BWX Technologies, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - THE BABCOCK & WILCOX COMPANY 8-K - BWX Technologies, Inc.	a6629945.htm

Exhibit 99.1

Babcock & Wilcox Announces Fourth Quarter 2010 Results

Earnings per share of $0.45 increased 165%
Consolidated backlog of $5.2 billion increased 19.3% sequentially

CHARLOTTE, N.C.--(BUSINESS WIRE)--March 1, 2011--The Babcock & Wilcox Company (NYSE: BWC) (“B&W” or the “Company”) today reported earnings per share for the fourth quarter ended December 31, 2010 of $0.45, an increase of 164.7% from the fourth quarter of 2009. Revenues for the fourth quarter of 2010 were $705.2 million, an increase of $16.6 million or 2.4% from the fourth quarter of 2009, the first quarterly year-over-year increase since the fourth quarter of 2008.

Recent Highlights

Awarded $2.0 billion naval nuclear reactor components contract
Awarded $428 million Department of Energy contract for operation of depleted uranium hexafluoride conversion facilities
Awarded $107 million boiler retrofit contract for major Canadian utility
Awarded $79 million naval nuclear fuel contract
Awarded $35 million waste-to-energy power generation contract in Finland
Awarded commercial nuclear power station up-rate contract
Named Larry L. Weyers, former Chairman and Chief Executive Officer of Integrys Energy Group, Inc., and Anne R. Pramaggiore, President and Chief Operating Officer of ComEd, to the board of directors

Government Operations Segment

Revenues of $298.1 million increased $44.3 million or 17.5% in the fourth quarter of 2010 compared to the fourth quarter of 2009. This increase is principally the result of an increase in activity for nuclear reactor components and nuclear fuel.

Operating income of $48.3 million increased $16.8 million or 53.4% in the fourth quarter of 2010 compared to the fourth quarter of 2009. This increase is principally related to productivity and project execution improvement on the production of nuclear reactor components, an increase in fees earned due to higher funding levels and productivity at the Company’s management and operations sites. In addition, year-over-year operating earnings improvement resulted from fourth quarter 2009 charges related to the temporary shut-down of NFS, which is now in full operation except for the commercial development line.

“During the fourth quarter, the National Nuclear Security Administration (NNSA) announced site scores for fiscal 2010. The results at our two largest management sites were outstanding. Pantex Plant nuclear weapons complex achieved the highest score in the NNSA complex in 2010 and the highest ever achieved at the site, and the Y-12 National Security Complex also achieved the highest score ever at that site. We are pleased to have performed exceptionally well. Delivering high value-added services to our government customer is important to continued success in this market. Additionally, we closed out the year with solid productivity on our key naval reactor manufacturing program and successfully negotiated a $2 billion contract for components for the Virginia-Class attack submarines and Ford-Class aircraft carrier, which resulted in the highest backlog in the history of the Government Operations segment at December 31, 2010,” said Brandon C. Bethards, President and Chief Executive Officer of B&W.

Power Generation Systems Segment

Revenues of $408.6 million for the fourth quarter of 2010 declined $26.7 million or 6.1% compared to the fourth quarter of 2009. This decrease was principally related to a decline in demand for new-build environmental systems, partially offset by increasing volumes in nuclear energy components, small aftermarket parts and renewable power generation systems. Backlog at December 31, 2010 in the Power Generation Systems segment increased $28.1 million, or 1.4% from the end of the third quarter to $2.05 billion. This is the second sequential quarterly increase in backlog for the Power Generation Systems segment.

Operating income was $31.2 million in the fourth quarter of 2010, an increase of $9.5 million, or 43.9% compared to $21.7 million in the fourth quarter of 2009. The increase in operating income is principally related to reductions in manageable expenses due to the Company’s continuous improvement initiatives and higher year-over-year equity income contributions, principally from our Chinese joint venture. These increases were partially offset by under-absorption of fixed manufacturing costs in a lower volume environment as well as an increase in research and development efforts.

“Leading indicators such as power consumption and an increase in demand for small aftermarket parts would suggest that the fossil power generation business may have reached bottom over the last few quarters. While the confluence of multiple EPA regulation has created challenges for the electric utilities, we continue to experience customer interest related to planning for environmental equipment purchases and installation services. Additionally, there is a meaningful pipeline of projects that we are tracking in the market,” Bethards said.

Research and Development

During the fourth quarter, the Company incurred approximately $18.5 million of research and development (R&D) costs. In addition to the ongoing investment in R&D at our state-of-the-art environmental and fossil power research facility, the Company has ongoing research programs for small modular nuclear reactor technology and environmental equipment technology. For the full year 2010, total internal R&D expenses were $69.2 million, an increase of $15.9 million over the full year 2009.

Liquidity

The Company’s cash and investments position, net of debt, was $472.9 million at the end of the fourth quarter of 2010, an increase of $216.8 million from the end of the third quarter of 2010. During the quarter, the Company generated approximately $230.9 million of cash flow from operating activities. In addition to net cash, the Company maintains a $700 million revolving credit agreement with approximately $463.8 million of availability as of the end of the fourth quarter. The Company continues to maintain adequate liquidity to fund operations, which could include increased working capital requirements, internal growth, and R&D programs, as well as additional product and geographic expansion opportunities.

Basis of Presentation

B&W operates in two business segments: Power Generation Systems and Government Operations, and was a wholly owned subsidiary of McDermott International, Inc., a Panamanian corporation (“MII”), until July 30, 2010 when MII distributed 100% of our outstanding common stock to the MII shareholders. On and prior to July 30, 2010, our financial position, operating results and cash flows consisted of The Babcock & Wilcox Operations of McDermott International, Inc., which represented a combined reporting entity comprised of the assets and liabilities in managing and operating the Power Generation Systems and Government Operations segments of MII in addition to two captive insurance companies, which have been combined and contributed to B&W in conjunction with the spin-off of B&W by MII. Further information with regard to the basis of presentation of the financial information included here can be found in the Form 10-K on file with the SEC.

Conference Call to Discuss Fourth Quarter 2010 Results

Date: Wednesday, March, 2, 2011, at 8:30 a.m. ET
Live Webcast: Investor Relations section of website at www.babcock.com

Forward-Looking Statements

B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog, to the extent backlog may be viewed as an indicator of future revenues, and the expected timing of final EPA regulations and rules. These forward-looking statements are based on current management expectations and involve a number of risks and uncertainties, including, among other things, adverse changes in the industries in which we operate and our ability to execute on contracts in backlog. If one or more of these or other risks materialize, actual results may vary materially from those expected. For a more complete discussion of these and other risk factors, please see B&W’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2010. B&W cautions not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.

About B&W

The Babcock & Wilcox Company is a leader in clean energy technology and services, primarily for the nuclear, fossil and renewable power markets as well as a premier advanced technology and mission critical defense contractor. B&W has locations worldwide and employs approximately 12,000 people, in addition to approximately 10,000 joint venture employees. A company overview presentation, which will be presented at investor conferences and meetings throughout this quarter, is available on the Investor Relations section of our website. For additional information please visit our website at www.babcock.com.

TABLES TO FOLLOW

THE BABCOCK & WILCOX COMPANY CONSOLIDATED AND COMBINED BALANCE SHEETS

	December 31,
	2010		2009
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	391,142	$	469,468
Restricted cash and cash equivalents		12,267		15,305
Investments		234		14
Accounts receivable – trade, net		289,374		319,861
Accounts receivable – other		64,231		39,289
Contracts in progress		225,448		245,998
Inventories		100,932		98,644
Deferred income taxes		90,620		96,680
Other current assets		34,868		21,456

Total Current Assets		1,209,116		1,306,715

Property, Plant and Equipment		968,712		945,298
Less accumulated depreciation		550,400		515,237

Net Property, Plant and Equipment		418,312		430,061

Investments		74,863		73,540

Goodwill		269,424		262,866

Deferred Income Taxes		236,504		270,002

Investments in Unconsolidated Affiliates		100,811		68,327

Note Receivable from Affiliate		-		42,573

Other Assets		191,480		149,775

TOTAL	$	2,500,510	$	2,603,859

THE BABCOCK & WILCOX COMPANY CONSOLIDATED AND COMBINED BALANCE SHEETS

	December 31,
	2010			2009
	(In thousands)

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable and current maturities of long-term debt	$	4,790		$	6,432
Accounts payable		185,240			178,350
Accounts payable to McDermott International, Inc.		-			112,053
Accrued employee benefits		235,856			198,195
Accrued liabilities – other		71,242			74,700
Advance billings on contracts		369,644			537,448
Accrued warranty expense		109,588			115,055
Income taxes payable		5,467			12,943

Total Current Liabilities		981,827			1,235,176

Long-Term Debt		855			4,222

Accumulated Postretirement Benefit Obligation		84,100			105,484

Environmental Liabilities		40,889			47,795

Pension Liability		579,000			699,117

Notes Payable to Affiliate		-			320,568

Other Liabilities		100,314			70,791

Commitments and Contingencies

Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 116,963,664 and 0 shares at December 31, 2010 and December 31, 2009, respectively		1,170			-
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; 0 shares issued		-			-
Capital in excess of par value		1,067,414			-
Retained earnings		96,671			-
Treasury stock at cost, 101,649 and 0 shares at December 31, 2010 and December 31, 2009, respectively		(2,397	)		-
Accumulated other comprehensive loss		(449,999	)		-
Stockholders’ Equity – The Babcock & Wilcox Company		712,859			-
Noncontrolling interest		666			-
Total Stockholders’ Equity		713,525			-

Total Parent Equity		-			120,706

TOTAL	$	2,500,510		$	2,603,859

THE BABCOCK & WILCOX COMPANY
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(in thousands, except per share amounts)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	12/31/10			12/31/09			12/31/10			12/31/09



Revenues	$	705,162		$	688,513		$	2,688,811		$	2,854,632
Costs and Expenses:
Cost of operations		543,955			557,171			2,093,201			2,235,377
(Gains) Losses on Asset Disposals and Impairments - net		(50	)		606			38			1,226
Selling, general and administrative expenses		112,405			114,115			405,682			403,559

Total Cost and Expenses		656,310			671,892			2,498,921			2,640,162

Equity in income of investees		25,642			20,950			74,082			55,094

Operating Income		74,494			37,571			263,972			269,564
Other Income (Expense):
Interest income		295			565			1,187			3,439
Interest expense		(1,610	)		(6,732	)		(12,939	)		(24,590	)
Other-net		(2,914	)		(3,401	)		(16,400	)		(16,112	)

Total Other Income (Expense)		(4,229	)		(9,568	)		(28,152	)		(37,263	)

Income from Continuing Operations before Provision for Income Taxes		70,265			28,003			235,820			232,301

Provision for Income Taxes		17,231			8,400			82,294			84,381

Net Income		53,034			19,603			153,526			147,920

Less: Noncontrolling Interests		(142	)		(25	)		(264	)		(156	)

Net Income Attributable to B&W	$	52,892		$	19,578		$	153,262		$	147,764


Earnings Per Share:
Basic
Net Income Attributable to B&W	$	0.45		$	0.17		$	1.32		$	1.27
Diluted:
Net Income Attributable to B&W	$	0.45		$	0.17		$	1.30		$	1.26

Weighted Average Shares
Basic		116,615,156			116,067,535			116,260,425			116,067,535
Diluted		118,008,894			117,423,807			117,626,065			117,423,807

THE BABCOCK & WILCOX COMPANY CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2010			2009			2008
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	153,526		$	147,920		$	323,854
Non-cash items included in net income:
Depreciation and amortization		71,633			72,712			45,985
Income of investees, net of dividends		(20,449	)		(4,450	)		(2,117	)
(Gains) losses on asset disposals and impairments – net		38			1,226			(9,603	)
Provision for deferred taxes		33,457			29,535			23,730
Amortization of pension and postretirement costs		79,935			86,637			33,735
Excess tax benefits from stock-based compensation		(5,276	)		1,813			(13,381	)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		101,260			71,316			(12,901	)
Income taxes receivable		(18,738	)		11,619			43,024
Accounts payable		19,882			(40,555	)		(4,076	)
Net contracts in progress and advance billings		(153,933	)		(63,879	)		(234,648	)
Income taxes		9,239			10,740			25,808
Accrued and other current liabilities		(9,761	)		(52,556	)		22,503
Pension liability and accrued postretirement and employee benefits		(85,371	)		(378	)		(154,743	)
Other		16,964			(18,877	)		(27,082	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		192,406			252,823			60,088
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in restricted cash and cash equivalents		3,038			(8,189	)		(2,000	)
Purchases of property, plant and equipment		(63,649	)		(93,725	)		(63,014	)
Acquisition of businesses, net of cash acquired		(29,962	)		(8,497	)		(190,878	)
Net (increase) decrease in available-for-sale securities		-			45,230			(59,200	)
Purchases of available-for-sale securities		(135,135	)		-			-
Sales and maturities of available-for-sale securities		134,276			-			-
Proceeds from asset disposals		753			245			9,978
Investments in unconsolidated affiliates		(42,912	)		(2,700	)		-
Decrease in note receivable from affiliate		43,277			-			-
Other		-			1			551
NET CASH USED IN INVESTING ACTIVITIES		(90,314	)		(67,635	)		(304,563	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowings and long-term debt		(29,914	)		(6,155	)		(4,768	)
Payment of debt issuance costs		(9,994	)		-			-
Increase in short-term borrowing		25,000			-			1,460
Dividend paid to McDermott International, Inc.		(100,000	)		-			-
Capital contribution from McDermott International, Inc.		12,501			-			-
Distribution to McDermott International, Inc.		(43,334	)		-			-
(Decrease) Increase in notes payable to affiliates		(43,386	)		2,368			49,950
Excess tax benefits from stock-based compensation		5,276			(1,813	)		13,381
Other		118			-			(1	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(183,733	)		(5,600	)		60,022
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		3,315			10,234			(9,867	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(78,326	)		189,822			(194,320	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		469,468			279,646			473,966
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	391,142		$	469,468		$	279,646

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest (net of amount capitalized)	$	3,746		$	24,728		$	27,520
Income taxes (net of refunds)	$	27,227		$	(29,663	)	$	12,256

The Babcock & Wilcox Company
Business Segment Information
For the Periods Ended December 31, 2010 and 2009
(In thousands of U.S. dollars)

		THREE MONTHS ENDED						TWELVE MONTHS ENDED
REVENUES:		12/31/10			12/31/09			12/31/10			12/31/09

Power Generation Systems		$	408,557		$	435,238		$	1,609,684		$	1,824,450
Government Operations			298,089			253,769			1,083,605			1,032,023
Adjustments and Eliminations			(1,484	)		(494	)		(4,478	)		(1,841	)

	TOTAL	$	705,162		$	688,513		$	2,688,811		$	2,854,632

SEGMENT INCOME:

Power Generation Systems		$	31,193		$	21,670		$	100,719		$	157,869
Government Operations			48,340			31,519			182,914			154,542
			79,533			53,189			283,633			312,411
Corporate			(5,039	)		(15,618	)		(19,661	)		(42,847	)
	OPERATING INCOME	$	74,494		$	37,571		$	263,972		$	269,564

EQUITY IN INCOME (LOSS) OF INVESTEES:

Power Generation Systems		$	11,665		$	6,334		$	30,788		$	14,043
Government Operations			13,977			14,616			43,294			41,051

	TOTAL	$	25,642		$	20,950		$	74,082		$	55,094

PENSION EXPENSE:

Power Generation Systems		$	16,442		$	16,179		$	65,595		$	63,597
Government Operations			12,175			12,553			49,685			50,217
Corporate			25			4,871			8,940			19,053

	TOTAL	$	28,642		$	33,603		$	124,220		$	132,867

DEPRECIATION AND AMORTIZATION:

Power Generation Systems		$	6,825		$	4,461		$	23,552		$	17,859
Government Operations			8,553			13,171			40,912			51,588
Corporate			3,255			890			7,169			3,265

	TOTAL	$	18,633		$	18,522		$	71,633		$	72,712

RESEARCH AND DEVELOPMENT, NET		$	18,458		$	20,126		$	69,167		$	53,246

CAPITAL EXPENDITURES:

Power Generation Systems		$	6,621		$	6,947		$	18,107		$	32,148
Government Operations			1,184			19,355			26,622			45,062
Corporate			7,061			768			18,920			16,515

	TOTAL	$	14,866		$	27,070		$	63,649		$	93,725

BACKLOG:

Power Generation Systems		$	2,049,357		$	1,973,615		$	2,049,357		$	1,973,615
Government Operations			3,152,535			2,766,445			3,152,535			2,766,445

	TOTAL	$	5,201,892		$	4,740,060		$	5,201,892		$	4,740,060

CONTACT:
The Babcock & Wilcox Company
Investor Contact:
Michael P. Dickerson, 704-625-4944
Vice President and Investor Relations Officer
investors@babcock.com
or
Media Contact:
Jud Simmons, 434-522-6462
Public Relations Manager
hjsimmons@babcock.com

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