ML20129C283
| ML20129C283 | |
| Person / Time | |
|---|---|
| Issue date: | 09/24/1996 |
| From: | Wright E NRC OFFICE OF INSPECTION & ENFORCEMENT (IE REGION II) |
| To: | Coughlan G External (Affiliation Not Assigned) |
| References | |
| RTR-REGGD-03.066, RTR-REGGD-3.066 NUDOCS 9610230271 | |
| Download: ML20129C283 (3) | |
Text
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OFFICIAL q-September 24, 1996
' Abbott Health Products, Inc.
ATTN: Mr. Gary P. Coughlan President Macco Industrial Park State Road 690. KM 1.7 Barrio Sabana Hoyos Vega Alta, PR 00692
SUBJECT:
REVIEW OF REVISED PARENT COMPANY GUARANTEE / FINANCIAL TEST SUBMITTED BY ABBOTT HEALTH PRODUCTS, INC.
(YOUR LETTER MARCH 25, 1996)
Dear Mr. Coughlin:
This refers to your financial assurance submittal dated March 25, 1996.
We have reviewed the documentation provided which included a revised parent company guarantee attesting to the availability of up to $75,000 (when required) for decommissioning of facilities utilized under License No. 52 24994 01.
Within the scor' f our review, your submission is acceptable and complies with NRC's Res
- ory Guide 3.66 " Standard Format and Content of Financial Assurance Mecher..sms Required for Decommissioning Under 10 CFR Parts 30, 40, 70, and 72" (June 1990).
Detailed comments from our review are enclosed for your use when providing future revisions. However, these comments do not require response at this time.
Thank you for your assistance in this matter.
i If you have questions about this letter, please call me at 404 331 5617.
Sincerely.
Original signed by E. G. Wright Earl G. Wright Senior License Reviewer Division of Nuclear Materials Safety Enclosuro Detailed Comments Distribution:
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REVIEW COMMENTS (D0 NOT REQUIRE A RESPONSE)
Apart from editorial and non substantive changes to the standard wording provided in Eeaulatory 3.66, the following modifications were noteworthy, but require no further response:
1.
The chief financial officer (CF0) letter does not identify the license number of the facility listed in paragraph 2, as recommended in Reaulatory Guide 3.66 on page 4-36. Because the financial test becomes more difficult to pass for higher decommissioning costs, failure to include the costs of all relevant licenses could result in a guarantor
" double counting" the same limited assets to assure multiple facilities.
NRC needs to verify that guarantors do not use a financial test to guarantee any other licenses (regardless of whether these licenses are held by the licensee, other subsidiaries of the guarantor, or the guarantor itself).
License numbers provide the most efficient method.
However, because the submitted paragraph does identify the name, location, and current cost estimate of the facility, and because the
'icense number of the facility is identified in other parts of the obmission, there is no benefit to revising the paragraph to identify the license number.
2.
The CF0 letter is signed by the President of the licensee rather tnan by the CF0 of the parent company guarantor as is called for in Reaulatory Guide 3.66.
In this case, however, Mr. Gary P. Coughlan serves as both the President of the licensee and the CF0 of the parent company.
Therefore, Mr. Coughlan should be qualified to certify the authenticity of the data used in the parent guarantor's financial test.
3.
According to a corporate resolution from the parent company. the parent company's CF0 is authorized as CFO to represent the guarantor in entering into the guarantee agreemelt. Nevertheless, Mr. Coughlan signed the guarantee agreement in his capacity as President of the licensee rather than his capacity as CF0 of the guarantor.
Nevertheless, because Mr. Coughlan does in fact serve as an authorized representative of the parent company we believe that his signature (in any capacity) adequately assures the parent company's acceptance of the guarantee.
4.
The submitted schedule attached to the auditor's special report follows the wording recommended in Reaulatory Guide 3.66, page 4 40. The recommended wording in Reaulatory Guide 3.66 notes, however, that the
" balance of schedule is not illustrated," and that the recommended wording " illustrates the form of schedule that is contemplated," while
" details and reconciling items will differ in specific situations." The schedule in the submission does not address all items that should have been addressed given the licensee's specific situation.
As a result, the submitted auditor's saecial report does not confirm the following information included in t1e guaranter. financial test demonstration:
current assets; the sum of net incow Jius depreciation, depletion and Enclosure j
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2 amortization; and total assets in the United States.
Despite this deficiency, we were able to use information in the guarantor's most recent 10 K filing with the U.S. Securities and Exchange Commission to confirm the accuracy of the financial test demonstration (including current assets; the sum of net income plus depreciation, depletion and amortization: and total assets in the United States).
l S.
The submission does not include a copy of the guarantor's annual financial statements as called for in Reaulatory Guide 3.66, page 3 21.
These financial statements, which must be audited by an independent certified accountant, are necessary in order to determine whether the data used in the financial test fairly 3 resent the guarantor's financial l
condition. We were able, however, to catain the guarantor's March 11, 1996,10 K filing with the U.S. Securities and Exchange Commission and l
to determine that it includes an independent certified accountant's
" clean" opinion of the guarantor's audited financial statements.
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6.
Recital 7 of the submitted )arent guarantee agreement states that if the licensee fails to perform tie required decommissioning activities, inen I
the guarantor shall carry out the required activities.
In contrast, the recommended wording in Reaulatory Guide 3.66, page 4 42, specifies that the guarantor will carry out the required activities or set up a trust fund to Day for the reauired activitics.
The submitt:d modificaticr.1:
acceptable because the guarantor is simply pre-selecting an allowable method for discharging its obligations under the guarantee.
1 7.
Recital 7 of the submitted parent guarantee agreement contains an apparent typographical error in that it states the license number as "52 24992-01" (emphasis added) instead of 52-24994-01. Because the license number is clearly stated as 52 24994 01 in Recitals 5 and 11 and i
in other supporting documentation, we ao not believe that this error reduces the assurance provided by the agreement.
J 8.
The submission does not include a standby trust agreement or related documentation. This omission is consistent, however, with the terms i
specified in Recital 7 of the guarantee.
Because the guarantor has elected to conduct the required activities, if necessary, rather than to j
fund a trust to pay for the activities, a standby trust agreement is not i
needed.
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Enclosure 1
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