ML20046A039
| ML20046A039 | |
| Person / Time | |
|---|---|
| Site: | BWX Technologies, 07001201, 07000364, 07000824, 07000135 |
| Issue date: | 06/24/1993 |
| From: | Hattox B BABCOCK & WILCOX CO. |
| To: | Greeves J NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| Shared Package | |
| ML20046A037 | List: |
| References | |
| NUDOCS 9307230374 | |
| Download: ML20046A039 (34) | |
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BABCOCK & WILCOX INVESTMENT COMPANY-a McDermott Company 1010 Common Street.
New Orleans, Loulslana 70112 '
(504) 587 4411-m June 24, 1993 1
Mr. John T.
Greeves Deputy Director, Facilities Office of Nuclear Material. Safety & Safeguards Division of Fuel Cycle Safety &. Safeguards U.S. Nuclear Regulatory Commission Washington, DC -20555 l
Dear Mr. Greeves:
I am the Senior Vice President-and Chief Financial: Officer of' l
The Babcock & Wilcox Investment Company, a1 Delaware corporation.
This letter is in support of this firm's use of-the financial test to demonstrate.. financial assurance,:.as specified in 10 CFR Part'30, 40 and 70.
This firm guarantees, through the parent' company guarantee 1 submitted _to demonstrate compliance under-10 CFR Part 30, 40 and 70, the decommissioning of the facilities' owned or
.i operated by a subsidiary of this firm.
The' current cost' i
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estimate or cortified amounts for-' decommissioning,.so guaranteed,-are shown'for each facility on AttachmentD1.
This firm is.not required ~to file a Form 10K with the U.S.-
Securities and Exchange Commission-for the latest fiscal year.-
This fiscal year of this firm. ends on March 31,.-1994.
The..
figures for the - following items: marked with an asterisk arel derived from this firm's independently audited,~ year-end.
financial statements and footnotes for the latest completed.
=;
fiscal year, ended March 31,y1993.
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'9307230374.930628 K
PDR =ADOCK 07000027 A
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Mr. John T'.
Greeves U.S.
Nuclear Regulatory Commission t
June 24, 1993 Page 2 k
Financial Test:
Alternative 1
($000).
t 1.
Decommissioning cost estimate or certified amount for facilities on Attachment 1 10.791-1 i
- 2.
Total liabilities (if any portion of the cost estinates for decommissioning is included in total liabilities on your firm's financial statement, deduct that amount of that. portion from this line and add that amount to lines 3 and 4) 801.091 1'
- 3.
Tangible Net Worth 807,733 I
- 4.
Net Worth 935,137
- S.
Current Assets 662.094'
- 6.
Current Liabilities 411,923
- 7.
Net Working Capital (line 5 minus line 6)
$: 250,171'
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- 8.
The sum of Net Income plus. Depreciation,-
Depletion, and Amortization (98;790):
- 9.
Total assets in United States (required only~if less than 90 percent.of firm's-
-assets are located in the United States' I
i Effective April 1, L.19 92 ',. The B a b c o c k & - W i l c o x Investment i
Company adopted SFAS No. 106,
" Employers' Accounting.fori Postretirement-Benefits Other'Than' Pensions", and'Lrecorded as!
the cumulative effect of an-accounting' change a ' transition j
obligation of $185,4543000.
The new standard ~ does, not-have i
any impact on the cash requirements = of any postretirement
' health and welfare plan.
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l Mr. John'T. Greeves U.S. Nuclear Regulatory Commission June 24, 1993 Page 3 Yes No 10.
Is line 3 at least $10 million?
X 11.
Is line 3 at least 6 times line 1?
X 12.
Is line 7 at least 6 times line 1?
X 13.
Are at least 90 percent of firm's assets located in the United States?
X 14.
Is line 9 at least 6 times line 1?.
_X_
(Guarantor must meet two of the following three ratios) 15.
Is line 2 divided by line 4 less than 2.0?
X 16.
Is line 8 divided by line 2 greater than 0.1?
X 17.
Is.line 5 divided by line 6 greater than 1.5?
X Denotes figures derived from financial statements.
I hereby' certify that the content of this letter is true and correct to the best of my knowledge.
Very truly yours, t
THE BABCOCK & WILCOX INVESTMENT COMPANY A
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81:qc]5-(. HMox Senior Vice President and Chief Financial Officer BAH:lsc
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ATTACHMDTT I BABCOCK & WILCOX INVES7MDIT COMPANY PARDIT COMPAln GUARANTEE LICDISEE FACILITY ADDRESS LICDISE #
CERTIFIED CURRDIT COST AMOUNT ESTIPATE (OOO 'S )
(000'S )
l The Babcock & Wilcox Pennsylvania Nuclear 609 N. Warren Ave.
SNM -145 Cmplete Company Service Operations Apollo.'PA 15613 (Apollo )
SNM -414
$2,0002 Pennsylvania Nuclear Service Operations (PaIks Township )
Lynchburg Service P. O. Box 11165 SNM -778
$4,925 Opera tions Lynchburg,VA 24506 Laboratory 3
Alliance Research 1562 Beacon ' Street SNM -30
$874 Laboratory A113ance, OH - 44601 BEM 03043-03 SUB -1259 Naval Nuclear Fuel P. O. Box 785 SNM -42
$2,992' Division Lynchburg, VA 24505
$10,791 TCfrAL 1.
Decontamination & Decommissioning work is essentially finished.
2.
Interim estimate. - Refer to R. V. Carlson letter to Elinor Adensam, Dated April 30, 1993.
3.
Decommissioning Plaa with cost estimate has been submitted to Region Office.
4.
Fif ty percent of current cost estimate for Research & Test Reactor Fuel Element (R7RFE ) portion. Refer to A. F. Olsen. letter to J. W. N. Hickey, dated October ' 30, 1992.
CERTIFICATE OF INCUMBENCY i
i I, Robert E. Stumpf, do hereby certify that I am a duly elected, qualified, and acting Assistant Secretary of The Babcock & Wilcox Company, a Delaware corporation, and I do further certify that the individual whose name and title appearing below is a duly elected, qualified and acting officer of said corporation, and holds on the date of this certificate the nffice opposite his name:
NAME TITLti SIGNATURE J. J. Stewart President and C
Chief Operating Officer bi LON IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said company this 15th day of June,1993.
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A s
Rdber't 'E'. 'Sfu' f,
Assistant Sec etary
CERTIFICATE OF INCUMBENCY I, Robert E. Stumpf, do hereby certify that I am a duly elected and qualified Assistant Secretary of Babcock & Wilcox investment Company, a Delaware corporation, and I do further certify that the individuals whose names, titles, and signatures appearing below are duly elected, qualified, and acting officers of said corporation and hold on the date of this certificate the office set opposite his name and that the signature appearing opposite his name is the genuine signature of said officer:
NAME OF OFFICER TITLE OF OFFICER SIGNATURE Robert E. Howson Chairman of the Board Chief Executive Brock A. Hattox Senior Vice President a
Chief Financial IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said corporation this 19th day of May,1993.
Rob'ert E. Stumpff Assistant Secretary l
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f E!)ERNST& YOUNG nw one so n svuc n ne sm w nw nn n,a,as st New Odrans, Louisiana 701 N Report ofIndependent Accountants The Board of Directors Babcock & Wilcox Investment Company We have audited, in accordance with generally accepted auditing standards, the consoli-dated financial statements of Babcock & Wilcox Investment Company (the " Company")
for the year ended March 31,1993, and have issued our report thereon dated May 10, 1993.
With respect to the attached schedule reconciling amounts contained in the chief financial officer's (CFO's) letter with amounts in the consolidated financial statements of the Company for the year ended March 31,1993, we have:
1.
Compared the amounts in the column "Per Financial Statements" with the corre-sponding amounts shown in the Company's consolidated financial statements for the year ended March 31,1993 and found them to be in agreement; 2.
Compared the amounts in the column "Per CFO's Letter" with the corresponding amounts shown in Brock Hattox's letter to Mr. John T. Greeves of the United States Nuclear Regulatory Commission dated June 24,1993 and found them to be in agreement:
3.
Compared the amounts in the column " Reconciling items" with the corresponding amounts shown in analyses prepared by the Company and found them to be in agreement; and 4.
Proved the arithmetic accuracy of the subtotals and totals.
Because the procedures in I through 4 above do not constitute an audit made in accor-dance with generally accepted auditing standards, we do not express an opinion on the amounts referred to above. In connection with the procedures referred to above, no mat-ters came to our attention that caused us to believe that the amounts should be adjusted.
1 Had we performed additional procedures or had we performed an audit in accordance with generally accepted auditing standards, matters might have come to our attention that would have been reported to you.
This report is intended solely for filing with the United States Nuclear Regulatory Commission and should not be used for any other purpose.
S June 24,1993 i
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SCHEDULE RECONCILINO AMOUNTS CONTAINED IN THE Cl!IEF FINANCIAL OFFICER'S LETTER WITH AMOUNTS IN THE FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS)
BABCOCK & WILCOX INVESTMENT COMPANY YEAR ENDED MARCH 31,1993 Line Number Per in Financial Reconciling Per CFO's CFO's Letty Statements Items I.etter 2
Total liabilities less accrued decommissioning costs:
Total Current Liabilities
$414,833 Long-Term Debt 11,075 Deferred Income Taxes 15,727 Notes Payable-McDermott Inc.
17,340 Other Liabilities 350,499 Subtotal
$809,474 Less accmed decommissioning costs in:
Current Liabilities
$2,910 leng-Term Liabilities 5,473 Subtotal
$8,383 Total Line 2 iBOLQ2L 4
Net Worth:
Stockholder's Equity
$922,276 Minority Interest 4,478 Subtotal
$926,754 Add accrued decommissioning costs
$8,383 Total Line 4
_ 1935.137 3
Tangible Net Worth:
Total Line 4
$935,137 less Intangibles:
Excess of Cost over Fair Value of Purchased Businesses
$125,972 Other Intangibles
$1,432 Total Line 3
__.I$12L404) 5 Current Assets
$662,094 Total Line 5
$M2.094 6
Current Liabilities
$414,833 Less accrued decommissioning costs in Current Liabilities
$2,910 Total Line 6
$411.923 7
Net Working Capital (Total Line 5 less Total Line 6)
____325117L 8
Net Income
($148,603)
Depreciation azul Amortization 49,813
($98,790)
Total Line 8
($2BJ.20J I
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=3ERNST& YOUNG
.monswsn nncm som m nnams st New Orleans, Louisuna 70139 Report ofIndependent Auditors l
The Board of Directors l
Babcock & Wilcox Investment Company We have audited the accompanying consolidated balance sheet of Babcock & Wilcox
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investment Company as of March 31,1993 and 1992, and the related casolidated state-ments of income (loss) and retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management. Our i
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting *.he amounts and disclosures in the finan-cial statements. An audit also includes acessing the accounting principles used and significant estimates made by manager ent, as well as evaluating the overall financial a
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
p in our opinion, the financial statements referred to above present fairly, in all material L
respects, the consolidated financial position of Babcock & Wilcox Investment Company at March 31,1993 and 1992, and the consolidated results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company changed its methods of accounting for income taxes and postretirement benefits other than pensions in 1993.
Y May 10,1993 F'
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Consolidated Financial Statements I
Babcock & Wilcox Investment Company Years endedMarch 31,1993 and1992 l
with Report ofindependent Auditors I
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BABCOCK & WILCOX INVESTMENT COMPANY CONSOLIDATED BALANCE SHEET MARCH 31,1993 AND 1992 (in thousands)
ASSETS Current Assets:
Cash and cash equivalents 55,173 12,495 Accounts receivab'e - trade 203,735 218,562
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Accounts receivaL!c - other 61,368 89,561 5
Accounts receivab!a - affiliates 38,546 10,134 l
Contracts in progress 180,804 178,249 l
Inventories 60,622 69,456 m
Deferred income taxes 56,665 42,780 i
Other current assets 5,181 5,041 Total Current Assets 662,094 626,278 Property, Plant and Equipment, at Cost:
Land 11,103 9,559 Buildings 141,153 103,622 g
Machinery and equipment 505,926 506,211 E
Property under construction 22,394 32,414 680,576 651,806 Less accumulated depreciation 364,785 338,917 Net Property, Plant and Equipment 315,791 312,889 Notes receivable - McDermott incorporated 397,923 430,934 Excess of Cost Over Fair Value of Net Assets of Purchased Businesses Less Accumulated l
Amortization of $77,828,000 at March 31,1993 l
and $72,224,000 at March 31,1992 125,972 131,576 ll Prepaid Pension Costs 177,473 173,167 Other Assets 56,975 62,846 I
TOTAL
$ 1,736,228
$ 1,737,690 j
See accompanying notes to consolidated financial statements.
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i 1913 1992 (In thousands)
LIABILITIES AND STOCKHOLDER'S EQUITY Current Liabilities:
Notes payable and current maturities of long-term debt 4,020 36,454 Accounts payable 98,568 98,227 Accounts payable - affiliates 8,161 20,831 Accrued employee benefits 56,255 38,582-Accrued liabilities - other 65,437 79,715 Advance billings on contracts 126,218 96,105 Accrued warranty expense 34,804 34,680 U.S. and foreign income taxes 21,370 60,944 Total Current Liabilities 414,833 465,538 Deferred Income Taxes 15,727 97,674 Long-Term Debt 11,075 14,901 Note Payable - McDermott incorporated 17,340 7,607 l
Accrued Postretirement Benefit Obligation 278,428 l
Other Liabilities 72,071 71,373 Minority Interest 4,478 4,669 Common Stock and Other Stockholder's Equity:
Common stock, par value $1.00 per share,1000 shares authorized and issued 1
1 Capitalin excess of par value 749,881 749,881 Retained earnings 177,630 326,233 Minimum pension liability (478) -
Cumulative foreign exchange translation adjustments (5,236) 291 Total Common Stock and Other Stockholder's Equity 922,276 1,075,928 TOTAL
$ 1,736,228
$ 1,737,690 3
l BA8 COCK & WILCOX INVESTMENT COMPANY CONSOLIDATED STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS FOR THE FISCAL YEARS ENDED MARCH 31,1993 AND 1992
-l 1993 1932 (In thousands)
Revenues
$ 1,530,700
$ 1,604,622 Costs and Expenses:
Cost of operations 1,335,714 1,384,832 Depreciation and amortization 49,813 45,425 Selling, general and administrative expenses 104,992 104,841 1,490,519 1,535,098 40,181 69,524 Equity in income of Investees 6,178 11,287 Operating income 46,359 80,811 Other income (Expense):
Interest income 13,315 11,371 Interest expense (6,088)
(7,656)
Other - net 1,290 41,407 8,517 45,122
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Income from Continuing Operations before Provision B
for income Taxes and Cumulative Effect of Accounting Changes 54,876 125,933 Provision for income Taxes 21,752 49,339 income from Continuing Operations before Cumulative Effect of Accounting Changes 33,124 76,594 Loss from Discontinued Operations (3,368)
. Income before Cumulative Effect of I
Accounting Changes 33,124 73,226 Cumulative Effect of Accounting Changes (181,727)
Net income (Loss)
(148,603) 73,226 Retained Earnings - Beginning of Year 326,233 322,327 Deduct Cash Dividends 69,320 Retaired Eemings - End of Year 177,630 326,233 See accompanying notes to consolidated financial statements.
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BABCOCK & WILCOX INVESTMENT COMPANY Ls CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FISCAL YEARS ENDED MARCH 31,1993 AND 1992 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
)
m (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (Loss)
$ (148,603) 73,226 l
Adjustments to reconcile not income to net cash used in operating activities:
Depreciation and amortization 49,813 45,425 Gain on sale and disposal of assets (25,159)
(57,131)
Loss on disposal of discontinued operations 3,550 Provision for (benefit from) deferred taxes 5,887 (53,046)
Cumulative effect of accounting changes 181,727 Other (1,618) 6,944 Changes in assets and liabilities, net of effects from divestitures:
Accounts receivable 59,696 (71,301)
Accounts payable 40,103 24,360 inventories 8,374 4,071 Contracts in progress and advance billings 27,161 9,858 Income taxes (39,394) 7,593 Other, net (53,171)
(25,157)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 104,816 (31,608)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale and disposal of assets 60,077 69,730 Proceeds from sale of discontinued operations 20,368 Purchases of property, plant and equipment (44,152)
(52,706)
(Increase) decrease in loans to affiliate (50,075) 8,449 Other -
321 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (34,150) 46,162 5
CONTINUED INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS
.1993 1@2 (in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt (35,906)
(2,415) issuance of long-term debt 39,474 I
increase (decrease) in short-term borrowing (13,321)
Increase in loan from affiliate 9,733 7,607 Dividends paid (69,320)
Other (1,491)
(1,354)
NET CASH USED IN FINANCING ACTIVITIES (27,664)
(39,329) l EFFECTS OF EXCHANGE RATE CHANGES ON CASH (324)
(724) -
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,678 (25,499) l CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 12,495 37,994 CASH AND CASH EQUIVALENTS AT END OF YEAR 55,173 12,495 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
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Interest (net of amount capitalized) 1,310 2,159 i
income taxes (includes amounts paid to McDermott incorporated, see Note 6) 9,473 35,480 l
See accompanying notes to consolidated financial statements.
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BABCOCK & WILCOX INVESTMENT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED MARCH 31,1993 AND 1992 l
NOTE 1 -
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES I
Princioles of Consolidation The consolidated financial statements include the accounts of Babcock & Wilcox investment Company ("BWICO") and all its subsidiaries, including The Babcock & Wilcox Company
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("B&W). Hereinafter, the " Company" will be used to mean BWICO and its consolidated y
subsidiaries. Investments in joint venture and other entities in which the Company has a 20%
j to 50% interest are accounted for on the equity method. Differences between the cost of 1
g equity investments and the amount of underlying equity in net assets of the investees are 3
amortized systematically to income. All significant intercompany transactions and accounts
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have been eliminated. BWICO is a wholly-owned subsidiary of McDermott incorporated 1
("McDermott") whose parent is McDermott International, Inc. (" International"),
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Certain amounts previously reported have been reclassified to conform with the presentation s
at March 31,1993. The notes to consolidated financial statements are presented on the basis g
of continuing operations, unless otherwise stated.
Contracts and Revenue Recoonition I
Contract revenues and related costs are principally recognized on a percentage of completion method for individual contracts or components thereof based upon work performed or a cost to cost method, as applicable to the product or activity involved. Revenues and related costs so recorded, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts, are included in Contracts in Progress. Billings that exceed I
accumulated contract costs and revenues and costs recognized under percentage of completion are included in Advance Billings on Contracts. Most long-term contracts have provisions for progress payments. Contract price and cost estimates are reviewed periodically
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as the work progresses and adjustments proportionate to the percentage of completion are E
reflected in income in the period when such estimates are revised. There are no unbilled revenues which will not be billed. Provisions are made currently for all known or anticipated g
losses. Claims for extra work or changes in scope of work are included in contract revenues B
when collection is probable.
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.1993 1992 (In thousands) included in Contracts in Progress are:
I Costs incurred less costs of revenue recognized 67,941 56,960 Revenues recognized less billings to customers 112,863 121,289 Contracts in Progress 180,804 178,249 ll 7
1S M 1992
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(in thousands) included in Advance Billings on Contracts are:
Billings to customers less revenues recognized 141,917 133,311 Costs incurred less costs of revenue recognized (15,699)
(37,206)
Advance Billings on Contracts 126,218 96,105 The Company is usually entitled to financial settlements relative to the individual circumstances of deferrals or cancellations of long-term contracts. The Company does not recognize such settlements or claims for additional compensation until final settlement is reached.
Included in Accounts receivable - trade are amounts representing retainages on contracts as follows:
1993 1992 (In thousands)
Retainages 133,645 132,254 L
Retainages expected to be collected after one year 54,114 81,948 Of its long-term retainages at March 31,1993, the Company anticipates collection as follows:
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$24,537,000 in fiscal 1995, $9,349,000 in fiscal 1996, $12,620,000 in fiscal 1997, and j
$7,608,000 thereafter.
Deoreciation Except for a major marine vessel, property, plant and equipment is depreciated on the straight-
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line method, using estimated economic usefullives of 8 to 40 years for buildings and 2 to 28 J
years for machinery and equipment. The major marine vessel, which has an estimated l
economic life of 10 to 20 years, is depreciated under the units-of-production method based on its utilization.
k Cash and Cash Eauivalents k
Cash equivalents are highly liquid investments, with maturities of three months or less when E
purchased. The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value.
Amortizetion of Excess of Cost Over Fair Value of Net Assets of Purchased Businesses Excess of the cost over fair value of net assets of purchased businesses principally pertains to B&nN, which is being amortized on a straight-line basis over forty years.
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Warranty Exoense i
Estimated warranty expense which may be required to satisfy contractual requirements is accrued relative to revenue recognition on the respective contracts. In addition, specific provisions are made where the costs of warranty are expected to significantly exceed such accruals.
Environmental Clean-uo Costs The Company accrues for future decommissioning and decontamination of its nuclear facilities that will permit the release of these facilities to unrestricted use at the end of each facility's g
life, which is a condition of its licenses from the Nuclear Regulatory Commission. Such B
accruals are based on the current estimated cost of those activities over the economic useful life of each facility, which is estimated at 40 years. During fiscal 1992, the provision was reduced $14,900,000 as a result of a Department of Energy grant for one facility.
Research and Develooment The cost of research and development which is not performed on specific contracts is charged to operations as incurred. Such expense was approximately $18,528,000 and $20,500,000 in fiscal years 1993 and 1992, respectively. In addition, expenditures on research and
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development activities of approximately $41,907,000 and $67,000,000 in fiscal years 1993 and 1992, respectively, were paid for by customers of the Company.
Caoitalization of Interest Cost in fiscal years 1993 and 1992, totalinterest cost incurred was $7,201,000 and $9,664,000, respectively, of which $1,113,000 and $2,008,000, respectively, was capitalized, income Taxes The Company is included in the federal income tax return filed by McDermott. McDermott's policy for intercompany allocation of federal income taxes provides generally that the Company computes the provision for federal income taxes on a separate company basis.
Effective April 1,1992, McDermott and the Company adopted SFAS No.109, " Accounting I
for income Taxes". This statement establishes new accounting and reporting standards for the effects of income taxes. It continues the liability approach provided by its predecessor standard, SFAS No. 96, which was adopted by McDermott and the Company in fiscal year 1989, but contains new requirements for asset recognition. It also contains new requirements i
regarding balance sheet classification and prior business combinations. The cumulative effect l.
of the accounting change reflects the impact of the net reduction in enacted tax rates on g
temporary differences resulting from adjustments of remaining assets and liabilities acquired l
in the acquisition of B&W in 1978 from net of tax to pre-tax amounts. The cumulative effect j
of the accounting change on prior years at April 1,1992 was $3,727,000. Other than the cumulative effect, the accounting change had no material effect on fiscal 1993.
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Postretirement Health Care Benefits During the fourth quarter of 1993 and effective April 1,1992, the Company adopted SFAS No.106, " Employers' Accounting for Postretirement Benefits Other Than Pensions." The i
Statement requires the accrual method of accounting for the cost of providing health and welfare benefits and expanded postretirement health and welfare plan disclosures.
In accordance with the Statement, the Company elected immediate recognition of its transition 1
obligation and recorded $185A54,000 (net of income taxes of $108,107,000) as the cumulative effect of an accounting change. In fiscal 1993, other than the cumulative effect
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of the accounting change, the adoption of SFAS No.106 resulted in a decrease in income i
from Continuing Operations before Cumulative Effect of Accounting Changes and an increase l
in Net Loss of $2,415,000. Postretirement benefit cost for the prior year has not been i
restated and was recognized by expensing the insurance programs' premiums, the self-insured program's claims paid, and the estimated unpaid liability for claims incurred by plan participants. The aggregate cost, including discontinued operations, was $19,341,000 in fiscal year 1992.
Foreion Currency Translation Assets and liabilities of foreign operations, other than operations in highly inflationary economies, are translated into U.S. Doflars at current exchange rates and income statement items are translated at average exchange rates for the year. Adjustments resulting from the translation of foreign currency financial statements are recorded in a separate component of equity; an analysis of these adjustments follows:
(in thousands)
Balance March 31,1991 1,772 Translation adjustments for fiscal 1992 (1,481)
Balance March 31,1992 291 Translation adjustments for fiscal 1993 (5,527)
Balance March 31,1993 (5,236)
Foreign currency transaction adjustments are reported in income. Included in Other income (Expense) are transaction losses of $50,000 and $411,000 for fiscal years 1993 and 1992, respectively.
Forward Exchance Contracts The Company enters into forward exchange contracts primarily as hedges relating to identifiable currency positions. These financialinstruments are designed to minimize exposure and reduce risk from exchange rate fluctuations in the regular course of business. Gains and losses on forward exchange contracts which hedge exposures on firm foreign commitments are deferred and recognized as adjustments to the bases of those assets. Gains and losses on forward exchange contracts which hedge foreign currency assets or liabilities are recognized in income as incurred Such amounts effectively offset gains and losses on foreign currency assets or liabilities that are hedged.
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At March 31, 1993, the Company had forward exchange contracts to purchase
$288,056,000 in foreign currencies (primarily Canadian dollars), and to sel! $34,060,000 in I
foreign currencies (primarily Canadian dollars). at varying maturities, ranging from 1994 to 1998.
The fair values of foreign currency forward exchange contracts are estimated by obtaining quotes from brokers. At March 31,1993, the Company had forward exchange contracts outstanding to purchase and sell foreign currencies with a net notional value of $253,996,000 and a fair value of $250,549,000.
NOTE 2 - DISCONTINUED OPERATIONS Welded Tubular Line of Business In February 1992, the Company sold its welded tubular line of business (" Welded") for I
$ 30,217,000, consisting of $20,368,000 in cash and receivables of $9,849,000. These proceeds are subject to purchase pnce adjustments that have not yet been determined, but are not expected to have a material effect on the consolidated financial statements of the I
Company. Loss from Discontinued Operations in fiscal 1992 includes income from operations of $182,000 (net of income taxes of $114,000) and a loss on disposal of $4,790,000 (net of income tax benefit of $2,936,000), including a $1,159,000 operating loss during the phase out period, resulting from the sale.
Revenues applicable to Welded operations were
$ 57,428,000 in fiscal 1992.
Seamless Tubular Line of Business During fiscal 1991, the Company sold its previously discontinued seamless tubular line of business. A gain on the disposal of $1,240,000, net of income taxes of $760,000, resulting from adjustments in fiscal 1992 is included in Loss from Discontinued Operations.
I NOTE 3 - SALE OF ACCOUNTS RECEIVABLE l
In December 1988, the Company entered into an agreement with a certain U.S. bank, B
whereby it can sell, up to a maximum limit, with limited recourse, an undivided interest in a designated pool of qualified accounts receivable. Under the terms of the agreement, new l
receivables are added to the pool as collections reduce previously sold accounts receivable.
B During fiscal 1993, the Company and the bank renewed the agreement for an additional period of three years and increased the maximum sales limit from $175,000,000 to $225,000,000.
At March 31,1993, approximately $170,000,000 of receivables had been sold for cash under 1
this agreement. Included in Other-net were expenses recorded on the sale of receivables which represent bank fees and discounts of $7,851,000 and $12,564,000 for the fiscal years ended March 31,1993 and 1992, respectively.
l 1
i 11 l
l
NOTE 4 - INVENTORIES Inventories are carried at the lower cost or market. Cost is determined on an average cost basis except for certain materials inventories, for which the last-in first-out (LIFO) method is used. The cost of approximately 15% and 21% of totalinventories was determined using the LIFO method at March 31,1993 and 1992, respectively. Consolidated inventories at March 31,1993 and 1992 are summarized below:
1993 1992 (in thousands)
Raw Materials and Supplies 31,566 36,591 l
Work in Progress 17,678 17,707 Finished Goods 11,378 15,158 60,622 69,456 NOTE 5 - PENSION PLANS AND POSTRETIREMENT BENEFITS Pension Plans The Company provides retirement benefits, primarily through non-contributory pension plans, for substantially all of its regular full-time employees. Salaried plan benefits are based on final l
average compensation and years of service, while hourly plan benefits are based on a flat benefit rate and years of service. The Company's funding policy is to fund applicable pension plans to meet the minimum funding requirements of the Employee Retirement income Security Act of 1974 (ERISA) and, generally, to fund other pension plans as recommended by the respective plan actuary and in accordance with applicable law. At January 1,1993 and 1992, approximately one-half of total plan assets were invested in listed stocks and bonds.
The remaining assets were held in U.S. Government securities and investments of a short-term nature.
1 The periodic pension benefit for fiscal years 1993 and 1992 included the following components:
1993 jf1'1 (In thousands)
Service cost - benefits earned during the period 15,446 14,187 Interest cost on projected benefit obligation 45,355 41,719 Actual return on plan assets (49,835)
(127,063)
Net amortization and deferral (22,659) 67,105 Net periodic pension benefit (11,693)
(4,052) 4 12
______m_
u_
Due to the sale of Welded, the Company recognized a curtailment and settlement of a certain related hourly pension plan in the United States. Consequently, the loss from discontinued r-operations in fiscal year 1992 includes a net after-tax gain of $1,659,000 resulting from the L.
curtailment and settlement.
Due to the sale of interests in its commercial nuclear joint ventures, the Company recognized a curtailment and settlement of a certain related salaried pension plan in the United States.
Consequently, income from continuing operations in fiscal year 1992 includes a net after tax gain of $1,615,000 resulting from the curtailment and settlement. Accordingly, net periodic pension cost relating to this pension plan was remeasured at December 4,1991. The impact on net periodic pension cost for fiscal 1992 was to increase pre-tax income from continuing operations by $2,049,000.
13 i
Q The following table sets forth the plans' funded status and amounts recognized in the Company's consolidated financial statements:
Plans for Which Plans for Which -
Assets Exceed Accumulated Accumulated Benefits Benefits Exceed Assets
.1993 1992 1993 1992 (in thousands)
Actuarial present value of
-l benefit obligations:
Vested benefit obligation
$ 337,602
$ 309,894 85,993 69,296 Accumulated benefit obligation
$ 373,a30
$ 344,720
$ 107,285 87,573 Projected benefit obligation
$ 449,243
$ 414,519
$ 109,226 88,215 3
Plan assets at fair value 679,309 676,774 81,829 67,572 Projected benefit obligation (in excess of) or less than plan assets 230,066 262,255 (27,397)
(20,643)
Unrecognized net gain (9,372)
(35,376)
(3,677)
(7,383)
Prior service cost not yet recognized in net periodic pension cost 8,921 6,656 16,119 5,091 Unrecognized transition (asset) obligation (52,142)
(60,368)
(124) 296 Adjustment required to recognize minimum liability (10,649)
(1,262)
Prepaid pension cost (pension liability) recognized in the s
consolidated financial h
statements S 177,473
$ 173,167
$ (25,728)
$ (23,901)
(-
At January 1,1933 and 1992, the weighted-average discount rate and the rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligations were 8-1/2% and 5% respectively. The expected long-term rate of return on plan assets was 8-1/2%
14
I in accordance with the provisions of SFAS No. 87, " Employers' Accounting for Pensions," the Company recorded during fiscal 1993 and 1992 an additional minimum liability for certain of its plans of $10,649,000 and $1,262,000, respectively.
These liabilities resulted in recognition of intangible assets of $10,649,000 and $538,000, respectively,in fiscal 1993 and 1992 and a reduction of stockholders
- equity of $478,000 in fiscal 1992.
l l
The principal ERISA pension plan provides that, subject of certain limitations, any excess assets in such plan would be used to increase pension benefits if certain events occurred within a 60-month period following a change in control of International.
Multiemolover clans One of the Company's subsidiaries contributes to various multiemployer plans. The plans generally provide defined benefits to substantially all unionized workers in this subsidiary, i
Amounts charged to pension cost and contributed to the plans were $4,687,000 and l
$4,886,000 in fiscal years 1993 and 1992, respectively.
j Postretirement health care and life insurance benefits The Company, directly or through McDermott, offers postretirement health care and life insurance benefits to substantially all of its retired regular full-time employees, including those associated with discontinued operations. The Company shares the cost of providing these benefits with all affected retirees, except for certain life insurance plans. Postretirement health care and life insurance benefits are offered under separate defined benefit postretirement plans to union and non-union employees.
The health care plans are contributory and contain cost-sharing provisions such as deductibles and coinsurance; the life insurance plans are contributory and non-contributory. The Company does not fund any of its plans.
The following table sets fortn the plans' funded status and amounts recognized in the Company's consolidated financial statements at March 31,1993:
1 (In thousands)
Accumulated Postretirement Benefit Obligation:
Retirees
$ 248,846 i
Fully eligible active participants 15,968 Other active plan participants 37,480 1
302,294 Unrecognizr m loss (1,190)
Accrued postretirement benefit cost
$ 301,104 I
i
,e I
i The accumulated postretirement benefit obligation in the above table includes $280,863,000 for the Company's health care plans and $21,431,000 for the Company's life insurance plans.
Net periodic postretirement benefit cost for fiscal year 1993 included the following I
components:
(In thousands) 1 Service cost 2,194 Interest cost 24,349 Net periodic postretirement benefit aost
$ 26,543 I
I For measurement purposes, a 13-1/2% weighted-average annual assumed rate of increase in the per capita cost of covered health care claims was assumed for 1993. The rate was i
assumed to decrease gradually to 5% in 2005 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For I
example, increasing the assumed health care cost trend rates by one percentage in each year would increase the accumulated postretirement benefit obligation as of March 31,1993 by
$17,080,000 and the aggregate of the service cost and interest cost components of net I
periodic postretirement benefit costs for fiscal 1993 by $1,610,000. At January 1,1993, j
the weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 8-1/2%.
Employees of the Company who are not U. S. citizens and located in certain foreign countries are covered by various foreign postretirement benefit arrangements. The Company has not yet adopted SFAS No.106 for these foreign plans. The effect of initial adoption will be reported as the cumulative effect of an accounting change and is not expected to have a material effect on the consolidated financial statements of the Company.
In November 1992, the Financial Accounting Standards Board issued SFAS No.112,
" Employers' Accounting for Postemployment Benefits," effective for fiscal years beginning I
after December 15, 1993.
SFAS No.112 requires accrual accounting, under certain conditions, for the estimated cost of benefits provided by an employer to former or inactive employees after employment but before retirement. The Company has not yet finalized its I
review of the impact of this statement, but the new standard will have no impact on the cash requirements for any postemployment benefits, and is not expected to have a material effect on the consolidated financial statements of the Company.
NOTE 6 -INCOME TAXES The Company makes payments to McDermott or settles against the note receivable from I
McDermott in the amount it would have paid to the Internal Revenue Service ("lRS") had it not been a member of the consolidated tax group.
During fiscal years 1993 and 1992, the Company settled against the note receivable from McDermott income taxes payable of I
$46,963,000 and $86,473,000 (including $20,800,000 for taxes paid by McDermott in April 16 1
1
1992 to the IRS relating to settled issues for years 1981 through 1986), respectively, and during fiscal year 1992 the Company paid income taxes of $25,783,000 to McDermott. Also during fiscal year 1992, the Company settled against the note receivable from McDermott accrued interest payable of $29,449,000 for interest paid by McDermott to the IRS on the settled issues and during fiscal year 1993, additional accrued interest payable of $15,500,000 pertaining to IRS issues was settled against the note. U.S. and foreign income taxes and net deferred income taxes include allocated federal income tax assets (liabilities), under McDermott's policy for intercompany allocation of federalincome taxes, of $32,282,000 and
$(94,000,000) at March 31,1993 and 1992, respectively.
Deferred income taxes reflect the net tax effects of temporary differences between the I
financial and tax bases of assets and liabilities. Significant components of deferred tax assets and liabilities as of March 31,1993 under SFAS No.109 and March 31,1992 under SFAS No. 96 are as follows:
1 1993 1992 (in thousands)
Deferred tax assets:
Accrued warranty expense 13,968 11,643 l
1 Accrued provisions for facility closings and dispositions and environmental cleanup 10,728 15,222 Accrued vacation pay 7,994 7,889 Accrued liabilities for self-insurance (including postretirement health care benefits) 136,244 26,584 Accrued liabilities for executive and 1
employee incentive compensation 5,892 4,494 l
Accrued pension liability 5,151 6,535 Accrued interest on proposed tax deficiencies 4,783
-15,017 Allowance for doubtful accounts 5,958 4,097 Net operating loss carryforward 2,116 Inventory valuation al!owances 2,202 2,032 I
investments in joint ventures 710 3,007 j
Other 7,010 2,470 J
Total deferred tax assets 202,756 98,990 Valuation allowance for deferred tax assets (3,149) j Net deferred tax assets 199,607 98,990 Deferred tax liabilities:
Property, plant and equipment 46,060 47,822 Long-term contracts 15,288 19,678 Prepaid pension costs 70,211 60,743 I
investments in joint ventures 24,944 24,614 Other 1,143 1,533 Total deferred tax liabilities 157,646 154,290 Not deferred tax assets (liabilities) 41,961 (55,400)
I f
17 1
(.L Income (loss) from continuing operations before provision for or benefit from income taxes was as follows:
1222 1222 (in thousands)
U. S.
47,604 121,162 Other than U. S.
7,272 4,771 54,876 125,933 The provision for (benefit from) income taxes from continuing operations consists of:
1222 1922 (in thousands) -
Ourrent:
Federal 13,286 84,973 i
State and local 630 15,806 i
Foreign 1,949 1,606
)
l Total current 15,865 102,385 Deferred:
Federal 4,378 (45,348)
.i State and local 956 (7,551)
Foreign 553 (147)
Total deferred 5,887 (53,046) l Provision for income Taxes 21,752 49,339 i
The effective income tax rate on continuing operations is reconciled to the statutory federal income tax rate as follows:
1993 1992 PERCENT PERCENT i
Statutory federal tax rate 34.0 34.0
.j State and local income tax effect 2.1 4.3 l
Foreign operations 1.6
.4 Excess of cost over fair value of net assets of The Babcock & Wilcox Company 3.1 1.3 Tax benefit of NOL utilization (2.7)
(1.2)
Othes 1.5
.4 Effective income Tax Rate 39.6 39.2 18 s
Undistributed earnings of foreign subsidiaries amounted to approximately $24,400,000 at
[--
March 31,1993.
These eamings are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state and local income taxes has been provided.
Upon distribution of those eamings, the Company would be subject to both U.S. income taxes -
h--
(subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign jurisdictions. The unrecognized deferred income tax liability is estimated to be approximately
$ 9,300,000. Withholding taxes of $2,100,000 would be payable upon remittance of all
(
previously unremitted earnings at March 31,1993.
During fiscal 1992, a decision was entered in the United States Tax Court conceming.
McDermott's U.S. income tax liability for the fiscal year ended March 31,1983 disposing of all significant U.S. federal income tax issues for that year. The IRS has issued notices for I
fiscal 1984 through 1988 asserting deficiencies in the amount of net operating losses and j
taxes reported. The deficiencies are based on issues substantially similar to those of earlier l
years. The Company believes that any income taxes ultimately assessed with respect to the Company will not exceed amounts provided.
NOTE 7 - RELATED PARTY TRANSACTIONS The Company has material transactions with Intemational and its other subsidiaries occurring in the normal course of operations. Such transactions include the leasing of marine equipment to International ($9,797,000 and $13,659,000, in fiscal years 1993 and 1992, respectively),
the allocation of general and administrative costs by McDermott to the Company
($24,470,000 and $25,934,000 in fiscal years 1993 and 1992, respectively), placing certain insurance coverage (at prices determined on an annual basis of $4,875,000 and $16,481,000 in fiscal years 1993 and 1992, respectively, including discontinued operations) through commercial insurance carriers which in turn substantially reinsure such exposure to a wholly-owned subsidiary of International, the allocation of health care costs ($52,429,000 and
$ 55,455,000 in fiscal years 1993 and 1992, respectively) resulting from participation in certain McDermott plans, the purchase of engineering and construction services ($306,000 and 0778,000 in fiscal years 1993 and 1992, respectively) from a subsidiary of McDermott, the sale and fabrication of construction services ($235,000 and $5,782,000 in fiscal 1993
{
and 1992, respectively) to a subsidiary of McDermott and the management of certain investments of the Company's pension plans by a wholly-owned subsidiary of International for which the Company paid fees of $1,487,000 and $1,563,000 in fiscal years 1993 and 1992, respectively.
The Company had sales to unconsolidated affiliates of International and its other subsidiaries of $4,148,000 and $9,022,000 in fiscal years 1993 and 1992, respectively. Purchases from these affiliates were $2,732,000 and $5,517,000 in fiscal years 1993 and 1992, respectively.
Property, plant and equipment and accumulated depreciation, respectively, include
$151,745,000 and $88,908,000 at March 31,1993 and $168,208,000 and $82,264,000 at March 31,1992 of marine equipment leased to Intemational.
Since fiscal 1991, the Company has purchased McDermott's domestic trade accounts receivables at face value and without recourse. A portion of the receivables purchased were sold by the Company (see Note 3). Included in the designated pool of qualified accounts.
19
_-_-_____._-__-_,_______________m._
. = - - _ - - _ _ - - - - - - - - _ _ _.
(
receivable at March 31,1993 and 1992 were $70,170,000 and $43,545,000 of receivables
[a purchased from McDermott.
Non-current Notes receivable - McDermott include a non-interest bearing note of
- $250,055,000 and $292,434,000 at March 31,1993 and 1992, respectively, and interest.
bearing notes of $147,868,000 and $138,500,000 at March 31, - 1993 and 1992, respectively. Both notes are payable within 30 days of written demand by the Company.
However, it is not the intent of the Company and McDermott to settle the non-current notes 1
receivable outstanding at March 31,1993 during fiscal 1994. Included in interest income was f
$11,318,000 and $9,316,000 of interest on the interest bearing notes in fiscal years 1993 i
and 1992, respectively, it was not practicable to estimate the fair value of the Company's
- l non-current Notes Receivable - McDermott because the timing of the settlement of these notes has not been determined.
Included in interest expense in fiscal 1993 and 1992 is $277,000 and $481,000, respectively, of interest on income taxes due to McDermott under McDeimntt's policy for intercompany allocation of federal income taxes (see Note 6).
L Certain officers and employees of the Company participate in certain benefit plans which involve the issuance of International common stock.
NOTE 8 - LONG-TERM DEBT Long-term debt consists of:
1993 1992 (in thousands)
Note payable to bank, interest at variable rate (4.25% at March 31,1993), due in annual installments through 1997 6,725 8,406 Project financing notes payable through 2012 4,564 4,597 7.50% Notes due 1993 33,820 Other notes payable through 1999 (at various interest rates ranging from 4.40%
to 6.40%) and capitalized lease obligations 3,806 4,532 15,095 51,355
. Less amounts due within one year 4,020 36,454 11,075 14,901 Maturities of long-term debt during the five fiscal years subsequent to March 31,1993 are as follows: 1994 - $4,020,000; 1995 - $2,335,000; 1996 - $2,009,000; 1997 -
$1,847,000; 1998 - $165,000.
20
i
['-
During fiscal year 1992, a three year agreement was entered into by the Company with a syndicate of banks for a $128,000,000 unsecured and committed revolving line of credit facility. Loans outstanding under the revolving credit facility have interest periods of 1,2 or 3 months and are due and payable at the end of each interest period. Loans outstanding under the revolving credit facility may not exceed the banks' commitments thereunder, which commitments are subject to reduction based upon the ratio of the borrower's consolidated net tangible assets to specified indebtedness plus unused commitments. In addition, it is a f
condition to borrowing under the revolving credit f acility that the borrower's consolidated net j
tangible assets exceed a certain level. There were no borrowings by B&W against the facility i
at March 31,1993 or March 31,1992.
The fair value of the Company's debt instruments are estimated based on quoted market l
prices, or where quoted prices are not available, on estimated pricer based on current yields l
for debt issues of similar quality and terms. The carrying amount reported in the balance I
sheet for long and short-term debt approximates its fair value.
{
NOTE 9 - CONTINGENCIES AND COMMITMENTS Litioation
{~
The Company is a defendant in numerous legal proceedings. Management believes that the outcome of these proceedings will not have a material adverse effect upon the consolidated financial position of the Company.
Ooeratino Leases Future minirnum payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year at March 31,1993 are as follows: 1sM -
$3,863,000; 1995 - $2,350,000; 1996 - $1,522,000; 1997 - $1,186,000; 1998 -
j
$845,000; and thereaf ter - $4,898,000. Future minimum lease payments and leased property under capital leases are not material. Total rental expense for fiscal 1993 and 1992 was
$30,564 000 and $26,102,000, respectively. These expense figures include contingent rentals and are net of sublease income, both of which are not material.
Other The Company performs significant amounts of work for the U.S. Government under both prime contracts and subcontracts and thus is subject to continuing reviews by governmental
/
agencies.
The Company maintains liability and property insurance that it considers normal in the industry. However, certain risks are either not insurable or insurance is available only at rates which the Company considers uneconomical. B&W has an agreement with a majority of its principal insurers concerning the method of allocation of products liability asbestos claim payments to the years of coverage, which operates to reduce B&W's liability for such claim payments. Pursuant to the agreement, B&W negotiates and settles these claims and bills these amount to the appropriate insurers. Litigation is proceeding against certain of those products liability excess insurers who are not signatories to this agreement. Litigation is also proceeding to determine the relative exposure of products liability excess insurers and B&W for a single year. Amounts not otherwise recoverable from insurers for any reason are borne by B&W.
Based upon information currently available, management believes that it is 21
'e c
l adequately insured against future asbestos claims and that its future liability for claim l
payments will not have a material adverse effect upon the consolidated financial position of 1
the Company.
{
[
Commitments for capital expenditures amounted to approximately $46,136,000 (including
$ 20,700,000 for a new combustion and emission facility at the Company's research center in Alliance, Ohio) at March 31,1993, of which approximately $30,229,000 relates to fiscal 1994.
The Company is contingently liable under standby letters of credit totaling $134,146,000 at March 31,1993, issued in the normal course of business. In addition, McDermott has indemnified performance bonds on enntracts of the Company.
NOTE 10 -INVESTMENTS IN JOINT VENTURES AND OTHER ENTITIES During December 1991, the Company reduced its participation in the nuclear fuel assembly and commercial nuclear services business by selling a portion of its interests in B&W Fuel
[
Company ("BWFC") and B&W Nuclear Service Company ("BWNSC") to a consortium of U. S.
subsidiaries of three French companies and the U.S. subsidiary of Framatome S.A.
("Framatome"), respectively. The Company retained a 25% interest in BWFC and BWNSC.
(
Both joint ventures were accounted for on a cost basis after the sale as the Delaware Company no longer exercised significant influence over these joint ventures. Prior to the sale BWFC was part of the Company's consolidated financial statements and BWNSC was accounted for as an equity investment. During fiscal 1990, the Company had previously reduced its interest to 50% in its commercial nuclear service business by forming BWNSC with the U. S.
subsidiary of Framatome, which is also one of the French companies participating in BWFC, and in fiscal 1988 sold a 49% equity interest in BWFC to the consortium referred to above.
Under the terms of the December 1991 sales agreements, Frematome purchased a 25%
interest in BWNSC for $45,000,000 and the three French companies, which include Framatome, purchased a 26% interest in BWFC for $13,800,000. In addition, the Company
=
was paid $17,000,000 relating to fees earned from, and the termination of, a management services agreement and received $33,820,000 in loan proceeds. On March 30,1993, the Company sold its remaining interests in BWFC and BWNSC to the same parties for
$10,150,000 and $32,440,000, respectively, and the loans of $33,820,000 were repaid.
Included in the Consolidated Statement of Income (Loss) and Retained Earnings were revenues of $44,639,000 and a loss of $419,000, applicable to BWFC' operations, for the fiscal year ended March 31, 1992. Included in Equity in income (Loss) of Investees was income applicable to BWNSC of $5,179,000 for the fiscal year ended March 31,1992. Included in Other-net were gains on the sales of $23,968,000 and $57,?97,000 for the fiscal years ended March 31,1993 and 1992, respectively, and income from management fees and services applicable to these operations of $8,446,000 for the fiscal year ended March 31, 1992.
22
a The Company's investments in unconsolidated affiliates were $20,942,000 and $47,757,000 at March 31,1993 and 1992, respectively. Transactions with such affiliates included sales to ($11,189,000 and $8,767,000 in fiscal years 1993 and 1992, respectively) and purchases from ($14,032,000 and $14,495,000 in fiscal years 1993 and 1992, respectively) these
- entities, Dividends received from unconsolidated investees were $14,032,000 and
$10,804,000 in fiscal years 1993 and 1992, respectively.
Summarized combined balance sheet and income statement information based on the most recent financial information for the Company's equity investments in joint ventures and other entities are presented below:
1993 1992 (in thousands)
Current Assets 23,280 15,712 Non-Current Assets 211,493 108,378 Total Assets 234,773
$ 124,090 Current Liabilities 22,232 12,425 Non-Current Liabilities 168,808 97,033 Owners' Equity 43,733 14,632 Total Liabilities and Owners' Equ:ty 234,773
$ 124,090 Revenues 58,902
$ 156,870 Gross Profit 38,369 62,842 income before Provision for income Taxes 12,980 (1,613)
Provision for income Taxes 344 Net income 12,980 (1,957) 23
p NOTE 11 - FOREIGN OPERATIONS LL Summarized financialinformation of foreign subsidiaries included in the consolidated financial
. statements is as follows:
1993 1992 (In thousands)
Assets 173,240
$ 144,686 Liabilities 114,947 94,169 Net income 4,937 4,397 NOTE 12 - FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK The Company's principal operations include the supply of individually engineered complete fossil fuel and nuclear steam generating systems and nuclear fuel assemblies, fossil fuel steam generating systems for industrial processes and power generation, replacement parts and engineered modifications for existing fossil fuel and nuclear steam generating systems, and specially engineered accessories and components.
The Company's customers are principally the electric utility industry (including government-owned utilities and independent power producers), the U.S. Government (including its contractors), and the pulp and paper and other process industries. This concentration of-customers may impact the Company's overall exposure to credit risk, either positively or negatively, in that the customers may be similarly affected by changes in economic or other conditions. However, the Company's management believes that the portfolio of receivables is well diversified and that such diversification minimizes any potential credit risk. Receivables are generally not collateralized.
1 The Company believes that its provision for possible losses on uncollectible accounts receivable is adequate for its credit loss exposure. At March 31,1993 and 1992, the allowance for possible losses deducted from Accounts receivable-trade on the balance sheet was $2,721,000 and $2,639,000, respectively.
F 24 4