UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, ~~D. C.~~D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2014~~March 31, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34658

THE BABCOCK & WILCOX COMPANY

(Exact name of registrant as specified in its charter)


DELAWARE		80-0558025
(State of Incorporation or Organization)		(I.R.S. Employer Identification No.)

THE HARRIS BUILDING
13024 BALLANTYNE CORPORATE PLACE
SUITE 700
CHARLOTTE, NORTH CAROLINA		28277
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code:(704) 625-4900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s common stock outstanding at ~~October 31, 2014~~April 30, 2015 was ~~106,553,653.~~106,987,776.

THE BABCOCK & WILCOX COMPANY

INDEX -– FORM ~~10 - Q~~10-Q


	PAGE

PART I - FINANCIAL INFORMATION

Item 1 – Condensed Consolidated Financial Statements		23

Condensed Consolidated Balance Sheets ~~September 30, 2014~~ March 31, 2015 and December 31, ~~2013~~2014 (Unaudited)		34

Condensed Consolidated Statements of Income Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2015 and 2014 ~~and 2013 (Unaudited)~~		5

~~Condensed Consolidated Statements of Comprehensive Income Three and Nine Months Ended September 30, 2014 and 2013~~ (Unaudited)		6

Condensed Consolidated Statements of ~~Stockholders’ Equity Nine~~Comprehensive Income Three Months Ended ~~September 30,~~March 31, 2015 and 2014 ~~and 2013~~ (Unaudited)		7

Condensed Consolidated Statements of ~~Cash Flows Nine~~Stockholders’ Equity Three Months Ended ~~September 30,~~March 31, 2015 and 2014 ~~and 2013~~ (Unaudited)		8

Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2015 and 2014 (Unaudited)		9

Notes to Condensed Consolidated Financial Statements		910

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		2726

Item 3 – Quantitative and Qualitative Disclosures About Market Risk		4137

Item 4 – Controls and Procedures		4137

PART II - OTHER INFORMATION

Item 1 – Legal Proceedings		4237

Item 1A – Risk Factors		4237

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		4238

Item 4 – Mine Safety Disclosures		4338

Item 6 – Exhibits		4439

SIGNATURES		4540

PART I

THE BABCOCK & WILCOX COMPANY

FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS


					March 31, 2015		December 31, 2014
	September 30, 2014		December 31, 2013		(Unaudited)
	(Unaudited)				(In thousands)
	(In thousands)
Current Assets:
Cash and cash equivalents	$	196,921	$	346,116	$	274,394	$	312,969
Restricted cash and cash equivalents		43,200		45,945		50,670		54,497
Investments		19,046		10,748		10,469		4,837
Accounts receivable – trade, net		424,875		360,323		404,941		430,600
Accounts receivable – other		66,052		45,480		51,448		44,299
Contracts in progress		350,165		370,820		395,542		398,373
Inventories		116,533		113,058		109,659		108,637
Deferred income taxes		97,770		97,170		73,892		73,479
Other current assets		57,297		47,764		49,820		46,111


Total Current Assets		1,371,859		1,437,424		1,420,835		1,473,802


Property, Plant and Equipment		1,179,435		1,126,683		1,171,347		1,167,581
Less accumulated depreciation		716,309		679,604		742,704		730,946


Net Property, Plant and Equipment		463,126		447,079		428,643		436,635


Investments		4,483		4,426		8,263		7,606


Goodwill		395,301		281,708		376,478		379,192


Deferred Income Taxes		117,159		127,076		250,221		245,766


Investments in Unconsolidated Affiliates		141,914		184,831		133,691		140,504


Intangible Assets		114,540		81,521		105,573		110,873


Other Assets		48,388		45,088		68,430		62,558


TOTAL	$	2,656,770	$	2,609,153	$	2,792,134	$	2,856,936

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY


							March 31, 2015			December 31, 2014
	September 30, 2014			December 31, 2013			(Unaudited)
	(Unaudited)						(In thousands, except share and per share amounts)
	(In thousands, except share and per share amounts)
Current Liabilities:
Notes payable and current maturities of long-term debt	$	8,890		$	4,671		$	18,219		$	18,215
Accounts payable		212,069			319,774			199,349			247,629
Accrued employee benefits		100,690			163,833			86,673			124,897
Accrued liabilities – other		87,707			58,192			101,512			97,207
Advance billings on contracts		232,008			317,771			254,844			255,535
Accrued warranty expense		59,574			56,436			53,722			53,624
Income taxes payable		10,182			6,551			19,421			22,529


Total Current Liabilities		711,120			927,228			733,740			819,636


Long-Term Debt		298,776			225			281,250			285,000


Accumulated Postretirement Benefit Obligation		46,049			43,194			56,939			58,213


Environmental Liabilities		55,951			53,391			56,548			56,259


Pension Liability		346,198			336,878			558,763			563,990


Other Liabilities		58,709			65,296			57,970			59,637


Commitments and Contingencies (Note 5)

Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 121,417,899 and 120,536,910 shares at September 30, 2014 and December 31, 2013, respectively		1,214			1,205
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 121,908,073 and 121,604,332 shares at March 31, 2015 and December 31, 2014, respectively								1,219			1,216
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued		—			—			—			—
Capital in excess of par value		772,842			747,189			784,076			775,393
Retained earnings		756,572			656,916			676,913			642,489
Treasury stock at cost, 14,910,058 and 10,068,731 shares at September 30, 2014 and December 31, 2013, respectively		(423,821	)		(268,971	)
Accumulated other comprehensive income		17,242			28,348
Treasury stock at cost, 14,967,834 and 14,915,776 shares at March 31, 2015 and December 31, 2014, respectively								(425,586	)		(423,990	)
Accumulated other comprehensive income (loss)								(4,896	)		3,596

Stockholders’ Equity – The Babcock & Wilcox Company		1,124,049			1,164,687			1,031,726			998,704
Noncontrolling interest		15,918			18,254			15,198			15,497

Total Stockholders’ Equity		1,139,967			1,182,941			1,046,924			1,014,201


TOTAL	$	2,656,770		$	2,609,153		$	2,792,134		$	2,856,936

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   Three Months Ended
September 30,
Nine Months Ended
September 30,

   2014 2013 2014 2013
   (Unaudited)
   (In thousands, except share and per share amounts)
Revenues
   $ 737,902    $ 774,834    $ 2,085,925    $ 2,466,393


Costs and Expenses:

Cost of operations
   554,614    578,394    1,569,229    1,884,134
Research and development costs
   8,379    23,787    63,293    52,970
Losses (gains) on asset disposals and impairments, net
   (605 ) 1,258    852    1,345
Selling, general and administrative expenses
   108,987    102,576    305,590    313,113
Special charges for restructuring activities
   8,675    4,849    28,803    25,504


Total Costs and Expenses
   680,050    710,864    1,967,767    2,277,066


Equity in Income of Investees
   7,308    18,151    35,760    51,713


Operating Income
   65,160    82,121    153,918    241,040


Other Income (Expense):

Interest income
   267    480    876    1,135
Interest expense
   (2,978 ) (631 ) (4,798 ) (2,238 )
Other – net
   18,625    (533 ) 20,527    1,878


Total Other Income (Expense)
   15,914    (684 ) 16,605    775


Income before Provision for Income Taxes
   81,074    81,437    170,523    241,815
Provision for Income Taxes
   20,671    24,416    45,474    70,217


Net Income
   60,403    57,021    125,049    171,598


Net Loss Attributable to Noncontrolling Interest
   811    3,425    7,646    8,892


Net Income Attributable to The Babcock & Wilcox Company
   $ 61,214    $ 60,446    $ 132,695    $ 180,490


Earnings per Common Share:

Basic:

Net Income Attributable to The Babcock & Wilcox Company
   $ 0.57    $ 0.54    $ 1.22    $ 1.61
Diluted:

Net Income Attributable to The Babcock & Wilcox Company
   $ 0.57    $ 0.54    $ 1.21    $ 1.60


Shares used in the computation of earnings per share (Note 10):

Basic
   107,105,986    110,931,376    109,103,879    112,309,170
Diluted
   107,444,284    111,749,381    109,482,318    113,049,700

~~See accompanying notes to condensed consolidated financial statements.~~

~~THE BABCOCK & WILCOX COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2014 2013 2014 2013
   (Unaudited)
   (In thousands)
Net Income
   $ 60,403    $ 57,021    $ 125,049    $ 171,598
Other Comprehensive Income (Loss):

Currency translation adjustments
   (6,837 ) 5,238    (13,979 ) (2,330 )
Derivative financial instruments:

Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $386, $(338), $436 and $1,004, respectively
   (1,115 ) 928    (1,257 ) (2,940 )
Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $(279), $158, $(266) and $(671), respectively
   807    (436 ) 760    1,853
Recognition of benefit plan costs, net of tax benefit of $(898), $(264), $(1,293) and $(782), respectively
   2,505    490    3,299    1,483
Available-for-sale investments:

Unrealized gains arising during the period, net of tax provision of $(3), $(42), $(60) and $(48), respectively
   5    75    108    203
Reclassification adjustment for gains included in net income, net of tax provision of $7, $2, $22 and $5, respectively
   (14 ) (4 ) (40 ) (725 )


Other Comprehensive Income (Loss)
   (4,649 ) 6,291    (11,109 ) (2,456 )


Total Comprehensive Income
   55,754    63,312    113,940    169,142


Comprehensive Loss Attributable to Noncontrolling Interest
   810    3,466    7,649    8,937


Comprehensive Income Attributable to The Babcock & Wilcox Company
   $ 56,564    $ 66,778    $ 121,589    $ 178,079


	Three Months Ended March 31,
	2015			2014
	(Unaudited)
	(In thousands, except share and per share amounts)

Revenues	$	730,565		$	662,017

Costs and Expenses:
Cost of operations		539,921			502,307
Research and development costs		8,346			23,996
Losses on asset disposals and impairments, net		15			—
Selling, general and administrative expenses		108,751			94,685
Special charges for restructuring activities		2,502			2,658

Total Costs and Expenses		659,535			623,646


Equity in Income (Loss) of Investees		(219	)		15,269


Operating Income		70,811			53,640


Other Income (Expense):
Interest income		174			419
Interest expense		(2,363	)		(899	)
Other – net		(1,715	)		1,322

Total Other Income (Expense)		(3,904	)		842


Income before Provision for Income Taxes		66,907			54,482

Provision for Income Taxes		21,866			13,328


Net Income	$	45,041		$	41,154


Net Loss Attributable to Noncontrolling Interest		216			3,890


Net Income Attributable to The Babcock & Wilcox Company	$	45,257		$	45,044


Earnings per Common Share:
Basic:
Net Income Attributable to The Babcock & Wilcox Company	$	0.42		$	0.41
Diluted:
Net Income Attributable to The Babcock & Wilcox Company	$	0.42		$	0.41


Shares used in the computation of earnings per share (Note 10):
Basic		106,775,916			110,439,415
Diluted		107,146,494			110,886,043

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~

COMPREHENSIVE INCOME

Accumulated
Common Stock Capital In
Excess of Retained Other
Comprehensive Treasury Stockholders’ Noncontrolling Total
Stockholders’
Shares Par Value Par Value Earnings Income (Loss) Stock Equity Interest Equity
(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
—      —      —      132,695    —      —      132,695    (7,646 ) 125,049
Dividends declared ($0.30 per share)
—      —      —      (33,039 ) —      —      (33,039 ) —      (33,039 )
Defined benefit obligations
—      —      —      —      3,299    —      3,299    —      3,299
Available-for-sale investments
—      —      —      —      68    —      68    —      68
Currency translation adjustments
—      —      —      —      (13,976 ) —      (13,976 ) (3 ) (13,979 )
Derivative financial instruments
—      —      —      —      (497 ) —      (497 ) —      (497 )
Exercise of stock options
152,965    1    3,926    —      —      —      3,927    —      3,927
Contributions to thrift plan
307,748    3    9,946    —      —      —      9,949    —      9,949
Shares placed in treasury
—      —      —      —      —      (154,850 ) (154,850 ) —      (154,850 )
Stock-based compensation charges
420,276    5    11,781    —      —      —      11,786    —      11,786
Contribution of in-kind services
—      —      —      —      —      —      —      5,830    5,830
Distributions to noncontrolling interests
—      —      —      —      —      —      —      (517 ) (517 )

Balance September 30, 2014 (unaudited)
121,417,899    $ 1,214    $ 772,842    $ 756,572    $ 17,242    $ (423,821 ) $ 1,124,049    $ 15,918    $ 1,139,967

Balance December 31, 2012
119,608,026    $ 1,196    $ 713,257    $ 349,063    $ 32,728    $ (109,809 ) $ 986,435    $ 16,481    $ 1,002,916
Net income
—      —      —      180,490    —      —      180,490    (8,892 ) 171,598
Dividends declared ($0.24 per share)
—      —      —      (27,085 ) —      —      (27,085 ) —      (27,085 )
Defined benefit obligations
—      —      —      —      1,483    —      1,483    —      1,483
Available-for-sale investments
—      —      —      —      (522 ) —      (522 ) —      (522 )
Currency translation adjustments
—      —      —      —      (2,285 ) —      (2,285 ) (45 ) (2,330 )
Derivative financial instruments
—      —      —      —      (1,087 ) —      (1,087 ) —      (1,087 )
Exercise of stock options
187,845    3    3,800    —      —      —      3,803    —      3,803
Contributions to thrift plan
345,037    3    10,016    —      —      —      10,019    —      10,019
Shares placed in treasury
—      —      —      —      —      (142,188 ) (142,188 ) —      (142,188 )
Stock-based compensation charges
220,840    2    13,070    —      —      —      13,072    —      13,072
Contribution of in-kind services
—      —      —      —      —      —      —      11,289    11,289
Distributions to noncontrolling interests
—      —      —      —      —      —      —      (414 ) (414 )

Balance September 30, 2013 (unaudited)
120,361,748    $ 1,204    $ 740,143    $ 502,468    $ 30,317    $ (251,997 ) $ 1,022,135    $ 18,419    $ 1,040,554


	Three Months Ended March 31,
	2015			2014
	(Unaudited)
	(In thousands)

Net Income	$	45,041		$	41,154

Other Comprehensive Income:
Currency translation adjustments		(10,930	)		(6,611	)
Derivative financial instruments:
Unrealized losses arising during the period, net of tax benefit of $174 and $339, respectively		(215	)		(975	)
Reclassification adjustment for losses included in net income, net of tax benefit of $(683) and $(221), respectively		1,916			632
Amortization of benefit plan costs, net of tax benefit of $(179) and $(197), respectively		331			397
Investments:
Unrealized gains arising during the period, net of tax provision of $(224) and $(25), respectively		415			46
Reclassification adjustment for losses (gains) included in net income, net of tax (benefit) provision of $(5) and $12, respectively		9			(22	)


Other Comprehensive Loss		(8,474	)		(6,533	)


Total Comprehensive Income		36,567			34,621


Comprehensive Loss Attributable to Noncontrolling Interest		198			3,897


Comprehensive Income Attributable to The Babcock & Wilcox Company	$	36,765		$	38,518

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY

   Nine Months Ended
September 30,
   2014 2013
   (Unaudited)
   (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
   $ 125,049    $ 171,598
Non-cash items included in net income:

Depreciation and amortization
   57,400    51,341
Income of investees, net of dividends
   16,920    (18,419 )
Losses on asset disposals and impairments
   3,870    1,345
Gain on exchange of USEC investment
   (18,647 ) —
In-kind research and development costs
   5,830    11,289
Recognition of losses for pension and postretirement plans
   12,952    2,265
Stock-based compensation expense
   11,786    13,072
Excess tax benefits from stock-based compensation
   (568 ) (64 )
Changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable
   (62,220 ) (44,663 )
Accounts payable
   (115,271 ) 5,305
Contracts in progress and advance billings on contracts
   (74,214 ) (140,862 )
Inventories
   138    10,559
Income taxes
   (11,804 ) (1,284 )
Accrued and other current liabilities
   13,206    (3,588 )
Pension liability, accrued postretirement benefit obligation and employee benefits
   (66,679 ) (69,842 )
Other, net
   17,057    5,921


NET CASH USED IN OPERATING ACTIVITIES
   (85,195 ) (6,027 )


CASH FLOWS FROM INVESTING ACTIVITIES:

Decrease in restricted cash and cash equivalents
   2,745    14,669
Purchases of property, plant and equipment
   (55,877 ) (45,288 )
Acquisition of business, net of cash acquired
   (127,705 ) —
Purchase of intangible assets
   (722 ) (2,200 )
Purchases of available-for-sale securities
   (21,225 ) (79,747 )
Sales and maturities of available-for-sale securities
   31,663    122,677
Investment in equity and cost method investees
   (4,900 ) (2,807 )
Proceeds from asset disposals
   846    586


NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
   (175,175 ) 7,890


CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of short-term borrowing and long-term debt
   (4,424 ) (157 )
Borrowings under short-term arrangements
   2,855    649
Borrowings under Credit Agreement
   809,300    —
Repayments under Credit Agreement
   (504,900 ) —
Payment of debt issuance costs
   (5,390 ) —
Repurchase of common shares
   (149,774 ) (140,143 )
Dividends paid to common shareholders
   (32,799 ) (27,082 )
Excess tax benefits from stock-based compensation
   568    64
Exercise of stock options
   3,854    3,756
Other
   (202 ) (414 )


NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
   119,088    (163,327 )


EFFECTS OF EXCHANGE RATE CHANGES ON CASH
   (7,913 ) (2,255 )


NET DECREASE IN CASH AND CASH EQUIVALENTS
   (149,195 ) (163,719 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   346,116    383,547


CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 196,921    $ 219,828


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest (net of amount capitalized)
   $ 3,573    $ 1,341
Income taxes (net of refunds)
   $ 52,845    $ 70,602
SCHEDULE OF NON-CASH INVESTING ACTIVITY:

Accrued capital expenditures included in accounts payable
   $ 3,201    $ 6,040


	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		Capital In Excess of Par Value		Retained Earnings						Treasury Stock			Stockholders’ Equity			Noncontrolling Interest			Total Stockholders’ Equity
	(In thousands, except share and per share amounts)
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		—		—		—		45,257			—			—			45,257			(216	)		45,041
Dividends declared ($0.10 per share)		—		—		—		(10,833	)		—			—			(10,833	)		—			(10,833	)
Defined benefit obligations		—		—		—		—			331			—			331			—			331
Available-for-sale investments		—		—		—		—			424			—			424			—			424
Currency translation adjustments		—		—		—		—			(10,948	)		—			(10,948	)		18			(10,930	)
Derivative financial instruments		—		—		—		—			1,701			—			1,701			—			1,701
Exercise of stock options		70,295		1		1,703		—			—			—			1,704			—			1,704
Contributions to thrift plan		94,914		1		2,767		—			—			—			2,768			—			2,768
Shares placed in treasury		—		—		—		—			—			(1,596	)		(1,596	)		—			(1,596	)
Stock-based compensation charges		138,532		1		4,213		—			—			—			4,214			—			4,214
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(101	)		(101	)

Balance March 31, 2015 (unaudited)		121,908,073	$	1,219	$	784,076	$	676,913		$	(4,896	)	$	(425,586	)	$	1,031,726		$	15,198		$	1,046,924

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		—		—		—		45,044			—			—			45,044			(3,890	)		41,154
Dividends declared ($.10 per share)		—		—		—		(11,120	)		—			—			(11,120	)		—			(11,120	)
Defined benefit obligations		—		—		—		—			397			—			397			—			397
Available-for-sale investments		—		—		—		—			24			—			24			—			24
Currency translation adjustments		—		—		—		—			(6,604	)		—			(6,604	)		(7	)		(6,611	)
Derivative financial instruments		—		—		—		—			(343	)		—			(343	)		—			(343	)
Exercise of stock options		76,308		1		2,455		—			—			—			2,456			—			2,456
Contributions to thrift plan		86,727		1		2,930		—			—			—			2,931			—			2,931
Shares placed in treasury		—		—		—		—			—			(20,454	)		(20,454	)		—			(20,454	)
Stock-based compensation charges		390,279		4		1,700		—			—			—			1,704			—			1,704
Contribution of in-kind services		—		—		—		—			—			—			—			4,173			4,173
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(112	)		(112	)

Balance March 31, 2014 (unaudited)		121,090,224	$	1,211	$	754,274	$	690,840		$	21,822		$	(289,425	)	$	1,178,722		$	18,418		$	1,197,140

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
	2015			2014
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	45,041		$	41,154
Non-cash items included in net income:
Depreciation and amortization		26,443			17,013
Income of investees, net of dividends		525			(4,694	)
Losses on asset disposals and impairments, net		15			—
In-kind research and development costs		—			4,173
Recognition of losses for pension and postretirement plans		510			594
Stock-based compensation and thrift plan expense		6,981			4,634
Excess tax benefits from stock-based compensation		44			(760	)
Changes in assets and liabilities:
Accounts receivable		17,336			17,528
Accounts payable		(41,448	)		(82,164	)
Contracts in progress and advance billings on contracts		2,557			(83,797	)
Inventories		(2,941	)		3,082
Income taxes		(10,793	)		(6,766	)
Accrued and other current liabilities		7,357			(31	)
Pension liability, accrued postretirement benefit obligation and employee benefits		(43,364	)		(20,913	)
Other, net		(3,219	)		(2,570	)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		5,044			(113,517	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash and cash equivalents		3,827			10,278
Purchases of property, plant and equipment		(21,349	)		(21,214	)
Purchases of securities		(6,593	)		(19,926	)
Sales and maturities of securities		410			24,390
Proceeds from asset disposals		(27	)		3
Investment in equity method investees		—			(4,900	)

NET CASH USED IN INVESTING ACTIVITIES		(23,732	)		(11,369	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowing and long-term debt		—			(441	)
Borrowings under short-term arrangements		—			733
Borrowings under the Credit Agreement		—			15,000
Repayments under Credit Agreement		(3,750	)		—
Repurchase of common shares		—			(15,665	)
Dividends paid to common shareholders		(10,782	)		(11,099	)
Exercise of stock options		1,740			2,191
Excess tax benefits from stock-based compensation		(44	)		760
Other		(101	)		(112	)

NET CASH USED IN FINANCING ACTIVITIES		(12,937	)		(8,633	)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(6,950	)		(4,542	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(38,575	)		(138,061	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		312,969			346,116

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	274,394		$	208,055

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	1,749		$	288
Income taxes (net of refunds)	$	30,981		$	15,088
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	3,342		$	4,854

See accompanying notes to condensed consolidated financial statements.

THE BABCOCK & WILCOX COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2014~~MARCH 31, 2015

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

We have presented ~~our~~the condensed consolidated financial statements of The Babcock & Wilcox Company (“B&W”) in U.S. Dollars in accordance with the interim reporting requirements of Form 10-Q, ~~and~~ Rule 10-01 of Regulation ~~S-X.~~S-X and accounting principles generally accepted in the United States (“GAAP”). Certain financial information and disclosures normally included in our financial statements prepared annually in accordance with ~~accounting principles generally accepted in the United States (“GAAP”)~~GAAP have been condensed or omitted. Readers of these financial statements should, therefore, refer to the consolidated financial statements and notes in our annual report on Form 10-K for the year ended December 31, ~~2013~~2014 (our ~~“2013~~“2014 10-K”). We have included all adjustments, in the opinion of management, consisting only of normal recurring adjustments, necessary for a fair presentation.

We use the equity method to account for investments in entities that we do not control, but over which we have the ability to exercise significant influence. We generally refer to these entities as “joint ventures.” We have reclassified amounts previously reported to conform to the presentation as of and for the three month period ended March 31, 2015. We have eliminated all intercompany transactions and accounts. We present the notes to our condensed consolidated financial statements on the basis of continuing operations, unless otherwise stated.

Unless the context otherwise indicates, “we,” “us” and “our” mean ~~The Babcock & Wilcox Company (“~~B~~&W”)~~&W and its consolidated subsidiaries.

Reporting Segments

We operate in ~~five~~four reportable segments: Power Generation, Nuclear Operations, Technical Services and Nuclear ~~Energy~~Energy. Prior to 2015, our mPower business was a separate reportable segment; however, in accordance with FASB TopicSegment Reporting, this business no longer meets the quantitative threshold criteria and ~~mPower.~~will be included in our “Other” category as it is no longer considered a reportable segment. The change in our reportable segments had no impact on our previously reported results of operations, financial condition or cash flows. We have applied the change in reportable segments to previously reported historical financial information and related disclosures included in this report. Our reportable segments are further described as follows:

Our Power Generation segment provides an advanced ~~clean~~fossil and ~~diverse portfolio~~renewable power generation equipment that includes a broad suite of boiler products and environmental systems and related services for power and industrial uses. We specialize in engineering, manufacturing, procurement, and erection of equipment and technologies used in the power generation industry and various other industries, and the provision of related services, including steam generating equipment, proven emissions control systems for environmental regulations, renewable energy solutions (biomass, combined heat and power, waste-to-energy and concentrating solar power), boiler cleaning systems, material transport equipment, fuel handling systems, cogeneration and combined cycle installations, and carbon capture and sequestration technologies. For this full range of product offerings, we offer complete aftermarket, operation and maintenance and construction project services. We provide products and services to electric utilities, municipalities, EPC contractors, architect engineers, independent power producers, international trading firms, electric power cooperatives and state electricity boards. Our markets include electric power generation, industrial, ~~pulp and paper,~~ chemical, oil refinery, cement, institutional, municipal and government customers worldwide. We have an extensive North American and global footprint including engineering, design, service, manufacturing, sales, business development, regional service centers, manufacturers’ representatives and joint venture facilities located in more than 30 countries around the globe. ~~We have supplied product and services for~~Our installed base represents more than 300,000 MW of ~~installed electric~~equivalent steam generating capacity in more than 80800 facilities in over 90 countries.

Our steam generating equipment operates on a range of traditional fossil fuels including coal, natural gas and oil along with renewable, unconventional and other typical waste fuel streams. We have commercialized many advanced emissions technologies to control nitrogen oxide, sulfur dioxide, sulfur trioxide, coarse and fine particulate matter, mercury, acid gases and other hazardous air emissions.

~~On June 20, 2014, we completed the acquisition of MEGTEC Holdings, Inc. (“MEGTEC”). MEGTEC~~

This segment also designs, engineers, manufactures and services air pollution control systems and coating/drying equipment for a variety of industrial applications and ~~is expected to complement~~complements our environmental products and solutions offerings.

~~See Note 11 for discussion regarding our Board of Directors’ approval of a plan to pursue the spin-off of the Power Generation business.~~

Our Nuclear Operations ~~segment manufactures~~segment’s primary activity is the manufacture of naval nuclear reactors for the U.S. Department of Energy (“DOE”)/National Nuclear Security 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. These two locations are N-Stamp certified by the American Society of Mechanical Engineers (“ASME”), making them two of only a few North American suppliers of large, heavy-walled nuclear components and vessels. The Euclid facility, which is also ASME N-Stamp certified, 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 properties and a controlled, clean-room environment with the capacity to assemble railcar-size components. Fuel for the naval nuclear reactors is provided by Nuclear Fuel Services, Inc. (“NFS”), one of our wholly owned subsidiaries. Located in Erwin, NFS also converts Cold War-era government stockpiles of highly enriched uranium into material suitable for further processing into commercial nuclear reactor fuel.

Our Technical Services segment provides 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 to the Department of Defense and the DOE, including the NNSA, the Office of Nuclear Energy, the Office of Science and the Office of Environmental Management. Through this segment we deliver products and management solutions to nuclear operations and high-consequence manufacturing facilities. A significant portion of this segment’s operations are conducted through joint ventures.

Our Nuclear Energy segment supplies commercial nuclear steam generators, components and ~~components~~services to nuclear utility customers. B&W has supplied the nuclear industry with more than 1,300 large, heavy components worldwide. This segment is the only commercial heavy nuclear component, N-Stamp certified manufacturer in North America. Our Nuclear Energy segment fabricates pressure vessels, reactors, steam generators, heat exchangers and other auxiliary equipment. This segment also provides specialized engineering services that include structural component design, 3-D thermal-hydraulic engineering analysis, weld and robotic process development and metallurgy and materials engineering. In addition, this segment offers services for nuclear steam generators and balance of plant equipment, as well as nondestructive examination and tooling/repair solutions for other plant systems and components. This segment also offers engineering and licensing services for new nuclear plant designs.

•

~~Our mPower segment is designing the B&W mPower~~^TM reactor, a small modular reactor (“SMR”) design generally based on proven light-water nuclear technology and able to operate for four years without refueling. Through our majority-owned joint venture, Generation mPower LLC (“GmP”), we are developing the associated mPower Plant power generating facility, which will use two B&W mPower^TM reactors to generate 360 MW within an advanced passively safe and secure plant architecture. As part of this initiative, we were selected to receive funding pursuant to a Cooperative Agreement with the DOE under its Small Modular Reactor Licensing Technical Support Program (the “Funding Program”) for SMR deployment by 2022. This Funding Program provides financial assistance for our mPower Plant design, engineering and licensing activities supporting the planned first mPower Plant. On April 14, 2014, we announced our plans to restructure the mPower program to focus on technology development. Beginning in the third quarter of 2014, we slowed the pace of development and intend to invest no more than $15 million on an annual basis, net of amounts reimbursed from the Funding Program. We intend to work with the DOE to amend the Funding Program to include, among other things, mutually agreeable program milestones for continued funding and a revised commercial operating date beyond 2022. If a mutually agreeable plan is not identified, future amounts may not be made available to us under the Funding Program.

See Note 9 for further information regarding our segments.

Operating results for the three ~~and nine~~ months ended ~~September 30, 2014~~March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2014.~~2015. For further information, refer to the consolidated financial statements and the related footnotes included in our ~~2013~~2014 10-K.

Spin-off

On March 16, 2015, our newly formed subsidiary Babcock & Wilcox Enterprises, Inc. filed an initial Form 10 Registration Statement with the U.S. Securities and Exchange Commission (“SEC”). The filing relates to the previously announced plan to separate our Power Generation business from our Government & Nuclear Operations business, which includes the Nuclear Operations, Technical Services and Nuclear Energy segments, through a tax free spin-off of the Power Generation business into a new independent, publicly traded company. We expect the spin-off will be completed by mid-summer 2015, subject to several conditions, including the SEC declaring effective the registration statement and final approval of the transaction by our Board of Directors. Concurrent with the spin-off, the Company will change its name to BWX Technologies, Inc.

Contracts and Revenue Recognition

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. We include revenues and related costs so recorded, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts, in contracts in progress. We include in advance billings on contracts billings that exceed accumulated contract costs and revenues and costs recognized under the percentage-of-completion method. Most long-term contracts contain provisions for progress payments. Our unbilled receivables do not contain an allowance for credit losses as we expect to invoice customers and collect all amounts for unbilled revenues. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. For all contracts, if a current estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined.

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.

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. Under the completed-contract method, income is recognized only when a contract is completed or substantially complete.

For parts orders and certain aftermarket services activities, we recognize revenues as goods are delivered and work is performed.

Variations from estimated contract performance could result in material adjustments to operating results for any fiscal quarter or year. We include claims for extra work or changes in scope of work to the extent of costs incurred in contract revenues when we believe collection is probable. At March 31, 2015 and December 31, 2014, we recognized accrued claims totaling $8.2 million.

In the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014, we recorded contract losses totaling ~~$0.0~~$7.6 million ~~and $11.6 million, respectively,~~ for additional estimated costs to complete our Power Generation segment’s Berlin Station project. ~~These losses are in addition to contract losses recorded for this project during 2013 and 2012.~~ We ~~had~~ previously asserted that substantial completion had been achieved on this project in early 2014 and that any further delays to complete this project ~~beyond the delays already caused by the customer during construction or otherwise excusable under the contract, are~~were the result of the customer’s failure to supply fuel complying with the contract specifications. The customer certified that we achieved substantial completion on the project effective July 19, 2014, following which we believe the customer has no further claims for liquidated damages associated with delays. See Note 5 for legal proceedings associated with this matter.

Comprehensive Income

The components of accumulated other comprehensive income (loss) included in stockholders’ equity are as follows:


	September 30, 2014			December 31, 2013			March 31, 2015			December 31, 2014
	(In thousands)						(In thousands)
Currency translation adjustments	$	24,439		$	38,415		$	599		$	11,547
Net unrealized gain on available-for-sale investments		198			130			579			155
Net unrealized gain on derivative financial instruments		130			627
Net unrealized gain (loss) on derivative financial instruments								1,578			(123	)
Unrecognized prior service cost on benefit obligations		(7,525	)		(10,824	)		(7,652	)		(7,983	)

Accumulated other comprehensive income	$	17,242		$	28,348
Accumulated other comprehensive income (loss)							$	(4,896	)	$	3,596

The amounts reclassified out of accumulated other comprehensive income (loss) by component and the affected condensed consolidated statements of income line items are as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014 2013 2014 2013
Accumulated Other Comprehensive Income
Component Recognized
   (In thousands)
Line Item Presented
Realized (losses) gains on derivative financial instruments
   $ 373    $ (421 ) $ 296    $ (1,573 ) Revenues
   (1,459 ) 977    (1,332 ) (1,029 ) Cost of operations
   —      38    10    78    Other-net


   (1,086 ) 594    (1,026 ) (2,524 ) Total before tax
   279    (158 ) 266    671    Provision for Income Taxes


   $ (807 ) $ 436    $ (760 ) $ (1,853 ) Net Income
Recognition of prior service cost on benefit obligations
   $ (1,794 ) $ (705 ) $ (2,812 ) $ (2,116 ) Cost of operations
   (1,609 ) (49 ) (1,780 ) (149 ) Selling, general and administrative expenses


   (3,403 ) (754 ) (4,592 ) (2,265 ) Total before tax
   898    264    1,293    782    Provision for Income Taxes


   $ (2,505 ) $ (490 ) $ (3,299 ) $ (1,483 ) Net Income
Realized gain on available-for-sale investments
   $ 21    $ 6    $ 62    $ 730    Other-net
   (7 ) (2 ) (22 ) (5 ) Provision for Income Taxes


   $ 14    $ 4    $ 40    $ 725    Net Income


Total reclassification for the period
   $ (3,298 ) $ (50 ) $ (4,019 ) $ (2,611 )


	Three Months Ended March 31,
	2015			2014
Accumulated Other Comprehensive Income (Loss) Component Recognized	(In thousands)						Line Item Presented
Realized gain (loss) on derivative financial instruments	$	694		$	163		Revenues
		(3,356	)		(1,026	)	Cost of operations
		63			10		Other-net

		(2,599	)		(853	)	Total before tax
		683			221		Provision for Income Taxes

	$	(1,916	)	$	(632	)	Net Income

Amortization of prior service cost on benefit obligations	$	(501	)	$	(509	)	Cost of operations
		(9	)		(85	)	Selling, general and administrative expenses

		(510	)		(594	)	Total before tax
		179			197		Provision for Income Taxes

	$	(331	)	$	(397	)	Net Income

Realized gain (loss) on investments	$	(14	)	$	34		Other-net
		5			(12	)	Provision for Income Taxes

	$	(9	)	$	22		Net Income

Total reclassification for the period	$	(2,256	)	$	(1,007	)

Inventories

The components of inventories are as follows:


	September 30, 2014		December 31, 2013		March 31, 2015		December 31, 2014
	(In thousands)				(In thousands)
Raw materials and supplies	$	86,311	$	85,455	$	82,766	$	81,530
Work in progress		11,086		10,872		9,843		9,831
Finished goods		19,136		16,731		17,050		17,276

Total inventories	$	116,533	$	113,058	$	109,659	$	108,637

Restricted Cash and Cash Equivalents

At ~~September 30, 2014,~~March 31, 2015, we had restricted cash and cash equivalents totaling ~~$45.8~~$53.2 million, ~~$5.6~~$4.7 million of which was held in restricted foreign cash accounts, ~~$2.6~~$2.5 million of which was held for future decommissioning of facilities (which is included in other assets on our condensed consolidated balance sheets) and ~~$37.6~~$46.0 million of which was held to meet reinsurance reserve requirements of our captive ~~insurer (in lieu of long-term investments).~~

~~Goodwill~~

Goodwill 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’s goodwill with the carrying amount of that goodwill.

~~The following summarizes the changes in the carrying amount of goodwill:~~

   Power
Generation Nuclear
Operations    Technical
Services    Nuclear
Energy    Total
   (In thousands)
Balance at December 31, 2013
   $ 104,630    $ 118,103       $ 45,000       $ 13,975       $ 281,708
Acquisition of MEGTEC and purchase price adjustments (Note 2)
   115,921    —         —         —         115,921
Foreign currency translation adjustments and other
   (2,328 ) —         —         —         (2,328 )








Balance at September 30, 2014
   $ 218,223    $ 118,103       $ 45,000       $ 13,975       $ 395,301

~~Intangible Assets~~

Intangible 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.insurer.

Warranty Expense

We accrue estimated expense included in cost of operations on our condensed consolidated statements of income to satisfy contractual warranty requirements when we recognize the associated revenue on the related contracts. In addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

The following summarizes the changes in the carrying amount of our accrued warranty expense:

Nine Months Ended
September 30,

   2014 2013
   (In thousands)
Balance at beginning of period
   $ 56,436    $ 83,682
Additions
   9,970    13,555
Acquisition of MEGTEC
   4,693    —
Expirations and other changes
   (1,664 ) (13,283 )
Payments
   (9,238 ) (15,957 )
Translation and other
   (623 ) (505 )


Balance at end of period
   $ 59,574    $ 67,492

~~Pension Plans and Postretirement Benefits~~

We sponsor various defined benefit pension and postretirement plans covering certain employees of our U.S. and international 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 and health care cost trends. We determine our discount rate based on a review of published financial data and discussions with our actuary regarding 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.

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 7 of our 2013 10-K for a detailed description of our plan assets.


	Three Months Ended March 31,
	2015			2014
	(In thousands)
Balance at beginning of period	$	53,624		$	56,436
Additions		4,175			3,590
Expirations and other changes		495			(3,718	)
Payments		(3,473	)		(1,559	)
Translation and other		(1,099	)		(225	)

Balance at end of period	$	53,722		$	54,524

Research and Development

Our 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 ~~costs~~ unrelated to specific contracts as ~~they are~~ incurred. Substantially all of these costs are inrelated to our Power Generation segment and our mPower ~~segments,~~program, the majority of which are ~~related to~~for the development of our B&W mPower^TM reactor and the associated mPower Plant.

~~During~~In the three ~~and nine~~ months ended ~~September 30,~~March 31, 2015 and 2014, we recognized $0.0 million and ~~$5.8~~$4.2 million, respectively, of non-cash, in-kind research and development costs ~~as compared to $3.9 million and $11.3 million during the three and nine months ended September 30, 2013, respectively,~~ related to services contributed by our minority partner to ~~GmP.~~

~~On April 12, 2013, Babcock & Wilcox~~Generation mPower, ~~Inc., a wholly owned~~LLC, our majority-owned subsidiary offormed in 2011 to oversee the mPower program to develop the small modular nuclear power plant based on B&W ~~entered into a~~mPower™ technology. In the three months ended March 31, 2014, we received funding of $17.1 million under our Cooperative Agreement ~~establishing the terms and conditions of a funding award totaling $150 million under the DOE’s Funding Program. This cost-sharing award requires us to use~~with the DOE funds to cover first-of-a-kind engineering costs associated with SMR design certification and licensing efforts. The DOE will provide cost reimbursement for up to 50% of qualified expenditures incurred from April 1, 2013 to March 31, 2018, subject to funding authorizations. The DOE has authorized $112.9 million of funding to B&W for this award program, with $4.2 million of authorized funds remaining at September 30, 2014. In the nine months ended September 30, 2014 and 2013, we recognized $25.4 million and $54.2 million, respectively, associated with the funding award.

under its Small Modular Reactor Licensing Technical Support Program (the “Cooperative Agreement”). On April 14, 2014, we announced our plans to restructure the mPower program to reduce spending and focus on technology development. ~~Beginning in the third quarter of 2014, we~~We slowed the pace of development and intend to invest no more than $15 million on an annual basis ~~net of amounts reimbursed from~~while we continue to search for additional investors in the ~~Funding Program.~~mPower program. We intend to ~~work~~continue working with the DOE to ~~amend~~further the ~~Funding Program,~~program. At this time, the latest extension to ~~include, among other things, mutually agreeable program milestones for continued~~the Cooperative Agreement has expired and the DOE funding ~~and a revised commercial operating date beyond 2022. If a mutually agreeable plan is not identified, future amounts may not be made available to us under the Funding Program.~~has been suspended.

Provision for Income Taxes

We are subject to U.S. federal income tax and income tax of multiple state and international jurisdictions. We provide for income taxes based on the enacted tax laws and rates in the jurisdictions in which we conduct our operations. These jurisdictions may have regimes of taxation that vary with respect to nominal rates and with respect

to the basis on which these rates are applied. This variation, along with changes in our mix of income within these jurisdictions, can contribute to shifts in our effective tax rate from period to period. We classify interest and penalties related to taxes (net of any applicable tax benefit) as a component of provision for income taxes on our condensed consolidated statements of income.

Our effective tax rate for the three months ended ~~September 30, 2014~~March 31, 2015 was approximately ~~25.5%~~32.7% as compared to ~~30.0%~~24.5% for the three months ended ~~September 30, 2013.~~March 31, 2014. The effective tax rate for the three months ended ~~September 30, 2014~~March 31, 2015 was lower than our statutory rate primarily due to the impact of the federal manufacturing tax deduction and ~~the~~foreign rate differential. The effective tax rate for the three months ended ~~September 30, 2013, primarily due to~~March 31, 2014 was lower than the impact of an $18.6 million gain from the exchange of our USEC investment for which the related tax provision was offset by the reversal of a previously established valuation allowance related to the prior impairments of the USEC investment.

~~Our~~ effective tax rate for the ~~nine months~~period ended September 30, 2014 was approximately 26.7% as compared to 29.0% for the nine months ended September 30, 2013. The effective tax rate for the nine months ended September 30, 2014 was lower than our statutory rateMarch 31, 2015 primarily due to the receipt of a favorable ruling from the Internal Revenue Service that ~~allows~~allowed us to amend prior year U.S. income tax returns to exclude distributions of ~~certain~~several of our foreign joint ventures from domestic taxable income. In addition, the effective tax rate for the nine months ended September 30, 2014 was lower due to the $18.6 million gain from the exchange of our USEC investment for which the related tax provision was offset by the reversal of a previously established valuation allowance related to the prior impairments of the USEC investment. Our effective tax rate for the nine months ended September 30, 2013 reflected the impact of certain tax benefits related to the retroactive provisions of the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013. These 2013 tax benefits relate primarily to research and development tax credits.

As of ~~September 30, 2014,~~March 31, 2015, we have gross unrecognized tax benefits of ~~$6.9~~$9.4 million. Of the $9.4 million ~~which, if recognized,~~gross unrecognized tax benefits, $7.1 million would ~~lower~~reduce our effective tax rate ~~from continuing operations.~~if recognized.

~~New Accounting Standards~~

~~In August 2014, the Financial Accounting Standards Board issued an update to the Topic~~~~Presentation 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.

NOTE 2 – ACQUISITIONS AND DISPOSITIONS

MEGTEC Acquisition

On June 20, 2014, we acquired the outstanding stock of industrial processes solutions provider MEGTEC Holdings, Inc. (“MEGTEC”) for $142.8 million, net of cash acquired. MEGTEC designs, engineers, manufactures and services air pollution control systems and coating/drying equipment for a variety of industrial applications and ~~is expected to complement~~complements our Power Generation segment’s environmental products and solutions offerings that serves utility markets.

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 long-lived and intangible asset valuations:


			MEGTEC
	MEGTEC (in thousands)		(in thousands)
Cash and cash equivalents	$	14,232	$	14,232
Accounts receivable		23,459		23,054
Inventories		5,528		5,395
Other current assets		9,069		9,200
Property, plant and equipment		5,090		5,090
Goodwill		115,921		108,800
Intangible assets		42,000		44,250

Total assets acquired	$	215,299	$	210,021


Accounts payable		13,402		13,402
Advance billings on contracts		9,144		11,144
Other current liabilities		17,477		18,089
Pension liability		5,041		5,041
Deferred income taxes		12,137		5,202
Other liabilities		1,085		130

Total liabilities assumed	$	58,286	$	53,008

Net assets acquired	$	157,013	$	157,013
Cash and cash equivalents acquired		14,232		14,232

Net assets acquired, net of unrestricted cash acquired	$	142,781	$	142,781


Amount of tax deductible goodwill	$	—	$	34,583

The preliminary intangible assets included above consist of the following (dollar amounts in thousands):


	Amount		Amortization Period	Amount		Amortization Period
Customer relationships	$	20,000	7 years	$	24,400	7 years
Backlog	$	9,500	1 year	$	10,600	1 year
Trade names / trademarks	$	6,000	15 years	$	6,000	15 years
Developed technology	$	6,500	10 years	$	3,250	10 years

Our condensed consolidated financial statements for the three ~~and nine~~ months ended ~~September 30, 2014 include $48.9 million and $52.5~~March 31, 2015 includes $41.1 million of revenues ~~respectively,~~ and ~~$1.6 million and $1.8~~$0.2 million of net income ~~respectively, related to MEGTEC operations occurring~~ from ~~the acquisition date to September 30, 2014.~~MEGTEC. Additionally, the following unaudited pro forma financial information presents our results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2014 ~~and 2013~~ had the acquisition of MEGTEC occurred on January 1, 2013. 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, 2013. This information is presented for comparative purposes only and should not be taken as representative of our future consolidated results of operations.


									Three Months Ended March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,				2014
	2014		2013		2014		2013
Revenues	$	737,902	$	822,629	$	2,166,257	$	2,591,301	$	705,383

Net Income Attributable to The Babcock & Wilcox Company	$	63,140	$	60,925	$	137,670	$	180,239	$	45,750

Basic Earnings per Common Share	$	0.59	$	0.55	$	1.26	$	1.60	$	0.41
Diluted Earnings per Common Share	$	0.59	$	0.55	$	1.26	$	1.59	$	0.41

The unaudited pro forma results include the following pre-tax adjustments to the historical results presented above:

~~Increase (decrease) in~~Additional amortization expense related to timing of amortization of the fair value of identifiable intangible assets acquired of approximately ~~$(2.4) million and $(1.1)~~$0.5 million for the three ~~and nine~~ months ended ~~September 30, 2014, respectively, and $2.8 million and $8.4 million for the three and nine months ended September 30, 2013, respectively.~~March 31, 2014.

Elimination of historical interest expense of approximately ~~$0.9 million for the nine months ended September 30, 2014, and $1.0 million and $1.9~~$0.3 million for the three ~~and nine~~ months ended ~~September 30, 2013, respectively.~~March 31, 2014.

Additional interest expense associated with the incremental borrowings that would have been incurred to acquire MEGTEC as of January 1, 2013 of approximately ~~$1.2 million for the nine months ended September 30, 2014, and~~ $0.6 ~~million and $1.9~~ million for the three ~~and nine~~ months ended ~~September 30, 2013, respectively.~~

~~Elimination of $0.6 million and $14.1 million, respectively, in acquisition related costs recognized in the three and nine months ended September 30, 2014 that are not expected to be recurring.~~

~~Ebensburg Acquisition~~

On May 21, 2014, we acquired the remaining outstanding interest in Ebensberg Power Company for a purchase price of $1.3 million. As part of the transaction, we acquired cash of $16.4 million and property, plant and equipment with a fair value of $16.1 million.

~~Nuclear Projects Business Disposition~~

In the first quarter of 2014, we announced that we would exit our Nuclear Energy segment’s Nuclear Projects business as it had lower margins and higher financial risks. Run-off operations for remaining projects were completed during the quarter ended June 30, 2014. Income (loss) before provision for income taxes for the Nuclear Projects business was $0.0 million and $(0.2) million in the three and nine months ended September 30, 2014, respectively, and $(0.6) million and $(1.6) million in the three and nine months ended September 30, 2013, respectively.

At September 30, 2014, assets recorded within the condensed consolidated financial statements for the Nuclear Projects business include $45.4 million in outstanding accounts receivable. This amount relates to a reimbursable target cost subcontract pursuant to which we performed steam generator replacement installation services for the prime contractor. All work under that subcontract has been completed. The customer has questioned the reasonableness of certain project costs, asserted liquidated damages and has not paid the prime contractor the referenced amounts invoiced under the prime contract. Based upon the terms of the subcontract, the prime contractor has not yet paid us. We filed a mechanic’s lien in the amount of $37.4 million on July 11, 2014, which represented the outstanding accounts receivable balance at the time, against the owner’s property in order to preserve our statutory legal rights, and we have until early March 2015 to file suit against the owner to foreclose on that lien. We contend that the invoiced amounts were reasonably incurred under the terms of the subcontract and that project delays and additional costs are attributable to the owner. Payment of all amounts currently due and owing is being sought from the prime contractor through the defined subcontract dispute resolution processes. If those efforts are unsuccessful, we will have the right to initiate collection litigation against the prime contractor.

31, 2014.

NOTE 3 – SPECIAL CHARGES FOR RESTRUCTURING ACTIVITIES

Global Competitiveness Initiative

In the third quarter of 2012, we announced the Global Competitiveness Initiative (“GCI”) to enhance competitiveness, better position B&W for growth and improve profitability. In conjunction with GCI, during the ~~nine~~three months ended ~~September 30,~~March 31, 2014, we incurred $0.2 million of expenses related to employee termination benefits and ~~$3.1~~$1.3 million of expenses related to facility consolidation. During the nine months ended September 30, 2013, we reduced our workforce and initiated other actions, resulting in $15.8 million of expenses related to employee termination benefits, $8.1 million of expenses related to consulting and GCI administrative costs, and $1.6 million of expenses related to facility consolidation charges.

Other Restructuring Actions

In the ~~first quarter of 2014, we announced a margin improvement program in our Power Generation and Nuclear Energy segments. In the nine~~three months ended ~~September 30, 2014,~~March 31, 2015, we also incurred $16.9 million of expenses related to this project, including $9.3 million of expenses related to employee termination benefits, $2.2 million of expenses related to consulting and administrative costs and $5.4$2.4 million of expenses related to facility ~~consolidation.~~consolidation in our Power Generation segment in conjunction with the margin improvement program that was announced in 2014.

~~In the nine months ended September 30, 2014, we also~~We incurred $8.2 million of expenses related to the restructuring of our mPower program, including $5.8 million of expenses related to employee termination benefits, $2.2 million of expenses related to consulting and administrative costs and $0.2 million of expenses related to facility consolidation.

~~Additionally, we incurred~~additional expenses related to employee termination benefits totaling $0.4 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2014 related to the restructuring of our Technical Services segment. In addition, we incurred consulting and administrative costs totaling $0.1 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively, related to the restructuring of our mPower program.

The following summarizes the changes in our restructuring liability for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 and ~~2013:~~2014:


							Three Months Ended
	Nine Months Ended						March 31,			March 31,
	September 30, 2014			September 30, 2013			2015			2014
	(In thousands)						(In thousands)
Balance at the beginning of the period	$	10,054		$	—		$	9,665		$	10,054
Special charges for restructuring activities⁽¹⁾		22,108			24,497			194			1,724
Payments		(24,572	)		(20,727	)		(5,260	)		(5,418	)
Translation and other		(204	)		—			(167	)		(160	)

Balance at the end of the period	$	7,386		$	3,770		$	4,432		$	6,200

(1)	Excludes non-cash charges of ~~$6.7~~$2.3 million and ~~$1.0~~$0.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ respectively, which did not impact the restructuring liability.

At ~~September 30, 2014,~~March 31, 2015, unpaid restructuring charges totaled ~~$6.5~~$4.2 million for employee termination benefits and ~~$0.9~~$0.2 million for ~~consulting and administrative~~facility costs.

NOTE 4 – PENSION PLANS AND POSTRETIREMENT BENEFITS

Components of net periodic benefit cost included in net income are as follows:

   Pension Benefits Other Benefits
   Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
   September 30, September 30, September 30, September 30,
   2014 2013 2014 2013 2014 2013 2014 2013
   (In thousands)
Service cost
   $ 9,305    $ 11,505    $ 28,602    $ 34,625    $ 217    $ 246    $ 649    $ 742
Interest cost
   29,980    27,624    90,668    83,250    978    946    2,924    2,844
Expected return on plan assets
   (37,314 ) (36,560 ) (112,080 ) (109,841 ) (575 ) (538 ) (1,725 ) (1,613 )
Amortization of prior service cost (credit)
   637    790    1,906    2,374    (40 ) (36 ) (120 ) (109 )
Recognized net actuarial loss
   11,079    —      11,079    —      —      —      —      —


Net periodic benefit cost
   $ 13,687    $ 3,359    $ 20,175    $ 10,408    $ 580    $ 618    $ 1,728    $ 1,864

During the quarter ended September 30, 2014, benefit accruals under certain hourly Canadian pension plans were ceased with an effective date of January 1, 2015. In addition, significant lump sum payments were made from certain salaried Canadian pension plans during the nine months ended September 30, 2014. As a result of these actions, we remeasured certain of our Canadian pension plans resulting in the recognition of a net actuarial loss of $11.1 million, which includes $5.5 million in actuarial losses, a $4.6 million settlement loss and a $1.0 million curtailment loss. We have excluded the recognized net actuarial loss from our reportable segments and such amount has been reflected in Note 9 as the Mark to Market Adjustment in the reconciliation of reportable segment income to consolidated operating income. We recorded $4.9 million of the net actuarial loss within cost of operations and $6.2 million of the loss within selling, general and administrative expenses.


	Pension Benefits						Other Benefits
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2015			2014			2015			2014
	(In thousands)
Service cost	$	9,872		$	9,646		$	227		$	216
Interest cost		28,581			30,327			957			969
Expected return on plan assets		(39,759	)		(37,377	)		(585	)		(575	)
Amortization of prior service cost (credit)		557			634			(47	)		(40	)

Net periodic benefit cost	$	(749	)	$	3,230		$	552		$	570

We made contributions to our pension and postretirement benefit plans totaling ~~$36.2~~$6.4 million and ~~$63.2~~$8.6 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2015 and 2014, ~~respectively, as compared to $28.3 million and $71.5 million in the three and nine months ended September 30, 2013,~~ respectively.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Other than as noted below, there have been no material changes during the period covered by this Form 10-Q in the status of the legal proceedings disclosed in Note 1110 to the consolidated financial statements in Part II of our ~~2013~~2014 10-K.

Investigations and Litigation

Apollo and Parks Township

In January 2010, Michelle McMunn, Cara D. Steele and Yvonne Sue Robinson filed suit against Babcock & Wilcox Power Generation Group, Inc. (“B&W PGG”), Babcock & Wilcox Technical Services Group, Inc., formerly known as B&W Nuclear Environmental Services, Inc., (the “B&W Parties”) and Atlantic Richfield Company (“ARCO”) in the United States District Court for the Western District of Pennsylvania. Since January 2010, additional suits have been filed by additional plaintiffs and there are currently fifteen lawsuits pending in the U.S. District Court for the Western District of Pennsylvania against the B&W Parties and ~~ARCO, including the most recent claims filed in May 2014.~~ARCO. In total, the suits presently involve approximately 93 primary ~~claimants, including the five additional primary claims filed in May 2014.~~claimants. The primary claimants allege, among other things, personal injuries and property damage as a result of alleged releases of radioactive material relating to the operation, remediation, and/or decommissioning of two former nuclear fuel processing facilities located in the Borough of Apollo and Parks Township, Pennsylvania (collectively, the “Apollo and Parks Litigation”). Those facilities previously were owned by Nuclear Materials and Equipment Company, a former subsidiary of ARCO (“NUMEC”), which was acquired by B&W PGG. The plaintiffs in the Apollo and Parks Litigation seek compensatory and punitive ~~damages.~~damages, and in November 2014 delivered a demand of $125.0 million for the settlement of all then-filed actions. All of the suits, except for the most recent filing, have been consolidated for non-dispositive pre-trial matters. Fact discovery in the Apollo and Parks Litigation is now closed for all claims other than the most recent claim in January 2015, but no trial date has been set.

At the time of ARCO’s sale of NUMEC stock to B&W PGG, B&W PGG received an indemnity and hold harmless agreement from ARCO with respect to claims and liabilities arising prior to or as a result of conduct or events predating the acquisition.

Insurance coverage and/or the ARCO indemnity currently provides coverage for the claims alleged in the Apollo and Parks Litigation, although no assurance can be given that insurance and/or the indemnity will be available or sufficient in the event of liability, if any.

The B&W 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 B&W 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 B&W 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 B&W 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 the B&W Parties 58.33% of the total of all ARCO’s proceeds/amounts recovered against ANI on account of the Hall Litigation.

The B&W Parties sought recovery from ANI for amounts paid by the B&W Parties to settle the Hall Litigation, along with unreimbursed attorney fees, allocated amounts assigned by ARCO to the B&W 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 B&W 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 B&W Parties, ARCO and ANI entered into an agreement in which the parties agreed to the dismissal with prejudice of all remaining claims pending in the ANI Litigation, excluding the B&W 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 B&W Parties’ and ARCO for their settlements under the provisions of the ANI policies. In February 2012, the Court granted the parties’ proposed order implementing their agreement and entered final judgment in favor of the B&W Parties and ARCO on the Settlement Claims. As part of the final order and 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 B&W and ARCO’s request for appeal. The parties’ briefs on the appeal have been filed and oral arguments were held October 7, 2014. B&W has not recognized any amounts claimed in the ANI Litigation in its financial statements due to the uncertainty surrounding the ultimate amount to be realized.

Berlin Station

Our subsidiary, Babcock & Wilcox Construction Co., Inc. (“BWCC”), is currently in a dispute with a customer in connection with a 75MW biomass-energy power plant that BWCC designed and built in Berlin, New Hampshire. The dispute primarily concerns material claims by BWCC against its customer for contract changes relating to schedule delays, delay costs, extra work, withheld payments, improper draws on letters of credit, withheld contract-retention amounts, as well as fraud and ~~withheld contract retention amounts.~~misrepresentation. The customer has made nine partial draws totaling approximately $11.0 million under letters of credit that were outstanding in connection with the project. These draws correspond to a total of approximately $11.9 million in alleged liquidated damages for delay (“Delay LDs”) on the project.

Following the customer’s denial of BWCC’s change order request relating to schedule delays, delay costs and extra work incurred up to that time, on January 16, 2014, BWCC filed suit against the customer in the Court of Common Pleas, Summit County, Ohio, Case No. 2014 01 0208, seeking damages in excess of $37 million (the “Ohio suit”). On or about January 30, 2014, BWCC’s customer filed suit against BWCC in the Superior Court of Coos County, New Hampshire, Case No. 214-2014-CV-14 alleging breach of contract and seeking unspecified amounts (the “New Hampshire suit”). which was subsequently transferred to the New Hampshire

business/commercial court division. On June 26, 2014, the Ohio suit was dismissed on jurisdictional and forum non conveniens grounds. On August 29, 2014, BWCC filed its Answer, Affirmative Defenses and Counterclaim in the New Hampshire suit seeking recovery of ~~damages~~damages. Damages claimed and incurred to date ofare at least ~~$66~~$70 million in connection with all matters currently in dispute.

~~There~~Given the customer’s prior wrongful acts, there is a risk that the customer will attempt to call all or part of the remaining $21.9 million of letters of credit during the pendency of this matter. We believe any such call would be wrongful and entitle us to a return of the funds drawn and other damages. We have made provisions in our financial statements for Delay LDs called to date against the letters of credit and have not recorded offsetting claims revenue related to these calls in our financial statements.

We believe BWCC has sound legal and factual bases for its claims. BWCC intends to aggressively pursue recovery on its claims, including recovery of the wrongful calls against BWCC’s letters of credit. However, it is premature to predict the outcome of this matter. The litigation could be lengthy, and if BWCC’s customer were to prevail completely or substantially in this matter, the outcome could have a material adverse effect on our financial statements.

Prairie Island

On November 12, 2014, one of our subsidiaries, Babcock & Wilcox Nuclear Energy, Inc. (“B&W NE”), filed suit in the District Court, 1st JDC, Goodhue County Minnesota, Docket No. 25.cv.14.2626, against both Northern States Power Co. d/b/a Xcel Energy (“Xcel”) and SNC-Lavalin claiming $45.4 million in damages along with interest and attorneys’ fees for breach of contract and pursuant to a previously filed mechanic’s lien on Xcel’s property. The suit arises from a steam generator replacement project at Xcel’s Prairie Island Nuclear Generating Plant in Red Wing, Minnesota in which B&W NE served as subcontractor to SNC-Lavalin. B&W NE’s claims assert, among other things, that amounts owed to B&W NE have been improperly withheld and that Xcel was not entitled to impose certain liquidated damages for delay under the terms of B&W NE’s contract. As of December 31, 2014, Xcel and SNC-Lavalin have filed answers and limited counterclaims, but B&W NE believes the counterclaims are without merit.

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 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, which we view as a positive development for both NWP and LANS. Both joint ventures are in discussions with the DOE on the implementation of this settlement framework.

ARPA

On February 28, 2014, Arkansas River Power Authority (“ARPA”) filed suit against Babcock & Wilcox Power Generation Group, Inc. (“B&W PGG”) in the United States District Court for the District of Colorado (Case No. 14-cv-00638-CMA-NYW) alleging breach of contract, negligence, fraud and other claims arising out of B&W PGG’s delivery of a circulating fluidized bed (“CFB”) boiler and related equipment used in the Lamar Repowering Project pursuant to a 2005 contract.

In 2009, B&W PGG informed ARPA that the boiler would require a selective non-catalytic reduction system in order to achieve contractual emissions guarantees, which B&W PGG supplied in 2010. B&W PGG recommended additional modifications in 2011 and 2012 to ensure the boiler would meet contractual emissions guarantees; however, ARPA has not installed all of the recommended modifications. ARPA has not announced whether it intends to complete and commission the Lamar plant.

On April 16, 2014, B&W PGG filed an Answer asserting numerous defenses, including waiver, prevention of performance and failure to mitigate damages and Counterclaims alleging bad faith, breach of contract and unjust enrichment. ARPA filed an Answer to the Counterclaims on May 7, 2014. The District Court granted leave for ARPA to amend its Complaint, and ARPA’s First Amended Complaint was accepted on March 20, 2015. B&W PGG filed its Answer to the First Amended Complaint on April 1, 2015. Discovery is ongoing and a trial date has not been set.

We believe that ARPA has asserted damages theories that are highly speculative and without legal or economic support as a litigation tactic. We also believe most of the alleged damages are expressly waived and/or capped in enforceable provisions of the 2005 contract. We cannot estimate the possible loss at this time. However, in addition to establishing other relevant sub-caps and including an explicit waiver of a broad range of damages, including consequential damages, the 2005 contract provides an overall cap of liability at the original contract price of approximately $20.5 million. ARPA has alleged various theories of possible liability and damages that would lead to vastly different measures of damages, making it impracticable to estimate a range of possible outcomes; however, ARPA’s damage claims total approximately $170 million. B&W PGG does not believe it is probable that ARPA will be successful in any of its claims. B&W PGG believes it has strong defenses and intends to aggressively defend this matter and pursue its counterclaims. However, if ARPA were to prevail on all or any significant portion of its claims in this matter, the outcome could have a material adverse effect on our financial condition.

Other Litigation and Settlements

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 and Babcock & Wilcox Canada, Ltd. in a case entitledAREVA 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. We have filed a post-trial motion requesting that the verdict be set aside or a new trial granted. On March 5, 2015, the trial court denied a post-trial motion requesting that the verdict be set aside or a new trial granted. The B&W parties have filed a notice of appeal with the Virginia Supreme Court.

The case was filed August 26, 2011 in the Circuit Court for the City of Lynchburg, Commonwealth of Virginia and alleged that the B&W 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.

NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS

Our global operations give rise to exposure to market risks from changes in foreign currency exchange (“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’ 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 condensed consolidated balance sheets. Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either deferred in stockholders’ equity as a component of accumulated other comprehensive income (loss) until the hedged item is recognized in ~~earnings, or offset against the change in fair value of the hedged firm commitment through~~ earnings. Any ineffective portion of a derivative’s change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in other – net on our condensed 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 condensed consolidated statements of income.

We have designated all of our FX forward contracts that qualify for hedge accounting as cash flow hedges. The hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in FX spot rates of forecasted transactions related to long-term contracts. We exclude from our assessment of effectiveness the portion

of the fair value of the FX forward contracts attributable to the difference between FX spot rates and FX forward rates. At ~~September 30, 2014,~~March 31, 2015, we had deferred approximately ~~$0.1~~$1.6 million of net gains on these derivative financial instruments in accumulated other comprehensive ~~income.~~income (loss). Assuming market conditions continue, we expect to recognize substantially all of this amount in the next twelve months.

At ~~September 30, 2014,~~March 31, 2015, our derivative financial instruments consisted of FX forward contracts. The notional value of our FX forward contracts totaled ~~$75.7~~$170.2 million at ~~September 30, 2014,~~March 31, 2015, with maturities extending to ~~December 2016.~~August 2017. These instruments consist primarily of contracts to purchase or sell Canadian ~~Dollars.~~Dollars, British Pounds Sterling or Euros. We are exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. We attempt to mitigate this risk by using major financial institutions with high credit ratings. The counterparties to all of our FX forward contracts are financial institutions included in our credit facility. Our hedge counterparties have the benefit of the same collateral arrangements and covenants as described under our credit facility.

The following tables summarize our derivative financial instruments at ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013:~~2014:


					Asset and Liability Derivatives
	Asset and Liability Derivatives				March 31,		December 31,
	September 30, 2014		December 31, 2013		2015		2014
	(In thousands)				(In thousands)
Derivatives Designated as Hedges:
FX Forward Contracts:

Location
Accounts receivable-other	$	3	$	1,139	$	3,151	$	541
Other assets	$	256	$	94	$	1,555	$	—
Accounts payable	$	1,904	$	581	$	3,790	$	2,744
Other liabilities	$	534	$	603	$	1,768	$	743

Derivatives Not Designated as Hedges:
FX Forward Contracts:

Location
Accounts receivable-other	$	173	$	464	$	431	$	176
Other assets	$	46	$	50	$	—	$	—
Accounts payable	$	310	$	10	$	101	$	284

The effects of derivatives on our financial statements are outlined below:


	The Effects of Derivative Instruments on our Financial Statements
	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2014			2013			2014			2013			2015			2014
	(In thousands)												(In thousands)
Derivatives Designated as Hedges:
Cash Flow Hedges:
FX Forward Contracts:
Amount of gain (loss) recognized in other comprehensive income	$	(1,501	)	$	1,266		$	(1,693	)	$	(3,944	)
Gain (loss) reclassified from accumulated other comprehensive income into earnings: effective portion
Amount of loss recognized in other comprehensive income (loss)													$	(389	)	$	(1,314	)

Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings: effective portion
Location
Revenues	$	373		$	(421	)	$	296		$	(1,573	)	$	694		$	163
Cost of operations	$	(1,459	)	$	977		$	(1,332	)	$	(1,029	)	$	(3,356	)	$	(1,026	)
Other-net	$	—		$	38		$	10		$	78		$	63		$	10

Gain (loss) recognized in income: portion excluded from effectiveness testing
Gain recognized in income: portion excluded from effectiveness testing
Location
Other-net	$	(346	)	$	169		$	(68	)	$	522		$	1,028		$	435

Derivatives Not Designated as Hedges:
FX Forward Contracts:
Gain (loss) recognized in income
Gain recognized in income
Location
Other-net	$	(210	)	$	352		$	(55	)	$	(231	)	$	217		$	67

NOTE 7 – FAIR VALUE MEASUREMENTS

Investments

The following is a summary of our investments measured at fair value at ~~September 30, 2014~~March 31, 2015 (in thousands):


	9/30/14		Level 1		Level 2		Level 3		3/31/15		Level 1		Level 2		Level 3
Trading securities
Corporate bonds	$	11,313	$	11,313	$	—	$	—
Corporate bonds – Centrus Energy Corp.									$	1,876	$	1,876	$	—	$	—

Available-for-sale securities
Equities	$	7,333	$	—	$	7,333	$	—
Equities – Centrus Energy Corp.									$	3,670	$	—	$	3,670	$	—
Mutual funds		4,137		—		4,137		—		4,283		—		4,283		—
Asset-backed securities and collateralized mortgage obligations		346		—		346		—		310		—		310		—
Certificates of deposit										1,500		—		1,500
Commercial paper		400		—		400				7,093		—		7,093		—

Total	$	23,529	$	11,313	$	12,216	$	—	$	18,732	$	1,876	$	16,856	$	—

The following is a summary of our ~~available-for-sale securities~~investments measured at fair value at December 31, ~~2013~~2014 (in thousands):


	12/31/13		Level 1		Level 2		Level 3		12/31/14		Level 1		Level 2		Level 3
									(In thousands)
Trading securities
Corporate bonds – Centrus Energy Corp.									$	2,439	$	2,439	$	—	$	—

Available-for-sale securities
Equities – Centrus Energy Corp.									$	3,088	$	—	$	3,088	$	—
Mutual funds	$	4,001	$	—	$	4,001	$	—		4,199		—		4,199		—
U.S. Government and agency securities		3,000		3,000		—		—
Asset-backed securities and collateralized mortgage obligations		425		—		425		—		319		—		319		—
Commercial paper		7,748		—		7,748		—		2,398		—		2,398		—

Total	$	15,174	$	3,000	$	12,174	$	—	$	12,443	$	2,439	$	10,004	$	—

We estimate the fair value of investments based on quoted market prices. For investments for which there are no quoted market prices, we derive fair values from available yield curves for investments of similar quality and terms.

~~Centrus Energy Corp. Transaction~~

On September 5, 2014, the Bankruptcy Court for the District of Delaware approved and confirmed the proposed voluntary Chapter 11 pre-packaged or pre-arranged plan of reorganization of USEC (the “Plan”). USEC Inc. completed the final steps necessary to emerge from its Chapter 11 bankruptcy on September 30, 2014. The reorganized company is called Centrus Energy Corp. and trades on the NYSE under the symbol LEU. Under the Plan, B&W received 7.98% of the Centrus Energy Corp. common stock and approximately $20.2 million in principal amount of 8.0% PIK Toggle Notes due 2019/2024 in exchange for its investment in USEC Series B-1 12.75% Convertible Preferred Stock and Warrants. We recorded a gain in other income of $18.6 million for the fair value of the Centrus Energy Corp. common stock and notes, which were trading at a discount to par value, at September 30, 2014.

Derivatives

Level 2 derivative assets and liabilities currently consist of FX forward contracts. Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments. At ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013,~~2014, we had forward contracts outstanding to purchase or sell foreign currencies, primarily Canadian Dollars, British Pounds Sterling and Euros, with a total fair value of ~~$(2.3)~~$(0.5) million and ~~$0.6~~$(3.1) million, respectively.

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments, as follows:

Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying condensed consolidated balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.

Long-term and short-term debt. We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instruments approximated their carrying value at ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013.~~2014.

Guarantee. In the third quarter of 2014, B&W issued a letter of credit with a four year term totaling approximately $10 million in support of a bank loan borrowed by Thermax Babcock & Wilcox Energy Solutions Private Limited (“TBWES”). TBWES is an unconsolidated affiliate and the letter of credit can be drawn if TBWES defaults on the loan. ~~The~~We recognized the fair value of ~~the~~this guarantee ~~is not material.~~totaling $1.7 million in other liabilities on our consolidated balance sheet at December 31, 2014 with an associated increase to our investments in unconsolidated affiliates.

NOTE 8 – STOCK-BASED COMPENSATION

Total stock-based compensation expense for all of our plans recognized for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2015 and 2014 totaled ~~$4.3~~$4.5 million and ~~$12.1~~$1.9 million, respectively, with associated tax benefit recognized for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2015 and 2014 totaling $1.6 million and ~~$4.6~~$0.7 million, respectively.

Total stock-based compensation expense for all of our plans recognized for the three and nine months ended September 30, 2013 totaled $4.5 million and $14.2 million, respectively, with associated tax benefit recognized for the three and nine months ended September 30, 2013 totaling $1.8 million and $5.5 million, respectively.

NOTE 9 – SEGMENT REPORTING

As described in Note 1, our operations are assessed based on ~~five~~four reportable segments. An analysis of our operations by reportable segment is as follows:

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2014 2013 2014 2013
   (In thousands)
REVENUES:

Power Generation
   $ 402,016    $ 426,960    $ 1,041,473    $ 1,359,614
Nuclear Operations
   297,489    282,120    877,141    874,245
Technical Services
   20,236    25,242    70,706    77,903
Nuclear Energy
   21,529    52,470    114,236    179,171
mPower
   —      343    278    980
Adjustments and Eliminations⁽¹⁾
   (3,368 ) (12,301 ) (17,909 ) (25,520 )


   $ 737,902    $ 774,834    $ 2,085,925    $ 2,466,393


⁽¹⁾Segment revenues are net of the following intersegment transfers and other adjustments:

Power Generation Transfers
   $ 1,193    $ 9,027    $ 5,413    $ 11,327
Nuclear Operations Transfers
   1,911    1,485    6,878    4,301
Technical Services Transfers
   2    1,120    55    2,669
Nuclear Energy Transfers
   262    669    5,563    7,223
mPower Transfers
   —      —      —      —


   $ 3,368    $ 12,301    $ 17,909    $ 25,520


OPERATING INCOME:

Power Generation
   $ 35,260    $ 38,348    $ 61,017    $ 102,213
Nuclear Operations
   61,893    63,819    180,103    184,280
Technical Services
   4,951    18,398    34,818    47,812
Nuclear Energy
   (6,698 ) 21    (4,627 ) 10,201
mPower
   (5,140 ) (25,576 ) (63,782 ) (53,627 )


   $ 90,266    $ 95,010    $ 207,529    $ 290,879


Unallocated Corporate⁽¹⁾
   (5,352 ) (8,040 ) (13,729 ) (24,335 )
Special Charges for Restructuring Activities
   (8,675 ) (4,849 ) (28,803 ) (25,504 )
Mark to Market Adjustment
   (11,079 ) —      (11,079 ) —


Total Operating Income⁽²⁾
   $ 65,160    $ 82,121    $ 153,918    $ 241,040


Other Income (Expense):

Interest income
   267    480    876    1,135
Interest expense
   (2,978 ) (631 ) (4,798 ) (2,238 )
Other – net
   18,625    (533 ) 20,527    1,878


Total Other Income (Expense)
   15,914    (684 ) 16,605    775


Income before Provision for Income Taxes
   $ 81,074    $ 81,437    $ 170,523    $ 241,815


⁽¹⁾Unallocated corporate includes general corporate overhead not allocated to segments.

⁽²⁾Included in operating income is the following:

(Gains) Losses on Asset Disposals and Impairments – Net:

Power Generation
   $ 19    $ 1,255    $ 1,476    $ 1,170
Nuclear Operations
   —      —      —      163
Technical Services
   —      —      —      —
Nuclear Energy
   (619 ) 3    (619 ) 12
mPower
   —      —      —      —
Corporate
   (5 ) —      (5 ) —


   $ (605 ) $ 1,258    $ 852    $ 1,345


Equity in Income of Investees:

Power Generation
   $ 2,859    $ 3,287    $ 5,659    $ 10,596
Nuclear Operations
   —      —      —      —
Technical Services
   4,419    15,063    30,069    41,595
Nuclear Energy
   30    (199 ) 32    (478 )
mPower
   —      —      —      —


   $ 7,308    $ 18,151    $ 35,760    $ 51,713


	Three Months Ended
	March 31,
	2015			2014
	(In thousands)
REVENUES:
Power Generation	$	397,155		$	312,078
Nuclear Operations		284,438			286,214
Technical Services		18,584			24,455
Nuclear Energy		32,957			47,780
Other		—			278
Adjustments and Eliminations⁽¹⁾		(2,569	)		(8,788	)

	$	730,565		$	662,017



⁽¹⁾Segment revenues are net of the following intersegment transfers and other adjustments:


Power Generation Transfers	$	604		$	2,981
Nuclear Operations Transfers		496			3,087
Technical Services Transfers		—			52
Nuclear Energy Transfers		1,469			2,668

	$	2,569		$	8,788


OPERATING INCOME:
Power Generation	$	22,996		$	10,542
Nuclear Operations		68,012			59,528
Technical Services		1,645			14,789
Nuclear Energy		(3,666	)		523
Other		(5,168	)		(26,709	)

	$	83,819		$	58,673

Unallocated Corporate⁽¹⁾		(10,506	)		(2,375	)
Special Charges for Restructuring Activities		(2,502	)		(2,658	)

Total Operating Income⁽²⁾	$	70,811		$	53,640


Other Income (Expense):
Interest income		174			419
Interest expense		(2,363	)		(899	)
Other – net		(1,715	)		1,322

Total Other Income (Expense)		(3,904	)		842


Income before Provision for Income Taxes	$	66,907		$	54,482



⁽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:
Power Generation	$	18		$	—
Nuclear Operations		—			—
Technical Services		—			—
Nuclear Energy		(3	)		—

	$	15		$	—

Equity in Income (Loss) of Investees:
Power Generation	$	(2,071	)	$	2,366
Nuclear Operations		—			—
Technical Services		1,852			12,901
Nuclear Energy		—			2

	$	(219	)	$	15,269

NOTE 10 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:


									Three Months Ended
									March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,				2015		2014
	2014		2013		2014		2013		(In thousands, except share and per share amounts)
	(In thousands, except share and per share amounts)
*Basic:*

Net income attributable to The Babcock & Wilcox Company	$	61,214	$	60,446	$	132,695	$	180,490	$	45,257	$	45,044


Weighted average common shares		107,105,986		110,931,376		109,103,879		112,309,170		106,775,916		110,439,415


Basic earnings per common share	$	0.57	$	0.54	$	1.22	$	1.61	$	0.42	$	0.41

*Diluted:*

Net income attributable to The Babcock & Wilcox Company	$	61,214	$	60,446	$	132,695	$	180,490	$	45,257	$	45,044


Weighted average common shares (basic)		107,105,986		110,931,376		109,103,879		112,309,170		106,775,916		110,439,415
Effect of dilutive securities:
Stock options, restricted stock and performance shares⁽¹⁾		338,298		818,005		378,439		740,530		370,578		446,628

Adjusted weighted average common shares		107,444,284		111,749,381		109,482,318		113,049,700		107,146,494		110,886,043


Diluted earnings per common share	$	0.57	$	0.54	$	1.21	$	1.60	$	0.42	$	0.41

(1)	At ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ we have excluded from our diluted share calculation ~~1,342,544~~3,048,297 and ~~525,716~~1,301,836 shares, respectively, related to stock options, as their effect would have been antidilutive.

~~NOTE 11 – SUBSEQUENT EVENT~~

On October 1, 2014, B&W announced that its Board of Directors was evaluating the separation of B&W’s Power Generation business and its Government & Nuclear Operations business into two publicly traded companies. On November 5, 2014, B&W announced that its Board of Directors had approved a plan to pursue a separation of B&W’s Power Generation business and its Government & Nuclear Operations business through a spinoff, creating a new independent, publicly traded power generation company. The transaction is expected to be tax-free to shareholders and should be completed by mid-summer of 2015, subject to various conditions, including the effectiveness of the SEC filings, regulatory review by the Nuclear Regulatory Commission and final approval by B&W’s Board of Directors.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included under Item 1 of this report and the audited consolidated financial statements and the related notes and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, ~~2013~~2014 (our ~~“2013~~“2014 10-K”).

In this quarterly report on Form 10-Q, unless the context otherwise indicates, “we,” “us” and “our” mean The Babcock & Wilcox Company (“B&W”) and its consolidated subsidiaries.

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords.

From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our company. These statements may include projections and estimates concerning the timing and success of specific projects and our future backlog, revenues, income and capital spending. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan,” “seek,” “goal,” “could,” “intend,” “may,” “should” or other words that convey the uncertainty of future events or outcomes. In addition, sometimes we will specifically describe a statement as being a forward-looking statement and refer to this cautionary statement.

These forward-looking statements include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:

our business strategy;

future levels of revenues (including our backlog and projected claims to the extent either may be viewed as an indicator of future revenues), operating margins, income from operations, net income or earnings per share;

anticipated levels of demand for our products and services;

future levels of research and development, capital, environmental or maintenance expenditures;

our beliefs regarding the timing and effects on our businesses of certain environmental and tax legislation, rules or regulations;

the success or timing of completion of ongoing or anticipated capital or maintenance projects;

expectations regarding the acquisition or divestiture of assets and businesses;

our share repurchase ~~program~~ or other return of capital activities;

our ability to maintain appropriate insurance and indemnities;

the potential effects of judicial or other proceedings, including tax audits, on our business or businesses, financial condition, results of operations and cash flows;

the anticipated effects of actions of third parties such as competitors, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation;

the effective date and expected impact of accounting pronouncements;

the planned spin-off of our Power Generation business;

•

our plans regarding the design, research and development, financing and deployment of the B&W mPower^TM reactor and related ~~DOE~~Department of Energy (“DOE”) funding program; and

anticipated benefits, timing of charges and changes associated with cost reduction and margin improvement activities.

In addition, various statements in this quarterly report on Form 10-Q, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements.

We have based our forward-looking statements on our current expectations, estimates and projections about our industries and our company. We caution that these statements are not guarantees of future performance and you should not rely unduly on them, as they involve risks, uncertainties and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may

differ materially from the future performance that we have expressed or forecast in our forward-looking statements.

Differences between actual results and any future performance suggested in our forward-looking statements could result from a variety of factors, including the following:

decisions on spending and trends by power-generating companies and by the U.S. Government, including continuing appropriations by Congress and the automatic budget cuts (or sequestration) established by the Budget Control Act of 2011;

the highly competitive nature of our businesses;

general economic and business conditions, including changes in interest rates and currency exchange rates;

general developments in the industries in which we are involved;

cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings;

our ability to perform projects on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers;

changes in our effective tax rate and tax positions;

our ability to maintain operational support for our information systems against service outages and data corruption, as well as protection against cyber-based network security breaches and theft of data;

our ability to protect our intellectual property and renew licenses to use intellectual property of third parties;

changes in incurred cost trends and estimates used in the percentage-of-completion method of accounting;

our ability to obtain and maintain surety bonds, letters of credit and similar financing;

the operating risks normally incident to our lines of business, including the potential impact of project losses, liquidated damages and professional liability, product liability, warranty and other claims against us;

our ability to manage our capital structure, including our access to capital, credit ratings, debt and ability to raise additional financing;

our ability to comply with covenants in our credit agreements and other debt instruments and the availability, terms and deployment of capital;

volatility and uncertainty of the credit markets;

our ability to successfully manage research and development projects and costs, including our efforts to successfully develop and commercialize new technologies and products;

risks associated with our restructuring of the mPower program, including the risk that we do not receive or experience delays in receiving funding from the ~~Department of Energy (“DOE”)~~DOE and the risk of exposure to claims of contractual and other liability from our current partner, customer or others;

the risks associated with integrating businesses we acquire;

our ability to obtain and maintain builder’s risk, liability, property and other insurance in amounts and on terms we consider adequate and at rates that we consider economical;

the aggregated risks retained in our captive insurance subsidiary;

the effects of asserted and unasserted claims;

results of tax audits ~~including a determination by the Internal Revenue Service that our spin-off from McDermott International, Inc. or certain other transactions should be treated as a taxable transaction,~~ and the realization of deferred tax assets;

changes in, and liabilities relating to, existing or future environmental matters and regulations, including with respect to our operations that involve the handling, transportation and disposal of radioactive or hazardous materials;

changes in, or our failure or inability to comply with, laws and governmental regulations;

difficulties we may encounter in obtaining regulatory or other necessary permits or approvals;

adverse outcomes from legal and regulatory proceedings;

our limited ability to influence and direct the operations of our joint ventures;

potential violations of the Foreign Corrupt Practices Act;

our ability to successfully compete with current and future competitors;

the loss of key personnel and the continued availability of qualified personnel;

our inability to realize expected benefits from our Global Competitiveness Initiative and other cost reduction initiatives;

our ability to negotiate and maintain good relationships with labor unions;

changes in pension and medical expenses associated with our retirement benefit ~~programs;~~programs and other actuarial assumptions;

potentially ~~inadequate~~insufficient systems of internal controls over financial reporting;

the ability of our suppliers to deliver raw materials in sufficient quantities and in a timely manner;

social, political and economic situations in foreign countries where we do business;

the possibilities of natural disasters, war, other armed conflicts or terrorist attacks; and

our ability to complete the spin-off of our Power Generation business within the expected time frame or at all, and without significant disruption to our business.

We believe the items we have outlined above are important factors that could cause estimates in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this report or elsewhere by us or on our behalf. We have discussed many of these factors in more detail elsewhere in this report and in Item 1A “Risk Factors” in our ~~2013~~2014 10-K. These factors are not necessarily all the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our security holders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements.

GENERAL

We operate in ~~five~~four segments: Power Generation, Nuclear Operations, Technical Services and Nuclear ~~Energy~~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 ~~mPower.~~ will be included in our “Other” category as it is no longer considered a reportable segment.

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 by cash on hand, external financing (including debt), equity or some combination thereof.

Power Generation Segment

Our Power Generation segment’s overall activity depends ~~mainly~~significantly on the capital expenditures and operations and maintenance expenditures of global electric power generating companies, ~~and~~ other steam-using ~~industries.~~industries and industrial facilities with environmental compliance needs. Several factors influence these expenditures, including:

prices for electricity, along with the cost of production and ~~distribution;~~

~~prices for coal~~distribution including the cost of fuel (coal and natural gas ~~and other sources used to produce electricity;~~in particular) within the United States or internationally;

demand for electricity ~~paper~~ and other end products of steam-generating ~~facilities;~~

~~availability~~facilities, including growth of coal-fired electricity demand in China, India and other ~~sources of electricity, paper or other end products;~~international locations;

requirements for environmental improvements;

impact of potential ~~regional, state, national and/or global~~U.S. and international requirements to significantly limit or reduce greenhouse gas emissions in the future;

environmental policies which include waste-to-energy or biomass as options to meet legislative requirements and clean energy portfolio standards;

level of capacity utilization at operating power plants ~~paper mills~~ and other ~~steam-using facilities;~~industrial uses of steam production;

requirements for maintenance and upkeep at operating power plants ~~and paper mills~~ to ~~comply with environmental regulations and~~ combat the accumulated effects of ~~wear~~usage; and ~~tear;~~

ability of electric power generating companies and other steam users to raise ~~capital;~~capital.

Customer demand is heavily affected by the variations in our customers’ business cycles and

~~relative prices~~ by the overall economies and energy and environmental policies of ~~fuels used~~the countries in ~~boilers, compared to prices for fuels used in gas turbines and other alternative forms of generation.~~

Our Power Generation segment plans to continue efforts to expand international offerings through acquisitions and partnering arrangements. On June 20, 2014, we completed the acquisition of MEGTEC Holdings, Inc. (“MEGTEC”). MEGTEC designs, engineers, manufactures and services air pollution control systems and coating / drying equipment for a variety of industrial applications and is expected to complement our environmental products and solutions offerings.which they operate.

Nuclear Operations Segment

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, this segment is a significant participant in the defense industry.

On June 13, 2014, a uranium conversion company filed suit against the Secretary of Energy seeking, among other things, to enjoin the DOE from transferring portions of its excess uranium stockpile to support non-proliferation and other national security initiatives, as well as fund environmental clean-up work and other

initiatives. On July 29, 2014, a motion for preliminary injunction was denied. However, the suit may still be successful in preventing the DOE’s transfer of excess uranium, which could adversely impact results in our Nuclear

Operations and Technical Services segments. ~~These activities contributed approximately $11 million and $6 million of operating income to our Nuclear Operations and Technical Services segments, respectively, during fiscal year 2013.~~

Technical Services Segment

The revenues and equity in income of investees of our Technical Services segment are largely a function of spending by the U.S. Government and the performance scores we and our consortium partners earn in managing and operating high-consequence operations at U.S. nuclear weapons sites and national laboratories. With its specialized capabilities of full life-cycle management of special nuclear materials, facilities and technologies, our Technical Services segment participates in the cleanup, operation and management of the nuclear sites and weapons complexes maintained by the DOE.

Nuclear Energy Segment

Our Nuclear Energy segment’s overall activity primarily depends ~~mainly~~ on the demand and competitiveness of nuclear energy. The activity of this segment depends on capital expenditures and maintenance spending of nuclear utilities. Factors such as price of electricity, along with the cost of production and distribution influence these expenditures. A significant portion of ~~this~~our Nuclear Energy segment’s ~~activities is generated from~~operations depend on the timing of maintenance outages primarily in the Canadian market and the cyclical nature of capital expenditures and major refurbishments for nuclear ~~market,~~utility customers, which could cause variability in our financial ~~results depending on the level of maintenance and capital spending of Canadian utilities in a given year.~~

~~mPower Segment~~

~~This segment is developing the B&W mPower~~^TM ~~reactor and the associated mPower Plant through its majority-owned joint venture, Generation mPower LLC. Its activity is a function of research and development efforts for the B&W mPower~~^TM reactor and the potential orders to be generated from various mPower Plant deployment initiatives. As part of this initiative, we were selected to receive funding and have signed a Cooperative Agreement with the DOE under its Small Modular Reactor Licensing Technical Support Program (“Funding Program”), which is expected to provide financial assistance initially totaling at least $150 million for small modular reactor (“SMR”) design engineering and licensing activities supporting the planned first mPower Plant.

The Funding Program is a cost-sharing award, which requires us to use the DOE funds to cover first-of-a-kind engineering costs associated with SMR design certification and licensing efforts. The DOE will provide cost reimbursement for up to 50% of qualified expenditures incurred from April 1, 2013 to March 31, 2018, subject to funding authorizations. The DOE has authorized $112.9 million of funding to B&W for this award program, with $4.2 million of authorized funds remaining. In the nine months ended September 30, 2014 and 2013, we recognized $25.4 million and $54.2 million, respectively, associated with the funding award.

On April 14, 2014, we announced our plans to restructure the mPower program to focus on technology development. Beginning in the third quarter of 2014, we slowed the pace of development and intend to invest no more than $15 million on an annual basis, net of amounts reimbursed from the Funding Program. As a result of our plans to restructure the mPower program, our operating income was negatively impacted by $21.5 million for the nine months ended September 30, 2014, consisting of $8.2 million of special charges for restructuring activities as further discussed below and $13.3 million of unrecognized cost-share due to limited additional authorized funding by the DOE under the Funding Program. We intend to work with the DOE to amend the Funding Program to include, among other things, mutually agreeable program milestones for continued funding and a revised commercial operating date beyond 2022. If a mutually agreeable plan is not identified, future amounts may not be made available to us under the Funding Program.results.

Power Generation Spin-off

On ~~October 1, 2014, B&W~~March 16, 2015, our newly formed subsidiary Babcock & Wilcox Enterprises, Inc. filed an initial Form 10 Registration Statement with the U. S. Securities and Exchange Commission (“SEC”). The filing relates to the previously announced ~~that its Board of Directors was evaluating the separation of B&W’s~~plan to separate our Power Generation business ~~and its~~from our Government & Nuclear Operations business, ~~into two publicly traded companies. On November 5, 2014, B&W announced that its Board~~which includes the Nuclear Operations, Technical Services and Nuclear Energy segments, through a tax free spin-off of ~~Directors had approved a plan to pursue a separation of B&W’s~~the Power Generation business ~~and its Government & Nuclear Operations business through a spinoff, creating~~into a new independent, publicly traded ~~power generation~~ company. ~~The transaction is expected to be tax-free to shareholders and should~~We expect the spin-off will be completed by mid-summer of 2015, subject to ~~various~~several conditions, including the ~~effectiveness of~~SEC declaring effective the ~~SEC filings, regulatory review by the Nuclear Regulatory Commission~~registration statement and final approval of the transaction by ~~B&W’s~~our Board of Directors. Concurrent with the spin-off, the Company will change its name to BWX Technologies, Inc.

Global Competitiveness Initiative and Other Restructuring Activities

We launched the Global Competitiveness Initiative (“GCI”) in the third quarter of 2012 to enhance competitiveness, better position B&W for growth, and improve profitability. ~~We have identified a~~A wide range of cost reduction activities were identified, including operational and functional efficiency improvements, organizational design changes and manufacturing optimization. ~~Once~~Savings from these initiatives have been phased in since 2012, and once fully executed, these actions are expected to produce at least $75 million in annual savings. The majority of the expected annual savings are ~~expected to result~~ from efficiency improvements that were completed in ~~2013.~~2013 and 2014. The balance of the cost savings relates to manufacturing initiatives that are expected to be completed by ~~mid-2015.~~the end of 2015. In order to achieve these savings, we ~~expect~~have incurred $42.9 million, which encompasses substantially all of the costs expected to ~~incur total restructuring charges (cash and non-cash) of approximately $60 million.~~be incurred under this program. We incurred ~~$3.3~~$0.0 million and ~~$25.5~~$1.5 million of costs associated with GCI for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ respectively.

We ~~continue to focus on~~are also targeting additional structural ~~changes in our operating model to drive significant margin improvement. We are targeting~~change initiatives that we expect, in conjunction with our GCI initiatives, to drive further margin improvement in our Power Generation segment by 200 to 300 basis points and allow us to achieve a minimum 10% operating margin in our Nuclear Energy ~~segment by~~segment. We expect to incur total restructuring charges (cash and noncash), as well as produce annual savings once these additional initiatives are fully implemented, in the ~~end~~range of ~~2015.~~$35 million to $50 million. We incurred ~~$16.9~~$2.4 million and $0.0 million of costs associated with these initiatives for the ~~nine~~three months ended ~~September 30, 2014. We expect~~March 31, 2015 and 2014, respectively.

The cost savings from these ~~actions~~programs are expected to ~~result in additional restructuring charges.~~make our offerings more cost-competitive through both direct and overhead cost reductions, allowing us to more aggressively pursue new business opportunities and other initiatives to increase stockholder value.

In addition, in the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014, we incurred ~~$8.2~~$0.1 million and $0.8 million of costs associated with the restructuring of our mPower program. In the three months ended March 31, 2014, we incurred $0.4 million of costs associated with the restructuring of our ~~mPower program and our~~ Technical Services ~~segment, respectively.~~segment.

Critical Accounting Policies and Estimates

~~Goodwill and Intangible Assets.~~ Each year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative analysis when we believe that there is sufficient excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant facts and circumstances that could affect fair value. Deterioration in macroeconomic, industry and market conditions, cost factors, overall financial performance, share price decline or entity and reporting unit specific events could cause us to determine a qualitative test is no longer appropriate.

When we determine that it is appropriate to test goodwill for impairment utilizing a quantitative test, the first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill. We utilize both the income and market valuation approaches to provide inputs into the estimate of the fair value of our reporting units, which would be considered by market participants.

Under the income valuation approach, we employ a discounted cash flow model to estimate the fair value of each reporting unit. This model requires the use of significant estimates and assumptions regarding future revenues, costs, margins, capital expenditures, changes in working capital, terminal year growth rate and cost of capital. Our cash flow models are based on our forecasted results for the applicable reporting units. Actual results could differ from our projections. Some assumptions, such as future revenues, costs and changes in working capital are company driven and could be affected by a loss of one or more significant contracts or customers; failure to control costs on certain contracts; a decline in 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.

Under the market valuation approach, we employ the guideline publicly traded company method, which indicates the fair value of the equity of each reporting unit by comparing it to publicly traded companies in similar lines of business. After identifying and selecting guideline companies, we analyze their business and financial profiles for relative similarity. Factors such as size, growth, risk and profitability are analyzed and compared to each of our reporting units. Assumptions include the selection of our peer companies and use of market multiples, which could deteriorate or increase based on the profitability of our competitors and performance of their stock, which is often dependent on the performance of the stock market and general economy as a whole.

Adverse changes in these assumptions utilized within the first step of our impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment. 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’s goodwill with the carrying amount of that goodwill.

Each year, we evaluate indefinite lived intangible assets to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative assessment when testing indefinite lived intangible assets for impairment to determine whether events or circumstances that could affect the significant inputs used in determining fair value have occurred that indicate that it is more likely than not that the indefinite lived intangible asset is impaired. Deterioration in macroeconomic, industry and market conditions, cost factors or overall financial performance could cause us to determine a qualitative test is no longer appropriate. When quantitative assessments are performed, we primarily utilize income-based valuation approaches. Under the income-based valuation approach, we employ a relief from royalty method of valuation. This method requires significant assumptions, including assumed royalty rate, future revenues and cost of capital. Assumptions related to operating performance, such as future revenues, could be affected by loss of a customer contract; a decline in 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.

Adverse changes in these assumptions utilized within our indefinite lived intangible asset impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment.

We completed our annual review of our indefinite lived intangible assets during the year ended December 31, 2013, which indicated that we had no impairment. The fair value of our indefinite lived intangible assets was substantially in excess of carrying value.

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated financial statements, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2013~~2014 10-K. There have been no material changes to our policies during the ~~nine~~three months ended September 30, 2014, except as disclosed above. Additionally, see Note 1 to our unaudited condensed consolidated financial statements included in this report for information on new and recently adopted accounting standards.March 31, 2015.

Accounting for Contracts

As of ~~September 30, 2014,~~March 31, 2015, in accordance with the percentage-of-completion method of accounting, we have provided for our estimated costs to complete all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. A principal risk on fixed-priced contracts is that revenue from the customer is insufficient to cover increases in our costs. 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. In some instances, we guarantee completion dates related to our projects or provide performance guarantees. Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated results of operations, financial condition and cash flows. Alternatively, reductions in overall contract costs at completion could materially improve our consolidated results of operations, financial condition and cash flows. In the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ we recognized net changes in estimates related to long-term contracts accounted for on the percentage-of-completion basis, which increased operating income by approximately ~~$42.3~~$5.8 million and ~~$11.9~~$4.9 million, respectively. Included in the ~~nine~~three months ended ~~September 30,~~March 31, 2014 ~~and 2013~~ were contract losses totaling ~~$11.6~~$7.6 million ~~and $30.2 million, respectively,~~ for additional estimated costs to complete our Power Generation segment’s Berlin Station project. This project has reached substantial completion.

RESULTS OF OPERATIONS – THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2014~~MARCH 31, 2015 VS. THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2013~~MARCH 31, 2014

Selected financial highlights are presented in the table below:


	Three Months Ended September 30,									Nine Months Ended September 30,									Three months ended March 31,
	2014			2013			$ Change			2014			2013			$ Change			2015			2014			$ Change
	(In thousands)																		(in thousands)
REVENUES:
Power Generation	$	402,016		$	426,960		$	(24,944	)	$	1,041,473		$	1,359,614		$	(318,141	)	$	397,155		$	312,078		$	85,077
Nuclear Operations		297,489			282,120			15,369			877,141			874,245			2,896			284,438			286,214			(1,776	)
Technical Services		20,236			25,242			(5,006	)		70,706			77,903			(7,197	)		18,584			24,455			(5,871	)
Nuclear Energy		21,529			52,470			(30,941	)		114,236			179,171			(64,935	)		32,957			47,780			(14,823	)
mPower		—			343			(343	)		278			980			(702	)
Other																				—			278			(278	)
Adjustments and Eliminations		(3,368	)		(12,301	)		8,933			(17,909	)		(25,520	)		7,611			(2,569	)		(8,788	)		6,219

																			$	730,565		$	662,017		$	68,548
	$	737,902		$	774,834		$	(36,932	)	$	2,085,925		$	2,466,393		$	(380,468	)

OPERATING INCOME:
Power Generation	$	35,260		$	38,348		$	(3,088	)	$	61,017		$	102,213		$	(41,196	)	$	22,996		$	10,542		$	12,454
Nuclear Operations		61,893			63,819			(1,926	)		180,103			184,280			(4,177	)		68,012			59,528			8,484
Technical Services		4,951			18,398			(13,447	)		34,818			47,812			(12,994	)		1,645			14,789			(13,144	)
Nuclear Energy		(6,698	)		21			(6,719	)		(4,627	)		10,201			(14,828	)		(3,666	)		523			(4,189	)
mPower		(5,140	)		(25,576	)		20,436			(63,782	)		(53,627	)		(10,155	)
Other																				(5,168	)		(26,709	)		21,541

	$	90,266		$	95,010		$	(4,744	)	$	207,529		$	290,879		$	(83,350	)	$	83,819		$	58,673		$	25,146

Unallocated Corporate		(5,352	)		(8,040	)		2,688			(13,729	)		(24,335	)		10,606			(10,506	)		(2,375	)		(8,131	)
Special Charges for Restructuring Activities		(8,675	)		(4,849	)		(3,826	)		(28,803	)		(25,504	)		(3,299	)		(2,502	)		(2,658	)		156
Mark to Market Adjustment		(11,079	)		—			(11,079	)		(11,079	)		—			(11,079	)

Total Operating Income	$	65,160		$	82,121		$	(16,961	)	$	153,918		$	241,040		$	(87,122	)	$	70,811		$	53,640		$	17,171

Consolidated Results of Operations

~~Three Months Ended September 30, 2014 vs. 2013~~

Consolidated revenues ~~decreased 4.8%~~increased 10.4%, or ~~$36.9~~$68.5 million, to ~~$737.9~~$730.6 million in the three months ended ~~September 30, 2014~~March 31, 2015 compared to ~~$774.8~~$662.0 million for the corresponding period in ~~2013~~2014 due primarily to ~~decreases~~increases in revenues from our Power Generation segment totaling $85.1 million. This increase was partially offset by decreased revenues in our Technical Services and Nuclear Energy segments ~~totaling $24.9~~of $5.9 million and ~~$30.9~~$14.8 million, respectively. ~~These decreases were partially offset by increased revenues in our Nuclear Operations segment totaling $15.4 million.~~

Consolidated operating income ~~decreased $17.0~~increased $17.2 million to ~~$65.2~~$70.8 million in the three months ended ~~September 30, 2014~~March 31, 2015 from ~~$82.1~~$53.6 million for the corresponding period in 2013. Operating income for the three months ended September 30, 2014 and 2013 includes special charges for restructuring activities totaling $8.7 million and $4.8 million, respectively. Excluding special charges for restructuring activities and an $11.1 million mark to market adjustment related to the interim remeasurement of certain Canadian pension plans, operating income decreased $2.1 million for the three months ended September 30, 2014 compared to 2013.2014. Operating income in our Power Generation, Nuclear Operations and Other segments increased $12.5 million, $8.5 million, and $21.5 million, respectively. These increases were partially offset by decreased operating income in our Technical Services and Nuclear Energy segments ~~declined $3.1 million, $1.9 million, $13.4~~totaling $13.1 million and ~~$6.7~~$4.2 million, ~~respectively. These decreases were partially offset by increased operating income in our mPower segment totaling $20.4~~respectively and an $8.1 million ~~and a $2.7 million decline~~increase in unallocated corporate expenses ~~for~~largely associated with the ~~2014 period as compared to 2013.~~

~~Nine Months Ended September 30, 2014 vs. 2013~~

Consolidated revenues decreased 15.4%, or $380.5 million, to $2,085.9 million in the nine months ended September 30, 2014 compared to $2,466.4 million for the corresponding period in 2013 due primarily to decreases in revenues from our Power Generation and Nuclear Energy segments totaling $318.1 million and $64.9 million, respectively.

Consolidated operating income decreased $87.1 million to $153.9 million in the nine months ended September 30, 2014 from $241.0 million for the corresponding period in 2013. Operating income for the nine months ended September 30, 2014 and 2013 includes special charges for restructuring activities totaling $28.8 million and $25.5 million, respectively. Excluding special charges for restructuring activities and an $11.1 million mark to market adjustment related to the interim remeasurement of certain Canadian pension plans, operating income decreased $72.7 million for the nine months ended September 30, 2014 compared to 2013. Operating income in our Power Generation, Nuclear Operations, Technical Services, Nuclear Energy and mPower segments declined $41.2 million, $4.2 million, $13.0 million, $14.8 million and $10.2 million, respectively. These decreases were partially offset by a $10.6 million decline in unallocated corporate expenses for the 2014 period as compared to 2013.planned spin-off.

Power Generation

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014 2013 $ Change 2014 2013 $ Change
Revenues
   $ 402,016    $ 426,960    $ (24,944 ) $ 1,041,473    $ 1,359,614    $ (318,141 )
Operating Income
   35,260    38,348    (3,088 ) 61,017    102,213    (41,196 )
% of Revenues
   8.8 % 9.0 % 5.9 % 7.5 %

~~Three Months Ended September 30, 2014 vs. 2013~~


	Three months ended March 31,
	2015			2014			$ Change
	(in thousands)
Revenues	$	397,155		$	312,078		$	85,077
Operating Income		22,996			10,542			12,454
% of Revenues		5.8	%		3.4	%

Revenues ~~decreased 5.8%~~increased 27.3%, or ~~$24.9~~$85.1 million, to ~~$402.0~~$397.2 million in the three months ended ~~September 30, 2014,~~March 31, 2015, compared to ~~$427.0~~$312.1 million in ~~2013. The decrease was~~2014, primarily attributable to ~~a $45.2 million decline in our~~aftermarket services projects, including both boiler retrofit material delivery and construction related activities totaling approximately $36.7 million. We also experienced higher new build steam generation systems ~~business~~ revenues ~~principally driven~~of $11.7 million primarily related to recently awarded large boiler projects. Additionally, the MEGTEC acquisition, completed on June 20, 2014, contributed an additional $41.1 million of revenue in the three months ended March 31, 2015. These increases were partially offset by ~~the timing and level of activities on utility boiler and renewable energy projects. In addition,~~a decrease in revenues in our new build environmental equipment business ~~revenues decreased $22.8~~of $8.8 million ~~due to lower levels of engineering, procurement and construction activities~~ as certain large projects ~~related~~have reached completion when compared to the ~~previously enacted environmental rules and regulations near completion and uncertainties continue regarding the ultimate outcome~~corresponding period of environmental regulations. Revenues from our aftermarket services business experienced a modest decrease of $9.9 million due to fewer service projects. The MEGTEC acquisition, which was completed on June 20, 2014 contributed $48.9 million of revenues for the three months ended September 30, 2014.

Operating income ~~decreased $3.1~~increased $12.5 million to ~~$35.3~~$23.0 million in the three months ended ~~September 30, 2014~~March 31, 2015, compared to ~~$38.3~~$10.5 million in ~~2013,~~2014, primarily ~~due~~attributable to the ~~lower~~higher revenues discussed above. In addition, the prior year period contained an additional loss provision recorded on the Berlin Station project of $7.6 million which had a favorable impact on operating income as a percentage of revenues of 2.4% for the three months ended March 31, 2015 when compared to the corresponding 2014 period. The MEGTEC acquisition contributed ~~$2.7~~$0.6 million of operating income for the three months ended ~~September 30, 2014, which includes $3.4~~March 31, 2015, net of $3.7 million of expense related to amortization of intangible assets. The ~~decrease~~increase in income was partially offset by a ~~$2.0 million reduction in selling, general and administrative expenses associated with cost savings initiatives.~~

~~Nine Months Ended September 30, 2014 vs. 2013~~

Revenues decreased 23.4%, or $318.1 million, to $1,041.5 million in the nine months ended September 30, 2014, compared to $1,359.6 million in 2013. The decrease was primarily attributable to a $179.1 million decline in revenues from our new build environmental equipment business revenues, principally driven by lower levels of engineering, procurement and construction activities as projects related to the previously enacted environmental rules and regulations near completion and uncertainties continue regarding the ultimate outcome of environmental regulations. We also experienced a $98.7 million decrease in revenues from our new build steam generation systems business due to a lower level of activity on our Berlin Station project and other renewable energy projects. In addition, we experienced a decrease in revenues of $100.5 million in our aftermarket services business related to fewer service projects, primarily due to a large boiler retrofit and construction project that was completed last year. The MEGTEC acquisition, which was completed on June 20, 2014, contributed $52.5 million of revenues for the nine months ended September 30, 2014.

Operating income decreased $41.2 million to $61.0 million in the nine months ended September 30, 2014 compared to $102.2 million in 2013, primarily due to the lower revenues discussed above being partially offset by a lower loss provision recorded on the Berlin Station project as compared to the prior period. The MEGTEC acquisition contributed $3.3 million of operating income for the nine months ended September 30, 2014, which includes $3.4 million of expense related to amortization of intangible assets. In addition, equity income from our joint ventures ~~decreased by $4.9~~of $4.4 million primarily due to market ~~pressures~~conditions in China and ~~start up activities~~the near completion of a U.S. environmental project joint venture that generated more operating income in India. These decreases were partially offset by an $8.0 million reduction in selling, general and administrative expenses associated with cost savings initiatives and a $3.3 million reduction in research and development expenditures.the corresponding period of 2014.

Nuclear Operations

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014 2013 $ Change 2014 2013 $ Change
Revenues
   $ 297,489    $ 282,120    $ 15,369    $ 877,141    $ 874,245    $ 2,896
Operating Income
   61,893    63,819    (1,926 ) 180,103    184,280    (4,177 )
% of Revenues
   20.8 % 22.6 % 20.5 % 21.1 %

~~Three Months Ended September 30, 2014 vs. 2013~~


	Three months ended March 31,
	2015			2014			$ Change
	(in thousands)
Revenues	$	284,438		$	286,214		$	(1,776	)
Operating Income		68,012			59,528			8,484
% of Revenues		23.9	%		20.8	%

Revenues ~~increased by 5.4%, or $15.4 million, to $297.5~~were $284.4 million in the three months ended ~~September 30, 2014~~March 31, 2015 and were relatively unchanged compared to ~~$282.1~~$286.2 million in the corresponding period of ~~2013, primarily attributable~~2014.

Operating income increased $8.5 million to ~~increased activity~~$68.0 million in the ~~manufacturing~~three months ended March 31, 2015 compared to $59.5 million in the corresponding period of ~~nuclear components for U.S. Government programs totaling $26.2 million. The increase was partially offset by lower revenue~~2014, primarily due to contract improvements in our naval nuclear fuel and downblending business ~~totaling $10.8~~as well as a $3.0 million ~~attributable to lower decommissioning and downblending activities.~~benefit from the settlement of a property-related insurance claim.

~~Operating income~~

Technical Services


	Three months ended March 31,
	2015		2014		$ Change
	(in thousands)
Revenues	$	18,584	$	24,455	$	(5,871	)
Operating Income		1,645		14,789		(13,144	)

Revenues decreased ~~$1.9~~24.0%, or $5.9 million, to ~~$61.9~~$18.6 million in the three months ended ~~September 30, 2014~~March 31, 2015 compared to ~~$63.8 million in the corresponding period of 2013, primarily due to lower margins associated with the manufacturing of nuclear components for U.S. Government programs.~~

~~Nine Months Ended September 30, 2014 vs. 2013~~

Revenues increased by 0.3%, or $2.9 million, to $877.1 million in the nine months ended September 30, 2014 compared to $874.2 million in the corresponding period of 2013, primarily attributable to increased activity in the manufacturing of nuclear components for U.S. Government programs totaling $13.3 million. The revenue increase related to the manufacturing of nuclear components was due to higher volume, partially offset by lower revenue related to the timing of satisfaction of obligations under materials purchase contracts as compared to the prior year period. The overall segment increase was partially offset by lower revenue in our naval nuclear fuel and downblending business totaling $10.4 million attributable to lower decommissioning and downblending activities.

Operating income decreased $4.2 million to $180.1 million in the nine months ended September 30, 2014 compared to $184.3 million in the corresponding period of 2013, primarily due to lower margins associated with the manufacturing of nuclear components for U.S. Government programs.

~~Technical Services~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014    2013    $ Change 2014    2013    $ Change
Revenues
   $ 20,236       $ 25,242       $ (5,006 ) $ 70,706       $ 77,903       $ (7,197 )
Operating Income
   4,951       18,398       (13,447 ) 34,818       47,812       (12,994 )

~~Three Months Ended September 30, 2014 vs. 2013~~

~~Revenues decreased 19.8%, or $5.0 million, to $20.2 million in the three months ended September 30, 2014 compared to $25.2~~$24.5 million for the corresponding period of ~~2013,~~2014, primarily attributable to a $5.1 million decrease in specialty manufacturing associated with the termination of our work scope for the American Centrifuge ~~Program.~~Program that occurred in the second quarter of 2014.

Operating income decreased ~~$13.4~~$13.1 million to ~~$5.0~~$1.6 million in the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 compared to ~~$18.4~~$14.8 million in the corresponding period of ~~2013. This decrease is primarily attributable to the~~2014. The loss of equity income on the Pantex and Y-12 contracts ~~effective~~as of June 30, ~~2014. In addition, income associated with specialty manufacturing associated with the American Centrifuge Program decreased $1.2 million.~~

~~Nine Months Ended September 30,~~ 2014 ~~vs. 2013~~

~~Revenues decreased 9.2%, or $7.2~~contributed to $10.0 million ~~to $70.7 million in the nine months ended September 30, 2014 compared to $77.9 million for the corresponding period~~ of ~~2013,~~this decrease. The remaining decline is primarily attributable to a $1.7 million decrease in ~~specialty manufacturing~~income associated with the termination of our work scope for the American Centrifuge ~~Program.~~

Program and an increase of $0.9 million in selling, general, and administrative expenses as a result of increased business development efforts.

Nuclear Energy

~~Operating income~~


	Three months ended March 31,
	2015			2014			$ Change
	(in thousands)
Revenues	$	32,957		$	47,780		$	(14,823	)
Operating Income		(3,666	)		523			(4,189	)
% of Revenues		(11.1	)%		1.1	%

Revenues decreased ~~$13.0~~31.0%, or $14.8 million, to ~~$34.8~~$33.0 million in the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 compared to $47.8 million in the corresponding period of ~~2013. This decrease is primarily attributable to the loss of the Pantex and Y-12 contracts effective June 30,~~ 2014. In addition, income from specialty manufacturing associated with the American Centrifuge Program decreased $2.7 million and selling, general and administrative expenses were $2.8 million higher compared to the corresponding period of 2013 primarily due to timing of new proposals.

~~Nuclear Energy~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014 2013    $ Change 2014 2013 $ Change
Revenues
   $ 21,529    $ 52,470       $ (30,941 ) $ 114,236    $ 179,171    $ (64,935 )
Operating Income
   (6,698 ) 21       (6,719 ) (4,627 ) 10,201    (14,828 )
% of Revenues
   (31.1 )% —         (4.1 )% 5.7 %

~~Three Months Ended September 30, 2014 vs. 2013~~

~~Revenues decreased 59.0%, or $30.9 million, to $21.5 million in the three months ended September 30, 2014 compared to $52.5 million in the corresponding period of 2013.~~ This decrease was primarily attributable to the exit of our nuclear projects business, which had $19.7 million of revenues in the prior year period. The remainder of the decrease is primarily attributable to the completion of two replacement steam generator contracts that were ongoing in the prior year period.

~~Operating income decreased $6.7 million to~~ a loss of $6.7 million in the three months ended September 30, 2014 compared to $0.0 million in the corresponding period of 2013, primarily attributable to the decrease in nuclear equipment revenues noted above related to the completion of the two replacement steam generator contracts. In addition, during the three months ended September 30, 2013, we recognized $4.0 million of warranty improvements associated with favorable warranty experience.

~~Nine Months Ended September 30, 2014 vs. 2013~~

Revenues decreased 36.2%, or $64.9 million, to $114.2 million in the nine months ended September 30, 2014 compared to $179.2 million in the corresponding period of 2013. This decrease is largely attributable to a decrease in revenues from our nuclear equipment business due to the completion of two replacement steam generator contracts that were ongoing in the prior year period. In addition, we also experienced a $22.0$9.7 million decrease in our nuclear services business ~~due~~driven by the timing of maintenance outages largely in the Canadian market and lower volume in our nuclear equipment business which resulted in a $5.0 million decline in revenue when compared to the ~~completion of certain maintenance and service projects that were ongoing in the prior~~corresponding 2014 period. ~~The exit of our nuclear projects business also contributed to a $20.8 million decrease in revenues compared to 2013.~~

Operating income decreased ~~$14.8~~$4.2 million to a loss of ~~$4.6~~$3.7 million in the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 compared to income of ~~$10.2~~$0.5 million in the corresponding period of ~~2013,~~2014, primarily attributable to ~~the decrease~~lower volume in ~~revenues noted above. This decrease was partially offset by $4.1 million of reduced selling, general~~our Canadian nuclear services and administrative expenses associated with cost savings from GCI initiatives. In addition, during the nine months ended September 30, 2013, we recognized $6.1 million of warranty improvements associated with favorable warranty experience.nuclear equipment businesses.

~~mPower~~Other

Three Months Ended
September 30,

Nine Months Ended
September 30,

   2014 2013 $ Change 2014 2013 $ Change
Revenues
   $ —      $ 343    $ (343 ) $ 278    $ 980    $ (702 )
Operating Income
   (5,140 ) (25,576 ) 20,436    (63,782 ) (53,627 ) (10,155 )

~~Three Months Ended September 30, 2014 vs. 2013~~


	Three months ended March 31,
	2015			2014			$ Change
	(in thousands)
Revenues	$	—		$	278		$	(278	)
Operating Income		(5,168	)		(26,709	)		21,541

Operating income increased ~~$20.4~~$21.5 million to a loss of ~~$5.1~~$5.2 million in the three months ended ~~September 30, 2014~~March 31, 2015 compared to a loss of ~~$25.6~~$26.7 million in the corresponding period of ~~2013,~~2014, due to the slowing of the pace of development related to our previously announced plans to restructure the mPower program. Research and development ~~activities~~spending decreased $32.8 million, which was offset partially by a $17.1 million decline in reimbursements from the DOE under its Small Modular Reactor Licensing Technical Support Program related to the development of the B&W mPower™ reactor ~~decreased by $25.9 million with a related decrease in~~design. At this time, the ~~recognition of the cost-sharing award from the DOE under~~latest extension to the Cooperative Agreement ~~totaling $10.9 million.~~has expired and the DOE funding has been suspended. Selling, general and administrative expenses also decreased by ~~$5.3 million.~~

~~Nine Months Ended September 30, 2014 vs. 2013~~

~~Operating income decreased $10.2~~$5.5 million ~~to a loss of $63.8 million in the nine months ended September 30, 2014~~ compared to ~~a loss of $53.6 million~~the same period in ~~the corresponding period of 2013,~~2014 primarily due tolower business development activity and cost savings as a ~~decrease in the recognition~~result of the cost-sharing award from the DOE under the Cooperative Agreement totaling $28.8 million. The nine months ended September 30, 2013 included the recognition of $9.7 million related to cost reimbursement for the 2012 pre-award period. Research and development activities related to the development of the B&W mPower™ reactor and selling, general and administrative expenses decreased by $13.6 million and $4.8 million, respectively, due to the slowing of the pace of development related to our announced plans to restructure the mPower program.restructuring activities.

Unallocated Corporate

Unallocated corporate expenses ~~decreased $2.7~~increased $8.1 million to ~~$5.4~~$10.5 million for the three months ended ~~September 30, 2014,~~March 31, 2015, as compared to ~~$8.0~~$2.4 million for the corresponding period in ~~2013. Additionally, unallocated corporate expenses decreased $10.6 million to $13.7 million for the nine months ended September 30,~~ 2014, ~~as compared to $24.3 million for the corresponding period in 2013. The decline in both the three and nine month periods is~~ mainly related to $5.0 million of costs associated with the ~~timing~~Company’s decision to pursue a separation of ~~healthcare cost allocations~~its Power Generation business and Government & Nuclear Operations business through a tax free spin-off. In addition, the 2014 period benefited from favorable healthcare ~~cost trends.~~costs.

Special Charges for Restructuring Activities

Operating income for the three months ended ~~September 30, 2014~~March 31, 2015 includes special charges for restructuring activities totaling ~~$0.9~~$2.5 million, ~~of GCI charges~~primarily related to facility ~~consolidation; $0.3~~consolidation in our Power Generation segment in conjunction with the margin improvement program that was announced in 2014.

Operating income for the three months ended March 31, 2014 includes employee termination benefits and facility consolidation charges of $1.5 million inunder GCI. We also incurred special charges for employee termination benefits, consulting and administrative costs of $1.2 million related to the restructuring of our mPower program; and $7.5 million in employee termination benefits, facility consolidation and consulting and administrative costs related to margin improvement initiatives in our Power Generation and Nuclear Energy segments. During the three months ended September 30, 2013, we recorded GCI charges of $4.8 million related to employee termination benefits, facility consolidation and consulting and administrative costs.

Operating income for the nine months ended September 30, 2014 includes special charges for restructuring activities totaling $3.3 million of GCI charges related to facility consolidation and employee termination benefits; $8.2 million in employee termination benefits, facility consolidation and consulting and administrative costs related to the restructuring of our mPower program; $16.9 million in employee termination benefits, facility consolidation and consulting and administrative costs related to margin improvement initiatives in our Power Generation and Nuclear Energy segments; and $0.4 million in employee termination benefits for the restructuring of our Technical Services ~~segment. During the nine months ended September 30, 2013, we recorded GCI charges of $25.5 million related to employee termination benefits, facility consolidation~~segment and ~~consulting and administrative costs.~~mPower program.

Provision for Income Taxes


	Three Months Ended September 30,									Nine Months Ended September 30,									Three months ended March 31,
	2014			2013			$ Change			2014			2013			$ Change			2015			2014			$ Change
Income from Continuing Operations before Provision for Income Taxes	$	81,074		$	81,437		$	(363	)	$	170,523		$	241,815		$	(71,292	)
																			(in thousands)
Income before Provision for Income Taxes																			$	66,907		$	54,482		$	12,425
Income Tax Provision		20,671			24,416			(3,745	)		45,474			70,217			(24,743	)		21,866			13,328			8,538
Effective Tax Rate		25.5	%		30.0	%					26.7	%		29.0	%					32.7	%		24.5	%

We operate in numerous countries that have statutory tax rates below that of the U.S. federal statutory rate of 35%. The most significant of these foreign operations are located in Canada, Denmark and the United Kingdom with effective tax rates of approximately 26%, 25% and 22%, respectively. Our effective tax rate for the three months ended ~~September 30, 2014~~March 31, 2015 was approximately ~~25.5%~~32.7% as compared to ~~30.0%~~24.5% for the three months ended ~~September 30, 2013.~~March 31, 2014. The effective tax rate for the three months ended ~~September 30, 2014~~March 31, 2015 was lower than our statutory rate primarily due to the impact of the federal manufacturing tax deduction and the foreign rate differential discussed above. The effective tax rate for the three months ended ~~September 30, 2013, primarily due to~~March 31, 2014 was lower than the impact of an $18.6 million gain from the exchange of our USEC investment for which the related tax provision was offset against the reversal of a previously established valuation allowance related to the prior impairments of the USEC investment.

~~Our~~ effective tax rate for the ~~nine months~~period ended ~~September 30, 2014 was approximately 26.7% as compared to 29.0% for the nine months ended September 30, 2013. The effective tax rate for the nine months ended September~~

~~30, 2014 was lower than our statutory rate~~March 31, 2015 primarily due to the receipt of a favorable ruling from the Internal Revenue Service that ~~allows~~allowed us to amend prior year U.S. income tax returns to exclude distributions of ~~certain~~several of our foreign joint ventures from domestic taxable income. In addition, the effective tax rate for the nine months ended September 30, 2014 was lower due to the $18.6 million gain from the exchange of our USEC investment for which the related tax provision was offset by the reversal of a previously established valuation allowance related to the prior impairments of the USEC investment. Our effective tax rate for the nine months ended September 30, 2013 reflected the impact of certain tax benefits related to the retroactive provisions of the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013. These 2013 tax benefits relate primarily to research and development tax credits.

Backlog

Backlog is not a measure recognized by generally accepted accounting principles. It is possible that our methodology for determining backlog may not be comparable to methods used by other companies. We generally include expected revenue in our backlog when we receive written confirmation from our ~~customers.~~customers authorizing the performance of work and committing the customer to payment for work performed. We are subject to the budgetary and appropriation cycle of the U.S. Government as it relates to our Nuclear Operations and Technical Services segments. Backlog may not be indicative of future operating results and projects in our backlog may be cancelled, modified or otherwise altered by customers. We do not include orders of our unconsolidated joint ventures in backlog. These unconsolidated joint ventures are primarily included in our Power Generation and Technical Services segments.


	September 30, 2014		December 31, 2013		March 31, 2015		December 31, 2014
	(Unaudited)				(Unaudited)
	(In millions)				(In millions)
Power Generation	$	2,133	$	2,072	$	2,581	$	2,247
Nuclear Operations		2,376		2,369		2,846		2,778
Technical Services		4		5		21		3
Nuclear Energy		273		142		236		264
mPower		—		2


Total Backlog	$	4,786	$	4,590	$	5,684	$	5,292

Of the ~~September 30, 2014~~March 31, 2015 backlog, we expect to recognize revenues as follows:


	2014		2015		Thereafter		Total		2015		2016		Thereafter		Total
	(Unaudited)								(Unaudited)
	(In approximate millions)								(In approximate millions)
Power Generation	$	351	$	777	$	1,005	$	2,133	$	916	$	619	$	1,046	$	2,581
Nuclear Operations		277		880		1,219		2,376		852		710		1,284		2,846
Technical Services		4		—		—		4		21		—		—		21
Nuclear Energy		35		59		179		273		64		54		118		236
mPower		—		—		—		—


Total Backlog	$	667	$	1,716	$	2,403	$	4,786	$	1,853	$	1,383	$	2,448	$	5,684

At ~~September 30, 2014,~~March 31, 2015, Power Generation backlog with the U.S. Government was ~~$32.3~~$33.3 million, all of which was funded.

At ~~September 30, 2014,~~March 31, 2015, Nuclear Operations backlog with the U.S. Government was ~~$2.2 billion,~~$2,844.7 million, of which ~~$219.1~~$177.0 million had not yet been funded.

At ~~September 30, 2014,~~March 31, 2015, Technical Services backlog with the U.S. Government was ~~$4.4~~$21.2 million, all of which was funded.

At ~~September 30, 2014,~~March 31, 2015, Nuclear Energy ~~and mPower~~ had no backlog with the U.S. Government.

Liquidity and Capital Resources

Credit Facility

On June 24, 2014, B&W entered into a Second Amended and Restated Credit Agreement (the “New Credit Agreement”) with a syndicate of lenders and letter of credit issuers, and Bank of America, N.A., as administrative agent, which amends and restates our previous Credit Agreement dated June 8, 2012. The New Credit Agreement provides for revolving credit borrowings and issuances of letters of credit in an aggregate amount of up to $1.0 billion and a term loan facility of up to $300 million, $150 million of which was drawn on the closing date of the New Credit Agreement. The remaining $150 million commitment for the term loan remains available under a delayed draw feature through December 31, 2014.million. The New Credit Agreement is scheduled to mature on June 24, 2019. The proceeds of the New Credit Agreement are available for the issuance of letters of credit, working capital needs and other general corporate purposes. The New Credit Agreement includes provisions that allow for additional financial institutions to become lenders, or for any existing lender to increase its commitment thereunder, subject to an aggregate maximum of $400 million for all incremental term loan, revolving credit borrowings and letter of credit commitments.

The New Credit Agreement is guaranteed by substantially all of B&W’s wholly owned domestic subsidiaries. Obligations under the New Credit Agreement are secured by first-priority liens on certain assets owned by B&W and the guarantors (other than our subsidiaries comprising our Nuclear Operations and Technical Services segments). If the corporate family rating of B&W and its subsidiaries from Moody’s is Baa3 or better (with a stable outlook or better), the corporate rating of B&W and its subsidiaries from S&P is BBB- or better (with a stable outlook or better), and other conditions are met, the liens securing obligations under the New Credit Agreement will be released, subject to reinstatement upon the terms set forth in the New Credit Agreement. B&W’s current corporate family rating from Moody’s is Ba1 and its corporate rating from S&P is BB+.

The New Credit Agreement requires interest payments on revolving loans on a ~~periodic~~quarterly basis until maturity. Beginning with the first quarter ~~following that in which the term loan commitment ends,~~of 2015, we ~~are~~were also required to make quarterly amortization payments on the term loan portion of the New Credit Agreement in an amount equal to 1.25% of the aggregate principal amount of the term loan facility that is utilized. We may prepay all loans under the New Credit Agreement at any time without premium or penalty (other than customary LIBOR breakage costs), subject to notice requirements. We are also required to make certain prepayments on any outstanding term loans under the New Credit Agreement after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and our right to reinvest such proceeds in certain circumstances, all as more particularly set forth in the New Credit Agreement.

The New Credit Agreement contains financial covenants relating to leverage and interest coverage and includes covenants that restrict, among other things, debt incurrence, liens, investments, acquisitions, asset dispositions, dividends, prepayments of subordinated debt and mergers. At ~~September 30, 2014,~~March 31, 2015, we were in compliance with all of the covenants set forth in the New Credit Agreement.

Loans outstanding under the New Credit Agreement bear interest at our option at either the Eurocurrency rate plus a margin ranging from 1.25% to 2.00% per year or the base rate (the highest of the Federal Funds rate plus 0.50%, the one month Eurocurrency rate plus 1.00%, or the administrative agent’s prime rate) plus a margin ranging from 0.25% to 1.00% per year. The applicable margin for loans varies depending on the credit ratings of the New Credit Agreement. Under the New Credit Agreement, we are charged a commitment fee on the unused portions of the New Credit Agreement, and that fee varies between 0.200% and 0.350% per year depending on the credit ratings of the New Credit Agreement. Additionally, we are charged a letter of credit fee of between 1.250% and 2.000% per year with respect to the amount of each financial letter of credit issued under the New Credit Agreement and a letter of credit fee of between 0.725% and 1.125% per year with respect to the amount of each performance letter of credit issued under the New Credit Agreement, in each case depending on the credit ratings of the New Credit Agreement. We also pay customary fronting fees and other fees and expenses in connection with the issuance of letters of credit under the New Credit Agreement. In connection with entering into the New Credit Agreement, we paid upfront fees to the lenders thereunder, and arrangement and other fees to the arrangers and agents of the New Credit Agreement. At ~~September 30, 2014,~~March 31, 2015, borrowings outstanding totaled ~~$150.0 million and $154.4~~$296.3 million under our term ~~loan and revolving line of credit, respectively, and letters~~loan. Letters of credit issued under the New Credit Agreement totaled ~~$170.2~~$174.8 million, resulting in ~~$825.4~~$825.2 million available for borrowings or to meet letter of credit requirements.

Based on the current credit ratings of the New Credit Agreement, the applicable margin for Eurocurrency rate loans is 1.375%, the applicable margin for base rate loans is 0.375%, the letter of credit fee for financial letters of credit is 1.375%, the letter of credit fee for performance letters of credit is 0.80%, and the commitment fee for unused portions of the New Credit Agreement is 0.225%. The New Credit Agreement does not have a floor for the base rate or the Eurocurrency rate. As of March 31, 2015, the interest rate on borrowings outstanding under our term loan was 3.283%.

The New Credit Agreement generally includes customary events of default for a secured credit facility. If any default occurs under the New Credit Agreement, or if we are unable to make any of the representations and warranties in the New Credit Agreement, we will be unable to borrow funds or have letters of credit issued under the New Credit Agreement.

In connection with the spin-off of our Power Generation business, we expect to enter into a new credit agreement that will provide for revolving credit borrowings and issuances of letters of credit. Funds under the new credit agreement are expected to be available for working capital and other liquidity requirements after the spin-off.

Other Arrangements

Certain subsidiaries within our Power Generation segment have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity. The aggregate value of all such letters of credit and bank guarantees as of ~~September 30, 2014~~March 31, 2015 was ~~$117.8~~$143.3 million.

We have posted surety bonds to support contractual obligations to customers relating to certain projects. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety’s discretion. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is more than adequate to support our existing project requirements for the next twelve months. In addition, these bonds generally indemnify customers should we fail to perform our 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 ~~September 30, 2014,~~March 31, 2015, bonds issued and outstanding under these arrangements in support of contracts totaled approximately ~~$400.8~~$538.3 million.

Long-term Benefit Obligations

Our unfunded pension and postretirement benefit obligations totaled ~~$399.8~~$620.2 million at ~~September 30, 2014.~~March 31, 2015. These long-term liabilities are expected to require use of Company resources to satisfy our future funding obligations. For the ~~nine~~three months ended ~~September 30, 2014,~~March 31, 2015, we made contributions to our pension and postretirement benefit plans totaling ~~$63.2~~$6.4 million. We expect to make contributions to these plans totaling ~~$4.3~~$24.0 million for the remainder of ~~2014.~~2015 primarily related to our foreign pension plans and postretirement plans.

Other

In aggregate, our cash and cash equivalents, restricted cash and cash equivalents and investments decreased by ~~$143.7~~$36.3 million to ~~$266.3~~$346.3 million at ~~September 30, 2014~~March 31, 2015 from ~~$410.0~~$382.6 million at December 31, ~~2013~~2014 primarily due to the items discussed below. We expect cash on hand, cash flow from operations and borrowing capacity under the New Credit Agreement to be sufficient to meet our liquidity needs for the next twelve months.

Our domestic and foreign cash and cash equivalents, restricted cash and cash equivalents and investments as of March 31, 2015 and December 31, 2014 were as follows:


	March 31, 2015		December 31, 2014
	(In thousands)
Domestic	$	131,707	$	183,651
Foreign		214,595		198,979

Total	$	346,302	$	382,630

Our working capital increased by approximately ~~$150.5~~$32.9 million to ~~$660.7~~$687.1 million at ~~September 30, 2014~~March 31, 2015 from ~~$510.2~~$654.2 million at December 31, ~~2013,~~2014, attributable primarily to an increase in net contracts in progress and advance billings on contracts due primarily to lower net advance billings associated with the decline in contract activity in our Power Generation segment. We also experienced increased working capital associated withtiming of accounts payable movement caused by the adverse timing of payments of contract costs in relation to the collection of billings on certain contracts. In addition, a larger portion of our pension liability is reported as a long-term obligation this period.and accrued employee benefit payments.

Our net cash ~~used in~~provided by operations was ~~$85.2~~$5.0 million in the ~~nine~~three months ended ~~September 30, 2014,~~March 31, 2015, compared to cash used in operations of ~~$6.0~~$113.5 million for the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014. This increase in cash ~~used~~provided by operations was ~~primarily~~largely attributable to ~~a reduction~~improved project cash flows in ~~accounts payable as discussed above.~~relation to the prior year period.

Our net cash used in investing activities increased by ~~$183.1~~$12.3 million to ~~$175.2~~$23.7 million in the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 from cash ~~provided by~~used in investing activities of ~~$7.9~~$11.4 million in the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014. This increase in ~~net~~ cash used in investing activities was primarily attributable to ~~the acquisition~~a decrease in sales of ~~MEGTEC.~~investments.

Our net cash ~~provided by~~used in financing activities was ~~$119.1~~$12.9 million in the ~~nine~~three months ended ~~September 30, 2014,~~March 31, 2015, compared to cash used in financing activities of ~~$163.3~~$8.6 million for the ~~nine~~three months ended ~~September 30, 2013.~~March 31, 2014. This increase in net cash ~~provided by~~used in financing activities was primarily attributable to ~~an increase in borrowings~~a shift from borrowing on our ~~credit facility, primarily~~Credit Agreement in the three months ended March 31, 2014 to ~~fund~~making installment payments on our Credit Agreement for the ~~acquisition of MEGTEC,~~three months ended March 31, 2015 which was partially offset by a decline in cash used for common share repurchase ~~activity and working capital needs.~~activity.

At ~~September 30, 2014,~~March 31, 2015, we had restricted cash and cash equivalents totaling ~~$45.8~~$53.2 million, ~~$5.6~~$4.7 million of which was held in restricted foreign accounts, ~~$2.6~~$2.5 million of which was held for future decommissioning of facilities (which we include in other assets on our condensed consolidated balance sheets) and ~~$37.6~~$46.0 million of which was held to meet reinsurance reserve requirements of our captive insurer (in lieu of long-term investments).

At ~~September 30, 2014,~~March 31, 2015, we had investments with a fair value of ~~$23.5~~$18.7 million. Our investment portfolio consists primarily of investments in corporate bonds, equities and highly liquid money market instruments. Our investments are carried at fair value and are either classified as trading, with unrealized gains and losses reported in earnings, or as available-for-sale, with unrealized gains and losses, net of tax, reported as a component of other comprehensive ~~income.~~income (loss).

Foreign Operations

Approximately ~~$174.6~~$209.9 million, or ~~88.7%~~76.5%, of our total unrestricted cash and cash equivalents at ~~September 30, 2014~~March 31, 2015 is related to foreign operations. In general, these resources are not available to fund our U.S. operations unless the funds are repatriated to the U.S., which would expose us to certain taxes we presently have not accrued in our results of operations. We presently have no plans to repatriate these funds to the U.S. in a taxable manner as the liquidity generated by our U.S. operations is sufficient to meet the cash requirements of our U.S. operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposures to market risks have not changed materially from those disclosed in Item 7A included in Part II of our ~~2013~~2014 10-K.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly 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”)). 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 ~~September 30, 2014~~March 31, 2015 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 Securities and Exchange Commission, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure. There has been no change in our internal control over financial reporting during the quarter ended ~~September 30, 2014~~March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding ongoing investigations and litigation, see Note 5 to our unaudited condensed consolidated financial statements in Part I of this report, which we incorporate by reference into this Item.

Item 1A. Risk Factors

In addition to the risk factor below and ~~the~~ other information in this report, the other factors presented in Item 1A. Risk Factors in our annual report on Form 10-K for the year ended December 31, ~~2013~~2014 are some of the factors that could materially affect our business, financial condition or future results.

~~The proposed spin-off of~~Pension and medical expenses associated with our ~~power generation business is contingent upon the satisfaction of~~retirement benefit plans may fluctuate significantly depending on a number of ~~conditions,~~factors, and we may ~~require significant time and attention~~be required to contribute cash to meet underfunded pension obligations.

A substantial portion of our ~~management~~current and ~~may not achieve~~retired employee population is covered by pension and postretirement benefit plans, the ~~intended results,~~costs and ~~difficulties in connection with the spin-off~~funding requirements of which depend on our various assumptions, including estimates of rates of return on benefit-related assets, discount rates for future payment obligations, rates of future cost growth, mortality assumptions and trends for future costs. Variances from these estimates could have ana material adverse

effect on us.

~~We plan~~ In addition, our policy to ~~pursue a spin-off of~~recognize these variances annually through mark to market accounting could result in volatility in our power generation business through a distribution to our stockholders of all of the shares of common stock of a subsidiary that would hold, directly or indirectly, the assets and liabilities of our power generation businesses. The spin-off will be contingent upon various conditions, including the approval of our Board of Directors, review by the Nuclear Regulatory Commission, the effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission and other conditions. For these and other reasons, the spin-off may not be completed. Additionally, execution of the proposed spin-off will likely require significant time and attention of our management, which could distract management from the operation of our business and the execution of our other strategic initiatives. Some of our employees may also be uncertain about their future roles within the separate companies pending the completion of the spin-off. Further, if the spin-off is completed, it may not achieve the intended results. Any such difficulties could have an adverse effect on our business, results of operations, which could be material. As of December 31, 2014, our defined benefit pension and postretirement benefit plans were underfunded by approximately $629.2 million. We also participate in various multi-employer pension plans in the U.S. and Canada under union and industry agreements that generally provide defined benefits to employees covered by collective bargaining agreements. Absent an applicable exemption, a contributor to a U.S. multi-employer plan is liable, upon termination or withdrawal from a plan, for its proportionate share of the plan’s underfunded vested liability. Funding requirements for benefit obligations of these multi-employer pension plans are subject to certain regulatory requirements, and we may be required to make cash contributions which may be material to one or more of these plans to satisfy certain underfunded benefit obligations. See Note 7 to the consolidated financial ~~condition.~~statements included in our annual report on Form 10-K for the year ended December 31, 2014 for additional information regarding our pension and postretirement benefit plan obligations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In November 2012, we announced that our Board of Directors authorized a share repurchase program. The following table provides information on our purchases of equity securities during the quarter ended ~~September 30, 2014. For the nine months ended September 30, 2014, we repurchased 4.7 million shares at a cost of $149.8 million.~~March 31, 2015. Any shares purchased that were not part of a publicly announced plan or program are related to repurchases of common stock pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.

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⁾
July 1, 2014 – July 31, 2014
   600,800       $ 32.76       600,800       $ 377.0
August 1 2014 – August 31, 2014
   938,295       $ 29.45       938,200       $ 349.4
September 1, 2014 – September 30, 2014
   92,579       $ 29.11       92,200       $ 346.6







Total
   1,631,674       $ 30.65       1,631,200







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⁾
January 1, 2015 – January 31, 2015
   65       $ 27.15       —         $ 346.6
February 1, 2015 – February 28, 2015
   100       $ 27.23       —         $ 346.6
March 1, 2015 – March 31, 2015
   51,893       $ 30.67       —         $ 346.6








Total
52,058    $ 30.66    —

⁽¹⁾	Includes 9565 shares, 100 shares and ~~379~~51,893 shares repurchased during ~~August~~January, February and ~~September,~~March, respectively, pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.

⁽²⁾

On November 7, 2012, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $250 million in the open market during a two-year period ending on November 5, 2014. On May 7, 2013, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $250 million. On February 26, 2014, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $250 million. The May 2013 and February 2014 authorizations are in addition to the initial $250 million share repurchase amount authorized in November 2012. On December 9, 2013, we completed the repurchase of shares using our initial $250 million authorization. We may repurchase shares in the open market using the additional repurchase amounts authorized in May 2013 and February 2014 during a two-year period that expires February 25, 2016.

Item 4. Mine Safety Disclosures

We own, manage and operate Ebensburg Power Company, an independent power company that produces alternative electrical energy. Through one of our 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 quarterly report on Form 10-Q.

Item 6. Exhibits

Exhibit 2.1* - Master Separation Agreement dated as of July 2, 2010 between McDermott International, Inc. and The Babcock & Wilcox Company (incorporated by reference to Exhibit 2.1 to The Babcock & Wilcox Company’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)).

Exhibit 3.1* - Restated Certificate of Incorporation of The Babcock & Wilcox Company (incorporated by reference to Exhibit 3.1 to The Babcock & Wilcox Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010~~(File~~ (File No. 1-34658)).

Exhibit 3.2* - Amended and Restated Bylaws of The Babcock & Wilcox Company effective September 9, 2013 (incorporated by reference to Exhibit 3.1 to The Babcock & Wilcox Company’s Current Report on Form 8-K dated September 11, 2013 (File No. 1-34658)).

Exhibit 10.1⁺ - Form of Non-Employee Director Grant Letter.

Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer.

Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer.

Exhibit 32.1 - Section 1350 certification of Chief Executive Officer.

Exhibit 32.2 - Section 1350 certification of Chief Financial Officer.

Exhibit 95 - Mine Safety Disclosure

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

*	Incorporated by reference to the filing indicated.

⁺	Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		THE BABCOCK & WILCOX COMPANY

		/s/ Anthony S. Colatrella

	By:	Anthony S. Colatrella
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Representative)

		/s/ David S. Black

	By:	David S. Black
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer and Duly Authorized Representative)

May 6, 2015

~~November 5, 2014~~

EXHIBIT INDEX


Exhibit Number		Description

2.1*		Master Separation Agreement, dated as of July 2, 2010, between McDermott International, Inc. and The Babcock & Wilcox Company (incorporated by reference to Exhibit 2.1 to The Babcock & Wilcox Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 1-34658)).

3.1*		Restated Certificate of Incorporation of The Babcock & Wilcox Company (incorporated by reference to Exhibit 3.1 to The Babcock & Wilcox Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010(File No. 1-34658)).

3.2*		Amended and Restated Bylaws of The Babcock & Wilcox Company effective September 9, 2013 (incorporated by reference to Exhibit 3.1 to The Babcock & Wilcox Current Report on Form 8-K dated September 11, 2013(File No. 1-34658)).

10.1⁺		Form of Non-Employee Director Grant Letter.

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.

95		Mine Safety Disclosure

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

*	Incorporated by reference to the filing indicated.

⁺ Management contract or compensatory plan or arrangement.


										Accumulated
	Common Stock				Capital In Excess of		Retained			Other Comprehensive			Treasury			Stockholders’			Noncontrolling			Total Stockholders’
	Shares		Par Value		Par Value		Earnings			Income (Loss)			Stock			Equity			Interest			Equity
	(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		—		—		—		132,695			—			—			132,695			(7,646	)		125,049
Dividends declared ($0.30 per share)		—		—		—		(33,039	)		—			—			(33,039	)		—			(33,039	)
Defined benefit obligations		—		—		—		—			3,299			—			3,299			—			3,299
Available-for-sale investments		—		—		—		—			68			—			68			—			68
Currency translation adjustments		—		—		—		—			(13,976	)		—			(13,976	)		(3	)		(13,979	)
Derivative financial instruments		—		—		—		—			(497	)		—			(497	)		—			(497	)
Exercise of stock options		152,965		1		3,926		—			—			—			3,927			—			3,927
Contributions to thrift plan		307,748		3		9,946		—			—			—			9,949			—			9,949
Shares placed in treasury		—		—		—		—			—			(154,850	)		(154,850	)		—			(154,850	)
Stock-based compensation charges		420,276		5		11,781		—			—			—			11,786			—			11,786
Contribution of in-kind services		—		—		—		—			—			—			—			5,830			5,830
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(517	)		(517	)

Balance September 30, 2014 (unaudited)		121,417,899	$	1,214	$	772,842	$	756,572		$	17,242		$	(423,821	)	$	1,124,049		$	15,918		$	1,139,967

Balance December 31, 2012		119,608,026	$	1,196	$	713,257	$	349,063		$	32,728		$	(109,809	)	$	986,435		$	16,481		$	1,002,916
Net income		—		—		—		180,490			—			—			180,490			(8,892	)		171,598
Dividends declared ($0.24 per share)		—		—		—		(27,085	)		—			—			(27,085	)		—			(27,085	)
Defined benefit obligations		—		—		—		—			1,483			—			1,483			—			1,483
Available-for-sale investments		—		—		—		—			(522	)		—			(522	)		—			(522	)
Currency translation adjustments		—		—		—		—			(2,285	)		—			(2,285	)		(45	)		(2,330	)
Derivative financial instruments		—		—		—		—			(1,087	)		—			(1,087	)		—			(1,087	)
Exercise of stock options		187,845		3		3,800		—			—			—			3,803			—			3,803
Contributions to thrift plan		345,037		3		10,016		—			—			—			10,019			—			10,019
Shares placed in treasury		—		—		—		—			—			(142,188	)		(142,188	)		—			(142,188	)
Stock-based compensation charges		220,840		2		13,070		—			—			—			13,072			—			13,072
Contribution of in-kind services		—		—		—		—			—			—			—			11,289			11,289
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(414	)		(414	)

Balance September 30, 2013 (unaudited)		120,361,748	$	1,204	$	740,143	$	502,468		$	30,317		$	(251,997	)	$	1,022,135		$	18,419		$	1,040,554


	Power Generation			Nuclear Operations		Technical Services		Nuclear Energy		Total
	(In thousands)
Balance at December 31, 2013	$	104,630		$	118,103	$	45,000	$	13,975	$	281,708
Acquisition of MEGTEC and purchase price adjustments (Note 2)		115,921			—		—		—		115,921
Foreign currency translation adjustments and other		(2,328	)		—		—		—		(2,328	)

Balance at September 30, 2014	$	218,223		$	118,103	$	45,000	$	13,975	$	395,301


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⁾
July 1, 2014 – July 31, 2014		600,800	$	32.76		600,800	$	377.0
August 1 2014 – August 31, 2014		938,295	$	29.45		938,200	$	349.4
September 1, 2014 – September 30, 2014		92,579	$	29.11		92,200	$	346.6

Total		1,631,674	$	30.65		1,631,200

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company