burke class destroyer in fiscal year 2026.

Although a new fiscal year began on October 1, 2024, annual appropriations to fund the federal government for fiscal year 2025 have not been enacted.

To provide Congress additional time to reach agreements on funding levels for federal agencies, a continuing resolution was enacted extending funding through December 20, 2024, at fiscal year 2024 levels.

Congress passed a second CR in December 2024 that extended federal funding through March 14, 2025.

While the DoD is normally prohibited from starting new programs or increasing funding on existing programs under a CR, the current CR includes anomalies that will allow the DoD to deviate from typical restrictions and obligate funding to support procurement of the Virginia class and Columbia class submarine programs.

A $5.7 billion emergency appropriations anomaly supports fiscal year 2024 and fiscal year 2025 Virginia class submarines as well as workforce wages and shipyard investments.

This funding does not count against the FRA fiscal year 2025 funding cap.

We cannot predict the outcome of the fiscal year 2025 budget process or whether additional short-term funding will be required in the event annual appropriations measures are not finalized by the expiration date of the current CR.

Global Geopolitical Environment – The global geopolitical environment continues to be impacted by uncertainty, heightened tensions, and instability, all of which drive the increasing need for defense offerings, including those provided by our company.

Global geopolitical relationships continue to evolve.

and its allies face a global security environment that is impacted by threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability.

The ongoing conflict in Ukraine and the associated sanctions have impacted the global economy, caused heightened cyber and other security risks, exacerbated supply chain challenges, resulted in higher energy costs, and further impacted inflationary pressures.

In addition, tensions with China, along with hostilities in the Middle East, continued conflicts globally, and changes in international trade policies have impacted, and could continue to impact, the global market for defense products, services, and solutions.

While the impact to our business resulting from these developments remains uncertain, they could have a material impact on current programs, as well as new business opportunities with the Department.

Defense Spending Environment – On May 2, 2025, the Administration released the President's topline recommendations on discretionary funding levels for fiscal year 2026, followed by detailed budget justification documents in June.

Additionally, under the Act, Congress provided mandatory funding of more than $29 billion for Shipbuilding and the Maritime Industrial Base.

This funding included one Virginia class (SSN 774) fast attack submarine and two Arleigh-Burke class (DDG 51) guided-missile destroyers, and provided additional funding for amphibious warfare ships and unmanned surface vessels.

Overall, the fiscal year 2026 NDAA authorizes $900.6 billion in national security funding.

The legislation supports our shipbuilding priorities with a total authorization of $26 billion for shipbuilding programs, including procurement authorization for the third Columbia class (SSBN 826) submarine and advance procurement for future submarines, one Virginia class (SSN 774) fast attack submarine and advance procurement for future submarines, advance procurement for future Arleigh-Burke class (DDG 51) class destroyers, and full funding for the Gerald R.

Ford class (CVN 78) aircraft carrier program.

Additionally, the fiscal year 2026 NDAA provides authorization for William J.

Clinton (CVN 82) and George W.

Bush (CVN 83), including incremental funding, advance construction, and advance procurement authorities;

incremental funding and authorization for up to five Columbia class (SSBN 826) submarines;

and continuous production authority for certain components of Virginia class (SSN 774) submarines.

Fiscal year 2026 began on October 1, 2025 without annual appropriations legislation or a continuing resolution.

As a result, parts of the U.S.

Government temporarily shut down.

On November 12, after a 43-day federal government shutdown, lawmakers passed and the President signed a continuing resolution funding the government until

January 30, 2026.

Lawmakers also passed three annual funding bills – Military Construction-VA, Agriculture-FDA, and Legislative Branch – to fund parts of the government long-term.

The negotiated fiscal year 2026 defense appropriations bill includes continued incremental funding for Enterprise (CVN 80) and Doris Miller (CVN 81), along with advance procurement for William J.

Clinton (CVN 82);

continued funding for the RCOH of USS John C.

Stennis (CVN 74);

funding for the Virginia class (SSN 774) and Columbia class (SSBN 826) submarine programs;

advanced procurement for the Arleigh Burke class (DDG 51) program, including additional funding for shipyard infrastructure and wage enhancements;

and funding for long-lead-time materials for the new frigate program.

Additionally, the bill provides $1.5 billion for the Maritime Industrial Base to invest in critical areas including supplier capacity and capability, strategic outsourcing, workforce training, and technology and infrastructure.

Global Geopolitical Environment – The global geopolitical and economic environment continues to be impacted by uncertainty, heightened geopolitical tensions, and instability.

Geopolitical relationships continue to change, and the U.S.

and its allies face a global security environment that includes threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability.

These global threats persist across all domains, from undersea to space to cyber, and the global market for defense products, services, and solutions is driven by these complex and evolving security challenges.

In addition, changes in the global economic environment, including changes in international trade policies, including those imposing tariffs, could further impact the global market for defense products.

Our current operating environment exists in the broader context of political and socioeconomic priorities and reflects, among other things, the continued impact of and uncertainty surrounding geopolitical tensions, financial market volatility, inflation, trade policy, and a challenging labor market.

Program Descriptions

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Cost-type contracts generally require that the contractor use its reasonable efforts to accomplish the scope of the work within some specified time and some stated dollar limitation.

• Time and Materials - Time and materials contracts specify a fixed hourly billing rate for each direct labor hour expended and reimbursement for allowable material costs and expenses.

• Time and Materials Contracts - Time and materials contracts specify a fixed hourly billing rate for each direct labor hour expended and reimbursement for allowable material costs and expenses.

Contract Fees - Negotiated contract fee structures include:

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CRITICAL ACCOUNTING POLICIES, ESTIMATES, AND JUDGMENTS

Our consolidated financial statements are prepared in accordance with U.S.

GAAP, which requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.

Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.

Management considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgment and estimates by management in its application.

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• Workers' compensation.

Summary of Significant Accounting Policies in Item 8 for further information.

Revenue Recognition

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Employee Pension and Other Postretirement Benefits in Item 8.

We calculate our retirement related benefit plan costs under both CAS and U.S.

GAAP Financial Accounting Standards ("FAS").

We calculate our retirement related benefit plan costs under both CAS and GAAP ("FAS").

The calculations under CAS and FAS require significant judgment.

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Government contracts through the pricing of products and services.

FAS prescribes the methodology used to determine retirement related benefit plan expense or income, as well as the liability, for financial reporting purposes.

FAS prescribes the methodology used to determine retirement related benefit plan expense or income, as well as the

liability, for financial reporting purposes.

The CAS requirements for these costs and their calculation methodologies differ from FAS.

As a result, while both CAS and FAS use

assumptions in their calculation methodologies, each method results in different calculated amounts of retirement related benefit plan costs.

As a result, while both CAS and FAS use assumptions in their calculation methodologies, each method results in different calculated amounts of retirement related benefit plan costs.

We recover our CAS costs through the pricing of products and services on U.S.

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Historical plan asset performance alone has inherent limitations in predicting future returns.

While studies are helpful in understanding past and current trends and performance, the rate of return assumption is based more on long-term prospective views to avoid short-term market influences.

Unless plan assets and benefit obligations are subject to re-

measurement during the year, the expected return on pension assets is based on the fair value of plan assets at the beginning of the year.

While studies are helpful in understanding past and current trends and performance, the rate of return assumption is based more on long-term prospective

views to avoid short-term market influences.

Unless plan assets and benefit obligations are subject to re-measurement during the year, the expected return on pension assets is based on the fair value of plan assets at the beginning of the year.

Mortality - Mortality assumptions are used to determine the retirement related benefit obligations and expense, and represent the likelihood and duration of benefit payments to plan participants based on historical experience and projected longevity.

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The amortization period for actuarial gains and losses is the estimated average remaining service life of the plan participants.

In 2024, the actual return on assets was approximately 7.7%, which was less than the expected return assumption of 8.00%.

For the year ended December 31, 2024, the weighted average discount rates for our pension and other postretirement benefit plans increased by 70 and 44 basis points, respectively.

The differences in asset returns resulted in an actuarial loss of $24 million, and the differences in discount rates resulted in an actuarial gain of $500 million for the year ended December 31, 2024.

In 2025, the actual return on assets was approximately 10.7%, which was more than the expected return assumption of 8.00%.

For the year ended December 31, 2025, the weighted average discount rates for our pension and other postretirement benefit plans decreased by 26 and 37 basis points, respectively.

The difference in asset returns resulted in an actuarial gain of $187 million, and the discount rate changes resulted in an actuarial loss of $181 million for the year ended December 31, 2025.

An increase or decrease of 25 basis points in the discount rate and the expected long-term rate of return assumptions would have had the following approximate impacts on pension expense and obligations:

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25 basis point increase in expected return on assets (18)

Assuming an 8.00% expected return on assets assumption, a $50 million pension plan contribution is generally expected to favorably impact the current year expected return on assets by approximately $2 million, depending on the timing of the contribution.

Assuming a 7.90% expected return on assets assumption, a $50 million pension plan contribution is generally expected to favorably impact the current year expected return on assets by approximately $2 million, depending on the timing of the contribution.

Sensitivities to assumptions are not necessarily linear and are specific to the time periods noted.

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Investments in equity securities (common and preferred) are valued at the last reported sales price when an active market exists.

Investments in fixed-income

securities are generally valued based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders.

Investments in fixed-income securities are generally valued based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders.

Investments in hedge funds, real estate investment funds, private partnerships, collective trust funds, and commingled funds are generally valued at their Net Asset Values ("NAV") or equivalent, which are based on the current fair values of the fund's underlying assets.

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As disclosed in Note 17:

Employee Pension and Other Postretirement Benefits in Item 8, net pre-tax unrecognized actuarial gains as of December 31, 2024 were $59 million and unrecognized actuarial losses as of December 31, 2023 were $455 million.

The increase in actuarial gains in 2024 was primarily driven by higher discount rates used to determine benefit obligations of $500 million and amortization of previously unrecognized actuarial losses of $5 million, which were offset by lower than expected asset returns of $24 million.

Employee Pension and Other Postretirement Benefits in Item 8, net pre-tax unrecognized actuarial gains as of December 31, 2025 and 2024 were $13 million and $59 million, respectively.

The decrease in actuarial gains in 2025 was primarily driven by lower discount rates used to determine benefit obligations of $181 million, amortization of previously unrecognized actuarial losses of $11 million, offset by higher than expected asset returns of $187 million.

Net pre-tax unrecognized prior service costs (credits) as of December 31, 2025 and 2024 were $98 million and $111 million, respectively.

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We periodically, and at least annually, update our assumptions based on an actuarial analysis.

For further information on workers’ compensation, see Environmental, Health & Safety in Item 1 and Note 16:

For further information on workers’ compensation, see Note 16:

Commitments and Contingencies in Item 8.

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Period-to-period revenues reflect performance under new and ongoing contracts.

Changes in sales and service

revenues are typically expressed in terms of volume.

Unless otherwise described, volume generally refers to

increases (or decreases) in reported revenues due to varying production activity levels, delivery rates, or service

levels on individual contracts.

Volume changes will typically carry a corresponding income change based on the

profit margin rate for a particular contract.

Sales and service revenues for the year ended December 31, 2024, increased $81 million, or 1%, compared to the same period in 2023, due to higher volumes at Mission Technologies and Ingalls, partially offset by lower volumes at Newport News.

Cost of Sales and Service Revenues

Changes in sales and service revenues are typically expressed in terms of volume.

Unless otherwise described, volume generally refers to increases (or decreases) in reported revenues due to varying production activity levels, delivery rates, or service levels on individual contracts.

Volume changes will typically carry a corresponding income change based on the profit margin rate for a particular contract.

Sales and service revenues for the year ended December 31, 2025, increased $949 million, or 8%, compared to the same period in 2024, due to higher volumes at Newport News, Ingalls, and Mission Technologies.

Net Cumulative Catch-up Revenue Adjustments

For the years ended December 31, 2025, 2024, and 2023, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Year Ended December 31

($ in millions) 2025 2024 2023

Gross favorable adjustments $ 322 $ 287 $ 309

Gross unfavorable adjustments (350) (413) (191)

Net adjustments $ (28) $ (126) $ 118

Revenue in Item 8 and Segment Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Cost of Product Sales and Service Revenues

Cost of sales for both product sales and service revenues consists of materials, labor, and subcontracting costs, as well as an allocation of indirect costs for overhead.

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Refer to Segment Operating Results in this section for details related to income from operating investments.

Other Income and Gains, Net

Other income and gains, net in 2024 was $9 million, compared to $120 million in 2023.

The decrease was due to the sale of a court judgment in 2023 and the settlement of a representations and warranties insurance claim related to the acquisition of Hydroid in 2023, partially offset by the settlement of an insurance claim in 2024.

General and Administrative Expenses

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These costs are allocated to contracts in progress on a systematic basis, and contract performance factors include this cost component as an element of cost.

General and administrative expenses in 2024 decreased $49 million, or 5%, compared to 2023.

The decrease was primarily due to lower state taxes.

General and administrative expenses in 2025 increased $4 million compared to 2024.

The increase was primarily due to higher state income taxes, partially offset by lower overhead costs.

Operating Income

We consider operating income an important measure for evaluating our operating performance, and, consistent with industry practice, we define operating income as revenues less the related costs of producing the revenues and general and administrative expenses.

We internally manage our operations by reference to "segment operating income," which is defined as operating income before the Operating FAS/CAS Adjustment and non-current state income taxes, neither of which affects contract performance.

Segment operating income is not a recognized measure under GAAP.

Segment Operating Income

We internally manage our operations by reference to "segment operating income," which is a non-GAAP measure and is defined as operating income before the Operating FAS/CAS Adjustment and non-current state income taxes, neither of which affects contract performance.

Segment operating income is a measure we use to evaluate our core operating performance as it reflects the aggregate performance results of contracts within a segment.

When analyzing our operating performance, investors should use segment operating income in addition to, and not as an alternative for, operating income or any other performance measure presented in accordance with GAAP.

It is a measure we use to evaluate our core operating performance.

We believe segment operating income reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business.

We believe the measure is used by investors and is a useful indicator to measure our performance.

believe the measure is used by investors and is a useful indicator to measure our performance.

Because not all companies use identical calculations, our presentation of segment operating income may not be comparable to similarly titled measures of other companies.

Refer to "Segment Operating Results" in this section for details related to segment operating income, as well as activity within each segment.

Changes in segment operating income are typically expressed in terms of volume, as discussed in Sales and Service Revenues above, or performance.

Performance refers to changes in contract profit margin rates.

These changes typically relate to profit recognition associated with revisions to estimated costs at completion ("EAC"), which reflect improved or deteriorated operating performance on that contract.

Operating income changes are accounted for on a cumulative to date basis at the time an EAC change is recorded.

Segment operating income may also be affected by, among other things, contract performance, inflationary pressures on our supply chain, the effects of workforce stoppages and other labor-related shortfalls, the availability of raw materials, the effects of natural disasters such as hurricanes, resolution of disputed items with the customer, recovery of insurance proceeds, and other discrete events.

At the completion of a long-term contract, any originally estimated costs not incurred or reserves not fully utilized, such as warranty reserves, could also impact contract earnings.

Where such items have occurred and the effects are material, a separate description is provided.

Refer to Segment Operating Results in this section for activity within each segment.

The following table reconciles operating income to segment operating income:

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FAS/CAS Adjustment and Operating FAS/CAS Adjustment

The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP and the expenses for these items included in segment operating income in accordance with CAS.

The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with FAS and the expenses for these items included in segment operating income in accordance with CAS.

The Operating FAS/CAS Adjustment excludes the following components of net periodic benefit costs:

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($ in millions) 2025 2024 2023 Dollars Percent Dollars Percent

FAS benefit (expense) $ 64 $ 30 $ 86 $ 34 113 % $ (56) (65) %

FAS benefit $ 100 $ 64 $ 30 $ 36 56 % $ 34 113 %

CAS cost 55 53 46 2 4 % 7 15 %

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Non-operating retirement benefit (190) (179) (148) (11) (6) % (31) (21) %

Operating FAS/CAS Adjustment (expense) benefit $ (62) $ (72) $ (145) $ 10 14 % $ 73 50 %

Operating FAS/CAS Adjustment expense $ (35) $ (62) $ (72) $ 27 44 % $ 10 14 %

The Operating FAS/CAS Adjustment in 2025 was a net expense of $35 million, compared to a net expense of $62 million in 2024.

The favorable change was primarily driven by higher interest rates under FAS.

We expect the FAS/CAS Adjustment in 2025 to be a net benefit of approximately $148 million (($100) million FAS and $48 million CAS), primarily driven by higher discount rates under FAS.

We expect the Operating FAS/CAS Adjustment in 2025 to be a net expense of approximately $43 million ($91 million FAS and $48 million CAS), primarily driven by higher interest rates under FAS.

We expect the FAS/CAS Adjustment in 2026 to be a net benefit of approximately $169 million (($123) million FAS and $46 million CAS), primarily driven by higher 2025 returns on plan assets.

We expect the Operating FAS/CAS Adjustment in 2026 to be a net expense of approximately $44 million ($90 million FAS and $46 million CAS), primarily driven by lower interest rates.

The expected FAS/CAS Adjustment is subject to change during 2026, when we remeasure our actuarial estimate of the unfunded benefit obligation with updated census data and other items later in the year.

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Current period state income taxes are charged to contract costs and included in cost of sales and service revenues in segment operating income.

Non-current state income tax benefit in 2024 was $24 million, compared to non-current state income tax benefit of $11 million in 2023.

The favorable change in non-current state income taxes was driven by a decrease in deferred state income tax expense, primarily attributable to the reduction in the blended state income tax rate applied to our deferred tax balances.

Non-current state income tax expense in 2025 was $25 million, compared to non-current state income tax benefit of $24 million in 2024.

The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and an increase in the blended state income tax rate applied to our deferred tax balances.

SEGMENT OPERATING RESULTS

Basis of Presentation

Our discussion of business segment performance focuses on sales and service revenues and operating income,

consistent with our approach for managing our business.

Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business.

We are aligned into three reportable segments:

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Key Segment Financial Measures

Sales and Service Revenues

Period-to-period revenues reflect performance under new and ongoing contracts.

Changes in sales and service revenues are typically expressed in terms of volume.

Volume changes will typically carry a corresponding income change based on the profit margin rate for a particular contract.

Segment Operating Income

Segment operating income reflects the aggregate performance results of contracts within a segment.

Excluded from this measure are certain costs not directly associated with contract performance, such as the Operating FAS/CAS Adjustment and non-current state income taxes.

Changes in segment operating income are typically expressed in terms of volume, as discussed above, or performance.

Performance refers to changes in contract profit margin rates.

These changes typically relate to profit recognition associated with revisions to estimated costs at completion ("EAC"), which reflect improved or deteriorated operating performance on that contract.

Operating income changes are accounted for on a cumulative to date basis at the time an EAC change is recorded.

At the completion of a long-term contract, any originally estimated costs not incurred or reserves not fully utilized, such as warranty reserves, could also impact contract earnings.

Where such items have occurred and the effects are material, a separate description is provided.

Net Cumulative Catch-up Revenue Adjustments

For the years ended December 31, 2024, 2023, and 2022, gross favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Year Ended December 31

($ in millions) 2024 2023 2022

Gross favorable adjustments $ 287 $ 309 $ 325

Gross unfavorable adjustments (413) (191) (212)

Net adjustments $ (126) $ 118 $ 113

Refer to Consolidated Operating Results in this section for details related to sales and service revenues and segment operating income.

Net Cumulative Catch-up Revenue Adjustments by Segment

For the years ended December 31, 2025, 2024, and 2023, net cumulative catch-up revenue adjustments by segment were as follows:

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Net adjustments $ (28) $ (126) $ 118

Revenue in Item 8 and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Year Ended December 31 2025 over 2024 2024 over 2023

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Sales and Service Revenues

Ingalls sales and service revenues, including intersegment sales, increased $15 million, or 1%, in 2024 compared to 2023, primarily driven by higher volumes in surface combatants, partially offset by lower volumes in amphibious assault ships and the NSC program.

Ingalls sales and service revenues, including intersegment sales, increased $311 million, or 11%, in 2025 compared to 2024, primarily driven by higher volumes in surface combatants and amphibious assault ships.

Segment Operating Income

Ingalls segment operating income in 2025 was $233 million, compared to segment operating income of $211 million in 2024.

The decrease was primarily driven by the sale of a court judgment in 2023 and lower performance on amphibious assault ships and surface combatants.

The increase was primarily due to higher volumes and contract adjustments in surface combatants, partially offset by lower performance in amphibious assault ships.

Year Ended December 31 2025 over 2024 2024 over 2023

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As a percentage of segment sales 5.1 % 4.1 % 6.2 %

The Company’s Newport News segment continues to experience performance challenges in the construction of aircraft carriers and the Virginia class (SSN 774) submarine program.

For the year ended December 31, 2025, cumulative catch-up revenue adjustments included significant unfavorable performance adjustments on the construction of aircraft carriers and Virginia class (SSN 774) submarines, which were offset by contract incentives.

Sales and Service Revenues

Newport News sales and service revenues, including intersegment sales, decreased $164 million, or 3%, in 2024 compared to 2023, primarily driven by cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program, and lower volumes on aircraft carriers and naval nuclear support services, partially offset by higher volumes in the Columbia class (SSBN 826) program.

Newport News sales and service revenues, including intersegment sales, increased $538 million, or 9%, in 2025 compared to 2024, primarily driven by higher volumes in submarines and aircraft carriers.

Segment Operating Income

Newport News segment operating income in 2025 was $331 million, compared to segment operating income of $246 million in 2024.

The decrease was primarily driven by lower performance on the Virginia class (SSN 774) submarine program and aircraft carriers, partially offset by contract incentives on the Columbia class (SSBN 826) program.

The increase was primarily driven by contract adjustments in the Virginia class (SSN 774) submarine program, partially offset by contract adjustments and incentives in 2024 in the RCOH program.

Mission Technologies

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Sales and Service Revenues

Mission Technologies sales and service revenues, including intersegment sales, for the year ended December 31, 2024, increased $238 million, or 9%, compared to 2023, primarily due to higher volumes in CEW&S and C5ISR contracts.

Mission Technologies sales and service revenues, including intersegment sales, for the year ended December 31, 2025, increased $107 million, or 4%, compared to 2024, primarily due to higher volumes in Warfare Systems, Global Security, and Unmanned Systems, partially offset by lower volumes in All-Domain Operations.

Segment Operating Income

Mission Technologies segment operating income for the year ended December 31, 2025, was $153 million, compared to segment operating income of $116 million in 2024.

The increase was primarily driven by higher volume and performance in CEW&S, higher performance in fleet sustainment, and higher equity income from operating investments, partially offset by the settlement of a representations and warranties insurance claim related to the acquisition of Hydroid in 2023.

The increase was primarily due to lower purchased intangible amortization, higher performance in Warfare Systems, and the higher volumes described above.

Mission Technologies segment operating income for the year ended December 31, 2024, was $116 million, compared to segment operating income of $101 million in 2023.

The increase was primarily driven by higher performance in Global Security, higher equity income from operating investments, and the higher volumes described above, partially offset by the settlement of a representations and warranties insurance claim related to the acquisition of Hydroid in 2023.

PRODUCT AND SERVICE REVENUES AND COST ANALYSIS

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Product Sales and Segment Cost of Product Sales

Product sales in 2024 decreased $200 million, or 3%, from 2023, primarily due to lower volumes on aircraft carriers and cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program at Newport News and lower volumes at Ingalls in amphibious assault ships, partially offset by higher volumes in the Columbia class (SSBN 826) program at Newport News and higher volumes at Ingalls in surface combatants.

Segment cost of product sales in 2024 increased $42 million, or 1%, compared to 2023, primarily due to higher volumes at Ingalls in surface combatants and higher volumes in the Columbia class (SSBN 826) program at Newport News, partially offset by lower volumes on aircraft carriers at Newport News.

Product sales in 2025 increased $669 million, or 9%, from 2024, primarily due to higher volumes in submarines and aircraft carriers at Newport News, and higher volumes in surface combatants and amphibious assault ships at Ingalls.

Segment cost of product sales in 2025 increased $604 million, or 9%, compared to 2024, primarily due to the higher product volumes described above.

Service Revenues and Segment Cost of Service Revenues

Service revenues in 2024 increased $281 million, or 7%, from 2023, primarily as a result of higher volumes at Mission Technologies in CEW&S and C5ISR.

Service revenues in 2025 increased $280 million, or 7%, from 2024, primarily due to higher volumes in surface combatants at Ingalls, Global Security and Warfare Systems at Mission Technologies, and naval nuclear support services at Newport News, partially offset by lower volumes in All-Domain Operations at Mission Technologies.

Cost of service revenues in 2025 increased $237 million, or 7%, compared to 2024, primarily due to the changes in service volumes described above.

Service revenues in 2024 increased $281 million, or 7%, from 2023, primarily as a result of higher volumes at Mission Technologies in All-Domain Operations and Warfare Systems.

Cost of service revenues in 2024 increased $245 million, or 7%, compared to 2023, consistent with the higher service volumes described above.

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Interest Expense

Interest expense for each of the years ended December 31, 2024 and 2023 was $95 million.

Interest expense for the year ended December 31, 2025, was $105 million, compared to $95 million in 2024.

The increase was primarily driven by higher interest expense related to the 2030 and 2035 Senior Notes issued in November 2024.

Non-Operating Retirement Benefit

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The non-operating retirement benefit in 2025 was $190 million, compared to $179 million in 2024.

The favorable change was primarily driven by higher 2023 returns on plan assets.

The favorable change was primarily driven by amortization of net actuarial costs.

Other, net income in 2025 was $35 million, compared to other, net income of $24 million in 2024.

There were no individually significant drivers for the increase in Other, net for the year ended December 31, 2024.

The increase in other, net income was primarily driven by an increase in unrealized gains on investments.

Federal and Foreign Income Taxes

Our effective tax rate on earnings from continuing operations was 22.1% in 2025, compared to 14.5% in 2024.

The decrease in our effective tax rate for 2024 was primarily attributable to current and prior period research and development tax credits recorded in 2024.

For the year ended December 31, 2024, our 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.

In October 2021, the Organization for Economic Co-operation and Development (the "OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (the "Framework"), which agreed to a two-pillar solution to address tax challenges arising from digitalization of the economy.

In December 2021, the OECD released Pillar Two Model Rules defining the global minimum tax rules, which contemplate a minimum tax rate of 15%.

To date, various jurisdictions have enacted, or are in the process of enacting, legislation on these rules, and the OECD continues to release additional guidance.

While it is uncertain whether the U.S.

will enact legislation to adopt the minimum tax directive, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement the minimum tax directive.

Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive.

We will continue to monitor the implementation of the Framework by the countries in which we operate.

We currently do not expect the Framework to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows.

Total backlog as of December 31, 2024, was approximately $48.7 billion.

The increase in our effective tax rate for 2025 was primarily attributable to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.

For the year ended December 31, 2025, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.

In 2021, the Organization for Economic Co-operation and Development ("OECD") announced a two-pillar solution to address tax challenges arising from the digitalization of the economy, which included a 15% global minimum tax under Pillar Two Model Rules ("Pillar Two").

On January 5, 2026, the OECD released a "side-by-side package" (“SbS”) for Pillar Two that includes administrative guidance on a SbS system, a permanent simplified effective tax rate safe harbor, an extension of the transitional country-by-country reporting safe harbor through 2027, and a substance-based tax incentive safe harbor.

Under this guidance, the U.S.

is recognized as a qualified SbS regime which effectively alleviates U.S.-based multi-national companies from top-up tax collectible under the Pillar Two income inclusion and undertaxed payments rules.

While we may be subject to Qualified Domestic Minimum Top-up Taxes in the jurisdictions in which we operate, the safe harbors provided by SbS are broadly applicable and we do not expect the Pillar Two framework to have a material impact on our effective tax rate, consolidated results of operations, financial position, or cash flows.

Total backlog as of December 31, 2025 and 2024, was approximately $53.1 billion and $48.7 billion, respectively.

Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer).

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Contract Awards

The value of new contract awards during the year ended December 31, 2024, was approximately $12.1 billion, including an award for the maintenance and overhaul of USS Boise (SSN 764), an award for an advanced planning contract for the RCOH of USS Harry S.

Truman (CVN 75) and an award for construction of USS Richard J.

Danzig (DDG 143).

The value of new contract awards during the year ended December 31, 2025, was approximately $16.9 billion, primarily driven by awards at Newport News and Ingalls, inclusive of a contract modification for construction of two additional Block V Virginia class submarines.

LIQUIDITY AND CAPITAL RESOURCES

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We believe these measures are useful to investors in assessing our financial performance.

The following table summarizes key components of cash flow provided by operating activities:

The following table summarizes key components of net cash provided by operating activities:

Year Ended December 31 2025 over 2024 2024 over 2023

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Net earnings $ 605 $ 550 $ 681 $ 55 10 % $ (131) (19) %

Depreciation and amortization of purchased intangible assets 326 347 358 (21) (6) % (11) (3) %

Other non-cash transactions, net 10 29 15 (19) (66) % 14 93 %

Depreciation and amortization of purchased intangibles 329 326 347 3 1 % (21) (6) %

Stock-based compensation 54 23 34 31 135 % (11) (32) %

Deferred income taxes 203 (122) (113) 325 266 % (9) (8) %

Loss (gain) on investments in marketable securities (22) (23) 25 1 4 % (48) (192) %

Gain on investments in marketable securities (34) (22) (23) (12) (55) % 1 4 %

Other non-cash transactions, net 23 10 29 13 130 % (19) (66) %

Retiree benefits (154) (112) (75) (42) (38) % (37) (49) %

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We have historically maintained a capital structure comprised of a mix of equity and debt financing.

We vary our leverage both to optimize our equity return and to pursue acquisitions.

We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations, existing borrowing facilities, and/or through refinancing in the debt markets prior to the maturity dates of our debt.

We discuss below our significant operating, investing, and financing activities affecting cash flows for each of the three years in the period ended December 31, 2024, as classified in our consolidated statements of cash flows.

Operating Activities

Cash provided by operating activities in 2025 was $1,196 million, compared to $393 million provided by operating activities in 2024.

The unfavorable change in operating cash flow was primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs and lower earnings, partially offset by lower payments for income taxes.

The favorable change in operating cash flow was primarily due to a favorable change in trade working capital driven by the timing of billings across programs, lower cash paid for income taxes, and higher earnings.

We expect cash generated from operations in 2026, in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next 12 calendar months beginning January 1, 2026 and beyond such 12-month period based on our current business plans.

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Cash used in investing activities in 2025 was $521 million, compared to $348 million used in investing activities in 2024.

The change in investing cash was primarily driven by an increase in capital expenditures and the sale of our

interest in an unconsolidated ship repair and specialty fabrication joint venture in 2023, partially offset by additional investment in one of our unconsolidated nuclear and environmental joint ventures in 2023.

For 2025, we expect our capital expenditures for maintenance and sustainment to be approximately 1.5% of annual revenues and our discretionary capital expenditures to be approximately 2.0% to 2.5% of annual revenues.

The change in investing cash was primarily driven by the acquisition of W International and an increase in capital expenditures.

For 2026, we expect our capital expenditures for maintenance and sustainment to be approximately 1.0% to 1.5% of annual revenues and our discretionary capital expenditures to be approximately 3.0% to 3.5% of annual revenues.

Our capital expenditures are expected to increase due to investments to expand our shipbuilding capacity.

Financing Activities

Cash provided by financing activities in 2024 was $356 million, compared to $771 million used in financing activities in 2023.

The change in cash provided by financing activities was primarily due to $1 billion in proceeds from the issuance of long term debt and lower repayment of long term debt in the current year, which was partially offset by increased repurchases of common stock.

Cash used in financing activities in 2025 was $732 million, compared to $356 million provided by financing activities in 2024.

The change in cash provided by financing activities was primarily due to proceeds from the issuance of long term debt in the prior year and higher repayment of long term debt in the current year, partially offset by lower repurchases of common stock.

Free Cash Flow

Free cash flow represents cash provided by (used in) operating activities less capital expenditures net of related grant proceeds.

Free cash flow represents cash provided by operating activities less capital expenditures net of related grant proceeds.

Free cash flow is not a measure recognized under GAAP.

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Free cash flow $ 800 $ 40 $ 692

Free cash flow in 2024 decreased $652 million from 2023, primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs, lower earnings, and higher capital expenditures, which was partially offset by lower payments for income taxes.

Free cash flow in 2025 increased $760 million from 2024, primarily due to a favorable change in trade working capital driven by the timing of billings across programs, lower cash paid for income taxes, and higher earnings, partially offset by higher capital expenditures.

Retirement Related Benefit Plan Contributions

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In determining whether to make discretionary contributions to these plans above the minimum required amounts, we consider various factors, including maintaining the funded status needed to avoid potential benefit restrictions and other adverse consequences, maintaining minimum CAS funding requirements, and the current and anticipated future funding levels of each plan.

The contributions to our qualified defined benefit pension plans are affected by a number of factors, including published IRS interest rates, the actual return on plan assets, actuarial assumptions, and demographic experience.

The contributions to our qualified defined benefit pension plans are affected by a number of factors, including published Internal Revenue Service

("IRS") interest rates, the actual return on plan assets, actuarial assumptions, and demographic experience.

These factors and our resulting contributions also impact the funded status of the plans.

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The funded percentages under ERISA and FAS vary due to inherent differences in the assumptions and methodologies used to calculate the respective obligations.

We expect our 2025 cash contributions to our qualified defined benefit pension plans to be less than $1 million, all of which we anticipate will be discretionary and which are exclusive of CAS cost recoveries in our contracts.

We expect our 2026 cash contributions to our qualified defined benefit pension plans to be approximately $2 million, all of which we anticipate will be discretionary and which are exclusive of CAS cost recoveries in our contracts.

Due to the differences in calculation methodologies, our FAS expense is not necessarily representative of our funding requirements or CAS cost recoveries.

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

For the year ended December 31, 2024, we repurchased 607,841 shares at an aggregate cost of $ 163 million, including $ 1 million of accrued excise tax.

For the years ended December 31, 2023 and 2022, we repurchased 337,007 and 244,561 shares, respectively, at aggregate costs of $ 75 million and $ 52 million, respectively.

For the year ended December 31, 2025, the Company did not repurchase any shares.

For the year ended December 31, 2024, the Company repurchased 607,841 shares at an aggregate cost of $ 163 million, including $ 1 million of accrued excise tax.

For the year ended December 31, 2023, the Company repurchased 337,007 shares at an aggregate cost of $ 75 million.

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

Additional Capital - In November 2024, we issued $ 500 million aggregate principal amount of 5.353% senior notes due 2030 and $ 500 million aggregate principal amount of 5.749% senior notes due 2035.

The net proceeds from these senior notes were expected to be used for general corporate purposes, including debt repayment (which may include repayment of our 3.844 % senior notes due 2025 and commercial paper borrowings) and working capital.

In September 2024, we amended and restated our existing $ 1.5 billion credit facility, increasing the capacity thereunder to $ 1.7 billion and extending the maturity date to September 2029 (the "Second Amended and Restated Revolving Credit Facility").

Additional Capital - In May 2025, the Company repaid $500 million aggregate principal amount of its 3.844 % senior notes upon their maturity.

The repayment was funded using a combination of cash on hand and proceeds from the Company’s commercial paper program.

In November 2024, we issued $ 500 million aggregate principal amount of 5.353 % senior notes due 2030 and $ 500 million aggregate principal amount of 5.749 % senior notes due 2035.

The net proceeds from these senior notes were used for general corporate purposes, including debt repayment (which included repayment of our 3.844 % senior notes due 2025 and commercial paper borrowings) and working capital.

Revolving Credit Facility").

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

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Debt, Note 15:

Leases, Note 17:

Employee Pension and Other Postretirement Benefits, Note 12:

Income Taxes, and Note 2:

Summary of Significant Accounting Policies in Item 8 for information about those obligations.

Income Taxes, Note 2:

Summary of Significant Accounting Policies, and Note 16:

Commitments and Contingencies in Item 8 for information about those obligations.

Our purchase obligations as of December 31, 2025, were approximately $7,063 million, with approximately $3,442 million expected to be paid in 2026 and $3,621 million thereafter.

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Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction.

We delivered USS Frank E.

(DDG 121), USS Lenah H.

Sutcliffe Higbee (DDG 123), and USS Jack H.

Lucas (DDG 125) in 2021, 2022, and 2023, respectively.

We delivered USS Jack H.

Lucas (DDG 125) and USS Ted Stevens (DDG 128) in 2023 and 2025, respectively.

We have contracts to construct the following Arleigh Burke class (DDG 51) destroyers:

Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), George M.

Jeremiah Denton (DDG 129), George M.

Neal (DDG 131), Sam Nunn (DDG 133), Thad Cochran (DDG 135), John F.

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Evans (DDG 141), Charles J.

French (DDG 142), and Richard J.

Danzig (DDG 143).

French (DDG 142), Richard J.

Danzig (DDG 143), Intrepid (DDG 145), and Robert Kerrey (DDG 146).

Columbia class (SSBN 826) submarines

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The Columbia class (SSBN 826) program plan of record is to construct 12 new SSBNs to replace the current aging Ohio class.

We have a teaming agreement with Electric Boat to build modules for the entire Columbia class (SSBN 826) submarine program that leverages our Virginia class (SSN 774) experience.

As a subcontractor to Electric Boat, we leverage our Virginia class (SSN 774) experience to perform design work and build modules for the entire Columbia class (SSBN 826) submarine program.

We have been awarded contracts from Electric Boat for integrated product and process development, providing long–lead–time material and advance construction, and construction of the first two boats of the Columbia class (SSBN 826) submarine program.

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In 2023, we received an award modification for long-lead-time material and advance construction for the next five boats.

USS Gerald R.

Ford class (CVN 78) aircraft carriers

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The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility, and national defense missions.

There were 11 ships planned for this program, of which the first ten ships have been delivered.

There were initially 11 ships for this program, of which the first ten ships have been delivered.

In 2025, we reached agreement with the U.S.

Coast Guard to terminate production and delivery of the 11th and final ship.

Naval nuclear support services Provide services to and in support of the U.S.

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Navy nuclear ships worldwide through mobile and in-house capabilities.

Services include maintenance services on nuclear reactor prototypes.

Services include maintenance services on nuclear reactor prototypes, such as those at the Kenneth A.

Kesselring Site, a research and development facility in New York that supports the U.S.

Navy, which were completed in 2024.

San Antonio class (LPD 17) amphibious transport dock ships

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Navy's seabase transformation.

In 2022, we delivered USS Fort Lauderdale (LPD 28), and we were awarded a long-lead-time material contract for Philadelphia (LPD 32).

In 2022, we were awarded a long-lead-time material contract for Philadelphia (LPD 32).

In 2023, we received an award modification for the detail design and construction of Philadelphia (LPD 32).

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Virginia class (SSN 774) fast attack submarines

Construct attack submarines as the principal subcontractor to Electric Boat.

Construct attack submarines as part of a teaming agreement with Electric Boat.

The Virginia class (SSN 774) is a post-Cold War design tailored to excel in a wide range of warfighting missions, including anti-submarine and surface ship warfare;

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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-K

Item 7. Management’s Discussion and Analysis