ML20140A550
| ML20140A550 | |
| Person / Time | |
|---|---|
| Site: | BWX Technologies, 07001201, 07000364, 07000135 |
| Issue date: | 03/13/1978 |
| From: | Zipf G BABCOCK & WILCOX CO. |
| To: | Martin J NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| References | |
| 08838, 8838, NUDOCS 8003210165 | |
| Download: ML20140A550 (4) | |
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Division of Fuel Cycle and Material Safety United States Nuclear Regulatory Commission Washington, D.C.
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Re.:
License Numbers SNM-42, SNM-145, SNM-414, SNM-778 and SNM-1 Financial Assurance for Payment of Decommissioning Costs
Dear Mr. Martin:
At a meeting in your offices on March 1, 1978, Mr. H. D. Kenney, Vice President and Controller, presented a summary of the financial condition of Babcock & Wilcox which demonstrated conclusively our ability to pay the costs of decommissioning our nuclear facilities.
Enclosed, as promised, is a copy of our Annual Report to Stockholders and our Annual Report on Form 10-K to the Securities and Exchange Com-mission for 1976.
The 1977 reports will be provided to you as soon as they become available in early April.
You asked us to state specifically our plans for decommissioning the Nuclear Materials Division high enriched uranium fuel fabrication facilities in Apollo, Pennsylvania.
Part of that effort has already been accomplished, as described to you in J. S. Dziewisz's letter of February 13, 1978.
The work remaining to be done is described in the Decommissioning Plans submitted on February 17, 1978.
That work is to begin in the second quarter of this year and is to be completed by the end of 1979.
It is estimated that the work will cost $159,000 during 1978, and $393,000 during 1979.
Full provision has been made for these financial obligations which are included in the total current liabilities of the Company's Balance Sheet at December 31, 1977.
Of course, should actual costs exceed these estimates, these would be funded and the work would not be delayed on that account.
We presently plan to phase out our Apollo low enriched uranium fuel fabrication operations in 1983 and 1984.
We estimate the costs associated with decommissioning these facilities will approximate $745,000 in 1983 and $1,504,000 in 1984.
We have reflected this liability on a pro-rata basis in our financial statements, since the terminal point for those operations was determined in 1975.
Under our present accounting practice, full provision will have been made in our financial statements prior to commencing decommissioning activities in 1983.
In the event our present timetable for phasing out operations at these facilities is either Sh The Babcock & Wilcox Company / Estabhshed 1867 6S3b
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Babcocka.Wilcox Mr. John B. Martin March 13, 1978 U.S.N.R.C.
a advanced or deferred, we would adjust our financial provisions accordingly.
i With respect to other nuclear facilities of the Nuclear Materials Division i
and other divisions of Babcock & Wilcox, although decommissioning plans and cost estimates have been developed, it is not possible at this time to j
. determine when operations at these facilities will be phased out.
Finan-cial Accounting Standards Board Opinion No. 5,
" Accounting for Contin-gencies," requires that certain conditions be met before an estimated loss from a loss contingency can be accrued.
Since it is not possible to determine when these other facilities may no longer be in operation, we i
would not be permitted by that accounting standard to follow the accounting procedures, which currently apply, for decommissioning the Apollo facilities.
It is our intent, however, to make appropriate financial provisions for these facilities once the criteria of FASB Opinion No. 5 are met.
In order to demonstrate the ability of Babcock & Wilcox to cover the costs of decommissioning all of its nuclear facilities, regardless of when de-commissioning occurs, we intend to provide you with assurance on a continuing basis.
i In connection with our private placement Promissory Note Agreements with insurance lenders, there are certain requirements as to consolidated j
capitalization as defined, dividend declarations and other covenants which
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must be met.
Within 90 days af ter the close of each fiscal year, the Company is required to furnish to the lenders an' officers' Certificate stating that a review of the activities of the Company during such fiscal t
year has been made to determine whether the Company has kept, observed, performed and fulfilled all of its obligations and met the covenants and conditions of the Agreements and, if the Company has not, a statement specifying all such defaults and the nature and status of each must be furnished.
We will provide a copy of such a statement.
Furthermore, in our Annual Report to Stockholders and in the Annual Report on Form 10-K, furnished to the Securities and Exchange Commission, we state that all restrictive provisions of our debt agreements have been met and our independent accountants certify to these representations.
t The Company's amount of working capital was substantially in excess of the i
estimated decommissioning costs at December 31, 1977.
We will advise you promptly if we become in non-compliance with either the debt covenants or if the amount of working capital (defined as Current Assets less Current Liabilities, net of Deferred Taxes) should fall below the then-current estimated cost of decommissioning and, in either event, alternative assurance reasonably satisfactory to the NRC will be provided.
Babcock & Wilcox personnel will be pleased to meet with you at any time to discuss the financial condition of our Company and our ability to cover the costs of decommissioning our nuclear facilities.
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Babcock &Wilcox Mr. John B. Martin March 13, 1978 U.S.N.R.C.
We trust that the meeting in Silver Springs, Maryland and this letter will satisfy the requirements of the Nuclear Regulatory Commission.
If you have any further questions or desire additional information, please advise us.
Very truly yours,
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George Zi Chairman and President GGZ:es Encls.
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