| ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2016
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| DELAWARE | 80-0558025 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| 800 MAIN STREET, 4TH FLOOR | ||
| LYNCHBURG, VIRGINIA | 24504 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
Title of each class | Name of each Exchange on which registered | |
| Common Stock, $0.01 par value | New York Stock Exchange | |
| Large accelerated filer | Accelerated filer | ¨ | ||||
| Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
99,451,237.
| PAGE | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
Item 5. | ||||||
| ||||||
| ||||||
| Years Ended December 31, 2016, 2015 | ||||||
| ||||||
| ||||||
| PAGE | ||||||
| ||||||
| Years Ended December 31, 2016, 2015 and 2014 | ||||||
| Years Ended December 31, 2016, 2015 and 2014 | ||||||
| Years Ended December 31, 2016, 2015 and 2014 | ||||||
| ||||||
| ||||||
Item 10. | ||||||
Statements we make in this Annual Report on Form 10-K, which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks, uncertainties and assumptions, including those to which we refer under the headings “Cautionary"Cautionary Statement Concerning Forward-Looking Statements”Statements" and “Risk Factors”"Risk Factors" in Items 1 and 1A of Part I of this report. In this annual reportAnnual Report on Form 10-K, unless the context otherwise indicates, “we,” “us”"we," "us" and “our”"our" mean BWX Technologies, Inc. (“BWXT”("BWXT" or “Company”the "Company") and its consolidated subsidiaries.PART IItem 1. BUSINESS
complement our existing businesses. We would expect to fund these opportunities In addition, we perform development and fabrication activities for submarine missile launch tubes for the U.S. Navy. In addition, this segment could benefit if the U.S. Government implements recommendations by the the U.S. Navy to increase the size of its fleet of ships to include additional submarines and/or aircraft carriers beyond the number included in the U.S. Navy's fiscal year 2016 long-range shipbuilding plan issued on April 3, 2015.GeneralBWX Technologies, Inc. (“BWXT”("BWXT" or the “Company”"Company") (formerly known as The Babcock & Wilcox Company) is a specialty manufacturer of nuclear components and a service provider with an operating history of more than 100 years. Our core businesses focus on the design, engineering and manufacture of precision naval nuclear components, reactors and nuclear fuel for the U.S. Government. We also provide uranium processing and environmental site restoration services, as well as a variety of products and services to customers in the nuclear power industry. While we provide a wide range of products and services, our business segments are heavily focused on major projects. At any given time, a relatively small number of projects can represent a significant part of our operations.On June 30, 2015, we completed the spin-off of our former Power Generation business (the “spin-off”"spin-off") into an independent, publicly traded company named Babcock & Wilcox Enterprises, Inc. (“BWE”("BWE"). The separation was effected through a pro rata distribution of 100% of BWE’s common stock to BWXT’s stockholders. The distribution consisted of one share of BWE common stock for every two shares of BWXT common stock to holders of our common stock on June 18, 2015. Cash was paid in lieu of any fractional shares of BWE common stock. BWXT did not retain any ownership interest in BWE following the spin-off. Concurrent with the spin-off, we changed our name to BWX Technologies, Inc. Our common stock is listed on the New York Stock Exchange under the trading symbol BWXT.Prior to June 30, 2015, we completed an internal restructuring that reorganized the subsidiaries involved in our former Power Generation business and established BWE as the direct or indirect parent company of all those subsidiaries. The results of operations of our former Power Generation business are presented as discontinued operations on the consolidated statements of income. We have presented the notes to our consolidated financial statements on the basis of continuing operations, unless otherwise stated.Business SegmentsWe operate in three reportable segments: Nuclear Operations, Technical Services and Nuclear Energy. Prior to 2015, our mPower business was a separate reportable segment. In accordance with FASB TopicSegment Reporting, mPower no longer meets the quantitative threshold criteria to be considered a reportable segment and is now included in our “Other”"Other" category. This change in reportable segments had no impact on our previously reported results of operations, financial condition or cash flows. We have applied these changes in reportable segments to previously reported historical financial information and related disclosures included in this report.For financial information regarding each of our segments, financial information regarding geographic areas and additional information regarding the change to our segments, see Note 1617 to our consolidated financial statements included in this report. For further details regarding each segment’s facilities, see Item 2, “Properties.”"Properties." In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues. We are currently exploring growth strategies across our segments through acquisitions to expand andbywith cash on hand external financing (including debt),or by raising additional capital through debt, equity or some combination thereof.Nuclear OperationsThrough this segment, we engineer, design and manufacture precision naval nuclear components and reactors for the U.S. Department of Energy (“DOE”("DOE")/National Nuclear Security Administration’s (“NNSA”("NNSA") Naval Nuclear Propulsion Program.Our Nuclear Operations segment specializes in the design and manufacture of close-tolerance and high-quality equipment for nuclear applications. In addition, we are a leading manufacturer of critical nuclear components, fuels and assemblies for government and limited other uses. We have supplied nuclear components for DOE programs since the 1950s and we are the largest domestic supplier of research reactor fuel elements for colleges, universities and national laboratories. We also convert or downblend high-enriched uranium into low-enriched fuel for use in commercial reactors to generate electricity. In addition, we have over 100 years of experience in supplying components for defense applications.We work closely with the DOE-supported nuclear non-proliferation program. Currently, this program is assisting in the development of a high-density, low-enriched uranium fuel required for high-enriched uranium test reactor conversions. We have also been a leader in the receipt, storage, characterization, dissolution, recovery and purification of a variety of uranium-bearing materials. All phases of uranium downblending and uranium recovery are performed at our Lynchburg, Virginia and Erwin, Tennessee sites.The demand for nuclear components by the U.S. Government determines a substantial portion of this segment’ssegment's backlog. We expect that orders for nuclear components will continue to be a significant part of backlog for the foreseeable future.Technical ServicesThrough this segment, we provide various services to the U.S. Government, including uranium processing, environmental site restoration services and management and operating services for various U.S. Government-owned facilities. These services are provided primarily to the DOE including the NNSA, the Office of Nuclear Energy, the Office of Science, and the Office of Environmental Management; the Department of Defense and the National Aeronautics and Space Administration (“NASA”("NASA").This segment’s principal operations include:managing and operating nuclear weapons production facilities;
We launched the Global Competitiveness Initiative (“GCI”) in the third quarter of 2012 to enhance competitiveness, better position BWXT for growth and improve profitability. We identified a wide range of cost reduction activities, including operational and functional efficiency improvements, organizational design changes and manufacturing optimization. We continued to focus on structural changes
In addition, during
segment.
were completed during the second quarter of 2014. Income (loss) before provision for income taxes for the Nuclear Projects business was $(4.5) million and $(2.7) million in the yearsyear ended December 31, 2014 and 2013, respectively.
U.S. Government and its prime contractors usually contain standard provisions for termination at the convenience of the U.S. Government or the prime contractor. As a U.S. Government contractor, we are subject to federal regulations under which our right to receive future awards of new federal contracts would be unilaterally suspended or barred if we were convicted of a crime or indicted based on allegations of a violation of specific federal statutes. In addition, some of our contracts with the U.S. Government require us to provide advance notice in connection with any contemplated sale or shut down of the relevant facility. In each of those situations, the U.S. Government has an exclusive right to negotiate a mutually acceptable purchase of the facility.
performed. Accordingly, we exclude from backlog orders or arrangements that have been awarded but thatfor which we have not been authorized to begin performance.
| December 31, | December 31, | |||||||||||||||
| 2015 | 2014 | |||||||||||||||
| (Dollars in millions) | ||||||||||||||||
Nuclear Operations | $ | 2,311 | 87 | % | $ | 2,778 | 91 | % | ||||||||
Technical Services | 4 | 0 | % | 3 | 0 | % | ||||||||||
Nuclear Energy | 335 | 13 | % | 264 | 9 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Backlog | $ | 2,650 | 100 | % | $ | 3,045 | 100 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
| December 31, 2016 | December 31, 2015 | |||||||||||||
| (Dollars in millions) | ||||||||||||||
| Nuclear Operations | $ | 3,485 | 88 | % | $ | 2,311 | 87 | % | ||||||
| Technical Services | 5 | — | % | 4 | — | % | ||||||||
| Nuclear Energy | 493 | 12 | % | 335 | 13 | % | ||||||||
| Total Backlog | $ | 3,983 | 100 | % | $ | 2,650 | 100 | % | ||||||
| 2016 | 2017 | Thereafter | Total | |||||||||||||
| (In approximate millions) | ||||||||||||||||
Nuclear Operations | $ | 894 | $ | 637 | $ | 780 | $ | 2,311 | ||||||||
Technical Services | 4 | — | — | 4 | ||||||||||||
Nuclear Energy | 145 | 133 | 57 | 335 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Backlog | $ | 1,043 | $ | 770 | $ | 837 | $ | 2,650 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 2017 | 2018 | Thereafter | Total | |||||||||||||
| (In approximate millions) | ||||||||||||||||
| Nuclear Operations | $ | 1,246 | $ | 1,132 | $ | 1,107 | $ | 3,485 | ||||||||
| Technical Services | 5 | — | — | 5 | ||||||||||||
| Nuclear Energy | 197 | 106 | 190 | 493 | ||||||||||||
| Total Backlog | $ | 1,448 | $ | 1,238 | $ | 1,297 | $ | 3,983 | ||||||||
Government with a combined value in excess of $3.0 billion. Approximately $2.1 billion of these awards were added to backlog during the year ended December 31, 2016.
| Revenues | Operating Income | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
Year ended December 31, 2015 | $ | 119,575 | 8 | % | $ | 16,461 | 6 | % | ||||||||
Year ended December 31, 2014 | $ | 110,986 | 8 | % | $ | 86 | 0 | % | ||||||||
Year ended December 31, 2013 | $ | 160,531 | 10 | % | $ | 31,961 | 14 | % | ||||||||
| Revenues | Operating Income | |||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||
| Year Ended December 31, 2016 | $ | 160,504 | 10 | % | $ | 47,302 | 15 | % | ||||||
| Year Ended December 31, 2015 | $ | 119,575 | 8 | % | $ | 16,461 | 6 | % | ||||||
| Year Ended December 31, 2014 | $ | 110,986 | 8 | % | $ | 86 | — | % | ||||||
2014.
respectively.
U.S.
U.S.
covered by and subject to the nuclear indemnity provisions of either the Price-Anderson Act or Public Law 85-804, which, among other things, authorizes the DOE to indemnify certain contractors when such acts would facilitate national defense. However, to the extent the value of the nuclear materials in our care, custody or control exceeds the commercially available limits of our insurance, we potentially have underinsured risk of loss for such nuclear material.
their interpretation, more vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing laws and regulations, may require additional expenditures by us, which may be material. Accordingly, we can provide no assurance that we will not incur significant environmental compliance costs in the future.
including the costs to complete the decommissioning projects underway at the Erwin, Tennessee facility. These letters of credit are to cover decommissioning required pursuant to work not subject to this DOE obligation.
| Item 1A. | RISK FACTORS |
arising out of our default could expose us to liability and have an adverse effect on our ability to compete for future contracts and orders. If any of our contracts reflected in backlog are terminated by the U.S. Government, our backlog would be reduced by the expected value of the remaining work under such contracts. In addition, on those contracts for which we are teamed with others and are not the prime contractor, the U.S. Government could terminate a prime contract under which we are a subcontractor, irrespective of the quality of our products and services as a subcontractor. Furthermore, certain of our U.S. Government contracts span one or more base years and multiple option years. The U.S. Government generally has the right not to exercise option periods and may not exercise an option period for various reasons.
credit, the demand for and competitiveness of nuclear power with other energy sources, the cyclical nature of the power generation industry, low business and consumer confidence, high unemployment and energy conservation measures and decisions of utilities that utilize nuclear power.
classified information and attacks from computer hackers, viruses, malicious code and other security problems. As a U.S. Government contractor, we may be prone to a greater number of those threats than companies in other industries. From time to time, we experience system interruptions and delays; however, prior cyber-based attacks directed at us have not had a material adverse impact on our results of operations. Due to the evolving nature of these security threats, however, the impact of any future incident cannot be predicted. adjustments proportionate to the percentage of completion in income in the period when we revise those estimates. To the extent these adjustments result in a reduction or an elimination of previously reported profits with respect to a project, we would recognize a charge against current earnings, which could be material. Our current estimates of our contract costs and the profitability of our long-term projects, although reasonably reliable when made, could change as a result of the uncertainties associated with these types of contracts, and if adjustments to overall contract costs are significant, the reductions or reversals of previously recorded revenue and profits could be material in future periods.If we fail to comply with government procurement laws and regulations, we could lose business and be liable for various penalties or sanctions.We must comply with laws and regulations relating to the formation, administration, and performance of U.S. Government contracts. These laws and regulations include the Federal Acquisition Regulations, Defense Federal Acquisition Regulations, the Truth in Negotiations Act, Cost Accounting Standards, and laws, regulations, and orders restricting the use and dissemination of classified information under the U.S. export control laws and the export of certain products and technical information. Certain government contracts provide audit rights by government agencies, including with respect to performance, costs, internal controls and compliance with applicable laws and regulations. In complying with these laws and regulations, we may incur significant costs, and non-compliance may result in the imposition of fines and penalties, including contractual damages. If we fail to comply with these laws and regulations or if a government audit, review, or investigation uncovers improper or illegal activities, we may be subject to civil penalties, criminal penalties, or administrative sanctions, including suspension or debarment from contracting with the U.S. Government. Our reputation could suffer harm if allegations of impropriety were made or found against us, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.Changes in our effective tax rate and tax positions may vary.We are subject to income taxes primarily in the United StatesU.S. and Canada. A change in tax laws, treaties or regulations, or their interpretation, in any jurisdiction in which we operate could result in a higher tax rate onsignificantly impact our earnings,provision for income taxes, which could have a material impact on our earnings, and cash flows from operations. operations and value of our deferred tax assets or liabilities. Recent proposals to lower the U.S. corporate income tax rate would require us to reduce the value in our net deferred tax assets upon enactment of new tax legislation, with a corresponding one-time non-cash increase in income tax expense. However, our income tax expense and cash tax payments would be materially lower in subsequent years.In addition, significant judgment is required in determining our provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain, and we are regularly subject to audit by tax authorities. Although we believe that our tax estimates and tax positions are reasonable, they could be materially affected by many factors including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, the realizability of deferred tax assets and changes in uncertain tax positions. A significant increase in our tax rate could have a material adverse effect on our profitability and liquidity.Our business could be negatively impacted by security threats, including physical and cybersecurity threats, and other disruptions.We face various security threats, including cyber threats, threats to the physical security of our facilities and infrastructure (including those that we manage and operate for our customers), and threats from terrorist acts, as well as the potential for business disruptions associated with these threats. Although we utilize a combination of tailored and industry standard security measures and technology to monitor and mitigate these threats, we cannot guarantee that these measures and technology will be sufficient to prevent security threats from materializing.We have been, and will likely continue to be, subject to cyber-based attacks and other attempts to threaten our information technology systems, including attempts to gain unauthorized access to our proprietary orThe costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Occurrence of any of these events could adversely affect our internal operations, the services we provide to customers, the value of our investment in research and development efforts and other intellectual property, our future financial results, our reputation or our stock price.In addition, from time to time we may replace and/or upgrade current financial, human resources and other information technology systems. These activities subject us to inherent costs and risks associated with replacing and updating these systems, including potential disruption of our internal control structure, substantial capital expenditures, demands on management time and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. Our systems’systems' implementations and upgrades may not result in productivity improvements at the levels anticipated, or at all. In addition, the implementation of new technology systems may cause disruptions in our business operations. Such disruption and any other information technology system disruptions, and our ability to mitigate those disruptions, if not anticipated and appropriately mitigated, could have a material adverse effect on us.We rely on intellectual property law and confidentiality agreements to protect our intellectual property. We also rely on intellectual property we license from third parties. Our failure to protect our intellectual property rights, or our inability to obtain or renew licenses to use intellectual property of third parties, could adversely affect our business.Our success depends, in part, on our ability to protect our proprietary information and other intellectual property. Our intellectual property could be stolen, challenged, invalidated, circumvented or rendered unenforceable. In addition, effective intellectual property protection may be limited or unavailable in some foreign countries where we operate.Our failure to protect our intellectual property rights may result in the loss of valuable technologies or adversely affect our competitive business position. We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection. We seek to protect this information through trade secret or confidentialityagreements with our employees, consultants, subcontractors or other parties, as well as through other security measures. These agreements and security measures may be inadequate to deter or prevent misappropriation of our confidential information. In the event of an infringement of our intellectual property rights, a breach of a confidentiality agreement or divulgence of proprietary information, we may not have adequate legal remedies to protect our intellectual property. Litigation to determine the scope of intellectual property rights, even if ultimately successful, could be costly and could divert management’smanagement's attention away from other aspects of our business. In addition, our trade secrets may otherwise become known or be independently developed by competitors.In some instances, we have augmented our technology base by licensing the proprietary intellectual property of third parties. In the future, we may not be able to obtain necessary licenses on commercially reasonable terms, which could have a material adverse effect on our operations.Our use of the percentage-of-completion method of accounting could result in volatility in our results of operations.We generally recognize revenues and profits under our long-term contracts on a percentage-of-completion basis. Accordingly, we review contract price and cost estimates regularly as the work progresses and reflectWe are involved in a number of legal proceedings. We cannot predict the outcome of litigation and other contingencies with certainty.Our business may be adversely affected by the outcome of legal proceeding, disputes and other contingencies that cannot be predicted with certainty. As required by GAAP, we estimate loss contingencies and establish reserves based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the facts and circumstances known to us at a particular point in time. Subsequent developments in legal proceedings may affect our assessment and estimates of the loss contingency recorded as a liability or as a reserve against assets in our financial statements. For a description of current legal proceedings, see Item 3 – Legal Proceedings and “Note 10"Note 11 – Commitments and Contingencies”Contingencies" of our consolidated financial statements.Maintaining adequate bonding and letter of credit capacity is necessary for us to successfully bid on and win various contracts.In line with industry practice, we are often required to post standby letters of credit and surety bonds to support contractual obligations to customers as well as other obligations. These letters of credit and bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. If a letter of credit or bond is required for a particular project and we are unable to obtain it due to insufficient liquidity or other reasons, we will not be able to pursue that project. We utilize bonding facilities, but, as is typically the case, the issuance of bonds under each of those facilities is at the surety’ssurety's sole discretion. In addition, we have capacity limits under our credit facility for letters of credit. Moreover, due to events that affect the insurance and bonding and credit markets generally, bonding and letters of credit may be more difficult to obtain in the future or may only be available at significant additional cost. There can be no assurance that letters of credit or bonds will continue to be available to us on reasonable terms. Our inability to obtain adequate letters of credit and bonding and, as a result, to bid on new work could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2015,2016, we had $82.2$154.9 million in letters of credit and bank guarantees and $19.3$19.7 million in surety bonds outstanding.Our credit facility could restrict our operations.The terms of our credit agreement impose various restrictions and covenants on us that could have adverse consequences, including:limiting our ability to react to changing economic, regulatory and industry conditions;
Our failure to comply with these restrictions and covenants could adversely affect our liquidity and operations.Our business strategy includes acquisitions to support our growth. Acquisitions of other businesses can create certain risks and uncertainties.We intend to pursue growth through the acquisition of businesses or assets that we believe will enable us to strengthen our existing businesses and expand into adjacent industries. We may be unable to execute this growth strategy if we cannot identify suitable businesses or assets, reach agreement on potential strategic acquisitions on acceptable terms or for other reasons. Moreover, businessIn December 2016, we completed our acquisition of NEC. Business acquisitions such as NEC involve certain risks, including:difficulties relating to the assimilation of personnel, services and systems of an acquired business and the assimilation of marketing and other operational capabilities;
On
In April 2014, we announced our plans to restructure the mPower program to reduce spending and focus on technology development that same year.
actions between Bechtel and us arising out of the GmP LLC Agreement and ancillary related agreements, whether known or unknown (including Bechtel's previously asserted breach claim for $120.0 million), were released in connection with entering into the Framework Agreement.
U.S.
either our inability to obtain commercially adequate insurance or indemnification or our refusal to pursue such operations in the absence of such protections.
We are subject to government regulations that may adversely affect our future operations.
Many aspects of our operations and properties are affected by political developments and are subject to both domestic and foreign governmental regulations, including those relating to:
In addition, a portion of the demand for our products and services is from electric power generating companies and other customers. The demand for power generation products and services can be influenced by state and federal governmental legislation setting requirements for utilities related to operations, emissions and environmental impacts. The legislative process is unpredictable and includes a platform that continuously seeks to increase the restrictions on power producers.
We cannot determine the extent to which our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations.
Our business requires us to obtain, and to comply with, national, state and local government permits and approvals.
Our business is required to obtain, and to comply with, national, state and local government permits and approvals. Any of these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the conditions of permits or approvals may adversely affect our operations by temporarily suspending our activities or curtailing our work and may subject us to penalties and other sanctions. Although existing licenses are routinely renewed by various regulators, renewal could be denied or jeopardized by various factors, including:
In addition, if new environmental legislation or regulations are enacted or implemented, or existing laws or regulations are amended or are interpreted or enforced differently, we may be required to obtain additional operating permits or approvals. Our inability to obtain, and to comply with, the permits and approvals required for our business could have a material adverse effect on us.
Our operations involve the handling, transportation and disposal of radioactive and hazardous materials, and environmental laws and regulations and civil liability for contamination of the environment or related personal injuries may result in increases in our operating costs and capital expenditures and decreases in our earnings and cash flows.
"
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act.
The U.S. Foreign Corrupt Practices Act (the “FCPA”) generally prohibits companies and their intermediaries from making improper payments to non-U.S. officials. Our training program and policies mandate compliance with the FCPA. We operate in some parts of the world that have experienced governmental corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. If we are found to be liable for violations of the FCPA (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others, including employees of our joint ventures), we could suffer from civil and criminal penalties or other sanctions.
by the affected employees. If any such strikes or other work stoppages were to occur, we could experience a significant disruption of operations. In addition, negotiations with unions could divert management attention. New union contracts could result in increased operating costs, as a result of higher wages or benefit expenses, for both union and nonunion employees. If nonunion employees were to unionize, we would experience higher ongoing labor costs.
Regulations related to “conflict minerals” may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our reputation with customers.
On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted new requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties. Under these requirements, companies that are subject to the rules conduct due diligence and disclose and report whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. The implementation of these new requirements could adversely affect the sourcing, availability and pricing of minerals used in the manufacture of certain components incorporated in our products. In addition, we will incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that the components of our products either may not originate from the Democratic Republic of Congo and adjoining countries or must be certified as conflict free.
and there can be no assurance that the indemnity from MII will be sufficient to protect us against the full amount of such liabilities, or that MII will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from MII any amounts for which we are held liable, we may be temporarily required to bear these losses, which could have a material adverse effect on our liquidity.
preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock.
| Item 1B. | UNRESOLVED STAFF COMMENTS |
| Item 2. | PROPERTIES |
Business Segment and Location | Principal Use | Owned/Leased (Lease Expiration) | ||
Nuclear Operations | ||||
Lynchburg, Virginia | Manufacturing facility(1) | Owned | ||
Barberton, Ohio | Manufacturing facility | Owned | ||
Euclid, Ohio | Manufacturing facility | Owned / Leased(2) | ||
Mount Vernon, Indiana | Manufacturing facility | Owned | ||
Erwin, Tennessee | Manufacturing facility | Owned | ||
Technical Services | ||||
Lynchburg, Virginia | Administrative office | Leased | ||
Nuclear Energy | ||||
Lynchburg, Virginia | Engineering office | Leased (2018) | ||
Cambridge, Ontario, Canada | Manufacturing facility | Owned | ||
| Manufacturing facility | Leased (2036) (3) | ||
Toronto, Ontario, Canada | Manufacturing facility | Leased (2036) (3) | ||
| Arnprior, Ontario, Canada | Manufacturing facility | Leased (2022) | ||
| Corporate | ||||
| Lynchburg, Virginia | Administrative office | Leased | ||
Charlotte, North Carolina | Administrative office | Leased (2019) | ||
| Washington, District of Columbia | Administrative office | Owned | ||
| (1) | The Lynchburg, Virginia facility is our Nuclear Operations segment’s primary manufacturing plant and is the nation’s largest commercial high-enriched uranium processing facility. The site is |
| (2) | We acquired the Euclid facilities through a bond/lease transaction facilitated by the Cleveland Cuyahoga County Port Authority (the |
| (3) | The Peterborough and Toronto leases were entered into as part of the acquisition of NEC. These facilities operate under a Class 1B Nuclear Fuel Facility Operating License renewed by the Canadian Nuclear Safety Commission to fabricate natural uranium fuel. We are leasing the facilities from an affiliate of one of the former owners of GEH-C for a period of 20 years subject to certain extension options. |
| Item 3. | LEGAL PROCEEDINGS |
| Item 4. | MINE SAFETY DISCLOSURES |
Before the spin-off was completed on June 30, 2015, we owned, managed and operated Ebensburg Power Company, an independent power company that produces alternative electrical energy. Through one of our former subsidiaries, Revloc Reclamation Service, Inc., Ebensburg Power Company operates multiple coal refuse sites in Western Pennsylvania (collectively, the “Revloc Sites”). At the Revloc Sites, Ebensburg Power Company utilizes coal refuse from abandoned surface mine lands to produce energy. Beyond converting the coal refuse to energy, Ebensburg Power Company is also taking steps to reclaim the former surface mine lands to make the land and streams more attractive for wildlife and human uses.
The Revloc Sites are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and this Item is included in Exhibit 95 to this annual report on Form 10-K.
| Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
| SHARE PRICE | DIVIDENDS PER SHARE | |||||||||||
| QUARTER ENDED | HIGH | LOW | ||||||||||
| March 31, 2016 | $ | 34.61 | $ | 26.89 | $ | 0.09 | ||||||
| June 30, 2016 | $ | 36.43 | $ | 32.24 | $ | 0.09 | ||||||
| September 30, 2016 | $ | 39.70 | $ | 34.69 | $ | 0.09 | ||||||
| December 31, 2016 | $ | 40.66 | $ | 36.16 | $ | 0.09 | ||||||
| SHARE PRICE | DIVIDENDS PER SHARE | |||||||||||
QUARTER ENDED | HIGH | LOW | ||||||||||
March 31, 2015 | $ | 32.28 | $ | 26.58 | $ | 0.10 | ||||||
June 30, 2015 | $ | 34.64 | $ | 31.47 | $ | 0.10 | ||||||
September 30, 2015 | $ | 28.00 | $ | 23.91 | $ | 0.06 | ||||||
December 31, 2015 | $ | 32.44 | $ | 25.90 | $ | 0.06 | ||||||
| SHARE PRICE | DIVIDENDS PER SHARE | |||||||||||
| QUARTER ENDED | HIGH | LOW | ||||||||||
| March 31, 2015 | $ | 32.28 | $ | 26.58 | $ | 0.10 | ||||||
| June 30, 2015 | $ | 34.64 | $ | 31.47 | $ | 0.10 | ||||||
| September 30, 2015 | $ | 28.00 | $ | 23.91 | $ | 0.06 | ||||||
| December 31, 2015 | $ | 32.44 | $ | 25.90 | $ | 0.06 | ||||||
YEAR ENDED DECEMBER 31, 2014
| SHARE PRICE | DIVIDENDS PER SHARE | |||||||||||
QUARTER ENDED | HIGH | LOW | ||||||||||
March 31, 2014 | $ | 35.40 | $ | 32.39 | $ | 0.10 | ||||||
June 30, 2014 | $ | 36.00 | $ | 31.58 | $ | 0.10 | ||||||
September 30, 2014 | $ | 33.57 | $ | 27.52 | $ | 0.10 | ||||||
December 31, 2014 | $ | 30.90 | $ | 27.42 | $ | 0.10 | ||||||
On November 5, 2012, our Board of Directors approved an annual cash dividend, payable quarterly, of $0.32 per share.
2016:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders | 2,698,436 | $ | 23.01 | 4,263,039 | ||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
| Equity compensation plans approved by security holders | 1,723,175 | $ | 23.56 | 3,979,962 | ||||||
Period | Total number of shares purchased(1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)(2) | ||||||||||||
October 1, 2015 – October 31, 2015 | 361,400 | $ | 27.33 | 360,000 | $ | 318.7 | ||||||||||
November 1, 2015 – November 30, 2015 | 297,948 | $ | 29.09 | 295,000 | $ | 310.1 | ||||||||||
December 1, 2015 – December 31, 2015 | 1,075,016 | $ | 30.88 | 1,075,016 | $ | 231.5 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 1,734,364 | $ | 29.84 | 1,730,016 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| Period | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (2) | ||||||||||
| October 1, 2016 – October 31, 2016 | 162 | $ | 38.11 | — | $ | 43.0 | ||||||||
| November 1, 2016 – November 30, 2016 | 5,268 | $ | 39.23 | — | $ | 43.0 | ||||||||
| December 1, 2016 – December 31, 2016 | — | — | — | $ | 43.0 | |||||||||
| Total | 5,430 | $ | 39.20 | — | ||||||||||
| (1) | Includes |
| (2) | On |
| (1) | Assumes initial investment of $100 on December 31, |
| Item 6. | SELECTED FINANCIAL DATA |
| For the Years Ended | ||||||||||||||||||||
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| (In thousands, except for per share amounts) | ||||||||||||||||||||
Statement of Income Data(1): | ||||||||||||||||||||
Revenues | $ | 1,415,529 | $ | 1,450,610 | $ | 1,546,663 | $ | 1,522,864 | $ | 1,476,284 | ||||||||||
Income before Provision for Income Taxes | $ | 221,065 | $ | 32,135 | $ | 285,512 | $ | 145,690 | $ | 17,507 | ||||||||||
Income from Continuing Operations | $ | 140,774 | $ | 38,740 | $ | 198,490 | $ | 112,582 | $ | 19,394 | ||||||||||
Income (Loss) from Discontinued Operations | (9,309 | ) | (9,352 | ) | 147,588 | 115,113 | 58,925 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | 131,465 | $ | 29,388 | $ | 346,078 | $ | 227,695 | $ | 78,319 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Basic Earnings per Common Share: | ||||||||||||||||||||
Income from Continuing Operations | $ | 1.32 | $ | 0.36 | $ | 1.77 | $ | 0.95 | $ | 0.16 | ||||||||||
Income (Loss) from Discontinued Operations | (0.09 | ) | (0.09 | ) | 1.32 | 0.97 | 0.50 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | 1.23 | $ | 0.27 | $ | 3.09 | $ | 1.92 | $ | 0.67 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Diluted Earnings per Common Share: | ||||||||||||||||||||
Income from Continuing Operations | $ | 1.31 | $ | 0.36 | $ | 1.76 | $ | 0.95 | $ | 0.16 | ||||||||||
Income (loss) from Discontinued Operations | (0.09 | ) | (0.09 | ) | 1.31 | 0.97 | 0.50 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | 1.22 | $ | 0.27 | $ | 3.07 | $ | 1.91 | $ | 0.66 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash Dividends Per Common Share | $ | 0.32 | $ | 0.40 | $ | 0.34 | $ | 0.08 | — | |||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total Assets(2): | $ | 1,382,139 | $ | 2,856,936 | $ | 2,609,153 | $ | 2,840,355 | $ | 2,789,111 | ||||||||||
Current Maturities of Long-Term Debt | $ | 15,000 | $ | 15,000 | $ | — | $ | — | $ | — | ||||||||||
Long-Term Debt | $ | 285,000 | $ | 285,000 | $ | — | $ | — | $ | — | ||||||||||
| For the Years Ended | ||||||||||||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
| (In thousands, except for per share amounts) | ||||||||||||||||||||
Statement of Income Data (1): | ||||||||||||||||||||
| Revenues | $ | 1,550,573 | $ | 1,415,529 | $ | 1,450,610 | $ | 1,546,663 | $ | 1,522,864 | ||||||||||
| Income from Continuing Operations before Provision for Income Taxes and Noncontrolling Interest | $ | 257,268 | $ | 221,065 | $ | 32,135 | $ | 285,512 | $ | 145,690 | ||||||||||
| Income from Continuing Operations, Net of Tax | $ | 183,057 | $ | 140,774 | $ | 38,740 | $ | 198,490 | $ | 112,582 | ||||||||||
| Income (Loss) from Discontinued Operations, Net of Tax | — | (9,309 | ) | (9,352 | ) | 147,588 | 115,113 | |||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 183,057 | $ | 131,465 | $ | 29,388 | $ | 346,078 | $ | 227,695 | ||||||||||
| Basic Earnings per Common Share: | ||||||||||||||||||||
| Income from Continuing Operations | $ | 1.79 | $ | 1.32 | $ | 0.36 | $ | 1.77 | $ | 0.95 | ||||||||||
| Income (Loss) from Discontinued Operations | — | (0.09 | ) | (0.09 | ) | 1.32 | 0.97 | |||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 1.79 | $ | 1.23 | $ | 0.27 | $ | 3.09 | $ | 1.92 | ||||||||||
| Diluted Earnings per Common Share: | ||||||||||||||||||||
| Income from Continuing Operations | $ | 1.76 | $ | 1.31 | $ | 0.36 | $ | 1.76 | $ | 0.95 | ||||||||||
| Income (Loss) from Discontinued Operations | — | (0.09 | ) | (0.09 | ) | 1.31 | 0.97 | |||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 1.76 | $ | 1.22 | $ | 0.27 | $ | 3.07 | $ | 1.91 | ||||||||||
| Dividends Declared Per Share | $ | 0.36 | $ | 0.32 | $ | 0.40 | $ | 0.34 | 0.08 | |||||||||||
| Balance Sheet Data: | ||||||||||||||||||||
Total Assets (2)(3) | $ | 1,579,815 | $ | 1,375,398 | $ | 2,847,015 | $ | 2,609,153 | $ | 2,840,355 | ||||||||||
| Current Maturities of Long-Term Debt | $ | 27,370 | $ | 15,000 | $ | 15,000 | $ | — | $ | — | ||||||||||
Long-Term Debt (3) | $ | 497,724 | $ | 278,259 | $ | 275,079 | $ | — | $ | — | ||||||||||
| (1) | Statement of income data prior to December 31, 2015 has been restated to reflect the June 30, 2015 spin-off of our former Power Generation business, which is presented as income (loss) from discontinued operations. |
| (2) | Total assets presented for years prior to December 31, 2015 include the historical assets of our former Power Generation business. |
| (3) | On January 1, 2016, we adopted an update to FASB Topic Interest – Imputation of Interest, which resulted in the retrospective reclassification of unamortized debt issuance costs related to the Company's Credit Agreement from other non-current assets to a reduction in long-term debt of $6.7 million and $9.9 million as of December 31, 2015 and 2014, respectively. |
loss contingency pursuant to the terms of the mPower Framework Agreement. We also recorded a gain of approximately $9.3 million related to the release from performance guarantees for various projects executed by our former Power Generation business. In addition, we reversed a $16.1 million loss contingency resulting from a favorable ruling in a lawsuit involving commercial nuclear contracts.
In the year ended December 31, 2011, we recorded additional costs totaling approximately $61.8 million ($50.7 million in our Nuclear Energy segment and $11.1 in our Nuclear Operations segment) to complete certain projects attributable to changes in estimate due to productivity and scheduling issues. In addition, we recognized a gain totaling approximately $10.9 million attributable to a settlement with the sellers of Nuclear Fuel Services, Inc. (“NFS”), a wholly owned subsidiary in our Nuclear Operations segment, related to adverse operating conditions in existence at the acquisition date.
| Item 7. |
income. industry. the projected loss is recognized in full when determined. It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or steel and other raw material prices. We routinely review estimates related to our contracts, and revisions to profitability are reflected in the quarterly and annual earnings we report. In the years ended December 31, 2016, 2015 2014. 2014. assets assumptions in combination with the actual return on plan assets can result in significant changes in our estimated pension and postretirement benefit cost and our consolidated financial condition. Additionally, in the Pension Plans Discount Rate: Effect on ongoing net periodic benefit cost(1) Effect on projected benefit obligation Return on Assets: Effect on ongoing net periodic benefit cost Postretirement Plans Discount Rate: Effect on ongoing net periodic benefit cost(1) Effect on projected benefit obligation Return on Assets: Effect on ongoing net periodic benefit cost Health Care Cost Trend Rate: Effect on ongoing net periodic benefit cost Effect on projected benefit obligationStatements we make in the following discussion, which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings “Cautionary"Cautionary Statement Concerning Forward-Looking Statements”Statements" and “Risk Factors”"Risk Factors" in Items 1 and 1A of Part I of this report.GENERALWe are a leading supplier of nuclear components and fuel to the U.S. government;Government; provide technical, management and site services to support governments in the operation of complex facilities and environmental remediation activities; and supply precision manufactured components, nuclear fuel and services for the commercial nuclear power industry. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues. We are currently exploring growth strategies across our segments through acquisitions to expand and complement our existing businesses. We would expect to fund these opportunities with cash on hand external financing (including debt),or by raising additional capital through debt, equity or some combination thereof.We operate in three reportable segments: Nuclear Operations, Technical Services and Nuclear Energy. Prior to 2015, our mPower business was considered a separate reportable segment; however, in accordance with FASB TopicSegment Reporting, this business no longer meets the quantitative threshold criteria and is now included in our “Other”"Other" category.The results of operations of BWE are presented as discontinued operations on the consolidated statements of income. We have presented the notes to our consolidated financial statements on the bases of continuing operations, unless otherwise stated.Spin-off of BWEOn June 30, 2015, we completed the spin-off of BWE to our stockholders through a stock distribution. BWE’s assets and business primarily consisted of those that we previously reported as our Power Generation segment. In connection with the spin-off, our stockholders received 100% of the outstanding common stock of BWE. The distribution of BWE common stock occurred by way of a pro rata stock distribution to our stockholders. Our stockholders received one share of BWE common stock for every two shares of our common stock held by such stockholder on June 18, 2015, and cash in lieu of any fractional shares. Prior to the completion of the spin-off, we made a cash payment to BWE totaling $132 million.In order to effect the distribution and govern our relationship with BWE after the distribution, we entered into a master separation agreement with BWE. In addition to the master separation agreement, we entered into other agreements with BWE in connection with the distribution, including a tax sharing agreement and transition services agreements.We incurred a total of approximately $66.5 million in total spin-off related costs through June 30, 2015, which includes approximately $29.8 million for professional services and $23.1 million of retention and severance-related charges. The majority of the remaining costs relate to the separation of our facilities and related infrastructure including our information technology systems. Income from discontinued operations for the year ended December 31, 2015 includes $34.4 million respectively, ofthese charges and included in continuing operations are spin-off costs of $26.0 million for the year ended December 31, 2015. A total of $6.1 million was recognized in the year ended December 31, 2014.Master Separation AgreementThe master separation agreement between us and BWE contains the key provisions relating to the separation of our former Power Generation business from us and the distribution of shares of BWE common stock. The master separation agreement identifies the assets that were transferred, liabilities that were assumed and contracts that were assigned to BWE by us or by BWE to us in the spin-off and describes how these transfers, assumptions and assignments occurred. Under the master separation agreement we also agreed to indemnify BWE against various claims and liabilities related to the past operation of our business (other than BWE’s business).At the spin-off, we had outstanding performance guarantees for various projects executed by BWE in the normal course of business. These guarantees totaled $1,542 million and have expiration dates from 2015 to 2035. The master separation agreement requires that BWE use commercially reasonable efforts to terminate (or have it or one of its subsidiaries substituted for us) all existing guarantees by us relating to BWE, including financial, performance and other guarantee obligations. BWE is required to (i) use commercially reasonable efforts to perform all underlying obligations covered by the guarantees, (ii) take all actions to put us in the same position as if BWE, not us, had performed or were performing the guarantee obligations, and (iii) indemnify and hold us harmless for any losses arising from the guarantees. Moreover, to the extent that BWE fails to terminate or substitute any of the existing guarantees by the 24-month anniversary of the spin-off, BWE will be obligated to pay a quarterly carrying fee until the expiration of the guarantee or the termination or substitution of the guarantee, whichever occurs first. We estimated the fair value of these performance guarantees at June 30, 2015 to total $10.2 million and have recorded these amounts in other liabilities on our consolidated balance sheet.As of December 31, 2015, we have been released from certain of these performance guarantees and have reduced the associated liability to $9.3 million accordingly. The remaining guarantees total approximately $1,072 million and have expiration dates ranging from 2016 to 2035. In February 2016, we wereBWE notified by BWEus that we have been released from substantially all of theseremaining performances guarantees.Tax Sharing AgreementWe Accordingly, we reduced the outstanding liability and BWE have entered into an agreement providing forrecorded a gain of approximately $9.3 million during the sharingyear ended December 31, 2016 as a component of taxes incurred before and after the distribution, various indemnification rights with respect to tax matters and restrictions to preserve the tax-free statusother – net in our consolidated statement of the distribution. Under the terms of the tax sharing agreement we entered into in connection with the spin-off, we will generally be responsible for 60% of any taxes imposed on us or BWE and its subsidiaries in the event that the spin-off and/or certain related preparatory transactions were to fail to qualify for tax-free treatment. However, if the spin-off and/or certain related preparatory transactions were to fail to qualify for tax-free treatment because of actions or failures to act by BWE, we would not be responsible for the related taxes associated with these actions. Conversely, if the spin-off and/or certain related preparatory transactions were to fail to qualify for tax-free treatment because of actions or failures to act by us, we would be responsible for all related taxes associated with these actions.Transition Services AgreementsUnder the transition services agreements, we and BWE are providing each other certain transition services for a limited time. Such services include, among others, accounting, human resources, information technology, legal, risk management, tax and treasury services. In consideration for such services, we and BWE each pay fees to the other for the services provided, and those fees are generally in amounts intended to allow the party providing the services to recover its direct and indirect costs incurred in providing those services. The transition services agreements contain customary mutual indemnification provisions.OutlookNuclear OperationsWe expect the backlog of our Nuclear Operations segment of approximately $2,311$3,485 million at December 31, 20152016 to produce revenues of approximately $894.3$1,246 million in 2016,2017, not including any change orders or new contracts that may be awarded during the year.The revenues of our Nuclear Operations segment are largely a function of defense spending by the U.S. Government. As a supplier of major nuclear components for certain U.S. Government programs, we are a significant participant in the defense industry and have not been negatively impacted by sequestration or federal budget reductions to date. We believe many of our programs are well aligned with national defense and other strategic priorities as we supply high-end equipment for submarines and aircraft carriers for the U.S. Navy. However, it is possible that reductions in federal government spending and sequestration could have an adverse impact on the operating results and cash flows of our Nuclear Operations and Technical Services segments in the future.We expect that orders for nuclear components will continue to be a significant part of backlog for the foreseeable future. In addition, our Nuclear Operations segment could benefit if the U.S. Government implements recommendations by the U.S. Navy to increase the size of its fleet of ships to include additional submarines and/or aircraft carriers beyond the number included in the U.S. Navy's fiscal year 2016 long-range shipbuilding plan issued on April 3, 2015.Technical ServicesA significant portion of this segment’s operations are conducted through joint ventures, which typically earn fees, and we account for them following the equity method of accounting. See Note 34 to our consolidated financial statements included in this report for financial information on our equity method investments. As a result, this segment reports minimal backlog and revenues.Given our specialized capabilities of full life-cycle management of special materials, facilities and technologies, we believe our Technical Services segment is well-positioned to continue to participate in the continuing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies.Nuclear EnergyWe expect the backlog of our Nuclear Energy segment of approximately $335$493 million at December 31, 20152016 to produce revenues of approximately $144.7$197 million in 2016,2017, not including any change orders or new contracts that may be awarded during the year. The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy. The activity of this segment depends on the timing of maintenance outages primarily in the Canadian market and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, which could cause variability in our financial results.InOur acquisition of NEC in December 2015, we signed a memorandum2016 has also expanded our Nuclear Energy segment's product offerings to include nuclear fuel manufacturing and nuclear fuel handling equipment. This acquisition further strengthens the diversity of understandingour service offerings and enhances our ability to commence the process for steam generator design and manufacturing related to a long-term, incrementalsupport major life extension program initiated byand refurbishment projects in the world’s largest operatingcommercial nuclear generating facility in Ontario, Canada. Anticipated future revenue associated with this memo of understanding is not included in our ending backlog as of December 31, 2015.CRITICAL ACCOUNTING POLICIES AND ESTIMATESOur financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States.States ("GAAP"). Preparing financial statements requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe the following are our most critical accounting policies that we apply in the preparation of our financial statements. These policies require our most difficult, subjective and complex judgments, often as a result of the need to make estimates of matters that are inherently uncertain.Contracts and Revenue Recognition. We determine the appropriate accounting method for each of our long-term contracts before work on the project begins. We generally recognize contract revenues and related costs on a percentage-of-completion method for individual contracts or combinations of contracts based on work performed, man hours or a cost-to-cost method, as applicable to the product or activity involved. We recognize estimated contract revenue and resulting income based on the measurement of the extent of progress completion as a percentage of the total project. Certain costs may be excluded from the cost-to-cost method of measuring progress, such as significant costs for materials and major third-party subcontractors, if it appears that such exclusion would result in a more meaningful measurement of actual contract progress and resulting periodic allocation of income. For all contracts, if a current estimate of total contract cost indicates a loss on a contract,2014 and 2013,2014, we recognized net favorable changes in estimate related to long-term contracts accounted for on the percentage-of-completion basis that increased operating income by approximately $31.4 million, $18.6 million and $25.0 million, and $17.6 million, respectively.For contracts as to which we are unable to estimate the final profitability except to assure that no loss will ultimately be incurred, we recognize equal amounts of revenue and cost until the final results can be estimated more precisely. For these deferred profit recognition contracts, we recognize revenue and cost equally and only recognize gross margin when probable and reasonably estimable, which we generally determine to be when the contract is approximately 70% complete. We treat long-term construction contracts that contain such a level of risk and uncertainty that estimation of the final outcome is impractical except to assure that no loss will be incurred as deferred profit recognition contracts. We did not enter into any contracts that we have accounted for as deferred profit recognition contracts during 2016, 2015 2014 or 2013.Our policy is to account for fixed-price contracts under the completed-contract method if we believe that we are unable to reasonably forecast cost to complete at start-up. For example, if we have no experience in performing the type of work on a particular project and are unable to develop reasonably dependable estimates of total costs to complete, we would follow the completed-contract method of accounting for such projects. Generally, our management’s policy is not to enter into fixed-price contracts without an accurate estimate of cost to complete. However, it is possible that in the time between contract execution and the start of work on a project, we could lose confidence in our ability to forecast cost to complete based on intervening events, including, but not limited to, experience on similar projects, civil unrest, strikes and volatility in our expected costs. In such a situation, we would use the completed-contract method of accounting for that project. Under the completed-contract method, income is recognized only when a contract is completed or substantially complete. We did not enter into any contracts that we have accounted for under the completed-contract method during 2016, 2015 2014 or 2013.Although we continually strive to improve our ability to estimate our contract costs and profitability, adjustments to overall contract costs due to unforeseen events could be significant in future periods. We recognize claims for extra work or for changes in scope of work in contract revenues, to the extent of costs incurred, when we believe collection is probable and can be reasonably estimated. We recognize income from contract change orders or claims when formally agreed with the customer. We regularly assess the collectabilitycollectibility of contract revenues and receivables from customers.Property, Plant and Equipment. We carry our property, plant and equipment at depreciated cost, reduced by provisions to recognize economic impairment when we determine impairment has occurred. Property, plant and equipment amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. Our estimates of cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes in operating performance. Any changes in such factors may negatively affect our business segments and result in future asset impairments.We depreciate our property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 33 years for buildings and three to 14 years for machinery and equipment. We expense the costs of maintenance, repairs and renewals, which do not materially prolong the useful life of an asset, as we incur them.Investments in Unconsolidated Affiliates. We use the equity method of accounting for affiliates in which our investment ownership ranges from 20% to 50%, unless significant economic or governance considerations indicate that we are unable to exert significant influence, in which case the cost method is used. The equity method is also used for affiliates in which our investment ownership is greater than 50% but we do not have a controlling interest. Currently, all of our material investments in affiliates that are not included in our consolidated results are recorded using the equity method. Affiliates in which our investment ownership is less than 20% and where we are unable to exert significant influence are carried at cost.Self-Insurance.We have a wholly owned insurance subsidiary that provides employer’s liability, general and automotive liability and workers’ compensation insurance and, from time to time, builder’s risk insurance within certain limits to our companies. We may also have business reasons in the future to have our insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies. When estimating our self-insurance liabilities, we consider a number of factors, including historical claims experience and trend lines, projected growth patterns, inflation and exposure forecasts. The assumptions we make with respect to each of these factors represent our judgment as to the most probable cumulative impact of each factor on our future obligations. Our calculation of self-insurance liabilities requires us to apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. We engage the services of an actuarial firm to assist us in the calculation of our liabilities for self-insurance. While the actual outcome of insured claims could differ significantly from estimated amounts, these loss estimates and accruals recorded in our financial statements for claims have historically been reasonable in light of the actual amount of claims paid. Provisions for exposure to self-insurance claims and the related payments of claims have historically not had a material adverse impact on our consolidated financial position, results of operations and cash flows, and we do not expect these provisions to have a material impact on our self-insurance programs in the future.Pension Plans and Postretirement Benefits. We utilize actuarial and other assumptions in calculating the cost and benefit obligations of our pension and postretirement benefits. The assumptions utilized in the determination of our benefit cost and obligations include assumptions regarding discount rates, expected returns on plan assets, mortality and health care cost trends. The assumptions utilized represent our best estimates based on historical experience and other factors.We calculate the majority of our pension costs under both financial accounting standards (“FAS”("FAS") in accordance with accounting principles generally accepted in the United States (“GAAP”)GAAP and cost accounting standards (“CAS”("CAS") in accordance with the Federal Acquisition Regulation and the related United StatesU.S. Government Cost Accounting Standards. We have prepared our consolidated financial statements and segment reporting disclosures utilizing pension costs calculated under FAS. Pension costs calculated under CAS are utilized as the basis for recovery of pension costs on our U.S. Government contracts. For the years ended December 31, 2016, 2015 2014 and 2013,2014, our CAS pension costs attributed to U.S. Government contracts totaled $49.6 million, $57.7 million $59.7 million and $45.1$59.7 million, respectively. Pension costs calculated under CAS are recovered on a percentage-of-completion method on the underlying U.S. Government contracts. As a result, the amount of recoverable CAS pension costs recognized as revenue on an annual basis may differ from the amounts noted above. See further discussion of our accounting for contracts and revenue recognition above and in Note 1 to our consolidated financial statements included in this report.Actual experience that differs from these assumptions or future changes in assumptions will affect our recognized benefit obligations and related costs. We immediately recognize net actuarial gains and losses into earnings in the fourth quarter as a component of net periodic benefit cost. Net actuarial gains and losses occur when actual experience differs from any of the various assumptions used to value our pension and postretirement benefit plans or when assumptions, which are revisited annually through our update of our actuarial valuations, change due to current market conditions or underlying demographic changes. The primary factors contributing to net actuarial gains and losses are changes in the discount rate used to value the obligations as of the measurement date each year, the difference between the actual return on plan assets and the expected return on plan assets and changes in health care cost trends. The effect of changes in the discount rate and expected rate of return on planprior year ended December 31, 2014, we adjusted our mortality assumption to reflect mortality improvements identified by the Society of Actuaries, adjusted for the Company’s experience. The impact of the change in this assumption caused a $70.9 million increase in our pension liability.The following sensitivity analysis shows the impact of a 25 basis point change in the assumed discount rate, return on assets and health care cost trend rate on our FAS pension and postretirement benefit plan obligations and expense for the year ended December 31, 2015: .25% Increase .25% Decrease (in millions) $ 0.4 $ (1.2 ) (45.6 ) 48.1 $ (3.2 ) $ 3.2 $ — $ — (1.6 ) 1.8 $ (0.1 ) $ 0.1 $ 0.1 $ (0.1 ) 1.6 (1.4 ) .25% Increase .25% Decrease (In millions) Pension Plans Discount Rate: Effect on ongoing net periodic benefit cost (1) $ 1.2 $ (1.4 ) Effect on projected benefit obligation (43.1 ) 45.3 Return on Assets: Effect on ongoing net periodic benefit cost $ (2.6 ) $ 2.6 Postretirement Plans Discount Rate: Effect on ongoing net periodic benefit cost (1) $ 0.1 $ (0.1 ) Effect on projected benefit obligation (1.4 ) 1.5 Return on Assets: Effect on ongoing net periodic benefit cost $ 0.1 $ (0.1 ) Health Care Cost Trend Rate: Effect on ongoing net periodic benefit cost $ 0.1 $ (0.1 ) Effect on projected benefit obligation 1.6 (1.2 ) (1) Excludes effect of annual mark to market adjustment.
U.S. Government funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
In November 2015, the FASB issued an update
Warranty. We accrue estimated expense included in costearnings of operations on our consolidated statements of incomenon-U.S. subsidiaries to satisfy contractual warranty requirements when we recognize the associated revenue on the related
contracts. In addition, we record specific provisions or reductions when we expect the actual warranty costs to significantly differ from the accrued estimates. Factors that impact our estimate of warranty costs include prior history of warranty claims and our estimates of future costs of materials and labor. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.
be permanently reinvested.
2014
Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
REVENUES: | ||||||||||||
Nuclear Operations | $ | 1,179,896 | $ | 1,220,952 | $ | 1,167,683 | ||||||
Technical Services | 83,807 | 84,834 | 104,254 | |||||||||
Nuclear Energy | 155,032 | 154,721 | 283,857 | |||||||||
Other | — | 278 | 1,523 | |||||||||
Adjustments and Eliminations | (3,206 | ) | (10,175 | ) | (10,654 | ) | ||||||
|
|
|
|
|
| |||||||
| $ | 1,415,529 | $ | 1,450,610 | $ | 1,546,663 | |||||||
|
|
|
|
|
| |||||||
OPERATING INCOME: | ||||||||||||
Nuclear Operations | $ | 257,400 | $ | 270,536 | $ | 237,855 | ||||||
Technical Services | 18,089 | 35,203 | 58,234 | |||||||||
Nuclear Energy | 1,669 | (23,211 | ) | 8,641 | ||||||||
Other | (13,949 | ) | (68,946 | ) | (81,304 | ) | ||||||
|
|
|
|
|
| |||||||
| $ | 263,209 | $ | 213,582 | $ | 223,426 | |||||||
|
|
|
|
|
| |||||||
Unallocated Corporate | (25,747 | ) | (26,249 | ) | (25,892 | ) | ||||||
Income Related to Litigation Proceeds | 65,728 | — | — | |||||||||
Special Charges for Restructuring Activities | (16,608 | ) | (20,908 | ) | (21,256 | ) | ||||||
Cost to Spin-off Power Generation Business | (25,987 | ) | (161 | ) | — | |||||||
Mark to Market Adjustment | (54,654 | ) | (141,139 | ) | 130,633 | |||||||
|
|
|
|
|
| |||||||
Total Operating Income | $ | 205,941 | $ | 25,125 | $ | 306,911 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| REVENUES: | ||||||||||||
| Nuclear Operations | $ | 1,269,272 | $ | 1,179,896 | $ | 1,220,952 | ||||||
| Technical Services | 97,219 | 83,807 | 84,834 | |||||||||
| Nuclear Energy | 189,159 | 155,032 | 154,721 | |||||||||
| Other | — | — | 278 | |||||||||
| Adjustments and Eliminations | (5,077 | ) | (3,206 | ) | (10,175 | ) | ||||||
| $ | 1,550,573 | $ | 1,415,529 | $ | 1,450,610 | |||||||
| OPERATING INCOME: | ||||||||||||
| Nuclear Operations | $ | 268,503 | $ | 257,400 | $ | 270,536 | ||||||
| Technical Services | 16,495 | 18,089 | 35,203 | |||||||||
| Nuclear Energy | 38,484 | 1,669 | (23,211 | ) | ||||||||
| Other | (6,398 | ) | (13,949 | ) | (68,946 | ) | ||||||
| $ | 317,084 | $ | 263,209 | $ | 213,582 | |||||||
| Unallocated Corporate | (26,353 | ) | (25,747 | ) | (26,249 | ) | ||||||
| mPower Framework Agreement | (30,000 | ) | — | — | ||||||||
| Income Related to Litigation Proceeds | — | 65,728 | — | |||||||||
| Special Charges for Restructuring Activities | — | (16,608 | ) | (20,908 | ) | |||||||
| Cost to Spin-off Power Generation Business | — | (25,987 | ) | (161 | ) | |||||||
| Mark to Market Adjustment | (21,468 | ) | (54,654 | ) | (141,139 | ) | ||||||
| Total Operating Income | $ | 239,263 | $ | 205,941 | $ | 25,125 | ||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2016 | 2015 | $ Change | 2015 | 2014 | $ Change | |||||||||||||||||||
| Revenues | $ | 1,269,272 | $ | 1,179,896 | $ | 89,376 | $ | 1,179,896 | $ | 1,220,952 | $ | (41,056 | ) | |||||||||||
| Operating Income | 268,503 | 257,400 | 11,103 | 257,400 | 270,536 | (13,136 | ) | |||||||||||||||||
| % of Revenues | 21.2% | 21.8% | 21.8% | 22.2% | ||||||||||||||||||||
Consolidated revenues decreased 6.2%2015
Consolidated operating income decreased $281.8$11.1 million to $25.1$268.5 million in the year ended December 31, 20142016 compared to $306.9$257.4 million for the corresponding period in 2013. Operating income includes actuarial gains and losses (“MTM charges”) related to our pension and postretirement plans, which reflected a non-cash gain (loss) of $(141.1) million and $130.6 million in 2014 and 2013, respectively. In addition,2015. The operating income forassociated with the yearsincreases in revenue noted above was partially offset by an increase in overhead and selling, general and administrative expenses. We also experienced a benefit of $3.0 million from the settlement of a property-related insurance claim during the year ended December 31, 2014 and 2013 includes special charges for restructuring activities totaling $20.9 million and $21.3 million, respectively. Operating income in our Technical Services and Nuclear Energy segments declined $23.0 million and $31.9 million, respectively. These decreases were partially offset by increased operating income in our Nuclear Operations and Other segment totaling $32.7 million and $12.4 million, respectively.
Nuclear Operations
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2015 | 2014 | $ Change | 2014 | 2013 | $ Change | |||||||||||||||||||
Revenues | $ | 1,179,896 | $ | 1,220,952 | $ | (41,056 | ) | $ | 1,220,952 | $ | 1,167,683 | $ | 53,269 | |||||||||||
Operating Income | 257,400 | 270,536 | (13,136 | ) | 270,536 | 237,855 | 32,681 | |||||||||||||||||
% of Revenues | 21.8 | % | 22.2 | % | 22.2 | % | 20.4 | % | ||||||||||||||||
2015.
discussed above that had a $20.6 million favorable impact on operating income in the prior year and continued to benefit 2015 by $9.6 million. Contract improvements in the prior year associated with our naval nuclear fuel and downblending operations resulted in an additional decline in operating income, which was partially offset by a $3.0 million benefit from the settlement of a property-related insurance claim during the year ended December 31, 2015.
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2016 | 2015 | $ Change | 2015 | 2014 | $ Change | |||||||||||||||||||
| Revenues | $ | 97,219 | $ | 83,807 | $ | 13,412 | $ | 83,807 | $ | 84,834 | $ | (1,027 | ) | |||||||||||
| Operating Income | 16,495 | 18,089 | (1,594 | ) | 18,089 | 35,203 | (17,114 | ) | ||||||||||||||||
2015
decontamination project.
Technical Services
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2015 | 2014 | $ Change | 2014 | 2013 | $ Change | |||||||||||||||||||
Revenues | $ | 83,807 | $ | 84,834 | $ | (1,027 | ) | $ | 84,834 | $ | 104,254 | $ | (19,420 | ) | ||||||||||
Operating Income | 18,089 | 35,203 | (17,114 | ) | 35,203 | 58,234 | (23,031 | ) | ||||||||||||||||
an increase in equity income of investees of $1.7 million.
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2016 | 2015 | $ Change | 2015 | 2014 | $ Change | |||||||||||||||||||
| Revenues | $ | 189,159 | $ | 155,032 | $ | 34,127 | $ | 155,032 | $ | 154,721 | $ | 311 | ||||||||||||
| Operating Income (Loss) | 38,484 | 1,669 | 36,815 | 1,669 | (23,211 | ) | 24,880 | |||||||||||||||||
| % of Revenues | 20.3% | 1.1% | 1.1% | (15.0)% | ||||||||||||||||||||
2015
year ended December 31, 2015.
shutdown incident at the Waste Isolation Pilot Plant. In addition,by $16.0 million. Lower selling, general and administrative expenses were $3.3 higherresulted in additional operating income improvements of $2.2 million when compared to the corresponding periodyear ended December 31, 2015. Also included in operating income was $16.1 million related to the reversal of 2013 primarily due to increased business development activities.
Nuclear Energy
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2015 | 2014 | $ Change | 2014 | 2013 | $ Change | |||||||||||||||||||
Revenues | $ | 155,032 | $ | 154,721 | $ | 311 | $ | 154,721 | $ | 283,857 | $ | (129,136 | ) | |||||||||||
Operating Income (Loss) | 1,669 | (23,211 | ) | 24,880 | (23,211 | ) | 8,641 | (31,852 | ) | |||||||||||||||
% of Revenues | 1.1 | % | (15.0 | )% | (15.0 | )% | 3.0 | % | ||||||||||||||||
a loss contingency that resulted from a favorable ruling in a lawsuit involving commercial nuclear contracts.
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2016 | 2015 | $ Change | 2015 | 2014 | $ Change | |||||||||||||||||||
| Revenues | $ | — | $ | — | $ | — | $ | — | $ | 278 | $ | (278 | ) | |||||||||||
| Operating Income (Loss) | (6,398 | ) | (13,949 | ) | 7,551 | (13,949 | ) | (68,946 | ) | 54,997 | ||||||||||||||
Revenues decreased 45.5%, or $129.12015
Operating incomepace of development related to our previously announced plans to restructure the mPower program. Research and development activities decreased $31.9$5.2 million to a loss of $23.2and selling, general and administrative expenses also decreased $2.3 million incompared to the year ended December 31, 2014 compared to income of $8.6 million in the corresponding period of 2013, primarily attributable to the $16.1 million loss recognition resulting from an adverse jury verdict in a lawsuit involving commercial nuclear contracts. We also experienced reduced operating income from our nuclear equipment business related to the decrease in revenues noted above. In addition, during the year ended December 31, 2013, we recognized $7.1 million of warranty improvements associated with favorable warranty experience. This decline in operating income was partially offset by $5.4 million of reduced selling, general and administrative expenses associated with cost savings from GCI and margin improvement initiatives.
Other
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2015 | 2014 | $ Change | 2014 | 2013 | $ Change | |||||||||||||||||||
Revenues | $ | — | $ | 278 | $ | (278 | ) | $ | 278 | $ | 1,523 | $ | (1,245 | ) | ||||||||||
Operating Income (Loss) | (13,949 | ) | (68,946 | ) | 54,997 | (68,946 | ) | (81,304 | ) | 12,358 | ||||||||||||||
2015.
Year Ended December 31, 2014 vs. 2013
Operating income
Unallocated Corporate
resulting from the spin-off, which has allowed the Company to significantly reduce costs that were previously incurred to support a larger organization.
Unallocated corporate expenses of $26.2 million forduring the year ended December 31, 2014 were largely unchanged2016 related to the deconsolidation of GmP as compareda component of other – net in our consolidated
terms of the Framework Agreement.
Special charges for restructuring activities decreased $0.3 million to $20.9 million in the year ended December 31, 2014, as compared to $21.3 million in 2013, due to charges associated with our margin improvement program and restructuring of our mPower program, offset by the absence of restructuring charges related to our GCI initiative as it was completed in 2013.
The effect
Other Income Statement Items
$2.1 million.
Other – net increased by $32.8 million
2015.
Net(income) loss attributable to noncontrolling interest decreased $7.9 million in the year ended December 31, 2015 compared to 2014, primarily attributable to a decline in recognition of our partner’s share of losses incurred in connection with BWXT mPower
Net loss attributable to noncontrolling interest decreased $5.6 million in
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| Income from Continuing Operations before Provision for Income Taxes and Noncontrolling Interest | $ | 257,268 | $ | 221,065 | $ | 32,135 | ||||||
| Provision for Income Taxes | 73,656 | 80,416 | 1,691 | |||||||||
| Effective Tax Rate | 28.6% | 36.4% | 5.3% | |||||||||
Provision for Income Taxes
Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
Income from Continuing Operations before Provision for Income Taxes | $ | 221,065 | $ | 32,135 | $ | 285,512 | ||||||
Income Tax Provision | 80,416 | 1,691 | 100,799 | |||||||||
Effective Tax Rate | 36.4 | % | 5.3 | % | 35.3 | % | ||||||
We primarily operate in the United States and Canada. Beginning in the second quarter of 2015, we began recognizing our consolidated income tax provision based on the U.S. federal statutory rate of 35%primarily due to the presumed repatriation$13.6 million non-taxable gain recognized related to the deconsolidation of GmP, $2.4 million of additional tax benefits related to employee share-based payments due to our early adoption of the FASB update to the Topic
foreign operations. Of the $7.5 million benefit associated with the change in our assertion regarding the undistributed earnings of our foreign operations, approximately $3.9 million related to the foreign rate differential on current year undistributed earnings and approximately $3.6 million related to the reversal of deferred tax liabilities recorded for previously accrued taxes.
ForU.S. operations plus the year ended December 31, 2014, our provision forapplicable state income taxes decreased $99.1 millionon our profitable U.S. subsidiaries. Our non-U.S. earnings are predominantly generated in Canada and are subject to $1.7 million, while income before provision for income taxes decreased $253.4 million to $32.1 million. Our effective tax at a local statutory rate wasof approximately 5.3% for 2014, as compared to 35.3% for 2013. This decrease in our effective tax rate was primarily due to the impact of an increase in benefits from amended federal manufacturing deductions and the receipt of a favorable ruling from the Internal Revenue Service that retroactively reduced the U.S. tax owed on income from certain of our foreign joint ventures. In addition, our effective tax rate was lower due to the $14.2 million gain and fair market value adjustment related to our Centrus investment for which the related tax provision was offset by the reversal of a previously established valuation allowance related to prior impairments of the USEC investment. The significant decrease in income before provision for income taxes attributable to our mark to market pension adjustments also had an effect to the reduction of our effective tax rate in 2014 as compared to 2013.
25%.
taxes including further discussion on the change to our assertion regarding the undistributed earnings of our foreign operations.
Loans outstanding
As of December 31, 2016, the weighted-average interest rate on outstanding borrowings under our Amended Credit Agreement was 2.08%.
credit is 1.25%1.375%, and the letter of credit fee for performance letters of credit is 0.75%, and the0.825%. The commitment fee for unused portions of the Credit Agreementrevolving credit facility is 0.15%0.175%. The applicable interest rate at December 31, 2016 was 4.125% per year for the revolving credit facility. The Amended Credit Agreement does not have a floor for the base rate or the Eurocurrency rate. As of December 31, 2015, the interest rate on borrowings under our Credit Agreement was 1.67%.
Rate.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Domestic | $ | 158,679 | $ | 159,770 | ||||
Foreign | 23,733 | 29,853 | ||||||
|
|
|
| |||||
Total | $ | 182,412 | $ | 189,623 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Domestic | $ | 92,680 | $ | 158,679 | ||||
| Foreign | 65,449 | 23,733 | ||||||
| Total | $ | 158,129 | $ | 182,412 | ||||
advance billings discussed above.
NEC.
2016 and borrowed a net $233.6 million under our credit facility.
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | ||||||||||||||||
| (In thousands) | ||||||||||||||||||||
Long-term debt principal | $ | 300,000 | $ | 15,000 | $ | 30,000 | $ | 255,000 | $ | — | ||||||||||
Interest payments | $ | 34,083 | $ | 6,924 | $ | 16,511 | $ | 10,648 | $ | — | ||||||||||
Lease payments | $ | 10,152 | $ | 3,113 | $ | 5,413 | $ | 1,626 | $ | — | ||||||||||
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | ||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Long-term debt principal | $ | 530,986 | $ | 27,370 | $ | 54,740 | $ | 448,876 | $ | — | ||||||||||
| Interest payments | $ | 53,836 | $ | 13,537 | $ | 32,026 | $ | 8,273 | $ | — | ||||||||||
| Lease payments | $ | 10,123 | $ | 3,746 | $ | 5,048 | $ | 1,329 | $ | — | ||||||||||
2017.
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | Thereafter | ||||
| (In thousands) | ||||||||
| $101,511 | $97,467 | $4,044 | $— | $— | ||||
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | Thereafter | ||||
| (In thousands) | ||||||||
| $ 174,546 | $ 168,271 | $ 2,280 | $ 3,995 | — | ||||
| Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
| Principal Amount by Expected Maturity | ||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| At December 31, 2015: | Fair Value at | |||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | 2015 | |||||||||||||||||||||||||
Investments | $ | 2,773 | — | — | $ | 2,628 | — | $ | 5,974 | $ | 11,375 | $ | 9,546 | |||||||||||||||||||
Average Interest Rate | 0.34 | % | — | — | 8.00 | % | — | 0.15 | % | |||||||||||||||||||||||
Long-term Debt | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 240,000 | — | $ | 300,000 | $ | 304,925 | |||||||||||||||||
Average Interest Rate | 2.32 | % | 2.85 | % | 3.17 | % | 3.39 | % | 3.57 | % | — | |||||||||||||||||||||
| At December 31, 2014: | Fair Value at | |||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | 2014 | |||||||||||||||||||||||||
Investments | $ | 2,398 | — | — | — | $ | 2,628 | $ | 7,364 | $ | 12,390 | $ | 12,443 | |||||||||||||||||||
Average Interest Rate | 0.22 | % | — | — | — | 8.00 | % | 0.13 | % | |||||||||||||||||||||||
Long-term Debt | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 240,000 | — | $ | 300,000 | $ | 303,922 | |||||||||||||||||
Average Interest Rate | 1.82 | % | 2.70 | % | 3.37 | % | 3.56 | % | 3.88 | % | — | |||||||||||||||||||||
Principal Amount by Expected Maturity (In thousands) | |||||||||||||||||||||||||||||||
| At December 31, 2016: | Fair Value at | ||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | ||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | 2016 | ||||||||||||||||||||||||
| Investments | $ | 12,218 | — | $ | 2,708 | — | — | $ | 5,401 | $ | 20,327 | $ | 23,530 | ||||||||||||||||||
| Average Interest Rate | 0.75% | — | 8.00% | — | — | 0.00% | |||||||||||||||||||||||||
| Long-term Debt | $ | 27,370 | $ | 27,370 | $ | 27,370 | $ | 448,876 | — | — | $ | 530,986 | $ | 522,804 | |||||||||||||||||
| Average Interest Rate | 2.54% | 3.07% | 3.46% | 3.66% | — | — | |||||||||||||||||||||||||
| At December 31, 2015: | Fair Value at | |||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | 2015 | |||||||||||||||||||||||||
| Investments | $ | 2,773 | — | — | $ | 2,628 | — | $ | 5,974 | $ | 11,375 | $ | 9,546 | |||||||||||||||||||
| Average Interest Rate | 0.34% | — | — | 8.00% | — | 0.15% | ||||||||||||||||||||||||||
| Long-term Debt | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 240,000 | — | $ | 300,000 | $ | 304,925 | |||||||||||||||||
| Average Interest Rate | 2.32% | 2.85% | 3.17% | 3.39% | 3.57% | — | ||||||||||||||||||||||||||
Forward Contracts to Purchase Foreign Currencies in U.S. Dollars (in thousands)
| ||||||||||||
| Year Ending | Fair Value at | Average Contractual | ||||||||||
| Foreign Currency | December 31, 2016 | December 31, 2015 | Exchange Rate | |||||||||
Canadian Dollars | $ | 25,244 | $ | (3,790 | ) | 1.2064 | ||||||
U.S. Dollars (selling Canadian Dollars) | $ | 3,279 | $ | 132 | 1.3280 | |||||||
| Year Ending | Fair Value at | Average Contractual | ||||||||||
| Foreign Currency | December 31, 2017 | December 31, 2015 | Exchange Rate | |||||||||
Canadian Dollars | $ | 10,287 | $ | (432 | ) | 1.3227 | ||||||
U.S. Dollars (selling Canadian Dollars) | $ | 3,758 | $ | 174 | 1.3209 | |||||||
| Forward Contracts to Purchase Foreign Currencies in U.S. Dollars (in thousands) | |||||||||||
| Year Ending | Fair Value at | Average Contractual | |||||||||
| Foreign Currency | December 31, 2017 | December 31, 2016 | Exchange Rate | ||||||||
| Canadian Dollars | $ | 22,817 | $ | (402 | ) | 1.3185 | |||||
| U.S. Dollars (selling Canadian Dollars) | $ | 5,732 | $ | 67 | 1.3267 | ||||||
| Euro (selling Canadian Dollars) | $ | 2,271 | $ | (57 | ) | 1.4578 | |||||
| Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Current Assets: Cash and cash equivalents Restricted cash and cash equivalents Investments Accounts receivable – trade, net Accounts receivable – other Contracts in progress Inventories Deferred income taxes Other current assets Assets of discontinued operations – current Total Current Assets Property, Plant and Equipment Less accumulated depreciation Net Property, Plant and Equipment Investments Goodwill Deferred Income Taxes Investments in Unconsolidated Affiliates Intangible Assets Other Assets Assets of Discontinued Operations – Non-current TOTAL Current Liabilities: Notes payable and current maturities of long-term debt Accounts payable Accrued employee benefits Accrued liabilities – other Advance billings on contracts Accrued warranty expense Income taxes payable Liabilities of discontinued operations – current Total Current Liabilities Long-term Debt Accumulated Postretirement Benefit Obligation Environmental Liabilities Pension Liability Other Liabilities Liabilities of Discontinued Operations – Non-current Commitments and Contingencies (Note 10) Stockholders’ Equity: Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 122,813,135 and 121,604,332 shares at December 31, 2015 and December 31, 2014, respectively Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; no shares issued Capital in excess of par value Retained earnings Treasury stock at cost, 17,515,757 and 14,915,776 shares at December 31, 2015 and December 31, 2014, respectively Accumulated other comprehensive income Stockholders’ Equity – BWX Technologies, Inc. Noncontrolling interest Total Stockholders’ Equity TOTAL Revenues Costs and Expenses: Cost of operations Research and development costs Losses (gains) on asset disposals and impairments, net Selling, general and administrative expenses Special charges for restructuring activities Income related to litigation proceeds Costs to spin-off the Power Generation business Total Costs and Expenses Equity in Income of Investees Operating Income Other Income (Expense): Interest income Interest expense Other – net Total Other Income (Expense) Income from continuing operations before Provision for Income Taxes and noncontrolling interest Provision for Income Taxes Income from continuing operations before noncontrolling interest Income (loss) from discontinued operations, net of tax Net Income Net Loss Attributable to Noncontrolling Interest Net Income Attributable to BWX Technologies, Inc. Amounts Attributable to BWX Technologies, Inc.’s Common Shareholders: Income from continuing operations Income (loss) from discontinued operations Net Income Attributable to BWX Technologies, Inc. Earnings per Common Share: Basic: Income from continuing operations Income (loss) from discontinued operations Net Income Attributable to BWX Technologies, Inc. Diluted: Income from continuing operations Income (loss) from discontinued operations Net Income Attributable to BWX Technologies, Inc. Shares used in the computation of earnings per share (Note 18): Basic Diluted COMPREHENSIVE INCOME Net Income Other Comprehensive Income (Loss): Currency translation adjustments Derivative financial instruments: Unrealized losses arising during the period, net of tax benefit of $1,786, $824 and $1,518, respectively Reclassification adjustment for losses included in net income, net of tax benefit of $(1,487), $(559) and $(973), respectively Benefit obligations: Unrecognized losses arising during the period, net of tax benefit of $381, $511 and $1,177, respectively Recognition of benefit plan costs, net of tax benefit of $(581), $(1,547) and $(1,035), respectively Investments: Unrealized gains arising during the period, net of tax provision of $(4), $(75) and $(103), respectively Reclassification adjustment for gains included in net income, net of tax provision of $124, $61 and $30, respectively Other Comprehensive Loss Total Comprehensive Income (Loss) Comprehensive (Income) Loss Attributable to Noncontrolling Interest Comprehensive Income Attributable to BWX Technologies, Inc. Balance December 31, 2012 Net income Dividends declared ($0.34 per share) Defined benefit obligations Available-for-sale investments Currency translation adjustments Derivative financial instruments Exercise of stock options Contributions to thrift plan Shares placed in treasury Stock-based compensation charges Contribution of in-kind services Distributions to noncontrolling interests Balance December 31, 2013 Net income Dividends declared ($0.40 per share) Defined benefit obligations Available-for-sale investments Currency translation adjustments Derivative financial instruments Exercise of stock options Contributions to thrift plan Shares placed in treasury Stock-based compensation charges Contribution of in-kind services Distributions to noncontrolling interests Balance December 31, 2014 Net income Dividends declared ($0.32 per share) Defined benefit obligations Available-for-sale investments Currency translation adjustments Derivative financial instruments Exercise of stock options Contributions to thrift plan Shares placed in treasury Stock-based compensation charges Distributions to noncontrolling interests Spin-off of Power Generation Business Balance December 31, 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income Non-cash items included in net income from continuing operations: Depreciation and amortization Income of investees, net of dividends Losses on asset disposals and impairments Impairment of investments Gain on exchange of USEC investment In-kind research and development costs Provision for (benefit from) deferred taxes Recognition of (gains) losses for pension and postretirement plans Stock-based compensation and thrift plan expense Excess tax benefits from stock-based compensation Changes in assets and liabilities, net of effects from acquisitions: Accounts receivable Accounts payable Contracts in progress and advance billings on contracts Inventories Income taxes Accrued and other current liabilities Pension liability, accrued postretirement benefit obligation and employee benefits Other, net NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in restricted cash and cash equivalents Purchases of property, plant and equipment Acquisition of businesses, net of cash acquired Purchase of intangible assets Purchases of securities Sales and maturities of securities Proceeds from asset disposals Investment in equity and cost method investees NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: Payment of short-term borrowing and long-term debt Payment of debt issuance costs Borrowings under short-term arrangements Borrowings under Credit Agreement Repayments under Credit Agreement Repurchase of common shares Dividends paid to common shareholders Exercise of stock options Excess tax benefits from stock-based compensation Cash divested in connection with spin-off of Power Generation business Other NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES EFFECTS OF EXCHANGE RATE CHANGES ON CASH TOTAL DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest Income taxes (net of refunds) SCHEDULE OF NON-CASH INVESTING ACTIVITY: Accrued capital expenditures included in accounts payableReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of BWX Technologies, Inc.:We have audited the accompanying consolidated balance sheets of BWX Technologies, Inc. and subsidiaries (the “Company”"Company") (formerly known as The Babcock & Wilcox Company) as of December 31, 20152016 and 2014,2015, and the related consolidated statements of income, comprehensive income, stockholders’stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2015.2016. These financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BWX Technologies, Inc. and subsidiaries (formerly known as The Babcock & Wilcox Company) as of December 31, 20152016 and 2014,2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015,2016, 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), the Company’sCompany's internal control over financial reporting as of December 31, 2015,2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 201627, 2017 expressed an unqualified opinion on the Company’sCompany's internal control over financial reporting./S/ DELOITTE & TOUCHE LLPCharlotte, North CarolinaBWX TECHNOLOGIES, INC.CONSOLIDATED BALANCE SHEETS December 31, 2015 2014 (In thousands) ASSETS $ 154,729 $ 123,624 15,364 50,835 3,476 4,837 153,326 165,144 22,444 6,094 265,770 290,622 7,311 9,926 — 38,320 24,874 32,127 — 752,273 647,294 1,473,802 846,936 880,848 578,092 573,048 268,844 307,800 6,070 7,606 168,434 169,914 181,359 132,778 32,088 31,256 58,328 60,227 19,722 50,133 — 623,420 $ 1,382,139 $ 2,856,936 ASSETS December 31, 2016 2015 (In thousands) Current Assets: Cash and cash equivalents $ 125,641 $ 154,729 Restricted cash and cash equivalents 6,130 15,364 Investments 14,517 3,476 Accounts receivable – trade, net 135,950 153,326 Accounts receivable – other 25,221 22,444 Contracts in progress 356,793 265,770 Other current assets 29,319 32,185 Total Current Assets 693,571 647,294 Property, Plant and Equipment 922,641 846,936 Less accumulated depreciation 622,955 578,092 Net Property, Plant and Equipment 299,686 268,844 Investments 9,013 6,070 Goodwill 210,788 168,434 Deferred Income Taxes 194,464 181,359 Investments in Unconsolidated Affiliates 42,854 32,088 Intangible Assets 114,748 58,328 Other Assets 14,691 12,981 TOTAL $ 1,579,815 $ 1,375,398 See accompanying notes to consolidated financial statements.BWX TECHNOLOGIES, INC.CONSOLIDATED BALANCE SHEETS December 31, 2015 2014 (In thousands) LIABILITIES AND STOCKHOLDERS’ EQUITY $ 15,000 $ 15,000 74,130 88,985 67,603 85,433 44,947 44,232 138,558 107,437 13,542 15,889 — 15,778 — 446,882 353,780 819,636 285,000 285,000 20,418 29,956 60,239 56,259 358,512 308,927 24,555 43,126 — 299,831 1,228 1,216 — — 22,732 775,393 739,350 642,489 (498,346 ) (423,990 ) 752 3,596 265,716 998,704 13,919 15,497 279,635 1,014,201 $ 1,382,139 $ 2,856,936 LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 2016 2015 (In thousands, except shareand per share amounts)Current Liabilities: Current maturities of long-term debt $ 27,370 $ 15,000 Accounts payable 99,983 74,130 Accrued employee benefits 81,793 67,603 Accrued liabilities – other 72,105 44,947 Advance billings on contracts 147,148 138,558 Accrued warranty expense 11,477 13,542 Total Current Liabilities 439,876 353,780 Long-Term Debt 497,724 278,259 Accumulated Postretirement Benefit Obligation 19,059 20,418 Environmental Liabilities 81,711 60,239 Pension Liability 357,049 358,512 Other Liabilities 33,986 24,555 Commitments and Contingencies (Note 11) Stockholders’ Equity: Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 124,149,609 and 122,813,135 shares at December 31, 2016 and December 31, 2015, respectively 1,241 1,228 Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; no shares issued — — Capital in excess of par value 22,018 22,732 Retained earnings 885,117 739,350 Treasury stock at cost, 24,858,809 and 17,515,757 shares at December 31, 2016 and December 31, 2015, respectively (762,169 ) (498,346 ) Accumulated other comprehensive income 3,811 752 Stockholders’ Equity – BWX Technologies, Inc. 150,018 265,716 Noncontrolling interest 392 13,919 Total Stockholders’ Equity 150,410 279,635 TOTAL $ 1,579,815 $ 1,375,398 BWX TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 2015 2014 2013 (In thousands, except per share amounts) $ 1,415,529 $ 1,450,610 $ 1,546,663 1,027,437 1,153,034 1,012,392 10,537 54,751 58,183 382 (671 ) (132 ) 207,761 230,377 197,724 16,608 20,908 21,256 (65,728 ) — — 25,987 161 — 1,222,984 1,458,560 1,289,423 13,396 33,075 49,671 205,941 25,125 306,911 30,331 233 215 (10,181 ) (7,087 ) (2,653 ) (5,026 ) 13,864 (18,961 ) 15,124 7,010 (21,399 ) 221,065 32,135 285,512 80,416 1,691 100,799 140,649 30,444 184,713 (9,203 ) (8,987 ) 147,877 $ 131,446 $ 21,457 $ 332,590 19 7,931 13,488 $ 131,465 $ 29,388 $ 346,078 $ 140,774 $ 38,740 $ 198,490 (9,309 ) (9,352 ) 147,588 $ 131,465 $ 29,388 $ 346,078 $ 1.32 $ 0.36 $ 1.77 (0.09 ) (0.09 ) 1.32 $ 1.23 $ 0.27 $ 3.09 $ 1.31 $ 0.36 $ 1.76 (0.09 ) (0.09 ) 1.31 $ 1.22 $ 0.27 $ 3.07 106,703,145 108,477,262 111,901,750 107,583,022 108,761,092 112,685,417 Year Ended December 31, 2016 2015 2014 (In thousands, except share and per share amounts) Revenues $ 1,550,573 $ 1,415,529 $ 1,450,610 Costs and Expenses: Cost of operations 1,074,529 1,027,437 1,153,034 Research and development costs 6,407 10,537 54,751 Losses (gains) on asset disposals and impairments, net (43 ) 382 (671 ) Selling, general and administrative expenses 216,486 207,761 230,377 mPower framework agreement 30,000 — — Income related to litigation proceeds — (65,728 ) — Special charges for restructuring activities — 16,608 20,908 Costs to spin-off the Power Generation business — 25,987 161 Total Costs and Expenses 1,327,379 1,222,984 1,458,560 Equity in Income of Investees 16,069 13,396 33,075 Operating Income 239,263 205,941 25,125 Other Income (Expense): Interest income 651 30,331 233 Interest expense (8,393 ) (10,181 ) (7,087 ) Other – net 25,747 (5,026 ) 13,864 Total Other Income (Expense) 18,005 15,124 7,010 Income from continuing operations before provision for income taxes and noncontrolling interest 257,268 221,065 32,135 Provision for Income Taxes 73,656 80,416 1,691 Income from continuing operations before noncontrolling interest 183,612 140,649 30,444 Income (loss) from discontinued operations, net of tax — (9,203 ) (8,987 ) Net Income $ 183,612 $ 131,446 $ 21,457 Net (Income) Loss Attributable to Noncontrolling Interest (555 ) 19 7,931 Net Income Attributable to BWX Technologies, Inc. $ 183,057 $ 131,465 $ 29,388 Amounts Attributable to BWX Technologies, Inc.’s Common Shareholders: Income from continuing operations, net of tax $ 183,057 $ 140,774 $ 38,740 Income (loss) from discontinued operations, net of tax — (9,309 ) (9,352 ) Net Income Attributable to BWX Technologies, Inc. $ 183,057 $ 131,465 $ 29,388 Earnings per Common Share: Basic: Income from continuing operations $ 1.79 $ 1.32 $ 0.36 Income (loss) from discontinued operations — (0.09 ) (0.09 ) Net Income Attributable to BWX Technologies, Inc. $ 1.79 $ 1.23 $ 0.27 Diluted: Income from continuing operations $ 1.76 $ 1.31 $ 0.36 Income (loss) from discontinued operations — (0.09 ) (0.09 ) Net Income Attributable to BWX Technologies, Inc. $ 1.76 $ 1.22 $ 0.27 Shares used in the computation of earnings per share (Note 19): Basic 102,471,788 106,703,145 108,477,262 Diluted 103,840,738 107,583,022 108,761,092 BWX TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF Year Ended December 31, 2015 2014 2013 (In thousands) $ 131,446 $ 21,457 $ 332,590 (12,483 ) (26,905 ) (2,518 ) (5,122 ) (2,360 ) (4,418 ) 4,230 1,610 2,942 (733 ) (840 ) (1,928 ) 1,096 3,681 1,975 7 136 302 (221 ) (111 ) (769 ) (13,226 ) (24,789 ) (4,414 ) 118,220 (3,332 ) 328,176 (6 ) 7,968 13,522 $ 118,214 $ 4,636 $ 341,698 Year Ended December 31, 2016 2015 2014 (In thousands) Net Income $ 183,612 $ 131,446 $ 21,457 Other Comprehensive Income (Loss): Currency translation adjustments (909 ) (12,483 ) (26,905 ) Derivative financial instruments: Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $(209), $1,786, and $824, respectively 598 (5,122 ) (2,360 ) Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $86, $(1,487), and $(559), respectively (250 ) 4,230 1,610 Benefit obligations: Unrecognized losses arising during the period, net of tax benefit of $606, $381 and $511, respectively (1,125 ) (733 ) (840 ) Recognition of benefit plan costs, net of tax benefit of $(566), $(581) and $(1,547), respectively 1,064 1,096 3,681 Investments: Unrealized gains arising during the period, net of tax provision of $(62), $(4) and $(75), respectively 3,788 7 136 Reclassification adjustment for gains included in net income, net of tax provision of $57, $124 and $61, respectively (107 ) (221 ) (111 ) Other Comprehensive Income (Loss) 3,059 (13,226 ) (24,789 ) Total Comprehensive Income (Loss) 186,671 118,220 (3,332 ) Comprehensive (Income) Loss Attributable to Noncontrolling Interest (555 ) (6 ) 7,968 Comprehensive Income Attributable to BWX Technologies, Inc. $ 186,116 $ 118,214 $ 4,636 BWX TECHNOLOGIES, INC.CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Capital In
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Stockholders’
Equity Noncontrolling
Interest Total
Stockholders’
Equity Shares Par Value (In thousands, except share and per share amounts) 119,608,026 $ 1,196 $ 713,257 $ 349,063 $ 32,728 $ (109,809 ) $ 986,435 $ 16,481 $ 1,002,916 — — — 346,078 — — 346,078 (13,488 ) 332,590 — — — (38,225 ) — — (38,225 ) — (38,225 ) — — — — 47 — 47 — 47 — — — — (467 ) — (467 ) — (467 ) — — — — (2,484 ) — (2,484 ) (34 ) (2,518 ) — — — — (1,476 ) — (1,476 ) — (1,476 ) 241,561 2 4,928 — — — 4,930 — 4,930 464,451 5 13,934 — — — 13,939 — 13,939 — — — — — (159,162 ) (159,162 ) — (159,162 ) 222,872 2 15,070 — — — 15,072 — 15,072 — — — — — — — 15,794 15,794 — — — — — — — (499 ) (499 ) 120,536,910 $ 1,205 $ 747,189 $ 656,916 $ 28,348 $ (268,971 ) $ 1,164,687 $ 18,254 $ 1,182,941 — — — 29,388 — — 29,388 (7,931 ) 21,457 — — — (43,815 ) — — (43,815 ) — (43,815 ) — — — — 2,841 — 2,841 — 2,841 — — — — 25 — 25 — 25 — — — — (26,868 ) — (26,868 ) (37 ) (26,905 ) — — — — (750 ) — (750 ) — (750 ) 193,595 2 4,748 — — — 4,750 — 4,750 436,246 4 13,721 — — — 13,725 — 13,725 — — — — — (155,019 ) (155,019 ) — (155,019 ) 437,581 5 9,735 — — — 9,740 — 9,740 — — — — — — — 5,831 5,831 — — — — — — — (620 ) (620 ) 121,604,332 $ 1,216 $ 775,393 $ 642,489 $ 3,596 $ (423,990 ) $ 998,704 $ 15,497 $ 1,014,201 — — — 131,465 — — 131,465 (19 ) 131,446 — — — (34,604 ) — — (34,604 ) — (34,604 ) — — — — 363 — 363 — 363 — — — — (214 ) — (214 ) — (214 ) — — — — (12,508 ) — (12,508 ) 25 (12,483 ) — — — — (892 ) — (892 ) — (892 ) 345,745 4 7,711 — — — 7,715 — 7,715 149,753 1 4,530 — — — 4,531 — 4,531 — — — — — (74,356 ) (74,356 ) — (74,356 ) 713,305 7 26,340 — — — 26,347 — 26,347 — — — — — — — (464 ) (464 ) — — (791,242 ) — 10,407 — (780,835 ) (1,120 ) (781,955 ) 122,813,135 $ 1,228 $ 22,732 $ 739,350 $ 752 $ (498,346 ) $ 265,716 $ 13,919 $ 279,635 Common Stock Capital InExcess ofPar Value RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock Stockholders’Equity NoncontrollingInterest TotalStockholders’Equity Shares ParValue (In thousands, except share and per share amounts) Balance December 31, 2013 120,536,910 $ 1,205 $ 747,189 $ 656,916 $ 28,348 $ (268,971 ) $ 1,164,687 $ 18,254 $ 1,182,941 Net income — — — 29,388 — — 29,388 (7,931 ) 21,457 Dividends declared ($0.40 per share) — — — (43,815 ) — — (43,815 ) — (43,815 ) Currency translation adjustments — — — — (26,868 ) — (26,868 ) (37 ) (26,905 ) Derivative financial instruments — — — — (750 ) — (750 ) — (750 ) Defined benefit obligations — — — — 2,841 — 2,841 — 2,841 Available-for-sale investments — — — — 25 — 25 — 25 Exercise of stock options 193,595 2 4,748 — — — 4,750 — 4,750 Contributions to thrift plan 436,246 4 13,721 — — — 13,725 — 13,725 Shares placed in treasury — — — — — (155,019 ) (155,019 ) — (155,019 ) Stock-based compensation charges 437,581 5 9,735 — — — 9,740 — 9,740 Contribution of in-kind services — — — — — — — 5,831 5,831 Distributions to noncontrolling interests — — — — — — — (620 ) (620 ) Balance December 31, 2014 121,604,332 $ 1,216 $ 775,393 $ 642,489 $ 3,596 $ (423,990 ) $ 998,704 $ 15,497 $ 1,014,201 Net income — — — 131,465 — — 131,465 (19 ) 131,446 Dividends declared ($0.32 per share) — — — (34,604 ) — — (34,604 ) — (34,604 ) Currency translation adjustments — — — — (12,508 ) — (12,508 ) 25 (12,483 ) Derivative financial instruments — — — — (892 ) — (892 ) — (892 ) Defined benefit obligations — — — — 363 — 363 — 363 Available-for-sale investments — — — — (214 ) — (214 ) — (214 ) Exercise of stock options 345,745 4 7,711 — — — 7,715 — 7,715 Contributions to thrift plan 149,753 1 4,530 — — — 4,531 — 4,531 Shares placed in treasury — — — — — (74,356 ) (74,356 ) — (74,356 ) Stock-based compensation charges 713,305 7 26,340 — — — 26,347 — 26,347 Distributions to noncontrolling interests — — — — — — — (464 ) (464 ) Spin-off of Power Generation Business — — (791,242 ) — 10,407 — (780,835 ) (1,120 ) (781,955 ) Balance December 31, 2015 122,813,135 $ 1,228 $ 22,732 $ 739,350 $ 752 $ (498,346 ) $ 265,716 $ 13,919 $ 279,635 Net income — — — 183,057 — — 183,057 555 183,612 Dividends declared ($0.36 per share) — — — (37,290 ) — — (37,290 ) — (37,290 ) Currency translation adjustments — — — — (909 ) — (909 ) — (909 ) Derivative financial instruments — — — — 348 — 348 — 348 Defined benefit obligations — — — — (61 ) — (61 ) — (61 ) Available-for-sale investments — — — — 3,681 — 3,681 — 3,681 Exercise of stock options 912,683 9 19,978 — — — 19,987 — 19,987 Shares placed in treasury — — (40,000 ) — — (263,823 ) (303,823 ) — (303,823 ) Stock-based compensation charges 423,791 4 15,922 — — — 15,926 — 15,926 Distributions to noncontrolling interests — — — — — — — (511 ) (511 ) Deconsolidation of Generation mPower LLC — — — — — — — (13,571 ) (13,571 ) Other — — 3,386 — — — 3,386 — 3,386 Balance December 31, 2016 124,149,609 $ 1,241 $ 22,018 $ 885,117 $ 3,811 $ (762,169 ) $ 150,018 $ 392 $ 150,410 BWX TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2015 2014 2013 (In thousands) $ 131,446 $ 21,457 $ 332,590 78,621 105,798 70,525 1,947 18,763 11,537 26,441 12,543 1,049 2,140 — 19,139 — (18,647 ) — — 5,831 15,794 (38,493 ) (95,697 ) 94,068 54,105 244,136 (219,915 ) 31,699 23,461 29,006 (396 ) (588 ) (177 ) 40,094 (50,080 ) 19,726 (23,985 ) (81,044 ) 54,895 57,174 (98,400 ) (210,582 ) 3,053 5,044 11,971 (6,991 ) (1,259 ) (6,364 ) (5,533 ) 18,557 (28,499 ) (37,474 ) (42,264 ) (68,961 ) 16,316 7,314 12,084 330,164 74,925 137,886 3,595 (8,552 ) 15,016 (68,335 ) (76,029 ) (64,950 ) — (127,703 ) — — (722 ) (2,200 ) (13,466 ) (23,622 ) (90,836 ) 6,456 40,725 168,879 63 997 1,028 (200 ) (4,900 ) (6,884 ) (71,887 ) (199,806 ) 20,053 — (4,539 ) (211 ) (4,893 ) (5,473 ) — — 2,967 484 177,350 1,156,100 — (177,350 ) (856,100 ) — (69,747 ) (149,774 ) (157,093 ) (34,479 ) (43,469 ) (38,011 ) 7,319 4,604 4,275 396 588 177 (307,562 ) — — (464 ) (305 ) (499 ) (409,430 ) 104,599 (190,878 ) (7,087 ) (12,865 ) (4,492 ) (158,240 ) (33,147 ) (37,431 ) 312,969 346,116 383,547 $ 154,729 $ 312,969 $ 346,116 $ 6,647 $ 6,061 $ 1,790 $ 117,753 $ 74,734 $ 86,924 $ 6,741 $ 7,219 $ 8,141 Year Ended December 31, 2016 2015 2014 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 183,612 $ 131,446 $ 21,457 Non-cash items included in net income from continuing operations: Depreciation and amortization 50,554 78,621 105,798 Income of investees, net of dividends (1,017 ) 1,947 18,763 Losses on asset disposals and impairments (43 ) 26,441 12,543 Gain on deconsolidation of Generation mPower LLC (13,571 ) — — Impairment of investments — 2,140 — Gain on exchange of USEC investment — — (18,647 ) In-kind research and development costs — — 5,831 Provision for (benefit from) deferred taxes (7,231 ) (38,493 ) (95,697 ) Recognition of (gains) losses for pension and postretirement plans 22,940 54,105 244,136 Stock-based compensation and thrift plan expense 15,371 31,699 23,461 Changes in assets and liabilities, net of effects from acquisitions: Accounts receivable 28,570 40,094 (50,080 ) Accounts payable 19,549 (23,985 ) (81,044 ) Contracts in progress and advance billings on contracts (60,473 ) 57,174 (98,400 ) Income taxes 13,216 (6,991 ) (1,259 ) Accrued and other current liabilities 18,542 (5,533 ) 18,557 Pension liability, accrued postretirement benefit obligation and employee benefits (21,057 ) (32,877 ) (37,103 ) Other, net (9,112 ) 19,369 12,358 NET CASH PROVIDED BY OPERATING ACTIVITIES 239,850 335,157 80,674 CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in restricted cash and cash equivalents 9,234 3,595 (8,552 ) Purchases of property, plant and equipment (52,634 ) (68,335 ) (76,029 ) Acquisition of businesses, net of cash acquired (117,780 ) — (127,703 ) Purchase of intangible assets — — (722 ) Purchases of securities (18,648 ) (13,466 ) (23,622 ) Sales and maturities of securities 9,261 6,456 40,725 Proceeds from asset disposals 43 63 997 Investments, net of return of capital, in equity method investees (9,165 ) (200 ) (4,900 ) NET CASH USED IN INVESTING ACTIVITIES (179,689 ) (71,887 ) (199,806 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of short-term borrowing and long-term debt — — (4,539 ) Borrowings under short-term arrangements — — 2,967 Borrowings under Credit Agreement 539,500 177,350 1,156,100 Repayments under Credit Agreement (305,906 ) (177,350 ) (856,100 ) Payment of debt issuance costs (682 ) (4,893 ) (5,473 ) Repurchase of common shares (292,997 ) (69,747 ) (149,774 ) Dividends paid to common shareholders (37,370 ) (34,479 ) (43,469 ) Exercise of stock options 18,323 7,319 4,604 Cash paid for shares withheld to satisfy employee taxes (9,254 ) (4,597 ) (5,161 ) Cash divested in connection with spin-off of Power Generation business — (307,562 ) — Other (511 ) (464 ) (305 ) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (88,897 ) (414,423 ) 98,850 EFFECTS OF EXCHANGE RATE CHANGES ON CASH (352 ) (7,087 ) (12,865 ) TOTAL DECREASE IN CASH AND CASH EQUIVALENTS (29,088 ) (158,240 ) (33,147 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 154,729 312,969 346,116 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 125,641 $ 154,729 $ 312,969 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 6,512 $ 6,647 $ 6,061 Income taxes (net of refunds) $ 66,291 $ 117,753 $ 74,734 SCHEDULE OF NON-CASH INVESTING ACTIVITY: Accrued capital expenditures included in accounts payable $ 8,724 $ 6,741 $ 7,219 BWX TECHNOLOGIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 20152016
Our Nuclear Operations segment engineers, designs and manufactures naval nuclear reactors for the U.S. Department of Energy (“DOE”("DOE")/National Nuclear Security Administration’s (“NNSA”Administration's ("NNSA") Naval Nuclear Propulsion Program, which in turn supplies them to the U.S. Navy for use in submarines and aircraft carriers. Through this segment, we own and operate manufacturing facilities located in Lynchburg, Virginia; Mount Vernon, Indiana; Euclid, Ohio; Barberton, Ohio; and Erwin, Tennessee. The Barberton and Mount Vernon locations specialize in the design and manufacture of heavy components.components inclusive of development and fabrication activities for submarine missile launch tubes. The Euclid facility which is N-Stamp certified by the American Society of Mechanical Engineers, fabricates electro-mechanical equipment for the U.S. Government, and performs design, manufacturing, inspection, assembly and testing activities. The Lynchburg operations fabricate fuel-bearing precision components that range in weight from a few grams to hundreds of tons. In-house capabilities also include wet chemistry uranium processing, advanced heat treatment to optimize component material
|
our consolidation statement of income. In addition, we also recorded a $30.0 million loss contingency pursuant to the terms of the Framework Agreement.
purposes as noncurrentnon-current assets. We adjust the amortized cost of debt securities for amortization of premiums and accretion of discounts to maturity. That amortization is included in interest income. We include realized gains and losses on our investments in other – net. The cost of securities sold is based on the specific identification method. We include interest on securities in interest income.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Included in Contracts in Progress: | ||||||||
Costs incurred less costs of revenue recognized | $ | 36,029 | $ | 149,627 | ||||
Revenues recognized less billings to customers | 229,741 | 140,995 | ||||||
|
|
|
| |||||
Contracts In Progress | $ | 265,770 | $ | 290,622 | ||||
|
|
|
| |||||
Included In Advance Billings on Contracts: | ||||||||
Billings to customers less revenues recognized | $ | 209,957 | $ | 130,247 | ||||
Costs incurred less costs of revenue recognized | (71,399 | ) | (22,810 | ) | ||||
|
|
|
| |||||
Advance Billings on Contracts | $ | 138,558 | $ | 107,437 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Included in Contracts in Progress: | ||||||||
| Costs incurred less costs of revenue recognized | $ | 76,763 | $ | 36,029 | ||||
| Revenues recognized less billings to customers | 280,030 | 229,741 | ||||||
| Contracts In Progress | $ | 356,793 | $ | 265,770 | ||||
| Included In Advance Billings on Contracts: | ||||||||
| Billings to customers less revenues recognized | $ | 162,833 | $ | 209,957 | ||||
| Costs incurred less costs of revenue recognized | (15,685 | ) | (71,399 | ) | ||||
| Advance Billings on Contracts | $ | 147,148 | $ | 138,558 | ||||
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Retainages expected to be collected within one year | $ | 97,577 | $ | 83,890 | ||||
Retainages expected to be collected after one year | 1,740 | 1,731 | ||||||
|
|
|
| |||||
Total retainages | $ | 99,317 | $ | 85,621 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Retainages expected to be collected within one year | $ | 74,452 | $ | 97,577 | ||||
| Retainages expected to be collected after one year | 1,674 | 1,740 | ||||||
| Total retainages | $ | 76,126 | $ | 99,317 | ||||
2019.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Currency translation adjustments | $ | 7,820 | $ | 11,547 | ||||
Net unrealized gain (loss) on available-for-sale investments | (49 | ) | 155 | |||||
Net unrealized loss on derivative financial instruments | (688 | ) | (123 | ) | ||||
Unrecognized prior service cost on benefit obligations | (6,331 | ) | (7,983 | ) | ||||
|
|
|
| |||||
Accumulated other comprehensive income | $ | 752 | $ | 3,596 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Currency translation adjustments | $ | 6,911 | $ | 7,820 | ||||
| Net unrealized loss on derivative financial instruments | (340 | ) | (688 | ) | ||||
| Unrecognized prior service cost on benefit obligations | (6,392 | ) | (6,331 | ) | ||||
| Net unrealized gain (loss) on available-for-sale investments | 3,632 | (49 | ) | |||||
| Accumulated other comprehensive income | $ | 3,811 | $ | 752 | ||||
| Year ended December 31, | ||||||||||||||
| 2015 | 2014 | 2013 | ||||||||||||
Accumulated Other Comprehensive Income Component Recognized | (In thousands) | Line Item Presented | ||||||||||||
Realized (loss) gain on derivative financial instruments | $ | 455 | $ | 683 | $ | (1,600 | ) | Revenues | ||||||
| (6,259 | ) | (2,798 | ) | (2,174 | ) | Cost of operations | ||||||||
|
|
|
|
|
| |||||||||
| (5,804 | ) | (2,115 | ) | (3,774 | ) | Total before tax | ||||||||
| 1,492 | 546 | 972 | Provision for Income Taxes | |||||||||||
|
|
|
|
|
| |||||||||
| $ | (4,312 | ) | $ | (1,569 | ) | $ | (2,802 | ) | Net Income | |||||
Amortization of prior service cost on benefit obligations | $ | (1,508 | ) | $ | (2,975 | ) | $ | (2,041 | ) | Cost of operations | ||||
| (35 | ) | (1,795 | ) | (197 | ) | Selling, general and administrative expenses | ||||||||
|
|
|
|
|
| |||||||||
| (1,543 | ) | (4,770 | ) | (2,238 | ) | Total before tax | ||||||||
| 501 | 1,362 | 752 | Provision for Income Taxes | |||||||||||
|
|
|
|
|
| |||||||||
| $ | (1,042 | ) | $ | (3,408 | ) | $ | (1,486 | ) | Net Income | |||||
Realized gains on investments | $ | 343 | $ | 172 | $ | 799 | Other-net | |||||||
| (123 | ) | (61 | ) | (30 | ) | Provision for Income Taxes | ||||||||
|
|
|
|
|
| |||||||||
| $ | 220 | $ | 111 | $ | 769 | Net Income | ||||||||
|
|
|
|
|
| |||||||||
Total reclassification for the period | $ | (5,134 | ) | $ | (4,866 | ) | $ | (3,519 | ) | |||||
|
|
|
|
|
| |||||||||
| December 31, | ||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||
| Accumulated Other Comprehensive Income Component Recognized | (In thousands) | Line Item Presented | ||||||||||||
| Realized (loss) gain on derivative financial instruments | $ | (30 | ) | $ | 455 | $ | 683 | Revenues | ||||||
| 366 | (6,259 | ) | (2,798 | ) | Cost of operations | |||||||||
| 336 | (5,804 | ) | (2,115 | ) | Total before tax | |||||||||
| (86 | ) | 1,492 | 546 | Provision for Income Taxes | ||||||||||
| $ | 250 | $ | (4,312 | ) | $ | (1,569 | ) | Net Income | ||||||
| Amortization of prior service cost on benefit obligations | $ | (1,601 | ) | $ | (1,508 | ) | $ | (2,975 | ) | Cost of operations | ||||
| (29 | ) | (35 | ) | (1,795 | ) | Selling, general and administrative expenses | ||||||||
| (1,630 | ) | (1,543 | ) | (4,770 | ) | Total before tax | ||||||||
| 566 | 501 | 1,362 | Provision for Income Taxes | |||||||||||
| $ | (1,064 | ) | $ | (1,042 | ) | $ | (3,408 | ) | Net Income | |||||
| Realized gains on investments | $ | 164 | $ | 343 | $ | 172 | Other – net | |||||||
| (57 | ) | (123 | ) | (61 | ) | Provision for Income Taxes | ||||||||
| $ | 107 | $ | 220 | $ | 111 | Net Income | ||||||||
| Total reclassification for the period | $ | (707 | ) | $ | (5,134 | ) | $ | (4,866 | ) | |||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Balance at beginning of period | $ | 15,889 | $ | 17,469 | $ | 25,343 | ||||||
Additions | 1,223 | 1,268 | 2,018 | |||||||||
Expirations and other changes(1) | (2,551 | ) | (2,342 | ) | (9,073 | ) | ||||||
Payments | (130 | ) | (20 | ) | (65 | ) | ||||||
Translation and other | (889 | ) | (486 | ) | (754 | ) | ||||||
|
|
|
|
|
| |||||||
Balance at end of period | $ | 13,542 | $ | 15,889 | $ | 17,469 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Balance at beginning of period | $ | 13,542 | $ | 15,889 | $ | 17,469 | ||||||
| Additions | 1,192 | 1,223 | 1,268 | |||||||||
| Acquisition of NEC | 282 | — | — | |||||||||
Expirations and other changes (1) | (3,631 | ) | (2,551 | ) | (2,342 | ) | ||||||
| Payments | (20 | ) | (130 | ) | (20 | ) | ||||||
| Translation | 112 | (889 | ) | (486 | ) | |||||||
| Balance at end of period | $ | 11,477 | $ | 13,542 | $ | 15,889 | ||||||
| (1) | Includes discounts provided to customers in satisfaction of warranty obligations totaling $1.2 million in each of the years ended December 31, 2016, 2015 |
Balance at beginning of period Additions/Adjustments Accretion Distributed in connection with the spin-off Balance at end of period Land Buildings Machinery and equipment Property under construction Less accumulated depreciation Net Property, Plant and Equipment Balance at December 31, 2013 Currency translation adjustments and other(1) Balance at December 31, 2014 Currency translation adjustments and other Balance at December 31, 2015 Amortized intangible assets: Gross cost: Customer relationships Tradename Unpatented technology All other Total Accumulated amortization: Customer relationships Tradename Unpatented technology All other Total Net amortized intangible assets Unamortized intangible assets: NRC category 1 license Balance at beginning of period Business acquisitions and adjustments Amortization expense Balance at end of period Year Ending December 31, 2016 2017 2018 2019 2020 Balance at beginning of period Additions Interest expense – debt issuance costs Distributed in connection with the spin-off Balance at end of period 2014, respectively. The presentation requirements for cash flows related to employee taxes paid for withheld shares resulted in an increase to both net cash provided by operating activities and net cash used in financing activities of $4.6 million and $5.2 million for the years ended December 31, 2015 and 2014, respectively.Asset Retirement Obligations and Environmental Clean-up CostsWe accrue for future decommissioning of our nuclear facilities that will permit the release of these facilities to unrestricted use at the end of each facility’sfacility's life, which is a requirement of our licenses from the NRC.U.S. Nuclear Regulatory Commission ("NRC") and the CNSC. In accordance with the FASB TopicAsset Retirement and Environmental Obligations,we record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When we initially record such a liability, we capitalize a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of a liability, we will settle the obligation for its recorded amount or incur a gain or loss. This topicapplies to environmental liabilities associated with assets that we currently operate and are obligated to remove from service. For environmental liabilities associated with assets that we no longer operate, we have accrued amounts based on the estimated costs of clean-up activities for which we are responsible, net of any cost-sharing arrangements. We adjust the estimated costs as further information develops or circumstances change. An exception to this accounting treatment relates to the work we perform for two facilities for which the U.S. Government is obligated to pay substantially all of the decommissioning costs.Substantially all of our asset retirement obligations relate to the remediation of our nuclear analytical laboratory and the NFS facility in our Nuclear Operations segment.segment as well as the facilities operated by NEC. The following table reflects our asset retirement obligations: Year Ended December 31, 2015 2014 2013 (In thousands) $ 47,811 $ 44,771 $ 42,366 �� 832 418 (109 ) 2,158 2,622 2,514 (287 ) — — $ 50,514 $ 47,811 $ 44,771 December 31, 2016 2015 2014 (In thousands) Balance at beginning of period $ 50,514 $ 47,811 $ 44,771 Costs incurred (141 ) — — Additions/adjustments — 832 418 Acquisition of NEC 18,505 — — Accretion 3,148 2,158 2,622 Distributed in connection with the spin-off — (287 ) — Translation (127 ) — — Balance at end of period $ 71,899 $ 50,514 $ 47,811 Research and DevelopmentOur research and development activities are related to the development and improvement of new and existing products and equipment, as well as conceptual and engineering evaluation for translation into practical applications. We charge the costs of research and development unrelated to specific contracts as incurred. Excluding customer-sponsored research and development, substantially all of these costs are related to our mPower program for the development of our BWXT mPower™ reactor and the associated power plant. Contractual arrangements for customer-sponsored research and development can vary on a case-by-case basis and include contracts, cooperative agreements and grants.Research and development activities totaled $40.1 million, $38.2 million $124.3 million and $179.2$124.3 million in the years ended December 31, 2016, 2015 2014 and 2013,2014, respectively. This includes amounts paid for by our customers of $33.7 million, $27.7 million $41.7 million and $42.6$41.7 million, in the years ended December 31, 2016, 2015 2014 and 2013,2014, respectively, and DOE funds provided under the Funding Program of $27.8 million and $78.4 million in the years ended December 31, 2014 and 2013, respectively. Amounts provided under the Funding Program in the year ended December 31, 2013 include $21.5 million of pre-award cost reimbursement, $9.7 million of which related to research and development costs incurred in2014.During the year ended December 31, 2012.During the years ended December 31, 2014, and 2013, we recognized $5.8 million and $15.8 million, respectively, of non-cash in-kind research and development costs (included above) related to services contributed by our minority partner to GmP, our majority-owned subsidiary formed in 2011 to oversee the program to develop the small modular nuclear power plant based on BWXT mPower™ technology.Pension Plans and Postretirement BenefitsWe sponsor various defined benefit pension and postretirement plans covering certain employees of our U.S. and Canadian subsidiaries. We utilize actuarial valuations to calculate the cost and benefit obligations of our pension and postretirement benefits. The actuarial valuations utilize significant assumptions in the determination of our benefit cost and obligations, including assumptions regarding discount rates, expected returns on plan assets, mortality and health care cost trends. We determine our discount rate based on a yield curve comprised of rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of our pension and postretirement plan obligations. The expected rate of return on plan assets assumption is based on capital market assumptions of the long-term expected returns for the investment mix of assets currently in the portfolio. The expected rate of return on plan assets is determined to be the weighted average of the nominal returns based on the weightings of the classes within the total asset portfolio. Expected health care cost trends represent expected annual rates of change in the cost of health care benefits and are estimated based on analysis of health care cost inflation. For the year ended December 31, 2014, we adjusted the mortality assumption for our domestic plans to reflect mortality improvements identified by the Society of Actuaries, adjusted for BWXT’sBWXT's experience.The components of benefit cost related to service cost, interest cost, expected return on plan assets and prior service cost amortization are recorded on a quarterly basis based on actuarial assumptions. In the fourth quarter of each year, or as interim remeasurements are required, we immediately recognize net actuarial gains and losses into earnings as a component of net periodic benefit cost. Recognized net actuarial gains and losses consist primarily of our reported actuarial gains and losses and the difference between the actual return on plan assets and the expected return on plan assets.We recognize the funded status of each plan as either an asset or a liability in the consolidated balance sheets. The funded status is the difference between the fair value of plan assets and the present value of its benefit obligation, determined on a plan-by-plan basis. Our pension plan assets can include assets that are difficult to value. See Note 78 for a detailed description of our plan assets.Income TaxesIncome tax expense for federal, foreign, state and local income taxes are calculated on pre-tax income based on current tax law and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Beginning in the second quarter of 2015, we began recognizing our consolidated income tax provision based on the U.S. federal statutory rate of 35% due to the presumed repatriation of our Canadian earnings. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We assess deferred taxes and the adequacy of the valuation allowance on a quarterly basis. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’smanagement's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We record interest and penalties (net of any applicable tax benefit) related to income taxes as a component of provision for income taxes on our consolidated statements of income.We would be subject to withholding taxes if we were to distribute earnings from certain foreign subsidiaries, and unrecognized deferred income tax liabilities, including withholding taxes, would be payable upon distribution of these earnings. We consider the earnings of our non-U.S. subsidiaries to be permanently reinvested.InventoriesWe carry our inventory at the lower of cost or market. At December 31, 20152016 and 2014,2015, we had inventories totaling $7.3$7.7 million and $9.9$7.3 million, respectively, consisting entirely of raw materials and supplies.Property, Plant and EquipmentWe carry our property, plant and equipment at depreciated cost, less any impairment provisions. We depreciate our property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 33 years for buildings and three to 14 years for machinery and equipment. Our depreciation expense was $48.4 million, $55.3 million $72.1 million and $42.6$72.1 million for the years ended December 31, 2016, 2015 2014 and 2013,2014, respectively. We expense the costs of maintenance, repairs and renewals that do not materially prolong the useful life of an asset as we incur them.Property, plant and equipment is stated at cost and is set forth below: December 31, 2015 2014 (In thousands) $ 8,589 $ 8,568 146,028 141,927 635,394 668,309 56,925 62,044 846,936 880,848 578,092 573,048 $ 268,844 $ 307,800 December 31, 2016 2015 (In thousands) Land $ 8,596 $ 8,589 Buildings 156,848 146,028 Machinery and equipment 697,896 635,394 Property under construction 59,301 56,925 922,641 846,936 Less accumulated depreciation 622,955 578,092 Net Property, Plant and Equipment $ 299,686 $ 268,844 Investments in Unconsolidated AffiliatesWe use the equity method of accounting for affiliates in which we are able to exert significant influence. Currently, substantially all of our material investments in affiliates that are not consolidated are recorded using the equity method. Affiliates in which our investment ownership is less than 20% and where we are unable to exert significant influence are carried at cost.GoodwillGoodwill represents the excess of the cost of our acquired businesses over the fair value of the net assets acquired. We perform testing of goodwill for impairment annually. We may elect to perform a qualitative test when we believe that there is sufficient excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant events and circumstances that could affect fair value during the current year. If we conclude based on this assessment that it is more likely than not that the reporting unit is not impaired, we do not perform a quantitative impairment test. In all other circumstances, we utilize a two-step quantitative impairment test to identify potential goodwill impairment and measure the amount of any goodwill impairment. The first step of the test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step compares the implied fair value of the reporting unit’sunit's goodwill with the carrying amount of that goodwill.The following summarizes the changes in the carrying amount of goodwill: Nuclear
Operations Technical
Services Nuclear
Energy Total (In thousands) $ 118,103 $ 45,000 $ 13,975 $ 177,078 (7,164 ) — — (7,164 ) $ 110,939 $ 45,000 $ 13,975 $ 169,914 — — (1,480 ) (1,480 ) $ 110,939 $ 45,000 $ 12,495 $ 168,434 (1)Includes adjustments resulting from acquisitions occurring prior to December 31, 2013 of $(7.2) million. NuclearOperations TechnicalServices NuclearEnergy Total (In thousands) Balance at December 31, 2014 $ 110,939 $ 45,000 $ 13,975 $ 169,914 Translation — — (1,480 ) (1,480 ) Balance at December 31, 2015 $ 110,939 $ 45,000 $ 12,495 $ 168,434 Acquisition of NEC (Note 2) — — 42,532 42,532 Translation — — (178 ) (178 ) Balance at December 31, 2016 $ 110,939 $ 45,000 $ 54,849 $ 210,788 Intangible AssetsIntangible assets are recognized at fair value when acquired. Intangible assets with definite lives are amortized to operating expense using the straight-line method over their estimated useful lives and tested for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Intangible assets with indefinite lives are not amortized and are subject to annual impairment testing. We may elect to perform a qualitative assessment when testing indefinite lived intangible assets for impairment to determine whether events or circumstances affecting significant inputs related to the most recent quantitative evaluation have occurred, indicating that it is more likely than not that the indefinite lived intangible asset is impaired. Otherwise, we test indefinite lived intangible assets for impairment by quantitatively determining the fair value of the indefinite lived intangible asset and comparing the fair value of the intangible asset to its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, we recognize impairment for the amount of the difference.Our intangible assets are as follows: Year Ended December 31, 2015 2014 2013 (In thousands) $ 20,790 $ 20,790 $ 20,790 1,500 1,500 8,360 4,400 4,400 4,400 2,200 2,200 2,200 $ 28,890 $ 28,890 $ 35,750 $ (9,313 ) $ (8,224 ) $ (7,129 ) (1,125 ) (975 ) (6,542 ) (3,312 ) (2,872 ) (2,438 ) (642 ) (422 ) (201 ) $ (14,392 ) $ (12,493 ) $ (16,310 ) $ 14,498 $ 16,397 $ 19,440 $ 43,830 $ 43,830 $ 43,830 Year Ended December 31, 2016 2015 2014 (In thousands) Amortized intangible assets: Gross cost: Customer relationships $ 29,679 $ 20,790 $ 20,790 CNSC class 1B nuclear facility license 24,444 — — Acquired backlog 12,592 — — Favorable operating lease 8,222 — — Unpatented technology 8,104 4,400 4,400 Tradename 1,500 1,500 1,500 Patented technology 741 — — All other 2,200 2,200 2,200 Total $ 87,482 $ 28,890 $ 28,890 Accumulated amortization: Customer relationships $ (10,415 ) $ (9,313 ) $ (8,224 ) CNSC class 1B nuclear facility license (34 ) — — Acquired backlog (209 ) — — Favorable operating lease (16 ) — — Unpatented technology (3,750 ) (3,312 ) (2,872 ) Tradename (1,275 ) (1,125 ) (975 ) Patented technology (3 ) — — All other (862 ) (642 ) (422 ) Total $ (16,564 ) $ (14,392 ) $ (12,493 ) Net amortized intangible assets $ 70,918 $ 14,498 $ 16,397 Unamortized intangible assets: NRC category 1 license $ 43,830 $ 43,830 $ 43,830 The following summarizes the changes in the carrying amount of intangible assets: Year Ended December 31, 2015 2014 2013 (In thousands) $ 60,227 $ 63,270 $ 65,105 — — 2,200 (1,899 ) (3,043 ) (4,035 ) $ 58,328 $ 60,227 $ 63,270 Year Ended December 31, 2016 2015 2014 (In thousands) Balance at beginning of period $ 58,328 $ 60,227 $ 63,270 Acquisition of NEC 58,999 — — Amortization expense (2,174 ) (1,899 ) (3,043 ) Translation (405 ) — — Balance at end of period $ 114,748 $ 58,328 $ 60,227 Estimated amortization expense for the next five fiscal years is as follows (in thousands): Amount $ 1,899 $ 1,899 $ 1,555 $ 1,209 $ 1,209 Other Non-Current AssetsYear Ended December 31, Amount 2017 $ 9,780 2018 $ 9,163 2019 $ 3,385 2020 $ 3,385 2021 $ 3,385 Deferred Debt Issuance CostsWe have included deferred debt issuance costs in other assets.the balance sheet as a direct deduction from the carrying amount of our debt liability. We amortize deferred debt issuance costs as interest expense over the life of the related debt. The following summarizes the changes in the carrying amount of these assets: Year Ended December 31, 2015 2014 2013 (In thousands) $ 9,921 $ 6,502 $ 8,405 4,893 5,473 — (1,852 ) (2,054 ) (1,903 ) (6,221 ) — — $ 6,741 $ 9,921 $ 6,502 Year Ended December 31, 2016 2015 2014 (In thousands) Balance at beginning of period $ 6,741 $ 9,921 $ 6,502 Additions 712 4,893 5,473 Interest expense – debt issuance costs (1,561 ) (1,852 ) (2,054 ) Distributed in connection with the spin-off — (6,221 ) — Balance at end of period $ 5,892 $ 6,741 $ 9,921 Capitalization of Interest CostWe capitalize interest in accordance with FASB TopicInterest. We incurred total interest of $9.1 million, $10.9 million $8.9 million and $4.4$8.9 million in the years ended December 31, 2016, 2015 2014 and 2013,2014, respectively, of which we capitalized $0.7 million, $1.8$0.7 million and $1.7$1.8 million in the years ended December 31, 2016, 2015 and 2014, and 2013, respectively.Cash and Cash Equivalents and Restricted CashOur cash equivalents are highly liquid investments with maturities of three months or less when we purchase them.We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes. At December 31, 2015,2016, we had restricted cash and cash equivalents totaling $18.1$9.0 million, $2.7$2.9 million of which was held for future decommissioning of facilities (which is included in other assets on our consolidated balance sheets) and $15.4$6.1 million of which was held to meet reinsurance reserve requirements of our captive insurer. The reduction in 2015 was primarily attributable to cash transferred in connection with the spin-off.Derivative Financial InstrumentsOur Canadian operations give rise to exposure to market risks from changes in foreign currency exchange (“FX”("FX") rates. We use derivative financial instruments, primarily FX forward contracts, to reduce the impact of changes in FX rates on our operating results. We use these instruments primarily to hedge our exposure associated with revenues or costs on our long-term contracts that are denominated in currencies other than our operating entities’entities' functional currencies. We do not hold or issue derivative financial instruments for trading or other speculative purposes.We enter into derivative financial instruments primarily as hedges of certain firm purchase and sale commitments denominated in foreign currencies. We record these contracts at fair value on our consolidated balance sheets and defer the related gains and losses in stockholders’stockholders' equity as a component of accumulated other comprehensive income until the hedged item is recognized in earnings. Any ineffective portion of a derivative’sderivative's change in fair value and any portion excluded from the assessment of effectiveness is immediately recognized in other – net on our consolidated statements of income. The gain or loss on a derivative instrument not designated as a hedging instrument is also immediately recognized in earnings. Gains and losses on derivative financial instruments that require immediate recognition are included as a component of other – net in our consolidated statements of income.Self-InsuranceWe have a wholly owned insurance subsidiary that provides employer’semployer's liability, general and automotive liability and workers’workers' compensation insurance and, from time to time, builder’sbuilder's risk insurance (within certain limits) to our companies. We may also, in the future, have this insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies. Included in other liabilities on our consolidated balance sheets are reserves for self-insurance totaling $6.9$7.2 million and $31.7$6.9 million at December 31, 2016 and 2015, and 2014, respectively. The reduction in 2015 was primarily attributable to reserves transferred in connection with the spin-off.Loss ContingenciesWe estimate liabilities for loss contingencies when it is probable that a liability has been incurred and the amount of loss is reasonably estimable. We provide disclosure when there is a reasonable possibility that the ultimate loss will exceed the recorded provision or if such probable loss is not reasonably estimable. We are currently involved in some significant litigation, as discussed in Note 10.11. Our losses are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties; the attribution of damages, if any, among multiple defendants; plaintiffs, in most cases involving personal injury claims, do not specify the amount of damages claimed; the discovery process may take multiple years to complete; during the litigation process, it is common to have multiple complex unresolved procedural and substantive issues; the potential availability of insurance and indemnity coverages; the wide-ranging outcomes reached in similar cases, including the variety of damages awarded; the likelihood of settlements forde minimus amounts prior to trial; the likelihood of success at trial; and the likelihood of success on appeal. Consequently, it is possible future earnings could be affected by changes in our assessments of the probability that a loss has been incurred in a material pending litigation against us and/or changes in our estimates related to such matters.Stock-Based CompensationWe expense stock-based compensation in accordance with FASB TopicCompensation – Stock Compensation. Under this topic, the fair value of equity-classified awards, such as restricted stock, performance shares and stock options, is determined on the date of grant and is not remeasured. The fair value of liability-classified awards, such as cash-settled stock appreciation rights, restricted stock units and performance units, is determined on the date of grant and is remeasured at the end of each reporting period through the date of settlement. Grant date fair values for restricted stock, restricted stock units, performance shares and performance units are determined using the closing price of our common stock on the date of grant. Grant date fair values for stock options and stock appreciation rights are determined using a Black-Scholes option-pricing model (“Black-Scholes”("Black-Scholes"). The determination of the fair value of a share-based payment award using an option-pricing model requires the input of significant assumptions, such as the expected life of the award and stock price volatility.Under the provisions of this FASB topic, we recognize expense for all share-based awards granted on a straight-line basis over the requisite service periods of the awards, which is generally equivalent to the vesting term. This topic requires compensation expense to be recognized such that compensation expense is recorded only for those awards expected to vest. As a result, we periodically review the amount of actual forfeitures and record any adjustments deemed necessary each reporting period. We also recognize excess tax benefits in our provision for income taxes. These excess tax benefits result from tax deductions in excess of the cumulative compensation expense recognized for options exercised and other equity-classified awards.Additionally, this FASB topic amended FASB Topic Statement of Cash Flows to require excess tax benefits to be classified along with other income tax cash flows as an operating activity. In addition, cash flows related to employee taxes paid for withheld shares are classified as a financing activity.See Note 10 for a further discussion of stock-based compensation.Recently Adopted Accounting StandardsIn April 2015, the Financial Accounting Standards Board ("FASB") issued an update to the Topic Interest – Imputation of Interest. This update simplifies the presentation of debt issuance costs by requiring debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, rather than recognizing debt issuance costs as an asset. On January 1, 2016, we adopted this update, which required retrospective application and resulted in the reclassification of $6.7 million of unamortized debt issuance costs related to the Company's Credit Agreement from other non-current assets to a reduction in long-term debt within the consolidated balance sheet as of December 31, 2015. Other than reclassification within the balance sheet, the adoption of this update had no further impact on our financial position, results of operations or cash flows.In March 2016, the FASB issued an update to the Topic Compensation – Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax reporting implications, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. We early adopted this update in the quarter ended December 31, 2016, which requires us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption.The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than capital in excess of par value for all periods in the year ended December 31, 2016. Additional amendments to the accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings as of January 1, 2016, where the cumulative effect of these changes are required to be recorded.Additionally, we have elected to change the manner in which we account for forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. Previously, we would recognize expense, net of an estimated forfeiture rate, for all share-based awards granted on a straight-line basis over the requisite service periods of the awards, which is generally equivalent to the vesting term. This topic requires compensation expenseIn conjunction with the early adoption of this Topic, we will now record forfeitures as they occur.We elected to be recognized, net of an estimateapply the presentation requirements for forfeitures, such that compensation expense is recorded only for those awards expectedcash flows related to vest. We review the estimate for forfeitures periodically and record any adjustments deemed necessary for each reporting period. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.Additionally, this FASB topic amended FASB TopicStatement of Cash Flows, to require excess tax benefits retrospectively to be reported as aall periods presented, which resulted in an increase to both net cash provided by operating activities and net cash used in financing cash flow, rather than as a reductionactivities of taxes paid. These excess tax benefits result from tax deductions in excess of$0.4 million and $0.6 million for the cumulative compensation expense recognized for options exercised and other equity-classified awards.See Note 9 for a further discussion of stock-based compensation.Recently Adopted Accounting StandardsIn November 2015, the FASB issued an update to the TopicIncome Taxes. This update requires that reporting entities classify deferred income tax assets and liabilities as non-current on the consolidated balance sheets. Deferred income taxes were previously required to be classified as current or non-current on the consolidated balance sheets based on the classification of the related asset or liability for which a temporary difference exists. We early adopted this update in the quarteryears ended December 31, 2015 and applied its provisions prospectively.Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than capital in excess of par value of $0.8 million, $1.7 million and $2.3 million for the three, six and nine months ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively, and impacted our previously reported quarterly results for fiscal year 2016 as follows: Three Months Ended Six Months Ended Nine Months Ended March 31, 2016 June 30, 2016 September 30, 2016 As Reported As Adjusted As Reported As Adjusted As Reported As Adjusted (Unaudited) (In thousands, except share and per share amounts) Condensed Consolidated Statements of Income: Provision for income taxes $ 16,230 $ 15,390 $ 46,590 $ 44,855 $ 66,622 $ 64,328 Net income $ 48,791 $ 49,631 $ 106,268 $ 108,003 $ 146,771 $ 149,065 Basic earnings per share $ 0.47 $ 0.48 $ 1.02 $ 1.04 $ 1.42 $ 1.44 Basic weighted-average shares outstanding 104,364,141 104,364,141 103,945,872 103,945,872 103,542,578 103,542,578 Diluted earnings per share $ 0.46 $ 0.47 $ 1.01 $ 1.02 $ 1.40 $ 1.42 Diluted weighted-average shares outstanding 105,762,919 105,867,948 105,290,974 105,419,583 104,799,178 104,941,720 Condensed Consolidated Statements of Cash Flows: Net cash provided by (used in) operating activities $ (18,265 ) $ (12,803 ) $ 62,642 $ 73,015 $ 81,138 $ 92,474 Net cash provided by (used in) financing activities $ (55,612 ) $ (61,074 ) $ (91,555 ) $ (101,928 ) $ (151,244 ) $ (162,580 ) March 31, 2016 June 30, 2016 September 30, 2016 As Reported As Adjusted As Reported As Adjusted As Reported As Adjusted (Unaudited) (In thousands) Condensed Consolidated Balance Sheets: Capital in excess of par value $ 36,408 $ 35,568 $ 49,384 $ 47,649 $ 16,171 $ 13,877 Retained earnings $ 778,689 $ 779,529 $ 826,737 $ 828,472 $ 857,841 $ 860,135 New Accounting StandardsIn May 2014, the FASB issued the TopicRevenue from Contracts with Customers, which supersedes the revenue recognition requirements in the TopicRevenue Recognition and most industry specific guidance. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Theguidance also outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied, as well as new, expanded disclosures.In August 2015, the FASB deferred the effective date of this amendment until 2018. The FASB has also issued numerous technical corrections and improvements to update its guidance, which will become effective upon adoption. The update may be adopted either retrospectively to each prior period or as a cumulative-effect adjustment on the date of adoption.We are currently evaluating the impactcommenced our assessment of the adoptionstandard and have developed a project plan to guide the implementation. This plan includes analyzing the standard's impact on our contract portfolio, comparing current accounting policies and practices to the requirements of the new standard and identifying potential differences from applying the requirements of the new standard to our contracts. While this assessment continues, we have not yet selected a transition method nor have we yet determined the effect of the standard on our financial statements.In August 2014, the FASB issued an update to the TopicPresentation of Financial Statements. This update requires an entity to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. If there is substantial doubt about an entity’s ability to continue as a going concern, certain disclosures are required. This update will be effective for us in 2017. We do not expect the adoption of this update to have a material impact on our financial statements.In April 2015, the FASB issued an update to the TopicInterest – Imputation of Interest. This update simplifies the presentation of debt issuance costs by requiring debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, rather than recognizing debt issuance costs as an asset. This update will be effective for us in 2016. The impact of this update on our consolidated financial statements as of December 31, 2015 and 2014 would include a reclassification of unamortized debt issuance costs of $6.7 million and $9.9 million, respectively, from other non-current assets to long-term debt within the consolidated balance sheets. Other than these reclassifications, the adoption of this update would have no further impact on our financial position, results of operations or cash flows.In July 2015, the FASB issued an update to the TopicInventory. This update requires reporting entities measuring inventories under the first-in, first-out or average cost methods to measure inventory at the lower of cost or net realizable value, where net realizable value is “estimated"estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.”" Inventory was previously required to be measured at the lower of cost or market value, where the measurement of market value had several potential outcomes. This update will be effective for us in 2017. We do not expect the adoption of this update to have a material impact on our financial statements.In February 2016, the FASB issued an update to the Topic Leases, which supersedes the lease reporting requirements in Topic Leases (previously "FAS 13"). This update requires that a lessee recognize on its balance sheet the assets and liabilities for all leases with lease terms of more than 12 months, along with additional qualitative and quantitative disclosures. The effect of leases in a consolidated statement of income and a consolidated statement of cash flows is expected to be largely unchanged. Accounting by lessors was not significantly impacted by this update. This update will be effective for us in 2019, with early adoption permitted. We are currently evaluating the impact of the adoption of this standard on our financial statements.In October 2016, the FASB issued an update to the Topic Statement of Cash Flows. This update clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. Restricted cash will now be included in the cash and cash equivalent balances in the statement of cash flows. Reconciliations between the balance sheet and the statement of cash flows, along with additional disclosures if certain criteria are met, are now required as well. This ASU is applicable to us and will be effective for interim periods beginning in 2018, with early adoption permitted. This update will affect the presentation of restricted cash and cash equivalents on the statement of cash flows, but will otherwise not have a material impact to our financial statements.NOTE 2 – ACQUISITIONSGE Hitachi Nuclear Energy Canada Inc. AcquisitionOn December 16, 2016, our subsidiary BWXT Canada Ltd. acquired the outstanding stock of the GE Hitachi Nuclear Energy Canada Inc. ("GEH-C") joint venture for CAD 157.9 million ($117.8 million U.S. Dollar equivalent), subject to customary working capital, cash and debt adjustments, which was renamed BWXT Nuclear Energy Canada Inc. ("NEC"). NEC is a leading supplier of nuclear fuel, fuel handling systems, tooling delivery systems and replacement components for CANDU reactors and has approximately 350 employees. NEC operates two facilities licensed by the CNSC to fabricate natural uranium fuel in Peterborough and Toronto, Ontario, Canada as well as a third facility in Arnprior, Ontario, Canada. NEC expands our current commercial nuclear products and services portfolio and allows us to leverage our technology-based competencies in offering new products and services related to plant life extensions as well as the ongoing maintenance of nuclear power generation equipment and is reported within our Nuclear Energy segment.The purchase price of the acquisition has been allocated among assets acquired and liabilities assumed at preliminary estimates of fair value based on information currently available, with the excess purchase price recorded as goodwill. Our preliminary purchase price allocation, as follows, is subject to change upon receipt of additional information and completion of further analysis, including, but not limited to, finalization of valuations related to asset retirement obligations as well as long-lived and intangible assets: NEC (In thousands) Accounts receivable – trade $ 15,659 Accounts receivable – other 1,359 Contracts in progress 21,597 Other current assets 159 Property, plant and equipment 24,346 Goodwill 42,532 Intangible assets 58,999 Total assets acquired $ 164,651 Accounts payable $ 3,922 Accrued employee benefits 1,965 Accrued liabilities – other 3,097 Accrued warranty expense 282 Accumulated postretirement benefit obligation 5,695 Environmental liabilities 18,505 Pension liability 1,054 Other liabilities 12,351 Total liabilities assumed $ 46,871 Net assets acquired $ 117,780 Amount of tax deductible goodwill $ — The preliminary intangible assets included above consist of the following (dollar amounts in thousands): Amount Amortization Period CNSC class 1B nuclear facility license $ 24,614 30 years Backlog $ 12,680 2 years Customer relationships $ 8,951 14 years Favorable operating lease $ 8,279 20 years Unpatented technology $ 3,729 15 years Patented technology $ 746 11 years Our consolidated financial statements for the year ended December 31, 2016 includes $2.9 million of revenues and $(0.7) million of net income (loss) related to NEC operations occurring from the acquisition date to December 31, 2016. Additionally, the following unaudited pro forma financial information presents our results of operations for the years ended December 31, 2016 and 2015 had the acquisition of NEC occurred on January 1, 2015. The unaudited pro forma financial information below is not intended to represent or be indicative of our actual consolidated results had we completed the acquisition at January 1, 2015. This information is presented for comparative purposes only and should not be taken as representative of our future consolidated results of operations. Year Ended December 31, 2016 2015 (In thousands) Revenues $ 1,630,069 $ 1,513,768 Net Income Attributable to BWX Technologies, Inc. $ 182,074 $ 129,112 Basic Earnings per Common Share $ 1.78 $ 1.21 Diluted Earnings per Common Share $ 1.75 $ 1.20 The unaudited pro forma results include the following pre-tax adjustments to the historical results presented above:Increase in amortization expense related to timing of amortization of the fair value of identifiable intangible assets acquired of approximately $7.7 million and $8.3 million for the years ended December 31, 2016 and 2015, respectively.Elimination of historical interest income of approximately $0.4 million and $0.5 million for the years ended December 31, 2016 and 2015, respectively.Additional interest expense associated with the incremental borrowings that would have been incurred to acquire NEC as of January 1, 2015 of approximately $2.1 million and $2.5 million for the years ended December 31, 2016 and 2015, respectively.Additional accretion associated with asset retirement obligations of approximately $1.5 million and $1.6 million for the years ended December 31, 2016 and 2015, respectively.Additional depreciation expense associated with the fair value adjustment of property, plant and equipment of approximately $1.0 million for the years ended December 31, 2016 and 2015.Elimination of $6.8 million in acquisition related costs recognized in the year ended December 31, 2016 that are not expected to be recurring.
effect the distribution and govern our relationship with BWE after the distribution, we entered into a master separation agreement with BWE. In addition to the master separation agreement, we entered into other agreements with BWE in connection with the distribution, including a tax sharing agreement and transition services agreements.
As of December 31, 2015, we have been released from certain of these performance guarantees and have reduced the associated liability to $9.3 million accordingly. The remaining guarantees total approximately $1,072 million and have expiration dates ranging from 2016 to 2035. In February 2016, we wereBWE notified by BWEus that we have been released from substantially all of theseremaining performances guarantees.
Accordingly, we reduced the outstanding liability and recorded a gain of approximately $9.3 million during the year ended December 31, 2016 as a component of other – net in our consolidated statement of income.
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Revenues | $ | 830,234 | $ | 1,472,409 | $ | 1,722,545 | ||||||
|
|
|
|
|
| |||||||
Costs and Expenses: | ||||||||||||
Cost of operations | 665,558 | 1,256,342 | 1,289,256 | |||||||||
Research and development costs | 8,480 | 18,483 | 21,043 | |||||||||
Losses on asset disposals and impairments, net | 8,963 | 1,752 | 1,181 | |||||||||
Selling, general and administrative expenses(1) | 108,911 | 206,175 | 181,658 | |||||||||
Special charges for restructuring activities | 7,666 | 20,183 | 18,343 | |||||||||
Costs to spin-off | 34,358 | 5,902 | — | |||||||||
|
|
|
|
|
| |||||||
Total Costs and Expenses | 833,936 | 1,508,837 | 1,511,481 | |||||||||
Equity in Income (Loss) of Investees | (1,104 | ) | 8,681 | 18,387 | ||||||||
|
|
|
|
|
| |||||||
Operating Income (Loss) | (4,806 | ) | (27,747 | ) | 229,451 | |||||||
Other Income (Loss) | (1,693 | ) | 1,078 | 2,210 | ||||||||
|
|
|
|
|
| |||||||
Income (Loss) before Provision for Income Taxes | (6,499 | ) | (26,669 | ) | 231,661 | |||||||
Provision for (Benefit from) Income Taxes | 2,704 | (17,682 | ) | 83,784 | ||||||||
|
|
|
|
|
| |||||||
Net Income (Loss) | (9,203 | ) | (8,987 | ) | 147,877 | |||||||
Net Income Attributable to Noncontrolling Interest | (106 | ) | (365 | ) | (289 | ) | ||||||
|
|
|
|
|
| |||||||
Income (Loss) from Discontinued Operations | $ | (9,309 | ) | $ | (9,352 | ) | $ | 147,588 | ||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
| Revenues | $ | 830,234 | $ | 1,472,409 | ||||
| Costs and Expenses: | ||||||||
| Cost of operations | 665,558 | 1,256,342 | ||||||
| Research and development costs | 8,480 | 18,483 | ||||||
| Losses on asset disposals and impairments, net | 8,963 | 1,752 | ||||||
Selling, general and administrative expenses (1) | 108,911 | 206,175 | ||||||
| Special charges for restructuring activities | 7,666 | 20,183 | ||||||
| Costs to spin-off | 34,358 | 5,902 | ||||||
| Total Costs and Expenses | 833,936 | 1,508,837 | ||||||
| Equity in Income (Loss) of Investees | (1,104 | ) | 8,681 | |||||
| Operating Income (Loss) | (4,806 | ) | (27,747 | ) | ||||
| Other Income (Loss) | (1,693 | ) | 1,078 | |||||
| Income (Loss) before Provision for Income Taxes | (6,499 | ) | (26,669 | ) | ||||
| Provision for (Benefit from) Income Taxes | 2,704 | (17,682 | ) | |||||
| Net Income (Loss) | (9,203 | ) | (8,987 | ) | ||||
| Net Income Attributable to Noncontrolling Interest | (106 | ) | (365 | ) | ||||
| Income (Loss) from Discontinued Operations | $ | (9,309 | ) | $ | (9,352 | ) | ||
| (1) | Included in selling, general and administrative expenses are allocations of corporate administrative expenses of $28.0 million |
The following table presents the carrying values of the major accounts of discontinued operations that are included in our December 31, 2014 condensed consolidated balance sheet (in thousands):
| December 31, 2014 | ||||
Cash and cash equivalents | $ | 189,345 | ||
Restricted cash and cash equivalents | 3,661 | |||
Accounts receivable – trade, net | 265,456 | |||
Accounts receivable – other | 38,205 | |||
Contracts in progress | 107,751 | |||
Inventories | 98,711 | |||
Deferred income taxes | 35,158 | |||
Other current assets | 13,986 | |||
|
| |||
Total Current Assets | $ | 752,273 | ||
|
| |||
Net Property, plant and equipment | $ | 128,835 | ||
Goodwill | 209,277 | |||
Deferred income taxes | 112,988 | |||
Investments in unconsolidated affiliates | 109,248 | |||
Intangible assets | 50,646 | |||
Other assets | 12,426 | |||
|
| |||
Total Assets of Discontinued Operations | $ | 1,375,693 | ||
|
| |||
Notes payable and current maturities of long-term debt | $ | 3,215 | ||
Accounts payable | 158,644 | |||
Accrued employee benefits | 39,464 | |||
Accrued liabilities – other | 59,726 | |||
Advance billings on contracts | 148,098 | |||
Accrued warranty expense | 37,735 | |||
|
| |||
Total Current Liabilities | $ | 446,882 | ||
|
| |||
Long-term debt | $ | — | ||
Accumulated postretirement benefit obligation | 28,257 | |||
Pension liability | 255,063 | |||
Other long-term liabilities | 16,511 | |||
|
| |||
Total Liabilities of Discontinued Operations | $ | 746,713 | ||
|
| |||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Non-cash items included in net income (loss): | ||||||||||||
Depreciation and amortization | $ | 21,458 | $ | 30,661 | $ | 23,892 | ||||||
Income (loss) of investees, net of dividends | (2,293 | ) | (8,726 | ) | (1,994 | ) | ||||||
Losses on asset disposals and impairments, net | 10,544 | 5,989 | 1,181 | |||||||||
Purchases of property, plant and equipment | 11,494 | 15,449 | 15,280 | |||||||||
| Year Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
| Non-cash items included in net income (loss): | ||||||||
| Depreciation and amortization | $ | 21,458 | $ | 30,661 | ||||
| Income (loss) of investees, net of dividends | $ | (2,293 | ) | $ | (8,726 | ) | ||
| Losses on asset disposals and impairments, net | $ | 10,544 | $ | 5,989 | ||||
| Purchases of property, plant and equipment | $ | 11,494 | $ | 15,449 | ||||
At December 31, 2014, we had outstanding accounts receivable recorded within the consolidated financial statements for the Nuclear Projects business totaling $45.4 million. These amounts related to a reimbursable target cost subcontract pursuant to which we performed steam generator replacement installation services for the prime contractor at the Prairie Island Nuclear Generating Plant. 2014.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Current assets | $ | 217,205 | $ | 177,895 | ||||
|
|
|
| |||||
Total Assets | $ | 217,205 | $ | 177,895 | ||||
|
|
|
| |||||
Current liabilities | $ | 138,982 | $ | 104,132 | ||||
Owners’ equity | 78,223 | 73,763 | ||||||
|
|
|
| |||||
Total Liabilities and Owners’ Equity | $ | 217,205 | $ | 177,895 | ||||
|
|
|
| |||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Revenues | $ | 624,756 | $ | 1,463,678 | $ | 2,239,448 | ||||||
Gross profit | $ | 33,397 | $ | 72,094 | $ | 111,488 | ||||||
Net Income | $ | 33,406 | $ | 72,104 | $ | 111,478 | ||||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Current assets | $ | 233,546 | $ | 217,205 | ||||
| Total Assets | $ | 233,546 | $ | 217,205 | ||||
| Current liabilities | $ | 119,633 | $ | 138,982 | ||||
| Owners’ equity | 113,913 | 78,223 | ||||||
| Total Liabilities and Owners’ Equity | $ | 233,546 | $ | 217,205 | ||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Revenues | $ | 693,441 | $ | 624,756 | $ | 1,463,678 | ||||||
| Gross profit | $ | 38,858 | $ | 33,397 | $ | 72,094 | ||||||
| Net Income | $ | 38,862 | $ | 33,406 | $ | 72,104 | ||||||
2015.
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Equity income based on stated ownership percentages | $ | 14,011 | $ | 34,700 | $ | 53,057 | ||||||
All other adjustments due to amortization of basis differences, timing of GAAP adjustments and other adjustments | (615 | ) | (1,625 | ) | (3,386 | ) | ||||||
|
|
|
|
|
| |||||||
Equity in income of investees | $ | 13,396 | $ | 33,075 | $ | 49,671 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Equity income based on stated ownership percentages | $ | 16,480 | $ | 14,011 | $ | 34,700 | ||||||
| All other adjustments due to amortization of basis differences, timing of GAAP adjustments and other adjustments | (411 | ) | (615 | ) | (1,625 | ) | ||||||
| Equity in income of investees | $ | 16,069 | $ | 13,396 | $ | 33,075 | ||||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Sales to | $ | 18,458 | $ | 17,156 | $ | 28,650 | ||||||
Dividends received | $ | 13,050 | $ | 43,112 | $ | 59,213 | ||||||
Capital contributions, net of returns | $ | 200 | $ | — | $ | — | ||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Sales to | $ | 24,870 | $ | 18,458 | $ | 17,156 | ||||||
| Dividends received | $ | 15,052 | $ | 13,050 | $ | 43,112 | ||||||
| Capital contributions, net of returns | $ | 9,165 | $ | 200 | $ | — | ||||||
Global Competitiveness Initiative
In the third quarter of 2012, we announced the Global Competitiveness Initiative (“GCI”) to enhance competitiveness, better position BWXT for growth and improve profitability. During the year ended December 31, 2013, we reduced our workforce and initiated other actions, resulting in $12.9 million of expenses related to employee termination benefits, $8.3 million of expenses related to consulting and GCI administrative costs and $0.1 million of expenses related to facility consolidation.
Other Restructuring Actions
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Liability balance at the beginning of the period | $ | 4,967 | $ | 5,148 | $ | — | ||||||
Special charges for restructuring activities(1) | 610 | 17,152 | 21,214 | |||||||||
Payments | (4,352 | ) | (16,967 | ) | (16,066 | ) | ||||||
Translation and other | (324 | ) | (366 | ) | — | |||||||
|
|
|
|
|
| |||||||
Liability balance at the end of the period | $ | 901 | $ | 4,967 | $ | 5,148 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Liability balance at the beginning of the period | $ | 901 | $ | 4,967 | $ | 5,148 | ||||||
Special charges for restructuring activities (1) | — | 610 | 17,152 | |||||||||
| Payments | (610 | ) | (4,352 | ) | (16,967 | ) | ||||||
| Translation and other | (10 | ) | (324 | ) | (366 | ) | ||||||
| Liability balance at the end of the period | $ | 281 | $ | 901 | $ | 4,967 | ||||||
| (1) | Excludes non-cash charges of $16.0 million and $3.8 million for the years ended December 31, 2015 and 2014, respectively, which did not impact the restructuring liability. |
With the acquisition of NEC in the fourth quarter of 2016, we now believe that we have sufficient evidence to support indefinite foreign reinvestment, and therefore, for the year ending December 31, 2016, we are asserting that any undistributed foreign earnings are indefinitely reinvested. With this change, we have recorded our current year Canadian tax provision based on the Canadian local statutory rate of approximately 25%.
2012.
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Balance at beginning of period | $ | 8,597 | $ | 4,943 | $ | 3,923 | ||||||
Increases based on tax positions taken in the current year | 185 | 868 | 732 | |||||||||
Increases based on tax positions taken in the prior years | — | 3,396 | 1,323 | |||||||||
Decreases based on tax positions taken in the prior years | (134 | ) | (260 | ) | (167 | ) | ||||||
Decreases due to settlements with tax authorities | (5,934 | ) | (350 | ) | — | |||||||
Decreases due to lapse of applicable statute of limitation | (492 | ) | — | (868 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at end of period | $ | 2,222 | $ | 8,597 | $ | 4,943 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Balance at beginning of period | $ | 2,222 | $ | 8,597 | $ | 4,943 | ||||||
| Increases based on tax positions taken in the current year | — | 185 | 868 | |||||||||
| Increases based on tax positions taken in the prior years | — | — | 3,396 | |||||||||
| Decreases based on tax positions taken in the prior years | — | (134 | ) | (260 | ) | |||||||
| Decreases due to settlements with tax authorities | (571 | ) | (5,934 | ) | (350 | ) | ||||||
| Decreases due to lapse of applicable statute of limitation | — | (492 | ) | — | ||||||||
| Balance at end of period | $ | 1,651 | $ | 2,222 | $ | 8,597 | ||||||
We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes. During the year ended December 31, 2015, we recorded a decrease in our accruals of $0.4 million, resulting in recorded liabilities of approximately $0.2 million for the payment of tax-related interest and penalties. At December 31, 2014 and 2013, our recorded liabilities for the payment of tax-related interest and penalties totaled approximately $0.6 million and $0.3 million, respectively.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Deferred tax assets: | ||||||||
Pension liability | $ | 131,652 | $ | 115,757 | ||||
Accrued warranty expense | 4,540 | 5,763 | ||||||
Accrued vacation pay | 8,764 | 9,013 | ||||||
Accrued liabilities for self-insurance (including postretirement health care benefits) | 8,654 | 13,517 | ||||||
Accrued liabilities for executive and employee incentive compensation | 17,529 | 22,384 | ||||||
Environmental and products liabilities | 20,861 | 22,250 | ||||||
Investments in joint ventures and affiliated companies | 17,518 | 14,832 | ||||||
Long-term contracts | 15,414 | 7,477 | ||||||
Net operating loss carryforward | — | 887 | ||||||
State tax net operating loss carryforward | 4,142 | 4,656 | ||||||
Foreign tax credit carryforward | 170 | — | ||||||
Other | 8,442 | 9,951 | ||||||
|
|
|
| |||||
Total deferred tax assets | 237,686 | 226,487 | ||||||
Valuation allowance for deferred tax assets | (17,752 | ) | (14,239 | ) | ||||
|
|
|
| |||||
Deferred tax assets | 219,934 | 212,248 | ||||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | 8,242 | 14,091 | ||||||
Long-term contracts | 9,849 | 9,623 | ||||||
Intangibles | 21,698 | 24,012 | ||||||
Other | 2,612 | 1,012 | ||||||
|
|
|
| |||||
Total deferred tax liabilities | 42,401 | 48,738 | ||||||
|
|
|
| |||||
Net deferred tax assets | $ | 177,533 | $ | 163,510 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Deferred tax assets: | ||||||||
| Pension liability | $ | 129,603 | $ | 131,652 | ||||
| Accrued warranty expense | 3,868 | 4,540 | ||||||
| Accrued vacation pay | 9,892 | 8,764 | ||||||
| Accrued liabilities for self-insurance (including postretirement health care benefits) | 7,663 | 8,654 | ||||||
| Accrued liabilities for executive and employee incentive compensation | 20,670 | 17,529 | ||||||
| Environmental and products liabilities | 34,798 | 20,861 | ||||||
| Investments in joint ventures and affiliated companies | 15,067 | 17,518 | ||||||
| Long-term contracts | 10,039 | 15,414 | ||||||
| State tax net operating loss carryforward | 5,573 | 4,142 | ||||||
| Tax credit carryforward | 160 | 170 | ||||||
| Other | 9,373 | 8,442 | ||||||
| Total deferred tax assets | 246,706 | 237,686 | ||||||
| Valuation allowance for deferred tax assets | (17,226 | ) | (17,752 | ) | ||||
| Deferred tax assets | 229,480 | 219,934 | ||||||
| Deferred tax liabilities: | ||||||||
| Property, plant and equipment | 10,249 | 8,242 | ||||||
| Long-term contracts | 11,920 | 9,849 | ||||||
| Intangibles | 35,920 | 21,698 | ||||||
| Other | — | 2,612 | ||||||
| Total deferred tax liabilities | 58,089 | 42,401 | ||||||
| Net deferred tax assets | $ | 171,391 | $ | 177,533 | ||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
U.S. | $ | 211,285 | $ | 50,617 | $ | 242,403 | ||||||
Other than U.S. | 9,780 | (18,482 | ) | 43,109 | ||||||||
|
|
|
|
|
| |||||||
Income before provision for income taxes | $ | 221,065 | $ | 32,135 | $ | 285,512 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| U.S. | $ | 215,572 | $ | 211,285 | $ | 50,617 | ||||||
| Other than U.S. | 41,696 | 9,780 | (18,482 | ) | ||||||||
| Income before provision for income taxes | $ | 257,268 | $ | 221,065 | $ | 32,135 | ||||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Current: | ||||||||||||
U.S. – federal | $ | 95,854 | $ | 60,662 | $ | 37,935 | ||||||
U.S. – state and local | 3,498 | 9,376 | 4,902 | |||||||||
Other than U.S. | (2,170 | ) | (5,833 | ) | (3,619 | ) | ||||||
|
|
|
|
|
| |||||||
Total current | 97,182 | 64,205 | 39,218 | |||||||||
|
|
|
|
|
| |||||||
Deferred: | ||||||||||||
U.S. – Federal | (25,981 | ) | (58,235 | ) | 46,238 | |||||||
U.S. – State and local | 3,423 | (5,167 | ) | 2,419 | ||||||||
Other than U.S. | 5,792 | 888 | 12,924 | |||||||||
|
|
|
|
|
| |||||||
Total deferred (benefit) provision | (16,766 | ) | (62,514 | ) | 61,581 | |||||||
|
|
|
|
|
| |||||||
Provision for income taxes | $ | 80,416 | $ | 1,691 | $ | 100,799 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Current: | ||||||||||||
| U.S. – federal | $ | 73,383 | $ | 95,854 | $ | 60,662 | ||||||
| U.S. – state and local | 3,068 | 3,498 | 9,376 | |||||||||
| Other than U.S. | 4,436 | (2,170 | ) | (5,833 | ) | |||||||
| Total current | 80,887 | 97,182 | 64,205 | |||||||||
| Deferred: | ||||||||||||
| U.S. – federal | (12,665 | ) | (25,981 | ) | (58,235 | ) | ||||||
| U.S. – state and local | 222 | 3,423 | (5,167 | ) | ||||||||
| Other than U.S. | 5,212 | 5,792 | 888 | |||||||||
| Total deferred | (7,231 | ) | (16,766 | ) | (62,514 | ) | ||||||
| Provision for income taxes | $ | 73,656 | $ | 80,416 | $ | 1,691 | ||||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
U.S. federal statutory (benefit) rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State and local income taxes | 3.3 | 5.9 | 1.5 | |||||||||
Foreign rate differential | (0.4 | ) | 5.3 | (1.4 | ) | |||||||
Foreign operations | 1.7 | (1.8 | ) | (0.1 | ) | |||||||
Tax credits | — | (3.6 | ) | (2.8 | ) | |||||||
Dividends and deemed dividends from affiliates | — | (18.3 | ) | — | ||||||||
Valuation allowances | 1.6 | (16.6 | ) | 2.2 | ||||||||
Uncertain tax positions | (1.1 | ) | 2.0 | 0.2 | ||||||||
Non-deductible expenses | 0.4 | 7.7 | 0.3 | |||||||||
Manufacturing deduction | (2.9 | ) | (23.9 | ) | (1.9 | ) | ||||||
Minority interest | 0.3 | 6.4 | 1.7 | |||||||||
Other | (1.5 | ) | 7.2 | 0.6 | ||||||||
|
|
|
|
|
| |||||||
Effective tax rate | 36.4 | % | 5.3 | % | 35.3 | % | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | |||||||||
| 2016 | 2015 | 2014 | |||||||
| U.S. federal statutory (benefit) rate | 35.0 | % | 35.0 | % | 35.0 | % | |||
| State and local income taxes | 0.8 | % | 3.3 | % | 5.9 | % | |||
| Foreign rate differential | (1.5 | )% | (0.4 | )% | 5.3 | % | |||
| Foreign operations | (1.4 | )% | 1.7 | % | (1.8 | )% | |||
| Tax credits | — | % | — | % | (3.6 | )% | |||
| Dividends and deemed dividends from affiliates | — | % | — | % | (18.3 | )% | |||
| Valuation allowances | 0.3 | % | 1.6 | % | (16.6 | )% | |||
| Uncertain tax positions | (0.1 | )% | (1.1 | )% | 2.0 | % | |||
| Non-deductible expenses | 0.8 | % | 0.4 | % | 7.7 | % | |||
| Manufacturing deduction | (2.6 | )% | (2.9 | )% | (23.9 | )% | |||
| Minority interest | (1.9 | )% | 0.3 | % | 6.4 | % | |||
| Other | (0.8 | )% | (1.5 | )% | 7.2 | % | |||
| Effective tax rate | 28.6 | % | 36.4 | % | 5.3 | % | |||
Beginning Balance | Charges To Expenses | Charged To Other Accounts | Ending Balance | |||||||||||||
| (In thousands) | ||||||||||||||||
Year Ended December 31, 2015 | $ | (14,239 | ) | (3,513 | ) | — | $ | (17,752 | ) | |||||||
Year Ended December 31, 2014 | $ | (19,585 | ) | 5,346 | — | $ | (14,239 | ) | ||||||||
Year Ended December 31, 2013 | $ | (13,442 | ) | (6,143 | ) | — | $ | (19,585 | ) | |||||||
Beginning Balance | Charges To Costs and Expenses | Charged To Other Accounts | Ending Balance | |||||||||||
| (In thousands) | ||||||||||||||
| Year Ended December 31, 2016 | $ | (17,752 | ) | (760 | ) | 1,286 | $ | (17,226 | ) | |||||
| Year Ended December 31, 2015 | $ | (14,239 | ) | (3,513 | ) | — | $ | (17,752 | ) | |||||
| Year Ended December 31, 2014 | $ | (19,585 | ) | 5,346 | — | $ | (14,239 | ) | ||||||
The Company has also accrued U.S.
All of our foreign earnings are considered permanently reinvested.
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Secured Debt: | ||||||||
Credit Facility | $ | 300,000 | $ | 300,000 | ||||
Less: Amounts due within one year | 15,000 | 15,000 | ||||||
|
|
|
| |||||
Long-term debt | $ | 285,000 | $ | 285,000 | ||||
|
|
|
| |||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Secured Debt: | ||||||||
| Revolving Credit Facility | $ | — | $ | — | ||||
| Term Loan | 285,000 | 300,000 | ||||||
| Incremental Term Loans | 245,986 | — | ||||||
| Less: Amounts due within one year | 27,370 | 15,000 | ||||||
| Long-term debt, gross | 503,616 | 285,000 | ||||||
| Less: Deferred debt issuance costs | 5,892 | 6,741 | ||||||
| Long-term debt | $ | 497,724 | $ | 278,259 | ||||
Loans outstanding
As of December 31, 2016, the weighted-average interest rate on outstanding borrowings under our Amended Credit Agreement was 2.08%.
Rate.
obligations under the applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity. As of December 31, 2015,2016, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $19.3$19.7 million.
Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (In thousands) | ||||||||||||||||
Change in benefit obligation: | ||||||||||||||||
Benefit obligation at beginning of period | $ | 1,652,271 | $ | 1,487,944 | $ | 73,484 | $ | 63,893 | ||||||||
Service cost | 23,562 | 24,316 | 690 | 758 | ||||||||||||
Interest cost | 63,867 | 68,190 | 2,600 | 2,823 | ||||||||||||
Plan participants’ contributions | 84 | 88 | 629 | 769 | ||||||||||||
Curtailments | (9 | ) | 917 | — | — | |||||||||||
Amendments | 1,737 | 305 | (623 | ) | — | |||||||||||
Acquisition | — | 682 | — | — | ||||||||||||
Settlements | (8,407 | ) | (21,182 | ) | — | — | ||||||||||
Actuarial loss (gain) | (45,970 | ) | 210,040 | (8,371 | ) | 9,581 | ||||||||||
Transfers | (14,568 | ) | (20,058 | ) | (2,046 | ) | (292 | ) | ||||||||
Foreign currency exchange rate changes | (23,081 | ) | (14,391 | ) | (979 | ) | (675 | ) | ||||||||
Benefits paid | (83,581 | ) | (84,580 | ) | (2,596 | ) | (3,373 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Benefit obligation at end of period | $ | 1,565,905 | $ | 1,652,271 | $ | 62,788 | $ | 73,484 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of period | $ | 1,343,918 | $ | 1,263,325 | $ | 41,751 | $ | 43,274 | ||||||||
Actual return on plan assets | (18,819 | ) | 160,293 | 84 | (415 | ) | ||||||||||
Plan participants’ contributions | 84 | 88 | 629 | 769 | ||||||||||||
Company contributions | 12,872 | 57,011 | 1,346 | 1,496 | ||||||||||||
Settlements | (8,407 | ) | (21,182 | ) | — | — | ||||||||||
Transfers | (13,154 | ) | (17,271 | ) | — | — | ||||||||||
Foreign currency exchange rate changes | (23,099 | ) | (13,766 | ) | — | — | ||||||||||
Benefits paid | (83,581 | ) | (84,580 | ) | (2,591 | ) | (3,373 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fair value of plan assets at the end of period | 1,209,814 | 1,343,918 | 41,219 | 41,751 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Funded status | $ | (356,091 | ) | $ | (308,353 | ) | $ | (21,569 | ) | $ | (31,733 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Amounts recognized in the balance sheet consist of: | ||||||||||||||||
Accrued employee benefits | $ | (2,902 | ) | $ | (2,782 | ) | $ | (1,151 | ) | $ | (1,777 | ) | ||||
Accumulated postretirement benefit obligation | — | — | (20,418 | ) | (29,956 | ) | ||||||||||
Pension liability | (357,163 | ) | (307,255 | ) | — | — | ||||||||||
Prepaid pension | 3,974 | 1,684 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accrued benefit liability, net | $ | (356,091 | ) | $ | (308,353 | ) | $ | (21,569 | ) | $ | (31,733 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Amount recognized in accumulated comprehensive income (before taxes): |
| |||||||||||||||
Prior service cost (credit) | $ | 12,019 | $ | 12,073 | $ | (2,491 | ) | $ | (2,181 | ) | ||||||
Supplemental information: | ||||||||||||||||
Plans with accumulated benefit obligation in excess of plan assets |
| |||||||||||||||
Projected benefit obligation | $ | 1,435,815 | $ | 1,550,513 | N/A | N/A | ||||||||||
Accumulated benefit obligation | $ | 1,435,815 | $ | 1,543,269 | $ | 62,788 | $ | 73,484 | ||||||||
Fair value of plan assets | $ | 1,075,749 | $ | 1,241,981 | $ | 41,219 | $ | 41,751 | ||||||||
Plans with plan assets in excess of accumulated benefit obligation |
| |||||||||||||||
Projected benefit obligation | $ | 130,090 | $ | 101,758 | N/A | N/A | ||||||||||
Accumulated benefit obligation | $ | 130,090 | $ | 100,325 | $ | — | $ | — | ||||||||
Fair value of plan assets | $ | 134,065 | $ | 101,937 | $ | — | $ | — | ||||||||
Pension Benefits Year Ended December 31, Other Benefits Year Ended December 31, Components of net periodic benefit cost: Service cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized net actuarial loss (gain) Net periodic benefit cost (income) 2015 2014 2013 2015 2014 2013 (In thousands) $ 23,562 $ 24,316 $ 31,136 $ 690 $ 758 $ 981 63,867 68,190 64,941 2,600 2,823 2,767 (90,137 ) (85,158 ) (85,153 ) (2,348 ) (2,295 ) (2,116 ) 1,797 2,214 2,386 (254 ) (163 ) (148 ) 60,863 132,901 (114,612 ) (6,207 ) 8,607 (16,183 ) $ 59,952 $ 142,463 $ (101,302 ) $ (5,519 ) $ 9,730 $ (14,699 )
Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Change in benefit obligation: | ||||||||||||||||
| Benefit obligation at beginning of period | $ | 1,565,905 | $ | 1,652,271 | $ | 62,788 | $ | 73,484 | ||||||||
| Service cost | 7,358 | 23,562 | 575 | 690 | ||||||||||||
| Interest cost | 54,860 | 63,867 | 2,201 | 2,600 | ||||||||||||
| Plan participants' contributions | 75 | 84 | 606 | 629 | ||||||||||||
| Amendments | 1,731 | 1,737 | — | (623 | ) | |||||||||||
| Acquisition | 1,054 | — | 5,695 | — | ||||||||||||
| Settlements and curtailments | (2,606 | ) | (8,416 | ) | — | — | ||||||||||
| Actuarial loss (gain) | 28,108 | (45,970 | ) | (5,469 | ) | (8,371 | ) | |||||||||
| Transfers | — | (14,568 | ) | — | (2,046 | ) | ||||||||||
| Foreign currency exchange rate changes | 3,376 | (23,081 | ) | 174 | (979 | ) | ||||||||||
| Benefits paid | (88,275 | ) | (83,581 | ) | (3,576 | ) | (2,596 | ) | ||||||||
| Benefit obligation at end of period | $ | 1,571,586 | $ | 1,565,905 | $ | 62,994 | $ | 62,788 | ||||||||
| Change in plan assets: | ||||||||||||||||
| Fair value of plan assets at beginning of period | $ | 1,209,814 | $ | 1,343,918 | $ | 41,219 | $ | 41,751 | ||||||||
| Actual return on plan assets | 83,168 | (18,819 | ) | 3,059 | 84 | |||||||||||
| Plan participants' contributions | 75 | 84 | 606 | 629 | ||||||||||||
| Company contributions | 12,293 | 12,872 | 1,399 | 1,346 | ||||||||||||
| Settlements | (2,606 | ) | (8,407 | ) | — | — | ||||||||||
| Transfers | — | (13,154 | ) | — | — | |||||||||||
| Foreign currency exchange rate changes | 3,390 | (23,099 | ) | — | — | |||||||||||
| Benefits paid | (88,275 | ) | (83,581 | ) | (3,570 | ) | (2,591 | ) | ||||||||
| Fair value of plan assets at the end of period | 1,217,859 | 1,209,814 | 42,713 | 41,219 | ||||||||||||
| Funded status | $ | (353,727 | ) | $ | (356,091 | ) | $ | (20,281 | ) | $ | (21,569 | ) | ||||
| Amounts recognized in the balance sheet consist of: | ||||||||||||||||
| Accrued employee benefits | $ | (3,171 | ) | $ | (2,902 | ) | $ | (1,222 | ) | $ | (1,151 | ) | ||||
| Accumulated postretirement benefit obligation | — | — | (19,059 | ) | (20,418 | ) | ||||||||||
| Pension liability | (356,380 | ) | (357,163 | ) | — | — | ||||||||||
| Prepaid pension | 5,824 | 3,974 | — | — | ||||||||||||
| Accrued benefit liability, net | $ | (353,727 | ) | $ | (356,091 | ) | $ | (20,281 | ) | $ | (21,569 | ) | ||||
| Amount recognized in accumulated comprehensive income (before taxes): | ||||||||||||||||
| Prior service cost (credit) | $ | 11,782 | $ | 12,019 | $ | (2,188 | ) | $ | (2,491 | ) | ||||||
| Supplemental information: | ||||||||||||||||
| Plans with accumulated benefit obligation in excess of plan assets: | ||||||||||||||||
| Projected benefit obligation | $ | 1,438,979 | $ | 1,435,815 | N/A | N/A | ||||||||||
| Accumulated benefit obligation | $ | 1,438,503 | $ | 1,435,815 | $ | 62,994 | $ | 62,788 | ||||||||
| Fair value of plan assets | $ | 1,079,428 | $ | 1,075,749 | $ | 42,713 | $ | 41,219 | ||||||||
| Plans with plan assets in excess of accumulated benefit obligation: | ||||||||||||||||
| Projected benefit obligation | $ | 132,607 | $ | 130,090 | N/A | N/A | ||||||||||
| Accumulated benefit obligation | $ | 132,607 | $ | 130,090 | $ | — | $ | — | ||||||||
| Fair value of plan assets | $ | 138,431 | $ | 134,065 | $ | — | $ | — | ||||||||
Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||||||||||
| 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Components of net periodic benefit cost: | ||||||||||||||||||||||||
| Service cost | $ | 7,358 | $ | 23,562 | $ | 24,316 | $ | 575 | $ | 690 | $ | 758 | ||||||||||||
| Interest cost | 54,860 | 63,867 | 68,190 | 2,201 | 2,600 | 2,823 | ||||||||||||||||||
| Expected return on plan assets | (82,690 | ) | (90,137 | ) | (85,158 | ) | (2,306 | ) | (2,348 | ) | (2,295 | ) | ||||||||||||
| Amortization of prior service cost | 1,932 | 1,797 | 2,214 | (302 | ) | (254 | ) | (163 | ) | |||||||||||||||
| Recognized net actuarial loss (gain) | 27,531 | 60,863 | 132,901 | (6,221 | ) | (6,207 | ) | 8,607 | ||||||||||||||||
| Net periodic benefit cost (income) | $ | 8,991 | $ | 59,952 | $ | 142,463 | $ | (6,053 | ) | $ | (5,519 | ) | $ | 9,730 | ||||||||||
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
Cost of operations | $ | 51,588 | $ | 129,313 | $ | (107,250 | ) | |||||
Selling, general and administrative expenses | 3,066 | 11,826 | (23,383 | ) | ||||||||
Other-net | 2 | 369 | (162 | ) | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 54,656 | $ | 141,508 | $ | (130,795 | ) | |||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Cost of operations | $ | 14,729 | $ | 51,588 | $ | 129,313 | ||||||
| Selling, general and administrative expenses | 6,739 | 3,066 | 11,826 | |||||||||
| Other – net | (158 | ) | 2 | 369 | ||||||||
| Total | $ | 21,310 | $ | 54,656 | $ | 141,508 | ||||||
Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (In thousands) | ||||||||||||||||
Increase (decrease) in accumulated other comprehensive income due to actuarial losses – before taxes | $ | (1,737 | ) | $ | (1,351 | ) | $ | 623 | $ | — | ||||||
Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Increase (decrease) in accumulated other comprehensive income due to actuarial losses – before taxes | $ | (1,731 | ) | $ | (1,737 | ) | $ | — | $ | 623 | ||||||
| Pension Benefits | Other Benefits | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
Weighted average assumptions used to determine net periodic benefit obligations at December 31: | ||||||||||||||||
Discount rate | 4.27 | % | 4.00 | % | 4.24 | % | 3.91 | % | ||||||||
Rate of compensation increase | — | 2.57 | % | — | — | |||||||||||
Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31: | ||||||||||||||||
Discount rate | 4.00 | % | 4.78 | % | 3.91 | % | 4.63 | % | ||||||||
Expected return on plan assets | 7.04 | % | 7.02 | % | 5.72 | % | 5.73 | % | ||||||||
Rate of compensation increase | 2.57 | % | 2.60 | % | — | — | ||||||||||
| Pension Benefits | Other Benefits | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Weighted average assumptions used to determine net periodic benefit obligations at December 31: | ||||||||||||
| Discount rate | 4.18 | % | 4.27 | % | 4.12 | % | 4.24 | % | ||||
| Pension Benefits | Other Benefits | |||||||||||||||||
| 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||
| Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31: | ||||||||||||||||||
| Discount rate | 4.27 | % | 4.00 | % | 4.78 | % | 4.22 | % | 3.91 | % | 4.63 | % | ||||||
| Expected return on plan assets | 7.03 | % | 7.04 | % | 7.02 | % | 5.71 | % | 5.72 | % | 5.73 | % | ||||||
| Rate of compensation increase | — | 2.57 | % | 2.60 | % | — | — | — | ||||||||||
| 2015 | 2014 | |||||||
Assumed health care cost trend rates at December 31 | ||||||||
Health care cost trend rate assumed for next year | 8.50 | % | 7.50 | % | ||||
Rates to which the cost trend rate is assumed to decline (ultimate trend rate) | 4.50 | % | 4.50 | % | ||||
Year that the rate reaches ultimate trend rate | 2024 | 2021 | ||||||
| 2016 | 2015 | |||||
| Assumed health care cost trend rates at December 31: | ||||||
| Health care cost trend rate assumed for next year | 8.00 | % | 8.50 | % | ||
| Rates to which the cost trend rate is assumed to decline (ultimate trend rate) | 4.50 | % | 4.50 | % | ||
| Year that the rate reaches ultimate trend rate | 2024 | 2024 | ||||
| One-Percentage- Point Increase | One-Percentage- Point Decrease | |||||||
| (In thousands) | ||||||||
Effect on total of service and interest cost | $ | 379 | $ | (314 | ) | |||
Effect on postretirement benefit obligation | $ | 6,551 | $ | (5,506 | ) | |||
| One-Percentage- Point Increase | One-Percentage- Point Decrease | |||||||
| (In thousands) | ||||||||
| Effect on total of service and interest cost | $ | 323 | $ | (209 | ) | |||
| Effect on postretirement benefit obligation | $ | 6,317 | $ | (4,895 | ) | |||
| 2015 | 2014 | |||||||
Asset Category: | ||||||||
Fixed Income (excluding U. S. Government Securities) | 37 | % | 38 | % | ||||
Commingled and Mutual Funds | 30 | % | 33 | % | ||||
U.S. Government Securities | 14 | % | 15 | % | ||||
Partnerships with Security Holdings | 9 | % | 5 | % | ||||
Equity Securities | 6 | % | 7 | % | ||||
Real Estate | 1 | % | 1 | % | ||||
Other | 3 | % | 1 | % | ||||
|
|
|
| |||||
Total | 100 | % | 100 | % | ||||
|
|
|
| |||||
| 2016 | 2015 | |||||
| Asset Category: | ||||||
| Fixed Income (excluding U. S. Government Securities) | 35 | % | 37 | % | ||
| Commingled and Mutual Funds | 31 | % | 30 | % | ||
| U.S. Government Securities | 16 | % | 14 | % | ||
| Partnerships with Security Holdings | 7 | % | 9 | % | ||
| Equity Securities | 7 | % | 6 | % | ||
| Real Estate | 1 | % | 1 | % | ||
| Other | 3 | % | 3 | % | ||
| Total | 100 | % | 100 | % | ||
Asset Class: | |||||
Fixed Income | 55 | % | |||
Equities | 45 | % | |||
| 2015 | 2014 | |||||||
Asset Category: | ||||||||
Equity Securities and Commingled Mutual Funds | 56 | % | 59 | % | ||||
Fixed Income | 42 | % | 39 | % | ||||
Other | 2 | % | 2 | % | ||||
|
|
|
| |||||
Total | 100 | % | 100 | % | ||||
|
|
|
| |||||
| 2016 | 2015 | |||||
| Asset Category: | ||||||
| Equity Securities and Commingled Mutual Funds | 55 | % | 56 | % | ||
| Fixed Income | 43 | % | 42 | % | ||
| Other | 2 | % | 2 | % | ||
| Total | 100 | % | 100 | % | ||
Canadian Plans | ||||
| Asset Class: | ||||
| 17 | % | ||
| % | |||
| ||||
Fixed Income | 45 | % | ||
| 12/31/15 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
Pension and Other Benefits: | ||||||||||||||||
Fixed Income | $ | 472,307 | $ | — | $ | 472,307 | $ | — | ||||||||
Equities | 64,601 | 64,601 | — | — | ||||||||||||
Commingled and Mutual Funds | 421,581 | 17,991 | 403,590 | — | ||||||||||||
U.S. Government Securities | 155,543 | 151,799 | 3,744 | — | ||||||||||||
Partnerships with Security Holdings | 93,828 | — | — | 93,828 | ||||||||||||
Real Estate | 3,645 | — | — | 3,645 | ||||||||||||
Cash and Accrued Items | 39,528 | 34,133 | 5,395 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 1,251,033 | $ | 268,524 | $ | 885,036 | $ | 97,473 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2016:
| 12/31/2016 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Pension and Other Benefits: | ||||||||||||||||||||
| Fixed Income | $ | 457,167 | $ | — | $ | 397,033 | $ | — | $ | 60,134 | ||||||||||
| Equities | 70,811 | 70,811 | — | — | — | |||||||||||||||
| Commingled and Mutual Funds | 433,945 | 19,500 | — | — | 414,445 | |||||||||||||||
| U.S. Government Securities | 178,572 | 174,492 | 4,080 | — | — | |||||||||||||||
| Partnerships with Security Holdings | 82,502 | — | — | — | 82,502 | |||||||||||||||
| Real Estate | 1,702 | — | — | — | 1,702 | |||||||||||||||
| Cash and Accrued Items | 35,873 | 32,520 | 3,353 | — | — | |||||||||||||||
| Total Assets | $ | 1,260,572 | $ | 297,323 | $ | 404,466 | $ | — | $ | 558,783 | ||||||||||
| 12/31/14 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
Pension and Other Benefits: | ||||||||||||||||
Fixed Income | $ | 521,334 | $ | — | $ | 521,334 | $ | — | ||||||||
Equities | 78,362 | 78,362 | — | — | ||||||||||||
Commingled and Mutual Funds | 504,856 | 20,187 | 484,669 | — | ||||||||||||
U.S. Government Securities | 179,560 | 171,084 | 8,476 | — | ||||||||||||
Partnerships with Security Holdings | 61,594 | — | — | 61,594 | ||||||||||||
Real Estate | 2,689 | — | — | 2,689 | ||||||||||||
Cash and Accrued Items | 37,274 | 32,370 | 4,904 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 1,385,669 | $ | 302,003 | $ | 1,019,383 | $ | 64,283 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The following is a summary2015:
| 12/31/2015 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Pension and Other Benefits: | ||||||||||||||||||||
| Fixed Income | $ | 472,307 | $ | — | $ | 416,059 | $ | — | $ | 56,248 | ||||||||||
| Equities | 64,601 | 64,601 | — | — | — | |||||||||||||||
| Commingled and Mutual Funds | 421,581 | 17,991 | — | — | 403,590 | |||||||||||||||
| U.S. Government Securities | 155,543 | 151,799 | 3,744 | — | — | |||||||||||||||
| Partnerships with Security Holdings | 93,828 | — | — | — | 93,828 | |||||||||||||||
| Real Estate | 3,645 | — | — | — | 3,645 | |||||||||||||||
| Cash and Accrued Items | 39,528 | 34,133 | 5,395 | — | — | |||||||||||||||
| Total Assets | $ | 1,251,033 | $ | 268,524 | $ | 425,198 | $ | — | $ | 557,311 | ||||||||||
| Year ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Balance at beginning of period | $ | 64,283 | $ | 68,228 | ||||
Issuances and acquisitions | 2,950 | 5,753 | ||||||
Dispositions | (24,202 | ) | (19,216 | ) | ||||
Realized gain | 17,721 | 13,838 | ||||||
Unrealized loss | (11,002 | ) | (4,320 | ) | ||||
Transfer of Level 3 assets in conjunction with the spin-off | 47,723 | — | ||||||
|
|
|
| |||||
Balance at end of period | $ | 97,473 | $ | 64,283 | ||||
|
|
|
| |||||
Our Level 3 instruments include assets with no market priceunderlying investments but rather calculations of net asset values per share or its equivalent.may not be redeemable at that fair value. When appropriate, we adjust these net asset values for contributions and distributions, if any, made during the period beginning on the latest net asset valueNAV valuation date and ending on our measurement date. We also consider available market data, relevant index returns, preliminary estimates from our investees and other data obtained through research and consultation with third partythird-party advisors in determining the fair value of our Level 3 instruments.
these investments.
| Domestic Plans | Foreign Plans | |||||||||||||||
| Pension Benefits | Other Benefits | Pension Benefits | Other Benefits | |||||||||||||
| (In thousands) | ||||||||||||||||
Expected employer contributions to trusts of defined benefit plans: | ||||||||||||||||
2016 | $ | 1,780 | $ | 2,045 | $ | 6,399 | N/A | |||||||||
Expected benefit payments: | ||||||||||||||||
2016 | $ | 84,260 | $ | 2,848 | $ | 6,035 | $ | 277 | ||||||||
2017 | 86,562 | 3,062 | 6,174 | 288 | ||||||||||||
2018 | 88,723 | 3,349 | 6,383 | 306 | ||||||||||||
2019 | 90,479 | 3,650 | 6,541 | 304 | ||||||||||||
2020 | 91,837 | 3,865 | 6,706 | 311 | ||||||||||||
2021-2025 | 468,785 | 20,228 | 35,917 | 1,683 | ||||||||||||
| Domestic Plans | Foreign Plans | |||||||||||||||
Pension Benefits | Other Benefits | Pension Benefits | Other Benefits | |||||||||||||
| (In thousands) | ||||||||||||||||
| Expected employer contributions to trusts of defined benefit plans: | ||||||||||||||||
| 2017 | $ | 14,300 | $ | 392 | $ | 7,033 | N/A | |||||||||
| Expected benefit payments: | ||||||||||||||||
| 2017 | $ | 83,807 | $ | 2,809 | $ | 6,290 | $ | 364 | ||||||||
| 2018 | 86,293 | 3,039 | 6,523 | 383 | ||||||||||||
| 2019 | 88,128 | 3,301 | 6,672 | 360 | ||||||||||||
| 2020 | 89,693 | 3,482 | 6,838 | 366 | ||||||||||||
| 2021 | 90,803 | 3,617 | 6,991 | 386 | ||||||||||||
| 2022-2026 | 459,502 | 18,469 | 37,164 | 2,076 | ||||||||||||
We established the 2010 Long-Term Incentive Plan of BWX Technologies, Inc. (the “Plan”), and amended and restated the Plan July 1, 2015.
Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
Risk-free interest rate | 1.33 | % | 0.97 | % | 0.56 | % | ||||||
Expected volatility | .29 | .30 | .33 | |||||||||
Expected life of the option in years | 4.04 | 3.76 | 3.93 | |||||||||
Expected dividend yield | 1.27 | % | 1.22 | % | 1.19 | % | ||||||
| Year Ended December 31, | ||||||
| 2015 | 2014 | |||||
| Risk-free interest rate | 1.33 | % | 0.97 | % | ||
| Expected volatility | .29 | .30 | ||||
| Expected life of the option in years | 4.04 | 3.76 | ||||
| Expected dividend yield | 1.27 | % | 1.22 | % | ||
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | |||||||||||||
Outstanding at beginning of period | 2,547 | $ | 29.15 | |||||||||||||
Granted | 1,470 | 30.46 | ||||||||||||||
Exercised | (346 | ) | 21.17 | |||||||||||||
Cancelled/expired/forfeited | (290 | ) | 26.43 | |||||||||||||
Impact of the spin-off | (683 | ) | N/A | |||||||||||||
|
|
|
|
|
| |||||||||||
Outstanding at end of period(1) | 2,698 | $ | 23.01 | 5.3 Years | $ | 23.7 | ||||||||||
|
|
|
|
|
| |||||||||||
Exercisable at end of period | 1,398 | $ | 22.42 | 3.7 Years | $ | 13.1 | ||||||||||
|
|
|
|
|
| |||||||||||
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | ||||||||||
| Outstanding at beginning of period | 2,698 | $ | 23.01 | ||||||||||
| Granted | — | N/A | |||||||||||
| Exercised | (913 | ) | 21.90 | ||||||||||
| Cancelled/expired/forfeited | (62 | ) | 23.95 | ||||||||||
| Outstanding at end of period | 1,723 | $ | 23.56 | 5.0 Years | $ | 27.8 | |||||||
| Exercisable at end of period | 1,130 | $ | 23.25 | 4.0 Years | $ | 18.6 | |||||||
| Number of Shares | Weighted- Average Grant Date Fair Value | |||||||
Nonvested at beginning of period | 535 | $ | 30.64 | |||||
Adjustment to assumed vesting percentage | 427 | 26.13 | ||||||
Granted | — | N/A | ||||||
Vested | — | N/A | ||||||
Cancelled/forfeited | (348 | ) | 26.34 | |||||
Impact of the spin-off | 4 | N/A | ||||||
Transfer to restricted stock units at spin-off | (618 | ) | N/A | |||||
|
|
|
| |||||
Nonvested at end of period | — | N/A | ||||||
|
|
|
| |||||
As
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||
| Nonvested at beginning of period | — | N/A | |||||
| Adjustment to assumed vesting percentage | 139 | $ | 32.88 | ||||
| Granted | 235 | 32.78 | |||||
| Vested | — | N/A | |||||
| Cancelled/forfeited | (24 | ) | 31.90 | ||||
| Nonvested at end of period | 350 | $ | 32.88 | ||||
165%.
| Number of Shares | Weighted- Average Grant Date Fair Value | |||||||
Nonvested at beginning of period | 376 | $ | 29.33 | |||||
Granted | 640 | 30.04 | ||||||
Vested | (453 | ) | 24.38 | |||||
Cancelled/forfeited | (99 | ) | 25.96 | |||||
Impact of the spin-off | (205 | ) | N/A | |||||
Transfer from performance shares at spin-off | 618 | N/A | ||||||
|
|
|
| |||||
Nonvested at end of period(1) | 877 | $ | 21.34 | |||||
|
|
|
| |||||
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||
| Nonvested at beginning of period | 877 | $ | 21.34 | ||||
| Granted | 191 | 32.91 | |||||
| Vested | (416 | ) | 20.61 | ||||
| Cancelled/forfeited | (57 | ) | 25.08 | ||||
| Nonvested at end of period | 595 | $ | 26.07 | ||||
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||
| Nonvested at beginning of period | 245 | $ | 20.27 | ||||
| Granted | — | N/A | |||||
| Vested | (245 | ) | 20.27 | ||||
| Cancelled/forfeited | — | N/A | |||||
| Nonvested at end of period | — | N/A | |||||
Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
Risk-free interest rate | 1.05 | % | 1.12 | % | 0.77 | % | ||||||
Expected volatility | .22 | .25 | 0.30 | |||||||||
Expected life of the option in years | 2.21 | 3.21 | 3.21 | |||||||||
Expected dividend yield | 0.76 | % | 1.42 | % | 1.19 | % | ||||||
| Year Ended December 31, | ||||||
| 2015 | 2014 | |||||
| Risk-free interest rate | 0.99 | % | 0.61 | % | ||
| Expected volatility | .20 | .23 | ||||
| Expected life of the option in years | 1.21 | 0.21 | ||||
| Expected dividend yield | 0.94 | % | 0.94 | % | ||
| Number of Units | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | |||||||||||||
Outstanding at beginning of period | 103 | $ | 28.72 | |||||||||||||
Granted | 41 | 30.92 | ||||||||||||||
Exercised | (32 | ) | 21.95 | |||||||||||||
Cancelled/expired/forfeited | — | N/A | ||||||||||||||
Impact of the spin-off | 7 | N/A | ||||||||||||||
|
|
|
|
|
| |||||||||||
Outstanding at end of period(1) | 119 | $ | 23.04 | 6.7 Years | $ | 1.0 | ||||||||||
|
|
|
|
|
| |||||||||||
Exercisable at end of period | 32 | $ | 21.37 | 4.3 Years | $ | 0.3 | ||||||||||
|
|
|
|
|
| |||||||||||
Number of Units | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | ||||||||||
| Outstanding at beginning of period | 119 | $ | 23.04 | ||||||||||
| Granted | — | N/A | |||||||||||
| Exercised | (16 | ) | 22.18 | ||||||||||
| Cancelled/expired/forfeited | (4 | ) | 23.83 | ||||||||||
| Outstanding at end of period | 99 | $ | 23.14 | 5.8 Years | $ | 1.6 | |||||||
| Exercisable at end of period | 57 | $ | 22.55 | 4.8 Years | $ | 1.0 | |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
Cash-Settled Restricted Stock Units
Nonvested restricted stock
Number of Units | Weighted- Average Fair Value | ||||||
| Nonvested at beginning of period | — | ||||||
| Adjustment to assumed vesting percentage | 4 | ||||||
| Granted | 5 | ||||||
| Vested | — | ||||||
| Cancelled/forfeited | — | ||||||
| Nonvested at end of period | 9 | $ | 39.70 | ||||
| Number of Units | Weighted- Average Fair Value | |||||||
Nonvested at beginning of period | 13 | |||||||
Granted | 15 | |||||||
Vested | (15 | ) | ||||||
Cancelled/forfeited | — | |||||||
Impact of the spin-off | 5 | |||||||
Transfer from cash performance units at spin-off | 34 | |||||||
|
|
|
| |||||
Nonvested at end of period | 52 | $ | 31.77 | |||||
|
|
|
| |||||
the table above assumes weighted-average vesting of 165%.
Thrift Plan
On August 13, 2010, 5,000,000
Duringchanges during the year ended December 31, 2015, we issued 149,753 shares2016 were as follows (unit data in thousands):
Number of Units | Weighted- Average Fair Value | ||||||
| Nonvested at beginning of period | 52 | ||||||
| Granted | 3 | ||||||
| Vested | (20 | ) | |||||
| Cancelled/forfeited | (3 | ) | |||||
| Nonvested at end of period | 32 | $ | 39.70 | ||||
Litigation” Litigation"). Those facilities previously were owned by Nuclear Materials and Equipment Company, a former subsidiary of ARCO (“NUMEC”("NUMEC"), which was acquired by B&W PGG. The plaintiffs in the Apollo and Parks Litigation seek compensatory and punitive damages, and in November 2014 delivered a demand of $125.0 million for the settlement of all then-filed actions. AllWhile we consider the likelihood of the suits, except forplaintiffs' recovery to be remote, solely on the two most recent filings, have been consolidated for non-dispositive pre-trial matters. Fact discovery inbasis of this demand we estimate the Apollorange of a possible loss at between $0.0 million and Parks Litigation is now closed for all claims other than the two most recent lawsuits filed in June and October 2015, but no trial date has been set.$125.0 million. In connection with the spin-off, we agreed to indemnify B&W PGG and its affiliates for any losses arising from the Apollo and Parks Litigation pursuant to the Master Separation Agreement.
In
The BWXT Parties and ARCO were defendants in a prior litigation filed in 1994 relating to the operation of the Apollo Borough and Parks Township facilities in the matter of Donald F. Hall and Mary Ann Hall, et al., v. Babcock & Wilcox Company, et al. (the “Hall Litigation”). In 1998, the BWXT Parties settled all then-pending and future punitive damage claims in the Hall Litigation for $8.0 million and sought reimbursement from third parties, including its insurers, American Nuclear Insurers and Mutual Atomic Energy Liability Underwriters (“ANI”). In 2008, ARCO settled the Hall Litigation with the plaintiffs for $27.5 million. The BWXT Parties then settled the Hall Litigation in 2009 for $52.5 million, settling approximately 250 personal injury and wrongful death claims, as well as approximately 125 property damage claims, alleging damages as a result of alleged releases involving the facilities. ARCO and the BWXT Parties retained their insurance rights against ANI in their respective settlements; however, under a related settlement regarding ARCO’s indemnification of B&W PGG relating to the two facilities, ARCO assigned to BWXT 58.3% of the total of all ARCO’s proceeds/amounts recovered against ANI on account of the Hall Litigation.
The BWXT Parties sought recovery from ANI for amounts paid by the BWXT Parties to settle the Hall Litigation, along with unreimbursed attorney fees, allocated amounts assigned by ARCO to the BWXT Parties, and applicable interest based upon ANI’s breach of contract and bad faith conduct in the matter of The Babcock & Wilcox Company et al. v. American Nuclear Insurers, et al. (the “ANI Litigation”). ARCO also sought recovery against ANI in the ANI Litigation, which has been pending before the Court of Common Pleas of Allegheny County, Pennsylvania.
In September 2011, a jury returned a verdict in the ANI Litigation, finding that the BWXT Parties’ settlement of the Hall Litigation for $52.5 million and ARCO’s settlement for $27.5 million were fair and reasonable. Following the verdict, in February 2012, the BWXT Parties, ARCO and ANI entered into an
agreement (the “February 2012 Agreement”) in which the parties agreed to the dismissal with prejudice of all remaining claims pending in the ANI Litigation, excluding the BWXT Parties’ and ARCO’s claims seeking reimbursement from ANI for the $52.5 million and $27.5 million settlements (plus interest) (the “Settlement Claims”). By agreement, ANI also waived: (1) any and all rights to appeal the September 2011 jury verdict on the basis of the trial court’s evidentiary rulings; and (2) any defenses and arguments of any kind except ANI’s position that it was not required to reimburse the BWXT Parties’ and ARCO for their settlements under the provisions of the ANI policies. In February 2012, the Court granted the parties’ proposed order implementing the February 2012 Agreement and entered final judgment in favor of the BWXT Parties and ARCO on the Settlement Claims (the “February 2012 Judgment”). As part of the February 2012 Judgment, the Court ruled that the B&W Parties and ARCO are entitled to pre-judgment interest on their $52.5 million and $27.5 million settlements, in the amounts of approximately $8.8 million and $6.2 million, respectively. In addition, post-verdict interest from the date of the jury verdict was awarded at 6%. In March 2012, ANI filed a notice of appeal as to the final judgment and a supersedeas appeal bond in the amount of 120% of the total final judgment amount. The parties filed their respective briefs with the Superior Court and oral arguments were held October 31, 2012.
In July 2013, the Superior Court reversed the judgment of the trial court with instructions to reconsider the issue of the Settlement Claims under a different standard. In August 2013, B&W and ARCO filed a request for appeal of the Superior Court’s decision to the Pennsylvania Supreme Court. On January 24, 2014, the Supreme Court of Pennsylvania granted the request for appeal. The parties’ briefs on the appeal have been filed and oral arguments were held October 7, 2014.
On July 21, 2015, the Supreme Court of Pennsylvania issued its ruling by reversing the decision of the Superior Court and reinstating the trial court’s February 2012 Judgment in favor of the BWXT Parties and ARCO. Under the February 2012 Agreement, the parties agreed that there would be no recourse to the United States Supreme Court and, following the exhaustion of its other appeal remedies, ANI is required to pay the BWXT Parties and ARCO all amounts in satisfaction of the February 2012 Judgment, plus any pre- and post-judgment interest and $5 million in liquidated contingency. The Pennsylvania Supreme Court denied ANI’s application for reargument in September 2015, which exhausted ANI’s appeal remedies under the February 2012 Agreement. On September 22, 2015, we received a $94.8 million payment, inclusive of pre-and post-judgment interest totaling $29.1 million, in satisfaction of our portion of the February 2012 Judgment. During the three and nine months ended September 30, 2015, we recognized $65.7 million as a reduction of total cost and expenses and $29.1 million as interest income in our consolidated statements of income.
New Mexico Environment Department
One of our subsidiaries owns a 30% interest in a joint venture, Nuclear Waste Partnership, LLC (“NWP”), which is executing a prime contract with the DOE for the management and operation of the DOE’s Waste Isolation Pilot Plant in Carlsbad, New Mexico (the “WIPP”). Another of our subsidiaries owns a 13% interest in a separate joint venture, Los Alamos National Security, LLC (“LANS”), which is executing a prime contract with the DOE/NNSA for the management and operation of the DOE’s Los Alamos National Laboratory (“Los Alamos”). On December 6, 2014, the DOE and each of its contractors, NWP and LANS, received Administrative Compliance Orders from the New Mexico Environment Department (“NMED”) alleging violations of New Mexico environmental laws and regulations at both WIPP and Los Alamos associated with radiological incidents that occurred at the WIPP in February 2014 (the “WIPP Event”). The Administrative Compliance Orders assessed civil penalties of approximately $17.75 million on the DOE and NWP and approximately $36.6 million on the DOE and LANS for the alleged violations at both the WIPP and Los Alamos. On April 30, 2015 the DOE, NWP, LANS and NMED reached a settlement framework in lieu of fines related to NMED’s alleged violations at WIPP and Los Alamos. On June 6, 2015, the DOE/NNSA and LANS executed an NNSA Fee Waiver Agreement resolving all financial liability issues concerning the WIPP Event. In return for a broad release of liability from NNSA for the WIPP Event, LANS agreed to repay NNSA certain provisional fee payments within five business days of the execution of the final settlement agreement between the DOE, NMED, LANS and NWP, which was signed on January 22, 2016.
NMED waived all fines and penalties against NWP and LANS related to the WIPP Event as part of the final settlement agreement. The return of provisional fee payments by LANS to NNSA under the Fee Waiver Agreement did not require any corresponding payments to LANS from NWP.
Bechtel has. BWXT asserted, among other things, that due to the alleged breaches by BWXT, in accordance with the terms of the LLC Agreement, Bechtel is entitled to 150% of Bechtel’s approximately $80 million investment in the program. BWXT has asserted that as a result of “significant adverse changes” that have developed since the inception of GmP, BWXT hasit had the right under the LLC Agreement to terminate the mPower program.program and Bechtel iswas therefore not entitled to any return of its investment. However, rather than terminate the program, BWXT would prefer to continue its investment for some period of time in an effort to further mitigate the adverse changes that have occurred and to continue advancing the research and development of the mPower small modular reactor technology.
In October 2015, BWXT and Bechtel agreed to a 60-day period of negotiations for the purpose of negotiating a resolution of these matters, which was subsequently extended. Negotiations are still ongoing as
fundraising period, BWXT believesplans to continue advancing the claims assertedmPower design through in-kind engineering services within our previously announced planned mPower project spending of no more than $10.0 million per year.
mPower program. In addition, provisions of the Framework Agreement resulted in the deconsolidation of GmP and the associated recognition of an approximate $13.6 million gain upon deconsolidation.
On December 17, 2014, an unfavorable jury verdict was delivered against The Babcock & Wilcox Company, Babcock & Wilcox Power Generation Group, Inc. Babcock & Wilcox Nuclear Energy, Inc. and Babcock & Wilcox Canada Ltd. in a case entitled AREVA NP, INC. f/k/a Framatome ANP, Inc. v. The Babcock & Wilcox Company, et. al. in the amount of approximately $16 million. We strongly disagree with the
verdict and believe the plaintiff’s claims are without merit. On March 5, 2015 the trial court denied our post-trial motion requesting that the verdict be set aside or a new trial granted. In November 2015, the Virginia Supreme Court granted the BWXT parties’ petition for appeal. Final briefs were filed on February 8, 2016 and oral arguments are scheduled to be held on March 2, 2016.
The case was filed August 26, 2011 in the Circuit Court for the City of Lynchburg, Commonwealth of Virginia and alleged that the BWXT parties to the suit owed royalties on certain commercial nuclear contracts performed by the Company and certain of its subsidiaries since 2004. As a result of the jury’s decision and notwithstanding our evaluation of post-trial remedies, we made provisions in our financial statements in the fourth quarter of 2014 for the full amount of the jury award.
Additionally, due
We are also involved in the design and manufacture of commercial nuclear fuel at two licensed facilities in Canada that are also subject to continuing reviews by governmental agencies in Canada, including the CNSC.
of its service life. We provided financial assurance aggregating $52.3$56.2 million and $44.2$52.3 million during the years ended December 31, 20152016 and 2014,2015, respectively, with existing letters of credit for the ultimate decommissioning of these licensed facilities. These two facilities have provisions in their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations are covered by the DOE, including the costs to complete the decommissioning projects underway at the
Fiscal Year Ending December 31, | Amount | |||
2016 | $ | 3,113 | ||
2017 | $ | 2,927 | ||
2018 | $ | 2,486 | ||
2019 | $ | 1,626 | ||
2020 | $ | — | ||
Thereafter | $ | — | ||
| Fiscal Year Ending December 31, | Amount | |||
| 2017 | $ | 3,746 | ||
| 2018 | $ | 2,574 | ||
| 2019 | $ | 2,474 | ||
| 2020 | $ | 777 | ||
| 2021 | $ | 552 | ||
| Thereafter | $ | — | ||
million.
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| (In thousands) | ||||||||||||||||
| Trading securities | ||||||||||||||||
| Corporate bonds | $ | 2,708 | $ | — | $ | (406 | ) | $ | 2,302 | |||||||
| Equities | 39 | — | (1 | ) | 38 | |||||||||||
| Available-for-sale securities | ||||||||||||||||
| U.S. Government and agency securities | 8,405 | — | (1 | ) | 8,404 | |||||||||||
| Corporate bonds | 3,313 | — | (1 | ) | 3,312 | |||||||||||
| Equities | 948 | 3,634 | — | 4,582 | ||||||||||||
| Mutual funds | 4,156 | 27 | — | 4,183 | ||||||||||||
| Asset-backed securities and collateralized mortgage obligations | 258 | — | (49 | ) | 209 | |||||||||||
| Commercial paper | 500 | — | — | 500 | ||||||||||||
| Total | $ | 20,327 | $ | 3,661 | $ | (458 | ) | $ | 23,530 | |||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| (In thousands) | ||||||||||||||||
Trading securities | ||||||||||||||||
Corporate bonds | $ | 2,628 | $ | — | $ | (1,925 | ) | $ | 703 | |||||||
Equities | 720 | 171 | — | 891 | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Equities | $ | 948 | $ | — | $ | — | $ | 948 | ||||||||
Mutual funds | 3,992 | — | (23 | ) | 3,969 | |||||||||||
Asset-backed securities and collateralized mortgage obligations | 314 | — | (52 | ) | 262 | |||||||||||
Commercial paper | 2,773 | — | — | 2,773 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 11,375 | $ | 171 | $ | (2,000 | ) | $ | 9,546 | |||||||
|
|
|
|
|
|
|
| |||||||||
The following is a summary of our investments at December 31, 2014:
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| (In thousands) | ||||||||||||||||
Trading securities | ||||||||||||||||
Corporate bonds | $ | 2,628 | $ | — | $ | (189 | ) | $ | 2,439 | |||||||
Available-for-sale securities | ||||||||||||||||
Equities | $ | 3,088 | $ | — | $ | — | $ | 3,088 | ||||||||
Mutual funds | 3,906 | 293 | — | 4,199 | ||||||||||||
Asset-backed securities and collateralized mortgage obligations | 370 | — | (51 | ) | 319 | |||||||||||
Commercial paper | 2,398 | — | — | 2,398 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 12,390 | $ | 293 | $ | (240 | ) | $ | 12,443 | |||||||
|
|
|
|
|
|
|
| |||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
| (In thousands) | ||||||||||||||||
| Trading securities | ||||||||||||||||
| Corporate bonds | $ | 2,628 | $ | — | $ | (1,925 | ) | $ | 703 | |||||||
| Equities | 720 | 171 | — | 891 | ||||||||||||
| Available-for-sale securities | ||||||||||||||||
| Equities | 948 | — | — | 948 | ||||||||||||
| Mutual funds | 3,992 | — | (23 | ) | 3,969 | |||||||||||
| Asset-backed securities and collateralized mortgage obligations | 314 | — | (52 | ) | 262 | |||||||||||
| Commercial paper | 2,773 | — | — | 2,773 | ||||||||||||
| Total | $ | 11,375 | $ | 171 | $ | (2,000 | ) | $ | 9,546 | |||||||
| Proceeds | Gross Realized Gains | Gross Realized Losses | ||||||||||
| (In thousands) | ||||||||||||
Year Ended December 31, 2015 | $ | 6,456 | $ | 343 | $ | — | ||||||
Year Ended December 31, 2014 | $ | 32,089 | $ | 172 | $ | — | ||||||
Year Ended December 31, 2013 | $ | 168,879 | $ | 1,127 | $ | — | ||||||
| Proceeds | Gross Realized Gains | Gross Realized Losses | ||||||||||
| (In thousands) | ||||||||||||
| Year Ended December 31, 2016 | $ | 9,261 | $ | 337 | $ | 6 | ||||||
| Year Ended December 31, 2015 | $ | 6,456 | $ | 343 | $ | — | ||||||
| Year Ended December 31, 2014 | $ | 32,089 | $ | 172 | $ | — | ||||||
Asset and Liability Derivatives December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Derivatives Designated as Hedges: | ||||||||
Foreign Exchange Contracts: | ||||||||
Location | ||||||||
Accounts receivable-other | $ | 132 | $ | 469 | ||||
Other assets | $ | 174 | $ | — | ||||
Accounts payable | $ | 3,790 | $ | 2,655 | ||||
Other liabilities | $ | 432 | $ | 743 | ||||
2015:
Asset and Liability Derivatives December 31, | ||||||||
| 2016 | 2015 | |||||||
| (In thousands) | ||||||||
| Derivatives Designated as Hedges: | ||||||||
| Foreign Exchange Contracts: | ||||||||
| Location | ||||||||
| Accounts receivable – other | $ | 70 | $ | 132 | ||||
| Other assets | $ | — | $ | 174 | ||||
| Accounts payable | $ | 462 | $ | 3,790 | ||||
| Other liabilities | $ | — | $ | 432 | ||||
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
Derivatives Designated as Hedges: | ||||||||
Cash Flow Hedges: | ||||||||
Foreign Exchange Contracts: | ||||||||
Amount of loss recognized in other comprehensive income | $ | (6,550 | ) | $ | (3,125 | ) | ||
Gain (loss) reclassified from accumulated other comprehensive income into earnings: effective portion | ||||||||
Location | ||||||||
Revenues | $ | 455 | $ | 683 | ||||
Cost of operations | $ | (6,259 | ) | $ | (2,798 | ) | ||
| December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
| Derivatives Designated as Hedges: | ||||||||||||
| Cash Flow Hedges: | ||||||||||||
| Foreign Exchange Contracts: | ||||||||||||
| Amount of gain (loss) recognized in other comprehensive income | $ | 807 | $ | (6,550 | ) | $ | (3,125 | ) | ||||
| Gain (loss) reclassified from accumulated other comprehensive income into earnings: effective portion | ||||||||||||
| Location | ||||||||||||
| Revenues | $ | (30 | ) | $ | 455 | $ | 683 | |||||
| Cost of operations | $ | 366 | $ | (6,259 | ) | $ | (2,798 | ) | ||||
Fair Value Measurements
2016:
| 12/31/2016 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Trading securities | ||||||||||||||||
| Corporate bonds | $ | 2,302 | $ | 2,302 | $ | — | $ | — | ||||||||
| Equities | 38 | 38 | — | — | ||||||||||||
| Available-for-sale securities | ||||||||||||||||
| U.S. Government and agency securities | 8,404 | 8,404 | — | — | ||||||||||||
| Corporate bonds | 3,312 | — | 3,312 | — | ||||||||||||
| Equities | 4,582 | — | 4,582 | — | ||||||||||||
| Mutual funds | 4,183 | — | 4,183 | — | ||||||||||||
| Asset-backed securities and collateralized mortgage obligations | 209 | — | 209 | — | ||||||||||||
| Commercial paper | 500 | — | 500 | — | ||||||||||||
| Total | $ | 23,530 | $ | 10,744 | $ | 12,786 | $ | — | ||||||||
| 12/31/15 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
Trading securities | ||||||||||||||||
Corporate bonds | $ | 703 | $ | 703 | $ | — | $ | — | ||||||||
Equities | 891 | 891 | — | — | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Equities | $ | 948 | $ | — | $ | 948 | $ | — | ||||||||
Mutual funds | 3,969 | — | 3,969 | — | ||||||||||||
Asset-backed securities and collateralized mortgage obligations | 262 | — | 262 | — | ||||||||||||
Commercial paper | 2,773 | — | 2,773 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 9,546 | $ | 1,594 | $ | 7,952 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
The following is a summary of our investments measured at fair value at December 31, 2014:
| 12/31/14 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
Trading securities | ||||||||||||||||
Corporate bonds | $ | 2,439 | $ | 2,439 | $ | — | $ | — | ||||||||
Available-for-sale securities | ||||||||||||||||
Equities | $ | 3,088 | $ | — | $ | 3,088 | $ | — | ||||||||
Mutual funds | 4,199 | — | 4,199 | — | ||||||||||||
Asset-backed securities and collateralized mortgage obligations | 319 | — | 319 | — | ||||||||||||
Commercial paper | 2,398 | — | 2,398 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 12,443 | $ | 2,439 | $ | 10,004 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
| 12/31/2015 | Level 1 | Level 2 | Level 3 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Trading securities | ||||||||||||||||
| Corporate bonds | $ | 703 | $ | 703 | $ | — | $ | — | ||||||||
| Equities | 891 | 891 | — | — | ||||||||||||
| Available-for-sale securities | ||||||||||||||||
| Equities | 948 | — | 948 | — | ||||||||||||
| Mutual funds | 3,969 | — | 3,969 | — | ||||||||||||
| Asset-backed securities and collateralized mortgage obligations | 262 | — | 262 | — | ||||||||||||
| Commercial paper | 2,773 | — | 2,773 | — | ||||||||||||
| Total | $ | 9,546 | $ | 1,594 | $ | 7,952 | $ | — | ||||||||
Long-
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
REVENUES (1): | ||||||||||||
Nuclear Operations | $ | 1,179,896 | $ | 1,220,952 | $ | 1,167,683 | ||||||
Technical Services | 83,807 | 84,834 | 104,254 | |||||||||
Nuclear Energy | 155,032 | 154,721 | 283,857 | |||||||||
Other | — | 278 | 1,523 | |||||||||
Adjustments and Eliminations | (3,206 | ) | (10,175 | ) | (10,654 | ) | ||||||
|
|
|
|
|
| |||||||
| $ | 1,415,529 | $ | 1,450,610 | $ | 1,546,663 | |||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands) | ||||||||||||
REVENUES (1): | ||||||||||||
| Nuclear Operations | $ | 1,269,272 | $ | 1,179,896 | $ | 1,220,952 | ||||||
| Technical Services | 97,219 | 83,807 | 84,834 | |||||||||
| Nuclear Energy | 189,159 | 155,032 | 154,721 | |||||||||
| Other | — | — | 278 | |||||||||
| Adjustments and Eliminations | (5,077 | ) | (3,206 | ) | (10,175 | ) | ||||||
| $ | 1,550,573 | $ | 1,415,529 | $ | 1,450,610 | |||||||
| (1) | Segment revenues are net of the following intersegment transfers and other adjustments: |
Nuclear Operations Transfers | $ | (3,087 | ) | $ | (9,761 | ) | $ | (6,772 | ) | |||
Technical Services Transfers | (24 | ) | (57 | ) | (3,432 | ) | ||||||
Nuclear Energy Transfers | (95 | ) | (357 | ) | (450 | ) | ||||||
|
|
|
|
|
| |||||||
| $ | (3,206 | ) | $ | (10,175 | ) | $ | (10,654 | ) | ||||
|
|
|
|
|
|
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
OPERATING INCOME: | ||||||||||||
Nuclear Operations | $ | 257,400 | $ | 270,536 | $ | 237,855 | ||||||
Technical Services | 18,089 | 35,203 | 58,234 | |||||||||
Nuclear Energy | 1,669 | (23,211 | ) | 8,641 | ||||||||
Other | (13,949 | ) | (68,946 | ) | (81,304 | ) | ||||||
|
|
|
|
|
| |||||||
| $ | 263,209 | $ | 213,582 | $ | 223,426 | |||||||
|
|
|
|
|
| |||||||
Unallocated Corporate(1) | (25,747 | ) | (26,249 | ) | (25,892 | ) | ||||||
Income Related to Litigation Proceeds | 65,728 | — | — | |||||||||
Special Charges for Restructuring Activities | (16,608 | ) | (20,908 | ) | (21,256 | ) | ||||||
Cost to spin-off Power Generation business | (25,987 | ) | (161 | ) | — | |||||||
Mark to Market Adjustment | (54,654 | ) | (141,139 | ) | 130,633 | |||||||
|
|
|
|
|
| |||||||
Total Operating Income(2) | $ | 205,941 | $ | 25,125 | $ | 306,911 | ||||||
|
|
|
|
|
| |||||||
Other Income (Expense): | ||||||||||||
Interest income | 30,331 | 233 | 215 | |||||||||
Interest expense | (10,181 | ) | (7,087 | ) | (2,653 | ) | ||||||
Other – net | (5,026 | ) | 13,864 | (18,961 | ) | |||||||
|
|
|
|
|
| |||||||
Total Other Income (Expense) | 15,124 | 7,010 | (21,399 | ) | ||||||||
|
|
|
|
|
| |||||||
Income before Provision for Income Taxes | $ | 221,065 | $ | 32,135 | $ | 285,512 | ||||||
|
|
|
|
|
| |||||||
| Nuclear Operations Transfers | $ | (208 | ) | $ | (3,087 | ) | $ | (9,761 | ) | |||
| Technical Services Transfers | (4,819 | ) | (24 | ) | (57 | ) | ||||||
| Nuclear Energy Transfers | (50 | ) | (95 | ) | (357 | ) | ||||||
| $ | (5,077 | ) | $ | (3,206 | ) | $ | (10,175 | ) | ||||
| OPERATING INCOME: | ||||||||||||
| Nuclear Operations | $ | 268,503 | $ | 257,400 | $ | 270,536 | ||||||
| Technical Services | 16,495 | 18,089 | 35,203 | |||||||||
| Nuclear Energy | 38,484 | 1,669 | (23,211 | ) | ||||||||
| Other | (6,398 | ) | (13,949 | ) | (68,946 | ) | ||||||
| $ | 317,084 | $ | 263,209 | $ | 213,582 | |||||||
Unallocated Corporate (1) | (26,353 | ) | (25,747 | ) | (26,249 | ) | ||||||
| mPower Framework Agreement | (30,000 | ) | — | — | ||||||||
| Income Related to Litigation Proceeds | — | 65,728 | — | |||||||||
| Special Charges for Restructuring Activities | — | (16,608 | ) | (20,908 | ) | |||||||
| Cost to spin-off Power Generation business | — | (25,987 | ) | (161 | ) | |||||||
| Mark to Market Adjustment | (21,468 | ) | (54,654 | ) | (141,139 | ) | ||||||
Total Operating Income (2) | $ | 239,263 | $ | 205,941 | $ | 25,125 | ||||||
Other Income (Expense): | ||||||||||||
| Interest income | 651 | 30,331 | 233 | |||||||||
| Interest expense | (8,393 | ) | (10,181 | ) | (7,087 | ) | ||||||
| Other – net | 25,747 | (5,026 | ) | 13,864 | ||||||||
| Total Other Income (Expense) | 18,005 | 15,124 | 7,010 | |||||||||
| Income before Provision for Income Taxes | $ | 257,268 | $ | 221,065 | $ | 32,135 | ||||||
| (1) | Unallocated corporate includes general corporate overhead not allocated to segments |
| (2) | Included in operating income is the following: |
(Gains) Losses on Asset Disposals – Net: | ||||||||||||
Nuclear Operations | $ | — | $ | — | $ | 163 | ||||||
Technical Services | — | — | — | |||||||||
Nuclear Energy | 4 | (665 | ) | (28 | ) | |||||||
Unallocated Corporate | 378 | (6 | ) | (267 | ) | |||||||
|
|
|
|
|
| |||||||
| $ | 382 | $ | (671 | ) | $ | (132 | ) | |||||
|
|
|
|
|
| |||||||
Equity in Income of Investees: | ||||||||||||
Nuclear Operations | $ | — | $ | — | $ | — | ||||||
Technical Services | 13,396 | 33,043 | 50,282 | |||||||||
Nuclear Energy | — | 32 | (611 | ) | ||||||||
|
|
|
|
|
| |||||||
| $ | 13,396 | $ | 33,075 | $ | 49,671 | |||||||
|
|
|
|
|
|
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| (In thousands) | ||||||||||||
CAPITAL EXPENDITURES: | ||||||||||||
Nuclear Operations | $ | 35,658 | $ | 34,777 | $ | 31,572 | ||||||
Technical Services | — | 66 | 98 | |||||||||
Nuclear Energy | 6,482 | 14,358 | 5,506 | |||||||||
Other | — | 1,983 | 2,854 | |||||||||
|
|
|
|
|
| |||||||
Segment Capital Expenditures | 42,140 | 51,184 | 40,030 | |||||||||
Corporate Capital Expenditures | 14,701 | 9,396 | 9,640 | |||||||||
|
|
|
|
|
| |||||||
Total Capital Expenditures | $ | 56,841 | $ | 60,580 | $ | 49,670 | ||||||
|
|
|
|
|
| |||||||
DEPRECIATION AND AMORTIZATION: | ||||||||||||
Nuclear Operations | $ | 38,836 | $ | 54,524 | $ | 26,975 | ||||||
Technical Services | 15 | 3 | 185 | |||||||||
Nuclear Energy | 6,551 | 6,564 | 6,520 | |||||||||
Other | 550 | 974 | 554 | |||||||||
|
|
|
|
|
| |||||||
Segment Depreciation and Amortization | 45,952 | 62,065 | 34,234 | |||||||||
Corporate Depreciation and Amortization | 11,211 | 13,072 | 12,399 | |||||||||
|
|
|
|
|
| |||||||
Total Depreciation and Amortization | $ | 57,163 | $ | 75,137 | $ | 46,633 | ||||||
|
|
|
|
|
| |||||||
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands) | ||||||||
SEGMENT ASSETS: | ||||||||
Nuclear Operations | $ | 777,885 | $ | 770,359 | ||||
Technical Services | 114,005 | 114,581 | ||||||
Nuclear Energy | 177,354 | 217,739 | ||||||
Other | 2,430 | 17,233 | ||||||
|
|
|
| |||||
Total Segment Assets | 1,071,674 | 1,119,912 | ||||||
Corporate Assets | 310,465 | 361,331 | ||||||
|
|
|
| |||||
Total Assets | $ | 1,382,139 | $ | 1,481,243 | ||||
|
|
|
| |||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES: | ||||||||
Nuclear Operations | $ | — | $ | — | ||||
Technical Services | 32,061 | 31,229 | ||||||
Nuclear Energy | 27 | 27 | ||||||
|
|
|
| |||||
Total Investment in Unconsolidated Affiliates | $ | 32,088 | $ | 31,256 | ||||
|
|
|
| |||||
REVENUES: Nuclear Operations: Nuclear Component Program Commercial Operations Eliminations/Other Technical Services: Commercial Operations Nuclear Environmental Services Management & Operation Contracts of U.S. Government Facilities Eliminations/Other Nuclear Energy: Nuclear Services Nuclear Equipment Nuclear Projects Eliminations/Other Other: Eliminations REVENUES(1): United States Canada China Romania Argentina All Other Countries Losses (Gains) on Asset Disposals and Impairments, Net: Nuclear Operations $ — $ — $ — Technical Services — — — Nuclear Energy (43 ) 4 (665 ) Unallocated Corporate — 378 (6 ) $ (43 ) $ 382 $ (671 ) Equity in Income of Investees: Nuclear Operations $ — $ — $ — Technical Services 15,099 13,396 33,043 Nuclear Energy — — 32 Other 970 — — $ 16,069 $ 13,396 $ 33,075 Year Ended December 31, 2016 2015 2014 (In thousands) CAPITAL EXPENDITURES: Nuclear Operations $ 43,546 $ 35,658 $ 34,777 Technical Services — — 66 Nuclear Energy 3,630 6,482 14,358 Other — — 1,983 Segment Capital Expenditures 47,176 42,140 51,184 Corporate Capital Expenditures 5,458 14,701 9,396 Total Capital Expenditures $ 52,634 $ 56,841 $ 60,580 DEPRECIATION AND AMORTIZATION: Nuclear Operations $ 34,364 $ 38,836 $ 54,524 Technical Services 16 15 3 Nuclear Energy 7,197 6,551 6,564 Other — 550 974 Segment Depreciation and Amortization 41,577 45,952 62,065 Corporate Depreciation and Amortization 8,977 11,211 13,072 Total Depreciation and Amortization $ 50,554 $ 57,163 $ 75,137 December 31, 2016 2015 (In thousands) SEGMENT ASSETS: Nuclear Operations $ 854,310 $ 777,885 Technical Services 128,193 114,005 Nuclear Energy 357,344 177,354 Other 3,156 2,430 Total Segment Assets 1,343,003 1,071,674 Corporate Assets 236,812 303,724 Total Assets $ 1,579,815 $ 1,375,398 INVESTMENT IN UNCONSOLIDATED AFFILIATES: Nuclear Operations $ — $ — Technical Services 41,464 32,061 Nuclear Energy 27 27 Other 1,363 — Total Investment in Unconsolidated Affiliates $ 42,854 $ 32,088 2. Information about our Product and Service Lines: Year Ended December 31, 2015 2014 2013 (In thousands) $ 1,179,662 $ 1,208,505 $ 1,153,216 51 773 7,681 183 11,674 6,786 1,179,896 1,220,952 1,167,683 — 10,897 21,227 75,218 70,998 73,043 8,589 2,939 9,984 — — — 83,807 84,834 104,254 109,519 105,078 113,180 44,504 41,354 83,449 1,009 8,289 87,002 — — 226 155,032 154,721 283,857 — 278 1,523 (3,206 ) (10,175 ) (10,654 ) $ 1,415,529 $ 1,450,610 $ 1,546,663 Year Ended December 31, 2016 2015 2014 (In thousands) REVENUES: Nuclear Operations: Nuclear Component Program $ 1,259,336 $ 1,179,662 $ 1,208,505 Commercial Operations 9,813 51 773 Eliminations/Other 123 183 11,674 1,269,272 1,179,896 1,220,952 Technical Services: Commercial Operations — — 10,897 Nuclear Environmental Services 86,425 75,218 70,998 Management & Operation Contracts of U.S. Government Facilities 10,794 8,589 2,939 Eliminations/Other — — — 97,219 83,807 84,834 Nuclear Energy: Nuclear Services 127,825 109,519 105,078 Nuclear Equipment 64,900 44,504 41,354 Nuclear Projects — 1,009 8,289 Eliminations/Other (3,566 ) — — 189,159 155,032 154,721 Other: — — 278 Eliminations (5,077 ) (3,206 ) (10,175 ) $ 1,550,573 $ 1,415,529 $ 1,450,610 3. Information about our Consolidated Operations in Different Geographic Areas: Year Ended December 31, 2015 2014 2013 (In thousands) $ 1,306,811 $ 1,374,613 $ 1,444,716 88,380 65,105 85,573 10,657 6,836 5,843 6,106 — — 1,761 2,430 5,354 1,814 1,626 5,177 $ 1,415,529 $ 1,450,610 $ 1,546,663 Year Ended December 31, 2016 2015 2014 (In thousands) REVENUES (1): U.S. $ 1,397,505 $ 1,306,811 $ 1,374,613 Canada 124,964 88,380 65,105 China 13,033 10,657 6,836 Romania 10,743 6,106 — Argentina 1,508 1,761 2,430 All Other Countries 2,820 1,814 1,626 $ 1,550,573 $ 1,415,529 $ 1,450,610 (1) We allocate geographic revenues based on the location of the customer’scustomers' operations.
NET PROPERTY, PLANT AND EQUIPMENT: | ||||||||||||
United States | $ | 250,867 | $ | 284,079 | $ | 289,678 | ||||||
Canada | 17,977 | 23,721 | 32,157 | |||||||||
|
|
|
|
|
| |||||||
| $ | 268,844 | $ | 307,800 | $ | 321,835 | |||||||
|
|
|
|
|
|
Revenues Operating income (1) Equity in income of investees Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) attributable to BWX Technologies, Inc. Earnings per common share: Basic: Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) attributable to BWX Technologies, Inc. Diluted: Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) attributable to BWX Technologies, Inc. 2015:NET PROPERTY, PLANT AND EQUIPMENT: U.S. $ 256,672 $ 250,867 $ 284,079 Canada 43,014 17,977 23,721 $ 299,686 $ 268,844 $ 307,800 4. Information about our Major Customers:In the years ended December 31, 2016, 2015 2014 and 2013,2014, U.S. Government contracts accounted for approximately 88%87%, 88% and 80%88% of our total consolidated revenues, respectively. Substantially, these revenues are included in our Nuclear Operations and Technical Services segments.NOTE 1718 – QUARTERLY FINANCIAL DATA (UNAUDITED)The following tables set forth selected unaudited quarterly financial information for the years ended December 31, 20152016 and 2014: Year Ended December 31, 2015
Quarter Ended March 31,
2015 June 30,
2015 Sept. 30,
2015 Dec. 31,
2015 (In thousands, except per share amounts) $ 335,486 $ 357,135 $ 358,970 $ 363,938 $ 53,783 $ 11,585 $ 130,966 $ 9,607 $ 1,852 $ 3,282 $ 5,894 $ 2,368 $ 34,233 $ (181 ) $ 106,344 $ 378 11,024 (16,966 ) (2,474 ) (893 ) $ 45,257 $ (17,147 ) $ 103,870 $ (515 ) $ 0.32 $ 0.00 $ 0.99 $ 0.00 0.10 (0.16 ) (0.02 ) (0.01 ) $ 0.42 $ (0.16 ) $ 0.97 $ 0.00 $ 0.32 $ 0.00 $ 0.98 $ 0.00 0.10 (0.16 ) (0.02 ) (0.01 ) $ 0.42 $ (0.16 ) $ 0.96 $ 0.00 Year Ended December 31, 2016
Quarter Ended March 31,
2016 June 30,
2016 September 30,
2016 December 31,
2016 (In thousands, except per share amounts) Revenues $ 364,826 $ 402,382 $ 379,505 $ 403,860 Operating income (1) $ 42,609 $ 88,458 $ 62,373 $ 45,823 Equity in income of investees $ 3,533 $ 4,708 $ 5,008 $ 2,820 Net income attributable to BWX Technologies, Inc. (2) $ 49,631 $ 58,372 $ 41,062 $ 33,992 Earnings per common share: (2) Basic: Net income attributable to BWX Technologies, Inc. $ 0.48 $ 0.56 $ 0.40 $ 0.34 Diluted: Net income attributable to BWX Technologies, Inc. $ 0.47 $ 0.56 $ 0.39 $ 0.34 (1) Includes equity in income of investees.
| Year Ended December 31, 2014 Quarter Ended | ||||||||||||||||
| March 31, 2014 | June 30, 2014 | Sept. 30, 2014 | Dec. 31, 2014 | |||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
Revenues | $ | 355,416 | $ | 362,488 | $ | 337,352 | $ | 395,354 | ||||||||
Operating income (1) | $ | 44,629 | $ | 27,457 | $ | 34,731 | $ | (81,692 | ) | |||||||
Equity in income of investees | $ | 12,903 | $ | 12,749 | $ | 4,449 | $ | 2,974 | ||||||||
Income (loss) from continuing operations | $ | 39,150 | $ | 22,211 | $ | 40,626 | $ | (63,247 | ) | |||||||
Income (loss) from discontinued operations | 5,894 | 4,226 | 20,588 | (40,060 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) attributable to BWX Technologies, Inc. | $ | 45,044 | $ | 26,437 | $ | 61,214 | $ | (103,307 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income (loss) from continuing operations | $ | 0.35 | $ | 0.20 | $ | 0.38 | $ | (0.59 | ) | |||||||
Income (loss) from discontinued operations | 0.05 | 0.04 | 0.19 | (0.38 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) attributable to BWX Technologies, Inc. | $ | 0.41 | $ | 0.24 | $ | 0.57 | $ | (0.97 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||
Diluted: | ||||||||||||||||
Income (loss) from continuing operations | $ | 0.35 | $ | 0.20 | $ | 0.38 | $ | (0.59 | ) | |||||||
Income (loss) from discontinued operations | 0.05 | 0.04 | 0.19 | (0.38 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) attributable to BWX Technologies, Inc. | $ | 0.41 | $ | 0.24 | $ | 0.57 | $ | (0.97 | ) | |||||||
|
|
|
|
|
|
|
| |||||||||
| (2) | Net income attributable to BWX Technologies, Inc. and the resulting basic and diluted earnings per common share for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016 have been adjusted from amounts previously reported to reflect the early adoption of the FASB update to the Topic Compensation – Stock Compensation as discussed in Note 1 to our consolidated financial statements. |
| Year Ended December 31, 2015 Quarter Ended | ||||||||||||||||
| March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | |||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Revenues | $ | 335,486 | $ | 357,135 | $ | 358,970 | $ | 363,938 | ||||||||
Operating income (1) | $ | 53,783 | $ | 11,585 | $ | 130,966 | $ | 9,607 | ||||||||
| Equity in income of investees | $ | 1,852 | $ | 3,282 | $ | 5,894 | $ | 2,368 | ||||||||
| Income (loss) from continuing operations, net of tax | $ | 34,233 | $ | (181 | ) | $ | 106,344 | $ | 378 | |||||||
| Income (loss) from discontinued operations, net of tax | 11,024 | (16,966 | ) | (2,474 | ) | (893 | ) | |||||||||
| Net income (loss) attributable to BWX Technologies, Inc. | $ | 45,257 | $ | (17,147 | ) | $ | 103,870 | $ | (515 | ) | ||||||
| Earnings per common share: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.32 | $ | 0.00 | $ | 0.99 | $ | 0.00 | ||||||||
| Income (loss) from discontinued operations | 0.10 | (0.16 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net income (loss) attributable to BWX Technologies, Inc. | $ | 0.42 | $ | (0.16 | ) | $ | 0.97 | $ | 0.00 | |||||||
| Diluted: | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.32 | $ | 0.00 | $ | 0.98 | $ | 0.00 | ||||||||
| Income (loss) from discontinued operations | 0.10 | (0.16 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net income (loss) attributable to BWX Technologies, Inc. | $ | 0.42 | $ | (0.16 | ) | $ | 0.96 | $ | 0.00 | |||||||
| (1) | Includes equity in income of investees. |
Income from continuing operations for our September 30, 2014 quarter included a gain in other income of $18.6 million, with no related tax provision, for the receipt of Centrus common stock and notes, which we received in exchange for our investment in USEC Inc. upon its emergence from Chapter 11 bankruptcy.
| Year Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
(In thousands, except shares and per share amounts) | ||||||||||||
Basic: | ||||||||||||
Income from continuing operations | $ | 140,774 | $ | 38,740 | $ | 198,490 | ||||||
Income (loss) from discontinued operations | (9,309 | ) | (9,352 | ) | 147,588 | |||||||
|
|
|
|
|
| |||||||
Net income attributable to BWX Technologies, Inc. | $ | 131,465 | $ | 29,388 | $ | 346,078 | ||||||
|
|
|
|
|
| |||||||
Weighted average common shares | 106,703,145 | 108,477,262 | 111,901,750 | |||||||||
|
|
|
|
|
| |||||||
Basic earnings per common share: | ||||||||||||
Income from continuing operations | $ | 1.32 | $ | 0.36 | $ | 1.77 | ||||||
Income (loss) from discontinued operations | (0.09 | ) | (0.09 | ) | 1.32 | |||||||
|
|
|
|
|
| |||||||
Net income attributable to BWX Technologies, Inc. | $ | 1.23 | $ | 0.27 | $ | 3.09 | ||||||
|
|
|
|
|
| |||||||
Diluted: | ||||||||||||
Income from continuing operations | $ | 140,774 | $ | 38,740 | $ | 198,490 | ||||||
Income (loss) from discontinued operations | (9,309 | ) | (9,352 | ) | 147,588 | |||||||
|
|
|
|
|
| |||||||
Net income attributable to BWX Technologies, Inc. | $ | 131,465 | $ | 29,388 | $ | 346,078 | ||||||
|
|
|
|
|
| |||||||
Weighted average common shares (basic) | 106,703,145 | 108,477,262 | 111,901,750 | |||||||||
Effect of dilutive securities: | ||||||||||||
Stock options, restricted stock and performance shares(1) | 879,877 | 283,830 | 783,667 | |||||||||
|
|
|
|
|
| |||||||
Adjusted weighted average common shares | 107,583,022 | 108,761,092 | 112,685,417 | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per common share: | ||||||||||||
Income from continuing operations | $ | 1.31 | $ | 0.36 | $ | 1.76 | ||||||
Income (loss) from discontinued operations | (0.09 | ) | (0.09 | ) | 1.31 | |||||||
|
|
|
|
|
| |||||||
Net income attributable to BWX Technologies, Inc. | $ | 1.22 | $ | 0.27 | $ | 3.07 | ||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| (In thousands, except shares and per share amounts) | ||||||||||||
| Basic: | ||||||||||||
| Income from continuing operations | $ | 183,057 | $ | 140,774 | $ | 38,740 | ||||||
| Income (loss) from discontinued operations | — | (9,309 | ) | (9,352 | ) | |||||||
| Net income attributable to BWX Technologies, Inc. | $ | 183,057 | $ | 131,465 | $ | 29,388 | ||||||
| Weighted average common shares | 102,471,788 | 106,703,145 | 108,477,262 | |||||||||
| Basic earnings per common share: | ||||||||||||
| Income from continuing operations | $ | 1.79 | $ | 1.32 | $ | 0.36 | ||||||
| Income (loss) from discontinued operations | — | (0.09 | ) | (0.09 | ) | |||||||
| Net income attributable to BWX Technologies, Inc. | $ | 1.79 | $ | 1.23 | $ | 0.27 | ||||||
| Diluted: | ||||||||||||
| Income from continuing operations | $ | 183,057 | $ | 140,774 | $ | 38,740 | ||||||
| Income (loss) from discontinued operations | — | (9,309 | ) | (9,352 | ) | |||||||
| Net income attributable to BWX Technologies, Inc. | $ | 183,057 | $ | 131,465 | $ | 29,388 | ||||||
| Weighted average common shares (basic) | 102,471,788 | 106,703,145 | 108,477,262 | |||||||||
| Effect of dilutive securities: | ||||||||||||
Stock options, restricted stock and performance shares (1) | 1,368,950 | 879,877 | 283,830 | |||||||||
| Adjusted weighted average common shares | 103,840,738 | 107,583,022 | 108,761,092 | |||||||||
| Diluted earnings per common share: | ||||||||||||
| Income from continuing operations | $ | 1.76 | $ | 1.31 | $ | 0.36 | ||||||
| Income (loss) from discontinued operations | — | (0.09 | ) | (0.09 | ) | |||||||
| Net income attributable to BWX Technologies, Inc. | $ | 1.76 | $ | 1.22 | $ | 0.27 | ||||||
| (1) | At December 31, 2016, 2015 |
| Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
| Item 9A. | CONTROLS AND PROCEDURES |
Disclosure Controls and ProceduresAs of the end of the period covered by this annual report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) adopted by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act")). Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of December 31, 20152016 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and communicated to management, including its principal executives and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and for our assessment of the effectiveness of internal control over financial reporting.Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated 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.Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2015,2016, based on the framework established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have excluded from our assessment the internal control over financial reporting at BWXT Nuclear Energy Canada Inc., which was acquired on December 16, 2016, and whose financial statements constitute 10% and less than 1% of the total assets and revenues, respectively, of our consolidated financial statement amounts as of and for the year ended December 31, 2016. This assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based on our assessment under the criteria described above, management has concluded that our internal control over financial reporting was effective as of December 31, 2015.2016. Deloitte & Touche LLP has audited our internal control over financial reporting as of December 31, 2015,2016, and their report is included in Item 9A.Changes in Internal Control Over Financial ReportingThere has been no change in our internal control over financial reporting during the quarter ended December 31, 20152016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of BWX Technologies, Inc.:We have audited the internal control over financial reporting of BWX Technologies, Inc. and subsidiaries (the “Company”"Company") (formerly known as The Babcock & Wilcox Company) as of December 31, 2015,2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at BWXT Nuclear Energy Canada Inc., which was acquired on December 16, 2016, and whose financial statements constitute 10% and less than 1% of the total assets and revenues, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2016. This assessment included an evaluation of the design of the internal control over financial reporting and testing of the operational effectiveness of those controls. Accordingly, our audit did not include the internal control over financial reporting at BWXT Nuclear Energy Canada Inc. The Company’sCompany'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.Reporting. Our responsibility is to express an opinion on the Company’sCompany's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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.A company’scompany's internal control over financial reporting is a process designed by, or under the supervision of, the company’scompany's principal executive and principal financial officers, or persons performing similar functions, and effected by the company’scompany's board of directors, management, and other personnel 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’scompany'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’scompany's assets that could have a material effect on the financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015,2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 20152016 of the Company and our report dated February 24, 201627, 2017 expressed an unqualified opinion on those financial statements./S/ DELOITTE & TOUCHE LLPCharlotte, North CarolinaFebruary 24, 201627, 2017Item 9B. OTHER INFORMATION
| Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
| Item 11. | EXECUTIVE COMPENSATION |
| Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
| Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
| Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
| Item 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
| 1. | CONSOLIDATED FINANCIAL STATEMENTS |
2015
2014
2013
2013
2014
| 2. | CONSOLIDATED FINANCIAL STATEMENT SCHEDULES |
| 3. | EXHIBITS |
| Exhibit Number | Description | |
| 2.1 | Master Separation Agreement dated as of July 2, 2010 between McDermott International, Inc. and the Company (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File no. 1-34658)). | |
| 2.2 | Master Separation Agreement, dated as of June 8, 2015, between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No.1-34658)). | |
| 3.1 | Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)). | |
| 3.2 | Certificate of Amendment to Restated Certificate of Incorporation dated June 30, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| 3.3 | Amended and Restated Bylaws of the Company effective September 9, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 11, 2013 (File No. 1-34658)). | |
| 3.4 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No. 1-34658)). | |
| 4.1 | Second Amended and Restated Credit Agreement, dated as of June 24, 2014, entered into by and among the Company, certain lenders and letter of credit issuers executing the signature pages thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 24, 2014 (File No. 1-34658)). | |
| 4.2 | Second Amended and Restated Pledge and Security Agreement, dated as of June 24, 2014, entered into by and among the Company and certain of its subsidiaries in favor of Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 24, 2014 (File No. 1-34658)). | |
| 4.3 | Credit Agreement, dated as of May 11, 2015, among the Company, as the borrower, Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2015 (File No. 1-34658)). | |
| Exhibit Number | Description | |
| 4.4 | Amendment No. 1 to Credit Agreement, dated September 2, 2016, among the Company, as the borrower, Bank of America, N.A., as Administrative Agent, and the other Lenders Party Thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 2, 2016 (File No. 1-346658)). | |
| 10.1 | Tax Sharing Agreement dated as of June 7, 2010 between J. Ray Holdings, Inc. and Babcock & Wilcox Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)). | |
| 10.2 | Tax Sharing Agreement, dated as of June 8, 2015, by and between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| 10.3 | Cooperative Agreement, dated as of April 12, 2013, between Babcock & Wilcox mPower, Inc. and the United States Department of Energy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 15, 2013 (File No. 1-34658)). | |
| 10.4* | BWX Technologies, Inc. Executive Incentive Compensation Plan as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No.1-34658)). | |
| 10.5* | Supplemental Executive Retirement Plan of BWX Technologies, Inc. as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| 10.6* | BWX Technologies, Inc. Defined Contribution Restoration Plan as amended and restated effective July 1, 2015 (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| 10.7* | Form of Change In Control Agreement between the Company and selected officers (other than Mr. Geveden) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2015 (File No. 1-34658)). | |
| 10.8* | Form of Amendment to Change in Control Agreement, dated July 1, 2016, between the Company and certain officers (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 1-34658)). | |
| 10.9* | Form of Change In Control Agreement between the Company and Mr. Geveden dated October 26, 2015 (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 1-34658)). | |
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 1-34658)). | ||
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (File No. 1-34658)). | ||
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 1-34658)). | ||
| 10.13* | Form of 2017 Performance Restricted Stock Unit Grant Agreement for Employees. | |
| 10.14* | Form of 2017 Restricted Stock Unit Grant Agreement for Employees. | |
| 10.15* | Form of 2016 Performance Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K filed for the year ended December 31, 2015 (File No. 1-34658)). | |
| Form of 2016 Restricted Stock Unit Grant Agreement for | ||
| Description | ||
| 10.17* | Form of Agreement to Convert Units Payable in BWE Shares into Units Payable in BWXT | |
| 2015 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2014 (File No. 1-34658)). | ||
| Form of 2015 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-34658)). | ||
| Form of 2015 Restricted Stock Unit Grant Agreement (ratable vesting) for Employees (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-34658)). | ||
| Form of 2015 Restricted Stock Unit Grant Agreement (cliff vesting) for Employees (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-34658)). | ||
| 2014 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No.1-34658)). | ||
| Form of 2014 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||
| Form of 2014 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||
| Form of 2014 Performance Restricted Stock Units Grant Agreement for Employees (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||
| 2013 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No.1-34658)). | ||
| Form of 2013 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||
| Form of 2013 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||
| Form of 2013 Performance Restricted Stock Units Grant Agreement for Employees (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||
| Form of 2012 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 1-34658)). | ||
| Form of 2011 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||
| Form of 2010 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||
| Form of 2010 Stock Option Grant Agreement for Employees converted on the spin-off from awards of stock options to purchase shares of McDermott International, Inc. common stock (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||
| Description | ||
| 10.34* | BWX Technologies, Inc. Executive Severance Plan amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| Cooperation Agreement among the Company and Starboard Value LP, and certain of its affiliates, dated March 12, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 12, 2014 (File No. 1-34658)). | ||
| Amended and Restated 2010 Long-Term Incentive Plan of the Company, dated as of February 25, 2014 (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement dated March 28, 2014 (File No. 1-34658)). | ||
| 2010 Long-Term Incentive Plan of the Company as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Restructuring Transaction Severance Agreement between the Company and John A. Fees, dated November 5, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||
| Restructuring Transaction Retention Agreement between the Company and E. James Ferland, dated November 5, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||
| Employment Agreement among the Company, Babcock & Wilcox Power Generation Group, Inc. and E. James Ferland, dated November 5, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||
| Form of Restructuring Transaction Retention Agreement between the Company and certain of our executive officers, dated November 5, 2014 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||
| Form of Restructuring Transaction Severance Agreement between the Company and certain of our executive officers, dated November 5, 2014 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||
| Restructuring Transaction Severance Agreement between the Company and J. Randall Data, dated November 5, 2014 (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-34658)). | ||
| Form of Non-Employee Director Grant Letter between the Company and certain of our directors (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No. 1-34658)). | ||
| Employee Matters Agreement, dated as of June 8, 2015, by and between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No. 1-34658)). | ||
| Transition Services Agreement, dated as of June 8, 2015, between the Company, as service provider, and Babcock &Wilcox Enterprises, Inc., as service receiver (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Transition Services Agreement, dated as of June 8, 2015, between Babcock & Wilcox Enterprises, Inc., as service provider, and the Company, as service receiver (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Assumption and Loss Allocation Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Babcock & Wilcox Enterprises, Inc. and the Company (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Description | ||
| 10.49 | Reinsurance Novation and Assumption Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Creole Insurance Company and Dampkraft Insurance Company (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |
| Novation and Assumption Agreement, dated as of June 19, 2015, by and among the Company, Babcock & Wilcox Enterprises, Inc., Dampkraft Insurance Company and Creole Insurance Company (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Form of Director and Officer Indemnification Agreement entered into between the Company and each of its directors and selected officers effective July 1, 2015 (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| Limited Liability Company Agreement of Generation mPower LLC dated as of February 28, 2011 by and among Generation mPower LLC, Babcock & Wilcox Modular Reactors, LLC and BDC Nexgen Power LLC (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||
| 10.53 | Accelerated share repurchase confirmation, dated September 15, 2016, between the Company and Wells Fargo, National Association (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 1-34658). | |
| 10.54* | Transition and Separation Agreement, dated November 30, 2016, between Peyton S. Baker and the Company (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 29, 2016 (File No. 1-34658)). | |
| 21.1 | Significant Subsidiaries of the Registrant. | |
| 23.1 | Consent of Deloitte & Touche LLP. | |
| 31.1 | Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer. | |
| 31.2 | Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer. | |
| 32.1 | Section 1350 certification of Chief Executive Officer. | |
| 32.2 | Section 1350 certification of Chief Financial Officer. | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| BWX TECHNOLOGIES, INC. | |||||||||
| /s/ Rex D. Geveden | ||||||||
February | 27, 2017 | By: | |||||||
| President and Chief Executive Officer | |||||||||
| Signature | Title | |
| President and Chief Executive Officer | |
| Rex D. Geveden | (Principal Executive Officer) | |
| Senior Vice President and Chief Financial Officer | |
| David S. Black | (Principal Financial Officer and Duly Authorized Representative) | |
| Vice President and Chief Accounting Officer | |
| Jason S. Kerr | (Principal Accounting Officer and Duly Authorized Representative) | |
| Executive Chairman | |
| John A. Fees | ||
| Director | |
| Jan A. Bertsch | ||
| ||
| /s/ Robb A. LeMasters
| Director | |
| Robb A. LeMasters | ||
| ||
| /s/ Charles W. Pryor
| Director | |
| Charles W. Pryor | ||
| ||
| /s/ Richard W. Mies
| Director | |
| Richard W. Mies | ||
| ||
| /s/ Robert L. Nardelli
| Director | |
| Robert L. Nardelli | ||
| ||
| /s/ Robert W. Goldman
| Director | |
| Robert W. Goldman | ||
| /s/ James M. Jaska | Director | |
| James M. Jaska | ||
| /s/ Kenneth J. Krieg | Director | |
| Kenneth J. Krieg | ||
| /s/ Barbara A. Niland | Director | |
| Barbara A. Niland | ||
27, 2017
Exhibit Number | Description | Sequentially Numbered Pages | ||
| 2.1 | Master Separation Agreement dated as of July 2, 2010 between McDermott International, Inc. and the Company (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File no. 1-34658)). | |||
| 2.2 | Master Separation Agreement, dated as of June 8, 2015, between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No.1-34658)). | |||
| 3.1 | Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)). | |||
| 3.2 | Certificate of Amendment to Restated Certificate of Incorporation dated June 30, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
| 3.3 | Amended and Restated Bylaws of the Company effective September 9, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 11, 2013 (File No. 1-34658)). | |||
| 3.4 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No. 1-34658)). | |||
| 4.1 | Second Amended and Restated Credit Agreement, dated as of June 24, 2014, entered into by and among the Company, certain lenders and letter of credit issuers executing the signature pages thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K dated June 24, 2014 (File No. 1-34658)). | |||
| 4.2 | Second Amended and Restated Pledge and Security Agreement, dated as of June 24, 2014, entered into by and among the Company and certain of its subsidiaries in favor of Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 24, 2014 (File No.1-34658)). | |||
| 4.3 | Credit Agreement, dated as of May 11, 2015, among the Company, as the borrower, Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K filed with the SEC on May 15, 2015 (File No. 1-34658)). | |||
| 4.4 | Amendment No. 1 to Credit Agreement, dated September 2, 2016, among the Company, as the borrower, Bank of America, N.A., as Administrative Agent, and the other Lenders Party Thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 2, 2016 (File No. 1-346658)). | |||
| 10.1 | Tax Sharing Agreement dated as of June 7, 2010 between J. Ray Holdings, Inc. and Babcock & Wilcox Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)). | |||
| 10.2 | Tax Sharing Agreement, dated as of June 8, 2015, by and between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
|
|
| ||
| 10.3 | Cooperative Agreement, dated as of April 12, 2013, between Babcock & Wilcox mPower, Inc. and the United States Department of Energy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 15, 2013 (File No. 1-34658)). | |||
| 10.4* | BWX Technologies, Inc. Executive Incentive Compensation Plan as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No.1-34658)). | |||
| 10.5* | Supplemental Executive Retirement Plan of BWX Technologies, Inc. as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No.1-34658)). | |||
Exhibit Number | Description | Sequentially Numbered Pages | ||
| 10.6* | BWX Technologies, Inc. Defined Contribution Restoration Plan as amended and restated effective July 1, 2015 (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
| 10.7* | Form of Change In Control Agreement between the Company and selected officers (other than Mr. Geveden) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2015 (File No. 1-34658)). | |||
| 10.8* | Form of Amendment to Change in Control Agreement, dated July 1, 2016, between the Company and certain officers (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 1-34658)). | |||
| 10.9* | Form of Change In Control Agreement between the Company and Mr. Geveden dated October 26, 2015 (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 1-34658)). | |||
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No. 1-34658)). | ||||
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (File No. 1-34658)). | ||||
| Form of Non-Employee Director Grant Letter (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 1-34658)). | ||||
| 10.13* | Form of 2017 Performance Restricted Stock Unit Grant Agreement for Employees. | |||
| 10.14* | Form of 2017 Restricted Stock Unit Grant Agreement for Employees. | |||
| 10.15* | Form of 2016 Performance Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K filed for the year ended December 31, 2015 (File No. 1-34658)). | |||
| Form of 2016 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K filed for the year ended December 31, 2015 (File No. 1-34658)). | ||||
| Form of Agreement to Convert Units Payable in BWE Shares into Units Payable in BWXT | ||||
| 2015 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2014 (File No. 1-34658)). | ||||
| Form of 2015 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K | ||||
| Form of 2015 Restricted Stock Unit Grant Agreement (ratable vesting) for Employees (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K | ||||
| Form of 2015 Restricted Stock Unit Grant Agreement (cliff vesting) for Employees (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K | ||||
|
|
| ||
| 2014 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||||
Exhibit Number | Description | Sequentially Numbered Pages | ||
| 10.23* | Form of 2014 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | |||
| Form of 2014 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||||
| Form of 2014 Performance Restricted Stock Units Grant Agreement for Employees (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 1-34658)). | ||||
| 2013 Notice of Grant under Amended and Restated 2010 Long-Term Incentive Plan of the Company (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||||
| Form of 2013 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||||
| Form of 2013 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||||
| Form of 2013 Performance Restricted Stock Units Grant Agreement for Employees (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 1-34658)). | ||||
| Form of 2012 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 1-34658)). | ||||
| Form of 2011 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||||
| Form of 2010 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||||
| Form of 2010 Stock Option Grant Agreement for Employees converted on the spin-off from awards of stock options to purchase shares of McDermott International, Inc. common stock (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 1-34658)). | ||||
| BWX Technologies, Inc. Executive Severance Plan amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||||
|
|
| ||
| Cooperation Agreement among the Company and Starboard Value LP, and certain of its affiliates, dated March 12, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 12, 2014 (File No. 1-34658)). | ||||
| Amended and Restated 2010 Long-Term Incentive Plan of the Company, dated as of February 25, 2014 (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement dated March 28, 2014 (File No. 1-34658)). | ||||
| 2010 Long-Term Incentive Plan of the Company as amended and restated July 1, 2015 (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||||
Exhibit Number | Description | Sequentially Numbered Pages | ||
| 10.38* | Restructuring Transaction Severance Agreement between the Company and John A. Fees, dated November 5, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | |||
| Restructuring Transaction Retention Agreement between the Company and E. James Ferland, dated November 5, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||||
| Employment Agreement among the Company, Babcock & Wilcox Power Generation Group, Inc. and E. James Ferland, dated November 5, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||||
| Form of Restructuring Transaction Retention Agreement between the Company and certain of our executive officers, dated November 5, 2014 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||||
| Form of Restructuring Transaction Severance Agreement between the Company and certain of our executive officers, dated November 5, 2014 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated October 31, 2014 (File No. 1-34658)). | ||||
| Restructuring Transaction Severance Agreement between the Company and J. Randall Data, dated November 5, 2014 (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-34658)). | ||||
| Form of Non-Employee Director Grant Letter between the Company and certain of our directors (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (File No. 1-34658)). | ||||
| Employee Matters Agreement, dated as of June 8, 2015, by and between the Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 9, 2015 (File No. 1-34658)). | ||||
| Transition Services Agreement, dated as of June 8, 2015, between the Company, as service provider, and Babcock | ||||
| Transition Services Agreement, dated as of June 8, 2015, between Babcock & Wilcox Enterprises, Inc., as service provider, and the Company, as service receiver (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||||
|
|
| ||
| Assumption and Loss Allocation Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Babcock & Wilcox Enterprises, Inc. and the Company (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | ||||
| | ||||
| 10.49 | Reinsurance Novation and Assumption Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Creole Insurance Company and Dampkraft Insurance Company (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
| | ||||
| 10.50 | Novation and Assumption Agreement, dated as of June 19, 2015, by and among the Company, Babcock & Wilcox Enterprises, Inc., Dampkraft Insurance Company and Creole Insurance Company (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
| | ||||
| 10.51* | Form of Director and Officer Indemnification Agreement entered into between the Company and each of its directors and selected officers effective July 1, 2015 (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
Exhibit Number | Description | Sequentially Numbered Pages | ||
| | ||||
| 10.52 | Limited Liability Company Agreement of Generation mPower LLC dated as of February 28, 2011 by and among Generation mPower LLC, Babcock & Wilcox Modular Reactors, LLC and BDC Nexgen Power LLC (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)). | |||
| 10.53 | Accelerated share repurchase confirmation, dated September 15, 2016, between the Company and Wells Fargo, National Association (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 1-34658). | |||
| 10.54* | Transition and Separation Agreement, dated November 30, 2016, between Peyton S. Baker and the Company (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 29, 2016 (File No. 1-34658)). | |||
| 21.1 | Significant Subsidiaries of the Registrant. | |||
| 23.1 | Consent of Deloitte & Touche LLP. | |||
| 31.1 | Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer. | |||
| 31.2 | Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer. | |||
| 32.1 | Section 1350 certification of Chief Executive Officer. | |||
| 32.2 | Section 1350 certification of Chief Financial Officer. | |||
| | ||||
| 101.INS | XBRL Instance Document | |||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||
| * | Management contract or compensatory plan or arrangement. |