Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Huntington Ingalls Industries, Inc.

Newport News, Virginia

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Huntington Ingalls Industries, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2025, the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 5, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue – Shipbuilding Contracts — Refer to Notes 2 and 7 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue on shipbuilding contracts with U.S. Government customers over time as the construction of the ship progresses because transfer of control to the customer is continuous. Ordinarily the Company’s contracts represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods. The use of the cost-to-cost method to measure performance progress over time is supported by clauses in the related contracts that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. The accounting for these contracts involves judgment, particularly as it relates to the process of

estimating total material costs, labor costs, and profit for the performance obligation. Cost of sales is recognized as incurred, and revenues are determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales.

Given the judgments necessary to estimate total material costs, labor costs, and profit in order to recognize revenue for certain shipbuilding contracts, auditing such estimates required extensive audit effort due to the complexity of the contracts and a high degree of auditor’s judgment, especially for contracts where there is limited historical data.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimates of total material costs, labor costs, and profit in order to recognize revenue for certain shipbuilding contracts included the following, among others:

• We tested the effectiveness of controls over shipbuilding contract revenue, including management’s controls over the estimates of total material costs, labor costs, and profit for performance obligations.

• We developed independent estimates of revenue based on historical profit margins and current year recorded costs. We compared those estimates to revenue recognized by the Company.

• We obtained the population of contracts during 2025 and assessed the financial and performance risk of the contracts based on our knowledge gained through prior-year audits of the Company, industry experience, and ongoing conversations with members of program management regarding the contract performance to identify contracts that we believe have an increased level of risk. For such contracts selected, we performed tailored audit procedures to address the specific characteristics of audit interest identified. Procedures performed included:

◦Read the relevant portions of contracts including any recent contract modifications to understand contract terms, including incentives, fee arrangement, scope of work, and other unusual contract terms.

◦Evaluated the estimates of total costs and profit for the performance obligation by performing some combination of the following:

◦Performed inquiries with the business managers and corroborated the information gained from these inquiries with other parties who have detailed knowledge of the contract’s progress, issues being encountered, and overall production status.

◦Evaluated the appropriateness and consistency of management’s material and labor estimates against historical performance, underlying performance metrics, and metrics of similar performance obligations.

◦Evaluated the range and probabilities of reasonably possible outcomes and where management set its point estimate within the range and tested the accuracy and completeness of the key data used in developing estimates.

◦Performed retrospective reviews when evaluating the thoroughness and precision of management’s estimation process by comparing costs incurred to date to previous estimates.

◦Tested the appropriateness of the timing and accuracy of changes in estimates, including inspection of underlying source documentation, and consideration of any contradictory information.

◦Evaluated the necessity and appropriateness of any constraints applied against any variable consideration.

/s/ Deloitte & Touche LLP

Richmond, Virginia

February 5, 2026

We have served as the Company’s auditor since 2011.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Huntington Ingalls Industries, Inc.

Newport News, Virginia

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Huntington Ingalls Industries, Inc. and subsidiaries (the "Company") as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 5, 2026, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Richmond, Virginia

February 5, 2026

HUNTINGTON INGALLS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

						Year Ended December 31
(in millions, except per share amounts)						2025						2024						2023
Sales and service revenues
Product sales						$	8,133					$	7,464					$	7,664
Service revenues						4,351						4,071						3,790
Sales and service revenues						12,484						11,535						11,454
Cost of sales and service revenues
Cost of product sales						7,081						6,500						6,467
Cost of service revenues						3,818						3,585						3,341
Income from operating investments, net						46						49						37
Other income and gains, net						3						9						120
General and administrative expenses						977						973						1,022
Operating income						657						535						781
Other income (expense)
Interest expense						(105)						(95)						(95)
Non-operating retirement benefit						190						179						148
Other, net						35						24						19
Earnings before income taxes						777						643						853
Federal and foreign income taxes						172						93						172
Net earnings						$	605					$	550					$	681
Basic earnings per share						$	15.39					$	13.96					$	17.07
Weighted-average common shares outstanding						39.3						39.4						39.9
Diluted earnings per share						$	15.39					$	13.96					$	17.07
Weighted-average diluted shares outstanding						39.3						39.4						39.9
Net earnings from above						$	605					$	550					$	681
Other comprehensive income
Change in unamortized benefit plan costs						(33)						528						238
Tax benefit (expense) for items of other comprehensive income						8						(134)						(61)
Other comprehensive income (loss), net of tax						(25)						394						177
Comprehensive income						$	580					$	944					$	858

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

						December 31
($ in millions)						2025						2024
Assets
Current Assets
Cash and cash equivalents						$	774					$	831
Accounts receivable, net						339						212
Contract assets						1,758						1,683
Inventoried costs						219						208
Income taxes receivable						284						204
Prepaid expenses and other current assets						77						90
Total current assets						3,451						3,228
Property, Plant, and Equipment
Land and land improvements						400						377
Buildings and leasehold improvements						3,483						3,182
Machinery and other equipment						2,402						2,267
Capitalized software costs						195						207
						6,480						6,033
Accumulated depreciation and amortization						(2,754)						(2,583)
Property, plant, and equipment, net						3,726						3,450
Other Assets
Operating lease assets						267						239
Goodwill						2,650						2,618
Other intangible assets, net of accumulated amortization of $1,222 million as of 2025 and $1,118 million as of 2024						694						782
Pension plan assets						1,544						1,422
Miscellaneous other assets						417						402
Total other assets						5,572						5,463
Total assets						$	12,749					$	12,141

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - CONTINUED

						December 31
($ in millions)						2025						2024
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable						$	556					$	598
Accrued employees’ compensation						443						392
Current portion of long-term debt						—						503
Current portion of postretirement plan liabilities						119						124
Current portion of workers’ compensation liabilities						217						201
Contract liabilities						1,220						774
Other current liabilities						490						399
Total current liabilities						3,045						2,991
Long-term debt						2,700						2,700
Pension plan liabilities						155						142
Other postretirement plan liabilities						200						209
Workers’ compensation liabilities						442						443
Long-term operating lease liabilities						223						205
Deferred tax liabilities						572						378
Other long-term liabilities						339						407
Total liabilities						7,676						7,475
Commitments and Contingencies (Note 16)
Stockholders’ Equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 53,826,236 issued and 39,241,527 outstanding as of 2025, and 53,714,128 issued and 39,129,419 outstanding as of 2024						1						1
Additional paid-in capital						2,087						2,045
Retained earnings						5,487						5,097
Treasury stock						(2,449)						(2,449)
Accumulated other comprehensive loss						(53)						(28)
Total stockholders’ equity						5,073						4,666
Total liabilities and stockholders’ equity						$	12,749					$	12,141

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

						Year Ended December 31
($ in millions)						2025						2024						2023
Operating Activities
Net earnings						$	605					$	550					$	681
Adjustments to reconcile to net cash provided by operating activities
Depreciation						225						217						219
Amortization of purchased intangibles						104						109						128
Stock-based compensation						54						23						34
Deferred income taxes						203						(122)						(113)
Gain on investments in marketable securities						(34)						(22)						(23)
Other non-cash transactions, net						23						10						29
Change in
Accounts receivable						(127)						256						168
Contract assets						(75)						(146)						(297)
Inventoried costs						(11)						(22)						(3)
Prepaid expenses and other assets						(66)						(33)						(42)
Accounts payable and accruals						449						(315)						264
Retiree benefits						(154)						(112)						(75)
Net cash provided by operating activities						1,196						393						970
Investing Activities
Capital expenditures
Capital expenditure additions						(402)						(367)						(292)
Grant proceeds for capital expenditures						6						14						14
Acquisitions of businesses						(132)						—						—
Investment in affiliates						—						—						(24)
Proceeds from equity method investment						—						—						63
Proceeds from sale of investments						5						—						—
Other investing activities, net						2						5						3
Net cash used in investing activities						(521)						(348)						(236)
Financing Activities
Proceeds from issuance of long-term debt						—						1,000						—
Repayment of long-term debt						(500)						(229)						(480)
Proceeds from line of credit borrowings						—						42						—
Repayment of line of credit borrowings						—						(42)						—
Debt issuance costs						—						(17)						—
Dividends paid						(213)						(206)						(200)
Repurchases of common stock						—						(162)						(75)
Employee taxes on certain share-based payment arrangements						(14)						(25)						(13)
Other financing activities, net						(5)						(5)						(3)
Net cash provided by (used in) financing activities						(732)						356						(771)
Change in cash and cash equivalents						(57)						401						(37)
Cash and cash equivalents, beginning of period						831						430						467
Cash and cash equivalents, end of period						$	774					$	831					$	430
Supplemental Cash Flow Disclosure
Cash paid for interest						$	108					$	101					$	101
Non-Cash Investing and Financing Activities
Capital expenditures accrued in accounts payable						$	23					$	23					$	29

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

($ in millions)												Common Stock						Additional Paid-in Capital						Retained Earnings (Deficit)						Treasury Stock						Accumulated Other Comprehensive Income (Loss)						Total Stockholders' Equity
Balance as of December 31, 2022												$	1					$	2,022					$	4,276					$	(2,211)					$	(599)					$	3,489
Net earnings												—						—						681						—						—						681
Dividends declared ($5.02 per share)												—						—						(200)						—						—						(200)
Stock compensation												—						23						(2)						—						—						21
Other comprehensive income, net of tax												—						—						—						—						177						177
Treasury stock activity												—						—						—						(75)						—						(75)
Balance as of December 31, 2023												1						2,045						4,755						(2,286)						(422)						4,093
Net earnings												—						—						550						—						—						550
Dividends declared ($5.25 per share)												—						—						(206)						—						—						(206)
Stock compensation												—						—						(2)						—						—						(2)
Other comprehensive income, net of tax												—						—						—						—						394						394
Treasury stock activity												—						—						—						(163)						—						(163)
Balance as of December 31, 2024												1						2,045						5,097						(2,449)						(28)						4,666
Net earnings												—						—						605						—						—						605
Dividends declared ($5.43 per share)												—						—						(213)						—						—						(213)
Stock compensation												—						42						(2)						—						—						40
Other comprehensive loss, net of tax												—						—						—						—						(25)						(25)
Balance as of December 31, 2025												$	1					$	2,087					$	5,487					$	(2,449)					$	(53)					$	5,073

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

HUNTINGTON INGALLS INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

						Page
Item 8.			NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			60
1.			DESCRIPTION OF BUSINESS			61
2.			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES			61
3.			ACCOUNTING STANDARDS UPDATES			68
4.			ACQUISITIONS			71
5.			STOCKHOLDERS' EQUITY			69
6.			EARNINGS PER SHARE			70
7.			REVENUE			71
8.			SEGMENT INFORMATION			75
9.			ACCOUNTS RECEIVABLE			78
10.			INVENTORIED COSTS			78
11.			GOODWILL AND OTHER INTANGIBLE ASSETS			79
12.			INCOME TAXES			79
13.			DEBT			83
14.			INVESTIGATIONS, CLAIMS, AND LITIGATION			84
15.			LEASES			86
16.			COMMITMENTS AND CONTINGENCIES			87
17.			EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS			88
18.			STOCK COMPENSATION PLANS			96
19.			SUBSIDIARY GUARANTORS			98

HUNTINGTON INGALLS INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Huntington Ingalls Industries, Inc. ("HII" or the "Company") is a global, all-domain defense partner, building and delivering the world's most powerful, survivable naval ships and technologies that safeguard America's seas, sky, land, space, and cyber. HII is organized into three reportable segments: Ingalls Shipbuilding ("Ingalls"), Newport News Shipbuilding ("Newport News"), and Mission Technologies. For more than a century, the Company's Ingalls segment in Mississippi and Newport News segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making HII America’s largest shipbuilder. The Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-K promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Consolidated Financial Statements, the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. Additionally, certain prior year amounts have been reclassified to conform to the current year presentation.

Accounting Estimates - The preparation of the Company's consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates.

Revenue Recognition - Most of the Company's revenues are derived from long-term contracts for the production of goods and services provided to its U.S. Government customers. The Company generally recognizes revenues on contracts with U.S. Government customers over time using a cost-to-cost measure of progress. The use of the cost-to-cost method to measure performance progress over time is supported by clauses in the related contracts that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. The Company utilizes the cost-to-cost method to measure performance progress because it best reflects the continuous transfer of control of the related goods and services to the customer as the Company satisfies its performance obligations.

When the customer is not a U.S. Government entity, the Company may recognize revenue over time or at a point in time when control transfers upon delivery, depending upon the facts and circumstances of the related arrangement. When the Company determines that revenue should be recognized over time, the Company utilizes a measure of progress that best depicts the transfer of control of the relevant goods and services to the customer. Generally, the terms and conditions of the contracts result in a transfer of control of the related goods and services as the Company satisfies its performance obligations. Accordingly, the Company recognizes revenue over time using the cost-to-cost method to measure performance progress. The Company may, however, utilize a measure of progress other than cost-to-cost, such as a labor-based measure of progress, if the terms and conditions of the arrangement require such accounting.

When using the cost-to-cost method to measure performance progress, certain contracts may include costs that are not representative of performance progress, such as large upfront purchases of uninstalled materials, unexpected waste, or inefficiencies. In these cases, the Company adjusts its measure of progress to exclude such costs, with the goal of better reflecting the transfer of control of the related goods or services to the customer and recognizing revenue only to the extent of the costs incurred that reflect the Company's performance under the contract.

In addition, for time and material arrangements, the Company often utilizes the practical expedient allowing the recognition of revenue in the amount the Company has a right to invoice, which corresponds with the value provided to the customer and to which the Company is entitled to payment for performance to date.

A performance obligation is a promise to transfer a distinct good or service to the customer and is the unit of account for which revenue is recognized. To determine the proper revenue recognition method, consideration is given to whether two or more contracts should be combined and accounted for as one contract and whether a single contract consists of more than one performance obligation. For contracts with multiple performance obligations, the contract transaction price is allocated to each performance obligation using an estimate of the standalone selling price based upon expected cost plus a margin at contract inception, which is generally the price disclosed in the contract. Contracts are often modified to account for changes in contract specifications and requirements. Generally, modifications do not result in additional performance obligations that are distinct from the existing performance obligations in the contract, and the effects of the modifications are recognized as an adjustment to revenue on a cumulative catch-up basis. Alternatively, when the performance obligations in the modifications are deemed distinct, contract modifications are accounted for prospectively.

The amount of revenue recognized as the Company satisfies performance obligations associated with contracts with customers is based upon the determination of transaction price. Transaction price reflects the amount of consideration to which the Company expects to be entitled for performance under the terms and conditions of the contract. Transaction price may include fixed and variable components, including shareline incentive fees whereby the value of the contract is variable based upon the amount of costs incurred, as well as other incentive fees based upon achievement of contractual schedule commitments or other specified criteria in the contract. Shareline incentive fees are determined based upon the formula under the relevant contract using the Company’s estimated cost to complete for each period. The Company generally utilizes a most likely amount approach to estimate variable consideration. In all such instances, the estimated revenues represent those amounts for which the Company believes a significant reversal of revenue is not probable.

Contract Estimates - In estimating contract performance, the Company utilizes a profit-booking rate based upon performance expectations that takes into consideration a number of assumptions and estimates regarding risks related to technical requirements, feasibility, schedule, and contract costs. Management performs periodic reviews of the contracts to evaluate the underlying risks, which may increase the profit-booking rate as the Company is able to mitigate and retire such risks. Conversely, if the Company is not able to retire these risks, cost estimates may increase, resulting in a lower profit-booking rate.

The cost estimation process requires significant judgment based upon the professional knowledge and experience of the Company’s engineers, program managers, and financial professionals. Factors considered in estimating the work to be completed and ultimate contract recovery include the availability, productivity, and cost of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect of any performance delays, the availability and timing of funding from the customer, and the recoverability of any claims included in the estimates to complete.

Changes in estimates of sales, costs, and profits on a performance obligation are recognized using the cumulative catch-up method of accounting, which recognizes in the current period the cumulative effect of the changes in current and prior periods. A significant change in an estimate on one or more contracts in a period could have a material effect on the Company's consolidated financial position or results of operations for that period.

When estimates of total costs to be incurred exceed estimates of total revenue to be earned on a complex, construction-type contract or a performance obligation related to such a contract, a provision for the entire loss on the contract or the performance obligation is recognized in the period the loss is determined. The determination of whether the loss is identified at the contract or performance obligation level is an accounting policy election that is applied consistently to similar contract types.

Accounts Receivable - Accounts receivable include amounts related to any unconditional Company right to receive consideration and are presented as accounts receivable, net in the consolidated statements of financial position, separate from other contract balances. Accounts receivable are comprised of amounts billed and currently due from customers. The Company reports accounts receivable net of an allowance for expected credit losses. Because the Company's accounts receivable are primarily with the U.S. Government or with companies

acting as a contractor to the U.S. Government, the Company does not have material exposure to accounts receivable credit risk.

Contract Assets - Contract assets primarily relate to the Company’s right to consideration for work completed but not billed as of the reporting date when the right to payment is not subject only to the passage of time, including retention amounts. Contract assets are classified as current assets and, in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long-term nature of many of the Company's contracts. Contract assets are transferred to accounts receivable when the right to consideration becomes unconditional.

Contract Liabilities - Contract liabilities are comprised of advance payments, billings in excess of revenues, and deferred revenue amounts. Such advances are generally not considered a significant financing component, because they are utilized to pay for contract costs within a one-year period. Contract liability amounts are recognized as revenue once the requisite performance progress has occurred.

Inventoried Costs - Inventoried costs primarily relate to company-owned raw materials, which are stated at the lower of cost or net realizable value, generally using the average-cost method, and costs capitalized pursuant to applicable provisions of the Federal Acquisition Regulation ("FAR") and U.S. Cost Accounting Standards ("CAS"). Under the Company's U.S. Government contracts, the customer asserts title to, or a security interest in, inventories related to such contracts as a result of contract advances, performance-based payments, and progress payments. In accordance with industry practice, inventoried costs are classified as current assets and include amounts related to contracts having production cycles longer than one year.

Costs to Obtain or Fulfill a Contract - Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or a specific anticipated contract (for example, mobilization and set-up) that generate or enhance the Company's ability to satisfy its performance obligations under a contract. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Capitalized costs to obtain or fulfill a contract are amortized to expense over the expected period of benefit. Costs to obtain or fulfill a contract are reported within prepaid expenses and other current assets on the consolidated statements of financial position and are not material as of December 31, 2025 and 2024.

Warranty Costs - Certain of the Company’s contracts contain assurance-type warranty provisions, which generally promise that the service or vessel will comply with agreed upon specifications. In such instances, the Company accrues the estimated loss by a charge to income in the relevant period. In limited circumstances, the Company's complex construction type contracts may provide the customer with an option to purchase a warranty or provide an extended assurance service coupled with the primary assurance warranty. In such cases, the Company accounts for the warranty as a separate performance obligation to the extent it is material within the context of the contract. Warranty liabilities are reported within other current liabilities and are not material as of December 31, 2025 and 2024.

Government Grants - The Company recognizes incentive grants, including transfers of depreciable assets, from federal, state, and local governments at fair value upon compliance with the conditions of their receipt and reasonable assurance that the grants will be received or the depreciable assets will be transferred. Grants related to specific expenses are recognized in the period in which the expenses are incurred as an offset to the related expenses. Grants related to depreciable assets are recognized over the periods and in the proportions in which depreciation expense on those assets is recognized. Government grants are reported within other current liabilities and other long term liabilities and are not material as of December 31, 2025 and 2024.

General and Administrative Expenses - In accordance with industry practice and regulations that govern the cost accounting requirements for government contracts, most general corporate expenses incurred at both the segment and corporate locations are allowable and allocable costs on government contracts. These costs are allocated to contracts in progress on a systematic basis, and contract performance factors include this as an element of cost.

General and administrative expenses also include certain other costs that do not affect segment operating income, primarily non-current state income taxes. 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 state unrecognized tax benefits in the relevant period.

Research and Development - Company-sponsored research and development activities primarily include independent research and development ("IR&D") related to experimentation, design, development, and test activities for government programs. IR&D expenses are included in general and administrative expenses and are generally allocable to government contracts. Company-sponsored IR&D expenses totaled $26 million, $27 million, and $35 million for the years ended December 31, 2025, 2024, and 2023, respectively. Expenses for research and development sponsored by the customer are charged directly to the related contracts.

Fair Value of Financial Instruments - In measuring fair value, the use of observable inputs is required to be maximized, where available. The fair value hierarchy provides for three levels of inputs:

Level 1: Quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs, other than Level 1 prices, such as: quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or that the Company corroborates with observable market data for substantially the full term of the related assets or liabilities.

Level 3: Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets and liabilities.

Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments that are recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties.

The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. These trusts were valued at $249 million and $233 million as of December 31, 2025 and 2024, respectively, and are presented within miscellaneous other assets on the 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.

Asset Retirement Obligations - Asset decommissioning and/or remediation activities may be required when the Company ceases to utilize certain facilities. The Company records, within other current liabilities or other long-term liabilities as appropriate, all known asset retirement obligations for which the liability's fair value can be reasonably estimated, including certain asbestos removal, asset decommissioning, and lease restoration obligations. Asset retirement obligations for which the liability's fair value can be reasonably estimated are not material as of December 31, 2025 and 2024.

Income Taxes - Income tax expense and other related information are based on the prevailing statutory rates for U.S. federal income taxes and the composite state income tax rate for the Company for each period presented. 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 state unrecognized tax benefits in the relevant period. These amounts are recorded within operating income, while the current period state income tax expense, which is generally allowable and allocable to contracts, is charged to contract costs and included in cost of sales and service revenues in segment operating income.

Deferred income taxes are recorded when revenues and expenses are recognized in different periods for financial statement purposes and for tax return purposes. Deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates expected to be in effect when the deferred tax items reverse in future periods.

The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and recent results of operations. Based on the Company's evaluation of these deferred tax assets, valuation allowances of $25 million and $26 million were recognized as of December 31, 2025 and 2024, respectively.

Uncertain tax positions meeting the more-likely-than-not recognition threshold, based on the merits of the position, are recognized in the financial statements. The Company recognizes the amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties, the Company recognizes an expense for the amount of

the penalty in the period the tax position is claimed or expected to be claimed in its tax return. Penalties and accrued interest related to unrecognized tax benefits are recognized as a component of income tax expense. Changes in accruals associated with unrecognized tax benefits are recorded in earnings in the period in which they are determined.

Cash and Cash Equivalents - The carrying amounts of cash and cash equivalents approximate fair value due to the short-term nature of these assets, which have original maturity dates of 90 days or less.

Concentration Risk - The Company’s assets that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with reputable financial institutions and limits the amount of credit exposure with any one of them. The Company regularly evaluates the creditworthiness of these financial institutions and mitigates this credit risk by entering into transactions with high-quality counterparties, limiting the exposure to each counterparty, and monitoring the financial condition of its counterparties.

In connection with its U.S. Government contracts, the Company is required to procure certain raw materials, components, and parts from supply sources approved by the U.S. Government. Only one supplier may exist for certain components and parts required to manufacture the Company's products.

Property, Plant, and Equipment - Depreciable properties owned by the Company are recorded at cost and depreciated over the estimated useful lives of individual assets and asset classes. Major improvements are capitalized while expenditures for maintenance, repairs, and minor improvements are expensed. Costs incurred for computer software developed or purchased for internal use are capitalized and amortized over the expected useful life of the software, not to exceed nine years. Leasehold improvements are amortized over the shorter of their useful lives or the term of the lease.

The remaining assets are depreciated using the straight-line method, with the following lives:

						Years
Land improvements						2						-						40
Buildings and improvements						2						-						60
Capitalized software costs						3						-						9
Machinery and other equipment						2						-						40

The Company evaluates the recoverability of its property, plant, and equipment when changes in economic circumstances or business objectives indicate the carrying value may not be recoverable. The Company's evaluations include estimated future cash flows, profitability, and other factors affecting fair value. As these assumptions and estimates may change over time, it may or may not be necessary to record impairment charges.

Cloud Computing Arrangements - Certain costs to implement cloud computing service arrangements hosted by third party vendors are capitalized when incurred during the application development stage. Implementation costs are subsequently amortized using the straight-line method over the expected term of the related cloud computing service arrangement, generally ten years or less. Capitalized implementation costs are reported net of accumulated amortization within miscellaneous other assets on the consolidated statements of financial position and are not material as of December 31, 2025 and 2024.

Leases - The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to a party the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company recognizes a lease liability at the lease commencement date, as the present value of future lease payments, using an estimated rate of interest that the Company would pay to borrow equivalent funds over an equivalent term on a collateralized basis. A lease asset is recognized based on the lease liability value and adjusted for any prepaid lease payments, initial direct costs, or lease incentive amounts. The lease term at the commencement date includes any renewal options or termination options when it is reasonably certain that the Company will exercise or not exercise those options, respectively.

Right of use assets associated with operating leases are recognized in operating lease assets in the consolidated statements of financial position. Lease liabilities associated with operating leases are recognized in long-term operating lease liabilities, with short-term lease liability amounts included in other current liabilities in the

consolidated statements of financial position. Right of use assets associated with finance leases are included in miscellaneous other assets in the consolidated statements of financial position. Finance lease liabilities are included in the current portion of long-term debt and long-term debt in the consolidated statements of financial position.

Rent expense for operating leases is recognized on a straight-line basis over the lease term and included in cost of sales and service revenues in the consolidated statements of operations and comprehensive income. Variable lease payments are generally recognized to expense as incurred and are not included in the right of use assets or lease liabilities.

The Company elected, for all asset classes, to exclude from its consolidated statements of financial position leases having terms of 12 months or less (short-term leases) and elected not to separate lease and non-lease components in the determination of lease payment obligations for its long-term lease contracts.

Goodwill and Other Intangible Assets - The Company performs impairment tests for goodwill annually as of October 31 and between annual impairment tests if an event occurs or circumstances of potential impairment exist that would more likely than not reduce the fair values of the Company's reporting units below their carrying values. The Company's reporting units are aligned with its operating segments. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the goodwill allocated to the reporting unit is less than its carrying amount. If the qualitative assessment indicates a possible impairment, the carrying value of the reporting unit is compared to its fair value, which is determined using a combination of discounted cash flow analysis and comparative market multiples. If the fair value is determined to be less than the carrying value, the Company records an impairment charge to the reporting unit.

The Company evaluates the recoverability of its intangible long-lived assets when changes in economic circumstances or business objectives indicate the carrying value may not be recoverable. The Company's purchased intangible assets are amortized on a straight-line basis or a method based on the pattern of benefits over their estimated useful lives.

Equity Method Investments - Investments in which the Company has the ability to exercise significant influence over the investee, but does not own a majority interest or otherwise control, are accounted for under the equity method of accounting and are included in miscellaneous other assets in the consolidated statements of financial position. The Company's equity method investments align strategically and are integrated with the Company's operations. Accordingly, the Company's share of the net earnings or losses of the investee is included in income from operating investments, net within the consolidated statements of operations and comprehensive income. The Company evaluates its equity method investments for other than temporary impairment whenever events or changes in business circumstances indicate that the carrying amounts of such investments may not be fully recoverable. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

In 2021, the Company contributed its San Diego Shipyard business to a joint venture, Titan Acquisition Holdings, L.P. ("Titan"), in exchange for a 10% non-controlling interest, which was recorded under the equity method of accounting. In 2023, the Company sold its investment in Titan. For the year ended December 31, 2023, the Company received $63 million in proceeds and recognized an immaterial loss on sale.

Self-Insured Group Medical Insurance - The Company maintains a self-insured group medical insurance plan. The plan is designed to provide a specified level of coverage for employees and their dependents. Estimated liabilities for incurred but not paid claims utilize actuarial methods based on various assumptions, which include, but are not limited to, HII's historical loss experience and projected loss development factors. These liabilities are recorded in other current liabilities on the consolidated statements of financial position and are not material as of December 31, 2025 and 2024.

Self-Insured Workers' Compensation Plan - The Company's operations are subject to federal and state workers' compensation laws. The Company maintains self-insured workers' compensation plans and participates in federally administered second injury workers' compensation funds. The Company estimates the liability for claims and funding requirements on a discounted basis utilizing actuarial methods based on various assumptions, which include, but are not limited to, the Company's historical loss experience and projected loss development factors as compiled in an annual actuarial study. Self-insurance accruals include amounts related to liabilities for reported claims and an estimated accrual for claims incurred but not reported. The Company's workers' compensation liability

was discounted at 4.09% and 4.58% as of December 31, 2025 and 2024, respectively. These discount rates were determined using a risk-free rate based on future payment streams. Workers' compensation benefit obligations on an undiscounted basis were $778 million and $780 million as of December 31, 2025 and 2024, respectively.

Litigation, Commitments, and Contingencies - Amounts associated with litigation, commitments, and contingencies are recorded as charges to earnings when management, after taking into consideration the facts and circumstances of each matter, including any settlement offers and projected loss or claim development factors, has determined it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Loan Receivable - The Company holds a loan receivable in connection with the financing of the sale of its previously owned Avondale Shipyard facility. The loan receivable is reported at amortized cost, net of loan discount, and approximates fair value. The current and non-current portions of the loan receivable are reported in prepaid expenses and other current assets and miscellaneous other assets on the consolidated statements of financial position, respectively. The loan receivable is not material for the years ended December 31, 2025 and 2024.

Interest income is recognized on an accrual basis using the effective yield method and reported within other, net on the consolidated statements of operations and comprehensive income and is not material for the years ended December 31, 2025, 2024, and 2023. The discount is accreted into income using the effective yield method over the estimated life of the loan receivable.

Retirement Related Benefit Plans - The Company accounts for its retirement related benefit plans on the accrual basis. The measurements of obligations, costs, assets, and liabilities require significant judgment. The costs of benefits provided by defined benefit pension plans are recorded in the period participating employees provide service. The costs of benefits provided by other postretirement benefit plans are recorded in the period participating employees attain full eligibility. The discount rate assumption is defined under GAAP as the rate at which a plan's obligation could be effectively settled. A discount rate is established for each of the retirement related benefit plans at its respective measurement date.

The expected return on plan assets component of retirement related costs is used to calculate net periodic expense, based on such factors as historical returns, targeted asset allocations, investment policy, duration, expected future long-term performance of individual asset classes, interest rates, inflation, portfolio volatility, investment management and administrative fees, and risk management strategies. 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 plan assets is based on the fair value of plan assets at the beginning of the year.

The costs of plan amendments that provide benefits already earned by plan participants (prior service costs and credits) are deferred in accumulated other comprehensive loss and amortized over the expected future service period of active participants as of the date of amendment. Actuarial gains and losses arising from differences between assumptions and actual experience or changes in assumptions are deferred in accumulated other comprehensive loss. This unrecognized amount is amortized to the extent it exceeds 10% of the greater of the plan's benefit obligation or plan assets. The amortization period for actuarial gains and losses is the estimated remaining service life of the plan participants.

The Company recognizes the funded status of each retirement related benefit plan as an asset or liability in its consolidated statements of financial position. The funded status represents the difference between the plan's benefit obligation and the fair value of the plan's assets. Unrecognized deferred amounts, such as demographic or asset gains or losses and the impacts of plan amendments, are included in accumulated other comprehensive loss and amortized as described above.

Stock Compensation - The fair value of stock-based compensation is measured based on the closing market price of the Company's common stock on the grant date. Compensation expense for stock awards is measured based on the grant date fair value and recognized over the vesting period, generally three years. For purposes of measuring compensation expense, the number of shares ultimately expected to vest is estimated at each reporting date based on the Company's expectations regarding the relevant service or performance criteria.

3. ACCOUNTING STANDARDS UPDATES

Recently Adopted Guidance

There were no new Accounting Standards Updates (“ASU”) adopted during the year ended December 31, 2025 that had a material impact on the Company’s consolidated financial statements.

Accounting Guidance Issued But Not Adopted as of December 31, 2025

In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance requires, among other things, tabular and qualitative disclosure of disaggregated expense information that is included in certain expense line items presented on the consolidated statement of operations. The new guidance also requires that the total amount and definition of selling expenses be disclosed. The new guidance is effective on a prospective basis for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption and retrospective application permitted. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. Among other targeted improvements, the new guidance amends existing software cost capitalization guidance by removing all references to software project development stages and providing criteria that clarify the threshold for software cost capitalization to begin. The new guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The new guidance may be applied on a prospective basis, retrospective basis, or modified basis for in-process projects. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The new standard establishes authoritative guidance for the recognition, measurement, and presentation of a grant received by a business entity from a government, including guidance for a grant related to an asset and a grant related to income. The new guidance also amends certain existing disclosure requirements for government assistance provided to business entities. The new guidance is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The new guidance may be applied on a modified prospective basis, modified retrospective basis, or full retrospective basis. The Company is currently evaluating the impacts of the new guidance on its consolidated financial statements.

Other accounting pronouncements issued but not effective until after December 31, 2025, are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

4. ACQUISITIONS

In January 2025, the Company acquired substantially all of the assets of W International SC, LLC and Vivid Empire SC, LLC (collectively “W International”), a South Carolina-based complex metal fabricator specializing in the manufacture of shipbuilding structures, modules, and assemblies, for a purchase price of $132 million. The acquired manufacturing facility expands the Company’s shipbuilding capacity and operates within the Newport News segment. The transaction closed using cash on hand and qualifies as a business combination under FASB Accounting Standards Codification ("ASC") Topic 805 – "Business Combinations."

The Company recognized $32 million of goodwill, which includes expected synergies and the value of W International’s acquired workforce, all of which was allocated to the Newport News segment and is tax deductible. There have been no other changes to the Company's goodwill since December 31, 2024. See Note 11: Goodwill and Other Intangible Assets.

The assets, liabilities, and results of operations of W International are not material to the Company’s consolidated financial position, results of operations, or cash flows.

5. STOCKHOLDERS' EQUITY

Common Stock - Changes in the number of Company outstanding shares for the year ended December 31, 2025, resulted from share activity under its stock compensation plans. See Note 18: Stock Compensation Plans.

Treasury Stock - In January 2024, the Company's board of directors authorized an increase in the Company's stock repurchase program from $3.2 billion to $3.8 billion and an extension of the term of the program to December 31, 2028. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. 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 purchased shares is recorded as treasury stock in the consolidated statements of financial position.

Dividends - In November 2025, the Company's board of directors authorized an increase in the Company's quarterly cash dividend from $1.35 per share to $1.38 per share. In November 2024, the Company's board of directors authorized an increase in the Company's quarterly cash dividend from $1.30 per share to $1.35 per share. In November 2023, the Company's board of directors authorized an increase in the Company's quarterly cash dividend from $1.24 per share to $1.30 per share. The Company paid cash dividends totaling $213 million ($5.43 per share), $206 million ($5.25 per share), and $200 million ($5.02 per share) in the years ended December 31, 2025, 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 $53 million and $28 million as of December 31, 2025 and 2024, respectively.

The changes in accumulated other comprehensive loss by component for the years ended December 31, 2025, 2024, and 2023, were as follows:

($ in millions)						Benefit Plans												Total
Balance as of December 31, 2022						$	(599)											$	(599)
Other comprehensive income before reclassifications						221												221
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost(1)						15												15
Amortization of net actuarial loss(1)						2												2
Tax expense for items of other comprehensive income						(61)												(61)
Net current period other comprehensive income						177												177
Balance as of December 31, 2023						(422)												(422)
Other comprehensive income before reclassifications						509												509
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost(1)						14												14
Amortization of net actuarial loss(1)						5												5
Tax expense for items of other comprehensive income						(134)												(134)
Net current period other comprehensive income						394												394
Balance as of December 31, 2024						(28)												(28)
Other comprehensive loss before reclassifications						(37)												(37)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost(1)						16												16
Amortization of net actuarial gain(1)						(12)												(12)
Tax benefit for items of other comprehensive loss						8												8
Net current period other comprehensive loss						(25)												(25)
Balance as of December 31, 2025						$	(53)											$	(53)

(1) These accumulated comprehensive loss components are included in the computation of net periodic benefit cost. See Note 17: Employee Pension and Other Postretirement Benefits. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2025, 2024, and 2023, was $1 million, $5 million, and $4 million, respectively.

6. EARNINGS PER SHARE

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

						Year Ended December 31
(in millions, except per share amounts)						2025						2024						2023
Net earnings						$	605					$	550					$	681
Weighted-average common shares outstanding						39.3						39.4						39.9
Net effect of dilutive stock options and awards						—						—						—
Dilutive weighted-average common shares outstanding						39.3						39.4						39.9
Earnings per share - basic						$	15.39					$	13.96					$	17.07
Earnings per share - diluted						$	15.39					$	13.96					$	17.07

The Company's calculation of diluted earnings per common share includes the dilutive effects of the assumed exercise of stock options and vesting of restricted stock based on the treasury stock method. 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 years ended December 31, 2025 and 2024, and 0.4 million RPSRs for the year ended December 31, 2023.

7. REVENUE

The following is a description of principal activities from which the Company generates its revenues. For more detailed information regarding reportable segments, see Note 8: Segment Information. For more detailed information regarding the Company's accounting policy for revenue, see Note 2: Summary of Significant Accounting Policies.

U.S. Government Contracts

The Ingalls and Newport News segments generate revenue primarily from performance under multi-year contracts with the U.S. Government, generally the U.S. Navy and U.S. Coast Guard, or prime contractors to contracts with the U.S. Government, relating to the advance planning, design, construction, repair, maintenance, refueling, overhaul, or inactivation of nuclear-powered ships and non-nuclear ships. The period over which the Company performs may extend past five years. The Mission Technologies segment also generates the majority of its revenue from contracts with the U.S. Government, including U.S. Government agencies. The Company generally invoices and receives related payments based upon performance progress no less frequently than monthly.

Shipbuilding - For most of the Company's shipbuilding contracts, the customer contracts with the Company to provide a comprehensive service of designing, procuring long-lead-time materials, manufacturing, and integrating complex equipment and technologies into a single ship or project, often resulting in a single performance obligation. Contract modifications to account for changes in specifications and requirements are recognized when approved by the customer. In the majority of circumstances, modifications do not result in additional performance obligations that are distinct from the existing performance obligations in the contract, and the effects of the modifications are recognized as an adjustment to revenue on a cumulative catch-up basis. Alternatively, in instances in which the performance obligations in the modifications are deemed distinct, contract modifications are accounted for prospectively.

The Company’s multi-year shipbuilding contracts with the U.S. Government are routinely modified as the result of unpriced change orders arising in the ordinary course of business. These anticipated changes are accounted for as contract modifications when the scope of the work has been approved and it is probable that the price will be approved. The Company recognizes variable consideration included in the transaction price for a modified contract to the extent the Company believes a significant reversal of revenue is not probable.

The Company considers incentive and award fees to be variable consideration and includes in the transaction price at inception the consideration to which the Company expects to be entitled under the terms and conditions of the contract, generally estimated using a most likely amount approach. Estimated revenues represent those amounts for which the Company believes a significant reversal of revenue is not probable.

The Company recognizes revenues related to shipbuilding contracts as it satisfies the related performance obligations over time using a cost-to-cost input method to measure performance progress, which best reflects the transfer of control to the customer.

Services - The Mission Technologies segment generates revenue primarily under U.S. Government contracts. Contracts generally are structured using either an Indefinite Delivery/Indefinite Quantity ("IDIQ") vehicle, under which orders are issued, or a standalone contract. Contracts may be fixed-price or cost-type, include variable consideration such as incentives and awards, and structured as task orders under an IDIQ contract vehicle or requirements contract vehicle. In either case, the Company generally performs services over a shorter duration and may continue to perform upon exercise of related period of performance options that are also shorter in duration. The Company’s performance obligations vary in nature and may be stand-ready, in which case the Company responds to the customer’s needs on the basis of its demand, a recurring service, typically recurring maintenance services, or a single performance obligation that does not comprise a series of distinct services.

In determining transaction price, the Company considers incentives and other contingencies to be variable consideration and includes in the initial transaction price the consideration to which the Company expects to be entitled under the terms and conditions of the contract, generally estimated using a most likely amount approach. Transaction price is limited to the extent of funding allotted by the customer and available for performance, and estimated revenues represent those amounts for which the Company believes a significant reversal of revenue is not probable. Where a series of distinct services has been identified, the Company generally allocates variable consideration to distinct time increments of service.

The Company generally recognizes revenue as it satisfies the related performance obligations over time using a cost-to-cost input method to measure performance progress, because, even when the Company has identified a series of services, its cost incurrence pattern generally is not ratable given the complex nature of the services the Company provides. Invoices are issued and related payments are received, on the basis of performance progress, no less frequently than monthly. In addition, many of the Company's U.S. Government services contracts are time and material arrangements. As a result, the Company often utilizes the practical expedient allowing the recognition of revenue in the amount the Company has a right to invoice, which corresponds with the value provided to the customer and to which the Company is entitled to payment for performance to date.

Non-U.S. Government Contracts

Revenues generated under commercial and state and local government agency contracts are primarily derived from the provision of nuclear and environmental services. Non-U.S. Government contracts typically are one or two years in duration.

In determining transaction price, the Company considers incentives and other contingencies to be variable consideration and includes in the initial transaction price the consideration to which the Company expects to be entitled under the terms and conditions of the contract, generally estimated using a most likely amount approach. In the context of variable consideration, the Company limits the transaction price to amounts for which the Company believes a significant reversal of revenue is not probable. Such amounts may relate to transaction price in excess of funding, a lack of history with the customer, a lack of history with the goods or services being provided, or other items.

Revenue generally is recognized over time given the terms and conditions of the related contracts. The Company generally utilizes a cost-to-cost input method to measure performance progress, which best reflects the transfer of control to the customer. The Company’s non-U.S. Government contract portfolio is comprised of a large number of time and material arrangements. As a result, the Company often utilizes the practical expedient allowing the recognition of revenue in the amount the Company has a right to invoice, which corresponds with the value provided to the customer and to which the Company is entitled to payment for performance to date.

Disaggregation of Revenue

The following tables present revenues on a disaggregated basis, in a manner that reconciles with the Company's reportable segment disclosures, for the following categories: product versus service type, customer type, contract type, and major program. The Company believes that this level of disaggregation provides investors with information to evaluate the Company’s financial performance and provides the Company with information to make capital allocation decisions in the most appropriate manner.

The following tables present revenues on a disaggregated basis:

						Year Ended December 31, 2025
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Revenue Type
Product sales						$	2,597					$	5,397					$	139					$	—					$	8,133
Service revenues						469						1,109						2,773						—						4,351
Intersegment						12						1						132						(145)						—
Sales and service revenues						$	3,078					$	6,507					$	3,044					$	(145)					$	12,484
Customer Type
Federal						$	3,066					$	6,505					$	2,899					$	—					$	12,470
Commercial						—						1						12						—						13
State and local government agencies						—						—						1						—						1
Intersegment						12						1						132						(145)						—
Sales and service revenues						$	3,078					$	6,507					$	3,044					$	(145)					$	12,484
Contract Type
Firm fixed-price						$	17					$	5					$	411					$	—					$	433
Fixed-price incentive						2,581						3,122						4						—						5,707
Cost-type						468						3,379						2,350						—						6,197
Time and materials						—						—						147						—						147
Intersegment						12						1						132						(145)						—
Sales and service revenues						$	3,078					$	6,507					$	3,044					$	(145)					$	12,484

						Year Ended December 31, 2024
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Revenue Type
Product sales						$	2,424					$	4,921					$	119					$	—					$	7,464
Service revenues						335						1,045						2,691						—						4,071
Intersegment						8						3						127						(138)						—
Sales and service revenues						$	2,767					$	5,969					$	2,937					$	(138)					$	11,535
Customer Type
Federal						$	2,759					$	5,964					$	2,804					$	—					$	11,527
Commercial						—						2						5						—						7
State and local government agencies						—						—						1						—						1
Intersegment						8						3						127						(138)						—
Sales and service revenues						$	2,767					$	5,969					$	2,937					$	(138)					$	11,535
Contract Type
Firm fixed-price						$	7					$	7					$	343					$	—					$	357
Fixed-price incentive						2,417						3,127						9						—						5,553
Cost-type						335						2,832						2,281						—						5,448
Time and materials						—						—						177						—						177
Intersegment						8						3						127						(138)						—
Sales and service revenues						$	2,767					$	5,969					$	2,937					$	(138)					$	11,535

						Year Ended December 31, 2023
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Revenue Type
Product sales						$	2,495					$	5,053					$	116					$	—					$	7,664
Service revenues						248						1,077						2,465						—						3,790
Intersegment						9						3						118						(130)						—
Sales and service revenues						$	2,752					$	6,133					$	2,699					$	(130)					$	11,454
Customer Type
Federal						$	2,743					$	6,129					$	2,558					$	—					$	11,430
Commercial						—						1						22						—						23
State and local government agencies						—						—						1						—						1
Intersegment						9						3						118						(130)						—
Sales and service revenues						$	2,752					$	6,133					$	2,699					$	(130)					$	11,454
Contract Type
Firm fixed-price						$	2					$	4					$	322					$	—					$	328
Fixed-price incentive						2,497						3,364						6						—						5,867
Cost-type						244						2,762						2,039						—						5,045
Time and materials						—						—						214						—						214
Intersegment						9						3						118						(130)						—
Sales and service revenues						$	2,752					$	6,133					$	2,699					$	(130)					$	11,454

						Year Ended December 31
($ in millions)						2025						2024						2023
Major Programs
Amphibious assault ships						$	1,464					$	1,426					$	1,511
Surface combatants and coast guard cutters						1,596						1,330						1,225
Other						18						11						16
Total Ingalls						3,078						2,767						2,752
Aircraft carriers						3,390						3,239						3,374
Submarines						2,540						2,206						2,161
Other						577						524						598
Total Newport News						6,507						5,969						6,133
All-domain operations and warfare systems						2,011						1,957						1,717
Global security, unmanned systems, and other						1,033						980						982
Total Mission Technologies						3,044						2,937						2,699
Intersegment eliminations						(145)						(138)						(130)
Sales and service revenues						$	12,484					$	11,535					$	11,454

As of December 31, 2025, the Company had $53.1 billion of remaining performance obligations. The Company expects to recognize approximately 21% of its remaining performance obligations as revenue through 2026, an additional 35% through 2028, and the balance thereafter.

Cumulative Catch-up Revenue Adjustments

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

						Year Ended December 31
($ in millions, except per share amounts)						2025						2024						2023
Effect on operating income						$	(28)					$	(126)					$	118
Effect on diluted earnings per share						$	(0.55)					$	(2.51)					$	2.33

For each of the years ended December 31, 2025, 2024, and 2023, no individual favorable cumulative catch-up revenue adjustment was material to the Company's consolidated statements of operations and comprehensive income.

For the year ended December 31, 2025, cumulative catch-up revenue adjustments included an unfavorable adjustment of $71 million on the construction of Enterprise (CVN 80) and Doris Miller (CVN 81) at the Company's Newport News segment. For each of the years ended December 31, 2024 and 2023, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's consolidated statements of operations and comprehensive income.

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.

Contract Balances

Contract assets include retention amounts, substantially all of which were under U.S. Government contracts, and were comprised of the following:

						December 31
($ in millions)						2025						2024
Due from U.S. Government						$	1,723					$	1,638
Due from other customers						35						45
Total contract assets						$	1,758					$	1,683

The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Net contract assets were comprised as follows:

						December 31
($ in millions)						2025						2024
Contract assets						$	1,758					$	1,683
Contract liabilities						1,220						774
Net contract assets						$	538					$	909

The Company recognized revenue related to its prior year-end contract liabilities of $619 million, $938 million, and $690 million for the years ended December 31, 2025, 2024, and 2023, respectively.

8. SEGMENT INFORMATION

The Company is organized into three operating segments, which are also its reportable segments: Ingalls, Newport News, and Mission Technologies, consistent with HII’s principal lines of business. Ingalls includes the Company’s non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of the Company’s nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. The Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defense and offensive cyberspace

strategies and electronic warfare; unmanned autonomous systems; live, virtual, and constructive training solutions; platform modernization; and critical nuclear operations.

The Company’s operations are managed by senior executives reporting to the Company’s President and Chief Executive Officer, the chief operating decision maker, who regularly reviews the reportable segments’ operating results to assess performance and allocate resources.

The Company internally manages 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. In evaluating operating performance, the chief operating decision maker looks primarily at changes in sales and service revenues, as well as segment operating income. This approach is consistent with the long-term life cycle of the Company’s contracts, as management assesses the bidding of each contract by focusing on net sales and operating profit and monitors performance in a similar manner through contract completion.

The Operating FAS/CAS Adjustment represents the difference between the service cost component of the Company's pension and other postretirement benefit plan expense determined in accordance with GAAP ("FAS") and the Company's pension and other postretirement expense under CAS.

U.S. Government Sales - Revenues from the U.S. Government include revenues from contracts for which HII is the prime contractor, as well as contracts for which the Company is a subcontractor and the ultimate customer is the U.S. Government. The Company derived substantially all of its revenues from the U.S. Government for each of the years ended December 31, 2025, 2024, and 2023.

Assets - Substantially all of the Company's assets are located or maintained in the United States.

Results of Operations by Segment

The following tables present the Company's operating results by segment:

						Year Ended December 31, 2025
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Sales and Service Revenues
Product sales						$	2,597					$	5,397					$	139					$	—					$	8,133
Service revenues						469						1,109						2,773						—						4,351
Intersegment						12						1						132						(145)						—
Total sales and service revenues						3,078						6,507						3,044						(145)						12,484
Segment Operating Income
Income from operating investments, net						—						—						46						—						46
Other income and gains, net						—						1						2						—						3
Less:
Cost of sales and service revenues
Product						2,258						4,685						109						—						7,052
Service						409						931						2,472						—						3,812
Intersegment						12						1						132						(145)						—
Other segment items						166						560						226						—						952
Total segment operating income						$	233					$	331					$	153					$	—					$	717
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment																														(35)
Non-current state income taxes																														(25)
Total operating income																														$	657

						Year Ended December 31, 2024
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Sales and Service Revenues
Product sales						$	2,424					$	4,921					$	119					$	—					$	7,464
Service revenues						335						1,045						2,691						—						4,071
Intersegment						8						3						127						(138)						—
Total sales and service revenues						2,767						5,969						2,937						(138)						11,535
Segment Operating Income
Income from operating investments, net						1						—						48						—						49
Other income and gains, net						—						10						(1)						—						9
Less:
Cost of sales and service revenues
Product						2,070						4,276						102						—						6,448
Service						294						865						2,416						—						3,575
Intersegment						8						3						127						(138)						—
Other segment items						185						589						223						—						997
Total segment operating income						$	211					$	246					$	116					$	—					$	573
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment																														(62)
Non-current state income taxes																														24
Total operating income																														$	535

						Year Ended December 31, 2023
($ in millions)						Ingalls						Newport News						Mission Technologies						Intersegment Eliminations						Total
Sales and Service Revenues
Product sales						$	2,495					$	5,053					$	116					$	—					$	7,664
Service revenues						248						1,077						2,465						—						3,790
Intersegment						9						3						118						(130)						—
Total sales and service revenues						2,752						6,133						2,699						(130)						11,454
Segment Operating Income
Income from operating investments, net						—						—						37						—						37
Other income and gains, net						71						—						49						—						120
Less:
Cost of sales and service revenues
Product						2,031						4,254						121						—						6,406
Service						207						900						2,223						—						3,330
Intersegment						9						3						118						(130)						—
Other segment items						214						597						222						—						1,033
Total segment operating income						$	362					$	379					$	101					$	—					$	842
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment																														(72)
Non-current state income taxes																														11
Total operating income																														$	781

Sales transactions between segments are generally recorded at cost.

Other segment items consist of general and administrative expenses.

Other Financial Information

The following tables present the Company's capital expenditures, as presented to the chief operating decision maker, and depreciation and amortization by segment:

						Year Ended December 31
($ in millions)						2025						2024						2023
Capital Expenditures**(1)**
Ingalls						$	74					$	60					$	65
Newport News						303						268						196
Mission Technologies						13						18						11
Total segment capital expenditures						390						346						272
Corporate						6						7						6
Total capital expenditures						$	396					$	353					$	278

(1) Net of grant proceeds for capital expenditures

						Year Ended December 31
($ in millions)						2025						2024						2023
Depreciation and Amortization
Ingalls						$	81					$	78					$	76
Newport News						141						136						150
Mission Technologies						103						110						120
Total segment depreciation and amortization						325						324						346
Corporate						4						2						1
Total depreciation and amortization						$	329					$	326					$	347

Asset information by segment is not disclosed because it is not a key measure of performance used by the chief operating decision maker.

9. ACCOUNTS RECEIVABLE

Accounts receivable, net were comprised of the following:

						December 31
($ in millions)						2025						2024
Due from U.S. Government						$	331					$	210
Due from other customers						10						4
Total accounts receivable						341						214
Allowance for expected credit losses						(2)						(2)
Total accounts receivable, net						$	339					$	212

Substantially all amounts included in accounts receivable as of December 31, 2025, are expected to be collected in 2026.

10. INVENTORIED COSTS

Inventoried costs are principally associated with contracts for which the U.S. government is the primary customer. As a result, the Company does not believe it has significant exposure to recoverability risk related to inventoried costs.

Inventoried costs were comprised of the following:

						December 31
($ in millions)						2025						2024
Production costs of contracts in process						$	23					$	27
Raw material inventory						196						181
Total inventoried costs						$	219					$	208

11. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

In connection with the Company’s annual goodwill impairment test as of October 31, 2025, management tested goodwill for each of its three reporting units with goodwill balances. Based on the annual goodwill impairment analysis, the Company determined that the estimated fair values of all reporting units exceeded by more than 10% their corresponding carrying values as of October 31, 2025.

As of both December 31, 2025 and 2024, accumulated goodwill impairment losses were $2,755 million, comprised of $1,568 million and $1,187 million at Ingalls and Newport News, respectively.

For the years ended December 31, 2025 and 2024, the carrying amounts of goodwill were as follows:

($ in millions)						Ingalls						Newport News						Mission Technologies						Total
Balance as of December 31, 2023						$	175					$	721					$	1,722					$	2,618
Adjustments						—						—						—						—
Balance as of December 31, 2024						175						721						1,722						2,618
Acquisitions						—						32						—						32
Balance as of December 31, 2025						$	175					$	753					$	1,722					$	2,650

Other Intangible Assets

Net intangible assets consist primarily of amounts relating to acquired customer relationships and contract backlog within Mission Technologies, as well as nuclear-powered aircraft carrier and submarine program intangible assets within Newport News, with an aggregate weighted-average useful life of 28 years based on the long life cycle of the related programs. Amortization expense for the years ended December 31, 2025, 2024, and 2023, was $104 million, $109 million, and $128 million, respectively.

The Company expects amortization for currently recorded purchased intangible assets of $84 million in 2026, $62 million in 2027, $56 million in 2028, $50 million in 2029, and $41 million in 2030.

12. INCOME TAXES

Tax Reform - Public Law 119-21 (the "Act"), signed into law on July 4, 2025, provides for significant changes to the U.S. federal income tax law that impacts corporations, including making certain business deductions permanent, such as bonus depreciation, immediate expensing of domestic research and development ("R&D") expenditures, and providing an election to accelerate the deduction for the remaining unamortized domestic R&D expenditures capitalized during the 2022 through 2024 tax years. These unamortized expenditures can be deducted over one or two years. The Act contains other provisions that are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

The Company’s financial statements as of December 31, 2025 include the impact of the following significant items:

Domestic R&D expenditures: The Company recorded a current tax benefit of $115 million based on its intent to expense all current year domestic R&D expenditures and to accelerate the deduction for the remaining unamortized domestic R&D expenditures capitalized during the 2022 through 2024 tax years over a two-year period. This

resulted in an increase of approximately $115 million to the Company’s current income taxes receivable and a corresponding increase in its net deferred tax liability.

Bonus Depreciation: While the Company has not completed its analysis of all capital expenditures that may qualify for immediate expensing, the Company recorded an estimated current tax benefit of $16 million based on its intent to fully expense all qualified property acquired and placed into service after January 19, 2025. This resulted in an increase of approximately $16 million to the Company’s current income taxes receivable and a corresponding increase in its net deferred tax liability.

The Company's earnings are primarily domestic, and its effective tax rate on earnings from operations for the year ended December 31, 2025, was 22.1%, compared with 14.5% and 20.2% for 2024 and 2023, respectively.

For the year ended December 31, 2025, the Company's effective tax rate differed from the statutory federal corporate income tax rate primarily as a result of a decrease in the estimated R&D tax credits for the prior period. For the years ended December 31, 2024 and 2023, the Company's effective tax rate differed from the statutory federal corporate income tax rate primarily as a result of R&D tax credits.

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 state unrecognized tax benefits in the relevant period. These amounts are recorded within operating income. Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income. For the years ended December 31, 2025, 2024, and 2023, state income taxes in Virginia make up the majority of the state income tax expense.

Federal and foreign income tax expense for the years ended December 31, 2025, 2024, and 2023, consisted of the following:

						Year Ended December 31
($ in millions)						2025						2024						2023
Income Taxes on Operations
Federal and foreign income taxes currently payable (receivable)						$	(5)					$	193					$	273
Change in deferred federal and foreign income taxes						177						(100)						(101)
Total federal and foreign income taxes						$	172					$	93					$	172

Earnings and income tax from foreign operations are not material for any periods presented.

The following table reconciles the Company's actual income tax expense to income tax expense based on the statutory federal corporate income tax rate:

						Year Ended December 31
						2025												2024												2023
($ in millions)						Dollars						Percent						Dollars						Percent						Dollars						Percent
U.S. federal statutory tax rate						$	163					21.0		%				$	135					21.0		%				$	179					21.0		%
Foreign tax effects						—						—		%				2						0.3		%				—						—		%
Effect of cross-border tax laws						(1)						(0.2)		%				(3)						(0.5)		%				(1)						(0.1)		%
Tax credits:
Research and development tax credit						17						2.2		%				(49)						(7.6)		%				(22)						(2.6)		%
Other						(4)						(0.5)		%				(2)						(0.3)		%				(2)						(0.2)		%
Nontaxable or nondeductible items						7						0.9		%				1						0.2		%				6						0.7		%
Changes in unrecognized tax benefits						—						—		%				18						2.8		%				10						1.2		%
Interest accrual on tax refunds						(7)						(0.9)		%				(8)						(1.2)		%				(6)						(0.7)		%
Other adjustments						(3)						(0.4)		%				(1)						(0.2)		%				8						0.9		%
Effective income tax rate						$	172					22.1		%				$	93					14.5		%				$	172					20.2		%

Cash paid for income taxes (net of refunds) consisted of the following:

						December 31
($ in millions)						2025						2024						2023
Federal						$	70					$	182					$	273
State:
Virginia						19						56						30
Other						7						17						26
Total state						26						73						56
Foreign						—						—						1
Cash paid for income taxes (net of refunds)						$	96					$	255					$	330

Unrecognized Tax Benefits - Unrecognized tax benefits represent the gross value of the Company's uncertain tax positions that have not been reflected in the consolidated statements of operations and comprehensive income. If the income tax benefits from federal tax positions are ultimately realized, such realization would affect the Company's income tax expense, while the realization of state tax benefits would be recorded in general and administrative expenses.

The changes in unrecognized tax benefits (exclusive of interest and penalties) for the years ended December 31, 2025, 2024, and 2023 are summarized in the following table:

						December 31
($ in millions)						2025						2024						2023
Unrecognized tax benefits at beginning of the year						$	110					$	98					$	90
Additions based on tax positions related to the current year						5						13						11
Additions based on tax positions related to prior years						1						4						—
Reductions based on tax positions related to prior years						(7)						—						—
Lapse of statute of limitations						(4)						(5)						(3)
Net change in unrecognized tax benefits						(5)						12						8
Unrecognized tax benefits at end of the year						$	105					$	110					98

Assuming sustainment of these positions, as of December 31, 2025, 2024, and 2023, the reversal of $86 million, $91 million, and $76 million, respectively, of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. As a result of the unrecognized tax benefits noted above, income tax expense increased by $6 million in 2025 for interest and penalties, resulting in an interest and penalty liability of $20 million as of December 31, 2025. In 2024, income tax expense increased $5 million for interest, resulting in an interest liability of $14 million as of December 31, 2024. In 2023, income tax expense increased $4 million for interest, resulting in an interest liability of $9 million as of December 31, 2023.

The following table summarizes the tax years that are either currently under examination or remain open under the applicable statute of limitations and subject to examination by the major tax jurisdictions in which the Company operates:

Jurisdiction						Years
United States - Federal(1)						2016						-						2024
Connecticut						2022						-						2024
Mississippi						2022						-						2024
Virginia						2022						-						2024

(1) Returns for the 2016, 2018, 2019, 2021, and 2022 tax years were filed under the Compliance Assurance Process ("CAP") program and accepted by the Internal Revenue Service ("IRS") with the exception of the R&D tax credit. The 2017 tax year was also filed under the CAP program and was accepted by the IRS with the exception of the manufacturing deduction and the R&D tax credit. The 2023 tax year was filed under the CAP program and accepted by the IRS with the exception of the R&D tax credit and capitalized R&D expenses. The statute of limitations for the 2020 and 2021 tax years has been extended to June 30, 2027.

IRS Audits - The Company was part of the IRS CAP program for the 2014 through 2023 tax years. Tax years through 2015 have been closed with the IRS. In calendar years 2020, 2021, and 2022, the Company filed refund claims for the R&D tax credit for tax years 2016-2019. Since these are refund claims, any adjustments to the amount claimed would not result in cash tax payments to the IRS. In addition, the Company has claimed R&D tax credits on its original filed returns since 2020. The status of the pending R&D tax credits is provided below.

2016-2019 claims and 2020-2021 credits - The Company reached an administrative resolution with the IRS on the 2016-2019 R&D tax credit refund claims and the R&D tax credit for the 2020-2021 tax years. After the IRS administrative review of the agreement is completed, it will be submitted to the Joint Committee on Taxation for approval.

2022-2023 credits - The IRS initiated audits for the 2022 and 2023 tax years, with minimal activity to date. The 2022 audit is limited to the R&D tax credit. The 2023 audit is limited to the R&D tax credit and capitalized R&D expenses.

The Company believes that its unrecognized tax benefits are adequate and will cover the expected impact of the agreement with the IRS. While the Company believes it has adequately provided for all unrecognized tax benefits, the Company might ultimately settle any disputed item for amounts greater than or less than the Company's accrued position. Accordingly, additional provisions for federal and state income tax related matters could be recorded in the future, and may be material, as revised estimates are made or the underlying matters are effectively settled or otherwise resolved.

Deferred Income Taxes - Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes. As described above, deferred tax assets and liabilities are calculated as of the balance sheet date using current tax laws and rates expected to be in effect when the deferred tax items reverse in future periods. Net deferred tax liabilities are classified as long-term deferred tax liabilities in the consolidated statements of financial position.

The tax effects of significant temporary differences and carry-forwards that resulted in year-end deferred tax balances, as presented in the consolidated statements of financial position, were as follows:

						December 31
($ in millions)						2025						2024
Deferred Tax Assets
Workers' compensation						$	154					$	150
Operating lease liabilities						71						67
Reserves not currently deductible for tax purposes						72						71
Stock compensation						9						8
Net operating losses, tax credit and other carry-forwards						30						33
Capitalized research and development expenses						152						315
Other						15						11
Gross deferred tax assets						503						655
Less valuation allowance						25						26
Net deferred tax assets						478						629
Deferred Tax Liabilities
Depreciation and amortization						465						457
Contract accounting differences						57						47
Purchased intangibles						198						212
Operating lease assets						67						62
Retirement benefits						248						216
Other						15						13
Gross deferred tax liabilities						1,050						1,007
Total net deferred tax liabilities						$	(572)					$	(378)

As of December 31, 2025, the Company had state income tax credit carry-forwards of approximately $14 million, which expire from 2026 through 2028. A deferred tax asset of approximately $11 million (net of federal benefit) related to these state income tax credit carry-forwards has been recorded, with a valuation allowance of $7 million against such deferred tax asset as of December 31, 2025. State net operating loss carry-forwards are individually and cumulatively immaterial to the Company’s deferred tax balances and expire from 2030 through 2044.

13. DEBT

The Company's long-term debt consisted of the following:

						December 31
($ in millions)						2025						2024
Senior notes due May 1, 2025, 3.844%						$	—					$	500
Senior notes due December 1, 2027, 3.483%						600						600
Senior notes due August 16, 2028, 2.043%						600						600
Senior notes due January 15, 2030, 5.353%						500						500
Senior notes due May 1, 2030, 4.200%						500						500
Senior notes due January 15, 2035, 5.749%						500						500
Gulf opportunity zone industrial development revenue bonds due December 1, 2028, 4.55%						21						21
Finance lease obligations						—						9
Less unamortized debt issuance costs						(21)						(27)
Total long-term debt						$	2,700					$	3,203
Less current portion						—						503
Long-term debt, net of current portion						$	2,700					$	2,700

Debt Facilities - In September 2024, the Company amended 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, currently 1.475% based upon the Company's credit rating, which may vary between 1.225% and 2.100%. The commitment fee rate on the Second Amended and Restated Revolving Credit Facility as of December 31, 2025, was 0.200% and 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 December 31, 2025, the Company had $11 million in issued but undrawn letters of credit and $1,689 million unutilized under the Second Amended and Restated Revolving Credit Facility. The Company had unamortized debt issuance costs associated with its debt facilities of $8 million and $10 million as of December 31, 2025 and 2024, respectively.

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.

In September 2024, the Company's borrowing capacity under its unsecured commercial paper note program increased from $1 billion to $1.7 billion. As of December 31, 2025, the Company had no outstanding debt under the commercial paper program.

Senior Notes - 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, the Company 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 its 3.844% senior notes due 2025 and commercial paper borrowings) and working capital.

The terms of the Company's senior notes limit the Company’s ability and the ability of certain of its subsidiaries to create liens, enter into sale and leaseback transactions, sell assets, and effect consolidations or mergers. Interest on the senior notes is payable semiannually. The Company had unamortized debt issuance costs associated with the senior notes of $13 million and $17 million as of December 31, 2025 and 2024, respectively.

Interest on the Gulf Opportunity Zone Industrial Development Revenue Bonds is payable semiannually.

The agreements governing the Company's debt contain customary affirmative and negative covenants. The Company was in compliance with all debt covenants during the year ended December 31, 2025. Each of the Company's existing and future materially wholly owned domestic subsidiaries, except those that are specifically designated as unrestricted subsidiaries, are and will be guarantors under existing debt facilities, with the exception of the Gulf Opportunity Zone Industrial Development Revenue Bonds.

The estimated fair value of the Company's total long-term debt as of December 31, 2025, was $2,730 million. There was no current portion of long-term debt and no finance lease liabilities as of December 31, 2025. The estimated fair value of the Company's total long-term debt, including the current portion of long-term debt and excluding finance lease liabilities, as of December 31, 2024, was $3,110 million. The estimated fair value of the current portion of the Company's long-term debt, excluding finance lease liabilities, was $497 million as of December 31, 2024. 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 under the fair value hierarchy.

As of December 31, 2025, the aggregate amounts of principal payments due on long-term debt within the next five years consisted of $600 million due in 2027, $621 million due in 2028, and $1 billion due in 2030.

14. INVESTIGATIONS, CLAIMS, AND LITIGATION

The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations. The Company accrues for losses associated with legal proceedings when, and to the extent that, loss amounts related to the legal proceedings are probable and can

be reasonably estimated. The actual losses that might be incurred to resolve such legal proceedings may be higher or lower than the amounts accrued. The Company also provides 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 - 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 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 on statute of limitations grounds without addressing the motions to dismiss filed by the defendants on other grounds. The Fourth Circuit Court of Appeals reversed the dismissal and remanded the case to the District Court for further proceedings. In November 2025, the District Court denied the defendants' remaining motions to dismiss the lawsuit. The Company cannot at this time predict or reasonably estimate the outcome of this matter.

Insurance Claims - 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. The Company also initiated arbitration proceedings against six other reinsurers seeking similar relief. In July 2021, the Vermont court granted the reinsurers’ motion for judgment on the pleadings, which would have ended the Company’s claim. The Company appealed the decision to the Vermont Supreme Court, which reversed and remanded the lower court's decision in September 2022, allowing the Company's claim to proceed. In 2025, the parties filed dispositive motions and await the court’s decision. The Company cannot at this time predict the outcome of this matter.

In September 2021, the Company filed a complaint in the Superior Court of Delaware, seeking a judgment against certain insurers for breach of contract and breach of the implied covenant of good faith and fair dealing under three representations and warranties insurance policies purchased in connection with the Company’s acquisition of Hydroid. The policies insured the Company against losses relating to the seller’s breach of certain representations and warranties in the Hydroid acquisition agreement. In December 2023, the Company and the insurers settled the matter for a payment of $49.5 million to the Company, recognized in the Mission Technologies segment's other income and gains, net in the consolidated statements of operations and comprehensive income.

U.S. Government Investigations and Claims - Departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil, or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory, treble, or other damages. U.S. Government regulations provide that certain findings against a contractor may also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. Any suspension or debarment would have a material effect on the Company because of its reliance on government contracts.

In 2024, the Company identified certain quality issues involving noncompliance with welding procedures at Newport News. The Company commenced an investigation and disclosed the matter to the U.S. Government. The Company continues to work with its U.S. Navy customer to evaluate the full extent of the matter and cannot at this time predict or reasonably estimate the ultimate outcome of this matter.

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. In some instances, partial or full insurance coverage is available for the Company's liabilities. The costs to resolve cases during the years ended December 31, 2025, 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. Although the Company believes the ultimate resolution of current cases will not have a material effect on its consolidated financial position, results of operations, or cash flows, it cannot predict what new or revised claims or litigation might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of asbestos related litigation.

Other Litigation - The Company and its predecessor-in-interest have been in litigation with the Bolivarian Republic of Venezuela (the "Republic") since 2002 over a contract for the repair, refurbishment, and modernization at Ingalls of two foreign-built frigates. Following an arbitration proceeding between the parties, in February 2018 the arbitral tribunal awarded the Company approximately $151 million on its claims and awarded the Republic approximately $22 million on its counterclaims. In November 2023, the Company sold its judgment against the Republic to a third party in exchange for an initial cash payment of $70.5 million, recognized in the Ingalls segment's other income and gains, net in the consolidated statements of operations and comprehensive income. The Company's consideration also includes a contingent participating interest in the final amount recovered.

Other - The Company is party to various other claims, arbitrations, investigations, and other legal proceedings that arise in the ordinary course of business, including U.S. Government investigations and claims that could result in administrative, civil, or criminal proceedings involving the Company. The Company is a contractor with the U.S. Government, and such proceedings can therefore include False Claims Act allegations against the Company. Based on the information available to the Company to date, the Company believes that the resolution of these other claims, legal proceedings, and investigations will not have a material effect on its consolidated financial position, results of operations, or cash flows. However, the Company cannot predict what new or revised claims, litigation, or other proceedings might be asserted or what information might come to light and can, therefore, give no assurances regarding the ultimate outcome of these matters.

15. LEASES

The Company leases certain land, warehouses, office space, and production, office, and technology equipment, among other items. Most equipment is leased on a short-term basis. Many land, warehouse, and office space leases include renewal terms that can extend the lease term. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements is generally limited by the expected lease term. The Company's lease agreements do not generally contain material residual value guarantees, material restrictive covenants, or purchase options. The Company's lease portfolio consists primarily of operating leases and an immaterial finance lease included in the consolidated financial statements. See Note 2: Summary of Significant Accounting Policies and Note 13: Debt.

The following table presents costs and other information related to the Company's leases:

						Year Ended December 31
($ in millions)						2025						2024						2023
Operating lease costs						$	72					$	72					$	67
Short-term operating lease costs						$	61					$	57					$	54
Variable operating lease costs						$	5					$	5					$	7
Operating cash flows from operating leases						$	(73)					$	(70)					$	(66)
Right-of-use assets obtained in exchange for new operating lease liabilities						$	91					$	41					$	80
Weighted-average remaining lease term (years) - operating leases						8 years						8 years						9 years
Weighted-average discount rate - operating leases						5.4		%				5.2		%				5.0		%

The undiscounted future non-cancellable lease payments under the Company's operating leases as of December 31, 2025, were as follows:

($ in millions)						December 31, 2025
2026						$	71
2027						61
2028						48
2029						41
2030						34
Thereafter						95
Total lease payments						350
Less: Imputed interest						69
Present value of operating lease liabilities						$	281

Lease liabilities included in the Company's consolidated statements of financial position as of December 31, 2025 and 2024, were as follows:

						December 31
($ in millions)						2025						2024
Short-term operating lease liabilities						$	58					$	51
Long-term operating lease liabilities						223						205
Total operating lease liabilities						$	281					$	256

16. COMMITMENTS AND CONTINGENCIES

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

Environmental Matters - The estimated costs to complete environmental remediation are 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 reasonably estimated by management. When only a range of costs is established and no amount within the range is more probable than another, the minimum amount in the range is accrued. Environmental liabilities are recorded on an undiscounted basis and are expensed or capitalized as appropriate. Capitalized expenditures, if any, relate to long-lived improvements in currently operating facilities. The Company does not record insurance recoveries before collection is probable. As of December 31, 2025 and 2024, the Company did not have any accrued receivables related to insurance reimbursements or recoveries for environmental matters.

The Company’s environmental liability 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 December 31, 2025, the probable estimable future cost for environmental remediation is 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 December 31, 2025, the Company had $11 million in issued but undrawn letters of credit, as indicated in Note 13: Debt, and $368 million of surety bonds outstanding.

U.S. Government Claims - From time to time, the U.S. Government communicates to the Company potential claims, disallowed costs, and penalties concerning prior costs incurred by the Company with which the U.S. Government disagrees. When such preliminary findings are presented, the Company and U.S. Government representatives engage in discussions, from which the Company evaluates the merits of the claims and assesses the amounts being questioned. 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 previously disclosed an issue regarding the degree of corrosion of certain steel plates used to fabricate Friedman (NSC 11). During the second quarter of 2025, the Company reached an agreement with the customer to resolve the matter. The resolution of the matter did not have a material impact to the Company's consolidated financial position, results of operations, or cash flows.

Collective Bargaining Agreements - Of the Company's approximately 44,000 employees, 45% are covered by a total of 13 collective bargaining agreements. Newport News has three collective bargaining agreements covering represented employees, which expire in February 2030, December 2030, and April 2031. Ingalls has five collective bargaining agreements covering represented employees, all of which expire in March 2026. Mission Technologies has a total of 80 employees covered by five collective bargaining agreements, which expire in September 2026, December 2027, September 2028, and two that expire in August 2027.

Collective bargaining agreements generally expire after three to five years and are subject to renegotiation at that time. The Company believes its relationship with its employees is satisfactory.

Purchase Obligations - Periodically the Company enters into agreements to purchase goods or services that are enforceable and legally binding on the Company and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. These obligations are primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts.

17. EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company provides eligible employees defined benefit pension plans, defined contribution benefit plans, and other postretirement benefit plans. Non-collectively bargained defined benefit pension plans accruing benefits under the traditional years of service and compensation formula were amended in 2009 to freeze future service accruals and were replaced with a cash balance benefit for all current non-collectively bargained employees. Except for the major collectively bargained plan at Ingalls, the Company's qualified defined benefit pension plans are frozen to new entrants. The Company's policy is to fund its qualified defined benefit pension plans at least to the minimum amounts required under U.S. Government regulations.

Defined benefit plan obligations are measured based on the present value of projected future benefit payments to participants for services rendered to date. The measurement of projected future benefits is dependent on the terms of each individual plan, demographics, and valuation assumptions. No assumption is made regarding any potential changes to the benefit provisions beyond those to which the Company is currently committed, for example under existing collective bargaining agreements.

The Company also sponsors 401(k) defined contribution pension plans in which most employees are eligible to participate. Company contributions for most defined contribution pension plans are based on the matching of employee contributions up to 4% of eligible compensation. In addition to the 401(k) defined contribution pension benefit formula, non-collectively bargained employees hired after June 30, 2008, and certain collectively bargained employees hired after July 10, 2017, are eligible to participate in a defined contribution benefit program in lieu of a defined benefit pension plan. The Company's contributions to the qualified defined contribution pension plans for the years ended December 31, 2025, 2024, and 2023, were $176 million, $166 million, and $158 million, respectively.

The Company also sponsors defined benefit and defined contribution pension plans to provide benefits in excess of the tax-qualified limits. The liabilities related to these plans as of December 31, 2025, were $204 million and $59 million, respectively, and as of December 31, 2024, were $189 million and $51 million, respectively. Grantor trust assets, primarily in the form of Level 1 marketable securities, are intended to fund certain of these obligations. The trusts’ fair values supporting these liabilities as of December 31, 2025 and 2024, were $249 million and $233 million, respectively, of which $192 million and $179 million, respectively, were related to the non-qualified defined benefit pension plans.

The Company provides contributory postretirement health care and life insurance benefits to a predominantly closed group of eligible employees, retirees, and their qualifying dependents. Covered employees achieve eligibility to participate in these contributory plans upon retirement from active service if they meet specified age, years of service, and grandfathered requirements. Benefits are not guaranteed, and the Company reserves the right to amend or terminate coverage at any time. The Company's contributions for retiree health care benefits are subject to caps, which limit Company contributions when spending thresholds are reached.

The measurement date for all of the Company's retirement related plans is December 31. The costs of the Company's defined benefit pension plans and other postretirement benefit plans for the years ended December 31, 2025, 2024, and 2023, were as follows:

						Pension Benefits																		Other Benefits
						Year Ended December 31																		Year Ended December 31
($ in millions)						2025						2024						2023						2025						2024						2023
Components of net periodic benefit cost
Service cost						$	86					$	109					$	112					$	4					$	6					$	6
Interest cost						336						321						343						19						19						21
Expected return on plan assets						(549)						(538)						(529)						—						—						—
Amortization of prior service cost (credit)						17						16						17						(1)						(2)						(2)
Amortization of net actuarial loss (gain)						1						18						17						(13)						(13)						(15)
Net periodic benefit (income) cost						$	(109)					$	(74)					$	(40)					$	9					$	10					$	10

The funded status of these plans as of December 31, 2025 and 2024, was as follows:

						Pension Benefits												Other Benefits
						December 31												December 31
($ in millions)						2025						2024						2025						2024
Change in benefit obligation
Benefit obligation at beginning of year						$	5,791					$	6,242					$	333					$	370
Service cost						86						109						4						6
Interest cost						336						321						19						19
Plan participants' contributions						5						5						9						9
Plan amendments						3						—						—						—
Actuarial loss (gain)						218						(499)						3						(26)
Benefits paid						(333)						(307)						(49)						(45)
Settlement						—						(80)						—						—
Benefit obligation at end of year						6,106						5,791						319						333
Change in plan assets
Fair value of plan assets at beginning of year						7,024						6,873						—						—
Actual return on plan assets						736						514						—						—
Employer contributions						14						11						40						36
Plan participants' contributions						5						5						9						9
Benefits paid						(333)						(307)						(49)						(45)
Transfers						—						2						—						—
Settlement						—						(74)						—						—
Fair value of plan assets at end of year						7,446						7,024						—						—
Funded status						$	1,340					$	1,233					$	(319)					$	(333)
Amounts recognized in the consolidated statements of financial position:
Pension plan assets						$	1,544					$	1,422					$	—					$	—
Current liability (1)						(49)						(47)						(119)						(124)
Non-current liability (2)						(155)						(142)						(200)						(209)
Accumulated other comprehensive loss (income) (pre-tax) related to:
Prior service costs (credits)						108						122						(10)						(11)
Net actuarial loss (gain)						90						60						(103)						(119)

(1) Included in other current liabilities and current portion of postretirement plan liabilities for pension benefits and other benefits, respectively.

(2) Included in pension plan liabilities and other postretirement plan liabilities for pension benefits and other benefits, respectively.

In 2024, the Company offered a bulk lump sum window for participants not currently receiving benefits where the present value of the deferred benefit is less than $75 thousand. Approximately 3,900 participants received lump sum distributions of approximately $80 million. The transaction did not trigger settlement accounting under FASB ASC Topic 715 – “Compensation – Retirement Benefits.”

The Projected Benefit Obligation ("PBO"), Accumulated Benefit Obligation ("ABO"), and asset values for the Company's qualified pension plans were $5,901 million, $5,714 million, and $7,446 million, respectively, as of December 31, 2025, and $5,602 million, $5,424 million, and $7,024 million, respectively, as of December 31, 2024. The PBO represents the present value of pension benefits earned through the end of the year, with allowance for future salary increases. The ABO is similar to the PBO, but does not provide for future salary increases.

The PBOs and fair values of plan assets for all qualified and non-qualified pension plans with PBOs in excess of plan assets were $204 million and zero, respectively, as of December 31, 2025, and $189 million and zero, respectively, as of December 31, 2024.

The ABOs for all qualified and non-qualified pension plans with ABOs in excess of plan assets were $192 million and $178 million as of December 31, 2025, and 2024, respectively. The ABOs for all pension plans were $5,906 million and $5,602 million as of December 31, 2025 and 2024, respectively.

The changes in amounts recorded in accumulated other comprehensive loss were as follows:

						Pension Benefits																		Other Benefits
						Year Ended December 31																		Year Ended December 31
($ in millions)						2025						2024						2023						2025						2024						2023
Prior service cost						$	(3)					$	—					$	—					$	—					$	—					$	—
Amortization of prior service cost (credit)						17						16						17						(1)						(2)						(2)
Net actuarial gain (loss)						(31)						475						202						(3)						26						19
Amortization of net actuarial loss (gain)						1						18						17						(13)						(13)						(15)
Other						—						9						—						—						(1)						—
Total changes in accumulated other comprehensive loss						$	(16)					$	518					$	236					$	(17)					$	10					$	2

The weighted average assumptions used to determine the net periodic benefit costs for each year ended December 31 were as follows:

						Pension Benefits
						2025						2024						2023
Discount rate						5.98		%				5.28		%				5.47		%
Expected long-term rate on plan assets						8.00		%				8.00		%				8.00		%
Rate of compensation increase						3.76		%				3.63		%				3.63		%

						Other Benefits
						2025						2024						2023
Discount rate						5.79		%				5.35		%				5.50		%
Initial health care cost trend rate assumed for next year						6.00		%				6.00		%				6.00		%
Gradually declining to a rate of						4.50		%				4.50		%				4.50		%
Year in which the rate reaches the ultimate rate						2030						2029						2028

The weighted average assumptions used to determine the benefit obligations as of December 31 of each year were as follows:

						Pension Benefits												Other Benefits
						December 31												December 31
						2025						2024						2025						2024
Discount rate						5.72		%				5.98		%				5.42		%				5.79		%
Weighted average interest crediting rate						3.57		%				3.54		%
Rate of compensation increase						3.77		%				3.76		%
Initial health care cost trend rate assumed for next year																		6.50		%				6.00		%
Gradually declining to a rate of																		4.50		%				4.50		%
Year in which the rate reaches the ultimate rate																		2031						2030

Health Care Cost Trend Rate - The health care cost trend rate represents the annual rates of change in the cost of health care benefits based on estimates of health care inflation, changes in health care utilization or delivery patterns, technological advances, government mandated benefits, and other considerations. Using a combination of market expectations and economic projections as of December 31, 2025, the Company selected an expected initial health care cost trend rate of 6.50% and an ultimate health care cost trend rate of 4.50% to be reached in 2031. As

of December 31, 2024, the Company assumed an expected initial health care cost trend rate of 6.00% and an ultimate health care cost trend rate of 4.50% to be reached in 2030.

The Employee Retirement Income Security Act of 1974 ("ERISA"), including amendments under pension relief legislation, defines the minimum amount the Company must contribute to its qualified defined benefit pension plans. In determining whether to make discretionary contributions to these plans above the minimum required amounts, the Company considers various factors, including attainment of the funded percentage needed to avoid benefit restrictions and other adverse consequences, minimum CAS funding requirements, and the current and anticipated future funding levels of each plan. The Company's contributions to its 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. These factors and the Company's resulting contributions also impact the funded status of each plan. The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the years ended December 31, 2025, 2024, and 2023:

						Year Ended December 31
($ in millions)						2025						2024						2023
Pension plans
Discretionary
Qualified						$	—					$	—					$	—
Non-qualified						14						11						12
Other benefit plans						40						36						32
Total contributions						$	54					$	47					$	44

For the year ending December 31, 2026, the Company expects its cash contributions to its qualified defined benefit pension plans to be approximately $2 million, all of which will be discretionary. For the year ending December 31, 2026, the Company expects its cash contributions to its other postretirement benefit plans to be approximately $35 million.

The following table presents estimated future benefit payments, using the same assumptions used in determining the Company's benefit obligations, as of December 31, 2025. Benefit payments depend on future employment and compensation levels, years of service, and mortality. Changes in any of these factors could significantly affect these estimated amounts.

($ in millions)						Pension Benefits						Other Benefit Payments
2026						$	366					$	35
2027						384						34
2028						401						32
2029						415						31
2030						427						29
Years 2031 to 2035						$	2,258					$	124

Pension Plan Assets

Pension assets include public equities, government and corporate bonds, cash and cash equivalents, private real estate funds, private partnerships, hedge funds, and other assets. Plan assets are held in a master trust and overseen by the Company's Investment Committee. All assets are externally managed through a combination of active and passive strategies. Managers may only invest in the asset classes for which they have been appointed.

The Investment Committee is responsible for setting the policy that provides the framework for management of the plan assets. The Investment Committee set the minimum and maximum permitted values for each asset class in the Company's pension plan master trust for the year ended December 31, 2025, as follows:

						Range
U.S. and international equities						25						-						35%
Fixed income securities						35						-						45%
Alternative investments						25						-						35%

The general objectives of the Company's pension asset strategy are to earn a rate of return over time to satisfy the benefit obligations of the plans, meet minimum ERISA funding requirements, and maintain sufficient liquidity to pay benefits and address other cash requirements within the master trust. Specific investment objectives include reducing the volatility of pension assets relative to benefit obligations, achieving a competitive total investment return, achieving diversification between and within asset classes, and managing other risks. Investment objectives for each asset class are determined based on specific risks and investment opportunities identified. Decisions regarding investment policies and asset allocations are made with the understanding of the historical and prospective return and risk characteristics of various asset classes, the effect of asset allocations on funded status, future Company contributions, and projected expenditures, including benefit payments. The Company updates its asset allocations periodically. The Company uses various analytics to determine the optimal asset mix and considers plan obligation characteristics, duration, liquidity characteristics, funding requirements, expected rates of return, regular rebalancing, and the distribution of returns. Actual allocations to each asset class could vary from target allocations due to periodic investment strategy changes, short-term market value fluctuations, the length of time it takes to fully implement investment allocation positions, such as real estate and other alternative investments, and the timing of benefit payments and Company contributions.

Taking into account the asset allocation ranges, the Company determines the specific allocation of the master trust's investments within various asset classes. The master trust utilizes select investment strategies, which are executed through separate account or fund structures with external investment managers who demonstrate experience and expertise in the appropriate asset classes and styles. The selection of investment managers is done with careful evaluation of all aspects of performance and risk, demonstrated fiduciary responsibility, investment management experience, and a review of investment manager policies and processes. Investment performance is monitored frequently against appropriate benchmarks and tracked to compliance guidelines with the assistance of third-party consultants and performance evaluation tools and metrics.

Plan assets are stated at fair value. The Company employs a variety of pricing sources to estimate the fair value of its pension plan assets, including independent pricing vendors, dealer or counterparty-supplied valuations, third-party appraisals, and appraisals prepared by the Company's investment managers or other experts.

Investments in equity securities, common and preferred, are valued at the last reported sales price when an active market exists. Securities for which official or last trade pricing on an active exchange is available are classified as Level 1. If closing prices are not available, securities are valued at the last trade price, if deemed reasonable, or a broker's quote in a non-active market, and are typically categorized as Level 2.

Investments in fixed-income securities are generally valued by independent pricing services or dealers who make markets in such securities. Pricing methods are based upon market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders, and fixed-income securities typically are categorized as Level 2.

Investments in collective trust funds and commingled funds that use Net Asset Values (“NAV”) are valued based on the redemption price of units owned by the master trust, which is based on the current fair values of the fund assets, as reported by the investment manager.

Investments in hedge funds generally do not have readily available market quotations and are estimated at fair value, which primarily utilizes NAV or the equivalent, as a practical expedient, as reported by the investment manager. Hedge funds usually have restrictions on redemptions that might affect the ability to sell the investment at NAV in the short term.

Real estate funds are typically valued through updated independent third-party appraisals, which are adjusted for changes in cash flows, market conditions, property performance, and leasing status. Since real estate funds do not have readily available market quotations, they are generally valued at NAV or its equivalent, as a practical expedient, as reported by the asset manager. Redemptions from real estate funds are also subject to various restrictions.

Private partnership interests include debt and equity investments. These investments are valued based on NAVs or their equivalents, adjusted for capital calls and distributions, reported by the respective general partners. The terms of the partnerships range from seven to ten or more years, and investors do not have the option to redeem their interests in these partnerships. As of December 31, 2025, unfunded commitments to private partnerships were $422 million.

Management reviews independently appraised values, audited financial statements, and additional pricing information to evaluate the NAVs. For the limited group of investments for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value, additional information is obtained from the investment manager and evaluated internally to determine whether any adjustments are required to reflect fair value.

The Company might be unable to quickly liquidate some assets at amounts close or equal to fair value in order to meet plan liquidity requirements or respond to specific events, such as the creditworthiness of any particular issuer or counterparty. Illiquid assets are generally long-term investments that complement the long-term nature of the Company's pension obligations and are generally not used to fund benefit payments in the short term. Management monitors liquidity risk on an ongoing basis and has procedures designed to maintain adequate liquidity for plan requirements.

The master trust has considerable investments in fixed income securities for which changes in the relevant interest rate of a particular instrument might result in the inability to secure similar returns upon the maturity or sale of the instrument. Changes in prevailing interest rates might result in an increase or decrease in fair value of the instrument. Investment managers are permitted to use interest rate swaps and other financial derivatives to manage interest rate and credit risks.

Counterparty risk is the risk that a counterparty to a financial instrument held by the master trust will default on its commitment. Counterparty risk is generally related to over-the-counter derivative instruments used to manage risk exposure to interest rates on long-term debt securities. Certain agreements with counterparties employ set-off agreements, collateral support arrangements, and other risk mitigation practices designed to reduce the net credit risk exposure in the event of a counterparty default. The Company has credit policies and processes that manage concentrations of risk by seeking to undertake transactions with large well-capitalized counterparties and by monitoring the creditworthiness of these counterparties.

Certain investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient are not required to be categorized in the fair value hierarchy table. The total fair value of these investments is included in the table below to permit reconciliation of the fair value hierarchy to amounts presented in the funded status table above.

						December 31, 2025
($ in millions)						Total						Level 1						Level 2						Level 3
Plan assets subject to leveling
U.S. and international equities						$	1,624					$	1,624					$	—					$	—
Government and agency debt securities						1,154						—						1,154						—
Corporate and other debt securities						1,696						—						1,696						—
Group annuity contract						3						—						3						—
Cash and cash equivalents, net						8						8						—						—
Net plan assets subject to leveling						$	4,485					$	1,632					$	2,853					$	—
Plan assets not subject to leveling
U.S. and international equities(1)						810
Corporate and other debt securities						277
Real estate investments						376
Private partnerships						962
Hedge funds						422
Cash and cash equivalents, net(2)						114
Total plan assets not subject to leveling						2,961
Net plan assets						$	7,446

(1) U.S. and international equity securities include investments in small, medium, and large capitalization stocks of public companies held in commingled trust funds.

(2) Cash and cash equivalents are liquid short-term investment funds and include net receivables and payables of the trust. These funds are available for immediate use to fund daily operations, execute investment policies, and serve as a temporary investment vehicle.

						December 31, 2024
($ in millions)						Total						Level 1						Level 2						Level 3
Plan assets subject to leveling
U.S. and international equities						$	1,499					$	1,499					$	—					$	—
Government and agency debt securities						777						—						777						—
Corporate and other debt securities						1,487						—						1,487						—
Group annuity contract						3						—						3						—
Cash and cash equivalents, net						21						21						—						—
Net plan assets subject to leveling						$	3,787					$	1,520					$	2,267					$	—
Plan assets not subject to leveling
U.S. and international equities(1)						1,199
Corporate and other debt securities						242
Real estate investments						469
Private partnerships						926
Hedge funds						275
Cash and cash equivalents, net(2)						126
Total plan assets not subject to leveling						3,237
Net plan assets						$	7,024

(1) U.S. and international equity securities include investments in small, medium, and large capitalization stocks of public companies held in commingled trust funds.

(2) Cash and cash equivalents are liquid short-term investment funds and include net receivables and payables of the trust. These funds are available for immediate use to fund daily operations, execute investment policies, and serve as a temporary investment vehicle.

There was no activity attributable to Level 3 retirement plan assets during the years ended December 31, 2025 and 2024.

18. STOCK COMPENSATION PLANS

As of December 31, 2025, HII had stock-based compensation awards outstanding under the following plans: the Huntington Ingalls Industries, Inc. 2011 Long-Term Incentive Stock Plan (the "2011 Plan"), the Huntington Ingalls Industries, Inc. 2012 Long-Term Incentive Stock Plan (the "2012 Plan"), and the Huntington Ingalls Industries, Inc. 2022 Long-Term Incentive Stock Plan (the "2022 Plan").

Stock Compensation Plans

On March 1, 2022, the Company's board of directors adopted the 2022 Plan, subject to stockholder approval, and the Company's stockholders approved the 2022 Plan on May 3, 2022. Award grants made on or after May 3, 2022, were made under the 2022 Plan. Award grants made prior to May 3, 2022, were made under the 2011 Plan or the 2012 Plan. No future grants will be made under the 2011 Plan or the 2012 Plan.

The 2022 Plan permits awards of stock options, stock appreciation rights, and other stock awards. Stock awards, in the form of RPSRs and RSRs, are granted to employees and members of the board of directors without payment to the Company. The 2022 Plan authorized (i) 1.3 million new shares; plus (ii) any shares subject to outstanding awards under the 2012 Plan that were subsequently forfeited to the Company; plus (iii) any shares subject to outstanding awards under the 2012 Plan that were subsequently exchanged by the participant as full or partial payment to the Company in connection with any such award or exchanged by a participant or withheld by the Company to satisfy the tax withholding obligations related to any such award. As of December 31, 2025, the remaining aggregate number of shares of the Company's common stock authorized for issuance under the 2022 Plan was 0.9 million.

The 2011 Plan and 2012 Plan permitted awards of stock options and other stock awards. Stock awards, in the form of stock rights, were granted to members of the board of directors without payment to the Company.

Stock Awards

The Company issued the following stock awards in the years ended December 31, 2025, 2024, and 2023:

Restricted Performance Stock Rights - For the year ended December 31, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $169.27. These rights are subject to cliff vesting on December 31, 2027. For the year ended December 31, 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 year ended December 31, 2023, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $215.24. These rights were fully vested as of 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 year ended December 31, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $170.99. For the year ended December 31, 2024, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $287.38.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 year ended December 31, 2023.

Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company. In 2025, the Company granted approximately 2,700 retention RSRs at a weighted average share price of $227.70, with cliff vesting one to two years from the grant date. In 2024, the Company granted approximately 2,200 retention RSRs at a weighted average share price of $281.01, with cliff vesting one to three years from the grant date. In 2023, the Company granted approximately 9,500 retention RSRs at a weighted average share price of $213.37, with cliff vesting two to three years from the grant date. As of December 31, 2025, approximately 5,200 retention RSRs were outstanding.

The Company also received transfers of stock awards from employees in satisfaction of minimum tax withholding obligations associated with the vesting of stock awards during the period. The Company does not consider these transfers as treasury stock because the stock is not issued; rather, the award is surrendered in lieu of payments of cash to settle tax obligations.

Stock Rights and Stock Issuances - The Company granted stock rights to its non-employee directors on a quarterly basis in 2025, with each grant less than 10,000 shares. All stock rights granted to non-employee directors are fully vested on the grant date. If a non-employee director has met certain stock ownership requirements, the non-employee director may elect under the terms of the Amended and Restated Directors’ Compensation Policy and Amended and Restated Board Deferred Compensation Policy to receive their annual equity award for the following calendar year in the form of either shares of the Company’s common stock or stock units that are payable in the fifth calendar year after the year in which the annual equity award is earned, or, if earlier, upon termination of the director’s board service.

Non-employee directors may also elect to receive their annual cash retainers in the form of stock units that become payable upon termination of the director’s board service. Non-employee directors who elect to receive their annual cash retainers in the form of stock units and have met their stock ownership requirements may elect under the terms of the Amended and Restated Directors’ Compensation Policy and Amended and Restated Board Deferred Compensation Policy to receive in the following calendar year either shares of the Company's common stock or stock units that are payable in the fifth calendar year after the year in which the stock units are earned, or, if earlier, upon termination of the director’s board service.

Stock award activity for the years ended December 31, 2025, 2024, and 2023, was as follows:

						Stock Awards (in thousands)						Weighted-Average Grant Date Fair Value						Weighted Average Remaining Contractual Term
Outstanding as of December 31, 2022						506						$	189.68					1.0 year
Granted						177						215.16
Adjustment due to performance						32						224.35
Vested						(155)						224.35
Forfeited						(25)						178.68
Outstanding as of December 31, 2023						535						189.98						1.0 year
Granted						174						286.14
Adjustment due to performance						61						181.76
Vested						(206)						181.76
Forfeited						(14)						240.77
Outstanding as of December 31, 2024						550						221.59						1.0 year
Granted						316						172.05
Adjustment due to performance						21						215.47
Vested						(194)						215.47
Forfeited						(30)						219.31
Outstanding as of December 31, 2025						663						$	199.43					1.0 year

Vested awards include stock awards that fully vested during the year based on the level of achievement of the relevant performance goals. The performance goals for outstanding RPSRs granted in 2025, 2024, and 2023 were based on three metrics as defined in the grant agreements: earnings before interest, taxes, depreciation, amortization, and pension ("EBITDAP"), weighted at 40%, pension-adjusted return on invested capital, weighted at 40%, and relative EBITDAP growth, weighted at 20%. The Company's EBITDAP growth is measured against EBITDAP growth of the S&P Aerospace and Defense Select Index.

Compensation Expense

The Company recorded $54 million, $23 million, and $34 million of expense related to stock awards for the years ended December 31, 2025, 2024, and 2023, respectively. The Company recorded $12 million, $7 million, and $10 million as tax benefits related to stock awards for the years ended December 31, 2025, 2024, and 2023, respectively.

The Company recognized tax benefits for the years ended December 31, 2025, 2024, and 2023, of $8 million, $6 million, and $7 million, respectively, from the issuance of stock in settlement of stock awards.

Unrecognized Compensation Expense

As of December 31, 2025, the Company had $23 million of unrecognized compensation expense associated with RSRs granted in 2025 and 2024, which will be recognized over a weighted average period of 1.0 year, and $25 million of unrecognized expense associated with RPSRs granted in 2025 and 2024, which will be recognized over a weighted average period of 1.0 year.

19. SUBSIDIARY GUARANTORS

As described in Note 13: Debt, the Company issued senior notes through the consolidating parent company, HII. Performance of the Company's obligations under its senior notes outstanding as of December 31, 2025, including any repurchase obligations resulting from a change of control, is fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of HII's existing and future material domestic subsidiaries ("Subsidiary Guarantors"). The Subsidiary Guarantors are 100% owned by HII. Each HII subsidiary that did not provide a guarantee ("Non-Guarantors") is not material and HII, as the parent company issuer, did not have independent assets or operations. There are no significant restrictions on the ability of the parent company and the Subsidiary

Guarantors to obtain funds from their respective subsidiaries by dividend or loan, except those imposed by applicable law.