What changed in this filing

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Item 1. Business

2021-02-22 compared with 2020-02-24 · 65 added, 48 removed, 393 unchanged (22% of the section changed)

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Department of Energy ("DOE")/National Nuclear Security Administration's ("NNSA") Naval Nuclear Propulsion Program.

In addition, we perform development and fabrication activities for missile launch tubes for U.S.

In addition, we perform fabrication activities for missile launch tubes for U.S.

Navy submarines.

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We have supplied nuclear components for DOE programs since the 1950s and are the largest domestic supplier of research reactor fuel elements for colleges, universities and national laboratories.

We also convert or downblend high-enriched uranium into low-enriched fuel for use in commercial reactors to generate electricity.

We also downblend Cold War-era government stockpiles of high-enriched uranium.

In addition, we have over 100 years of experience in supplying components for defense applications.

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In addition, the U.S.

Navy issued its fiscal year 2020 long-range shipbuilding plan in March 2019, which includes recommendations to increase the size of its fleet of ships to include additional submarines and aircraft carriers beyond the

number disclosed in long-range shipbuilding plans issued prior to February 2018.

We expect the U.S.

Navy's new shipbuilding plan will require us to make additional capital expenditures and investment in personnel to meet this growth in demand.

Navy issued its fiscal year 2022 long-range shipbuilding plan in December 2020, which maintains recommendations made in its fiscal year 2020 long-range shipbuilding plan (released in September 2019) to increase the size of its fleet of ships to include additional submarines and aircraft carriers beyond the number disclosed prior to September 2019.

While the new Administration may make further changes with its fiscal year 2022 budget submission, we have made additional capital expenditures and investments in personnel to meet this anticipated growth in demand and we expect to continue making such expenditures and investments.

Nuclear Power Group

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We have supplied the nuclear industry with more than 1,300 large, heavy components worldwide and we are the only commercial heavy nuclear component manufacturer in North America.

This segment is also a leading supplier of nuclear fuel, fuel handling systems, tooling delivery systems and related services for CANDU nuclear power plants.

This segment is also a leading supplier of nuclear fuel, fuel handling systems, tooling delivery systems, nuclear-grade materials and precisely machined components, and related services for CANDU nuclear power plants.

This segment also provides a variety of engineering and in-plant services and is a significant supplier to nuclear power utilities undergoing major refurbishment and plant life extension projects.

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Our Nuclear Power Group segment's overall activity primarily depends on the demand and competitiveness of nuclear energy.

A significant portion of our Nuclear Power Group segment's operations depend on the timing of maintenance outages, principally in the Canadian market, and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, which could cause variability in our financial results.

A significant portion of our Nuclear Power Group segment's operations depends on the timing of maintenance outages, principally in the Canadian market, and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, which could cause variability in our financial results.

Nuclear Services Group

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• managing and operating space flight hardware and test facilities for NASA.

This segment is also engaged in inspection and maintenance services for the commercial nuclear industry primarily in the U.S.

These services include steam generator, heat exchanger and balance of plant inspection and servicing as well as high pressure water lancing, non-destructive examination and the development of customized tooling solutions.

This segment also develops technology for a variety of applications, including advanced nuclear power sources, and offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for new advanced nuclear reactors.

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We manage and operate complex, high-consequence nuclear and national security operations for the DOE and the NNSA, primarily through our joint ventures, as further discussed under the caption "Joint Ventures" below.

In addition, this segment's activities associated with the U.S.

commercial nuclear industry depend on the demand and competitiveness of nuclear power in the U.S.

and our ability to successfully obtain commercial nuclear contracts.

Divestiture of U.S.-Based Commercial Nuclear Services Business

On May 29, 2020, our subsidiary BWXT Nuclear Energy, Inc.

divested its U.S.-based commercial nuclear services business, a component of our Nuclear Services Group segment.

In a cashless transaction, we exchanged net assets totaling $18.0 million, consisting primarily of property, plant and equipment and certain warranty obligations, for a manufacturing facility and the associated land of approximately the same value.

The acquired assets are reported as part of the Nuclear Services Group segment.

Laker Energy Products Ltd.

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Laker Energy Products is a global supplier of nuclear-grade materials and precisely machined components for CANDU nuclear power utilities and employs approximately 140 personnel.

Laker Energy Products will be reported as part of our Nuclear Power Group segment.

Laker Energy Products is reported as part of our Nuclear Power Group segment.

Nordion Medical Isotope Business

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Government in accordance with the Federal Acquisition Regulation (the "FAR") and the related U.S.

Government Cost

Accounting Standards ("CAS").

Government Cost Accounting Standards ("CAS").

Examples of costs that may be incurred by us and not billable to the U.S.

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Government through regular invoicing.

This segment also serves the U.S.

commercial nuclear industry and customers for our advanced technology platforms primarily through the use of fixed-price contracts that are awarded following a competitive bid process.

Fixed-price contracts entail more risk to us because the price has been pre-determined and is generally not subject to adjustment, regardless of costs incurred, unless authorized by the customer.

This segment also serves customers of our advanced technology platforms primarily through the use of fixed-price contracts that are awarded following a competitive bid process.

Fixed-price contracts entail more risk to us because the price

has been pre-determined and is generally not subject to adjustment, regardless of costs incurred, unless authorized by the customer.

Backlog represents the dollar amount of revenue we expect to recognize in the future from contracts awarded and in progress.

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Our backlog at December 31, 2020 and 2019 was as follows:

2020 December 31,

(In approximate millions)

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Of the backlog at December 31, 2020, we expect to recognize revenues as follows:

2021 2022 Thereafter Total

(In approximate millions)

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As of December 31, 2020, our Nuclear Services Group segment's backlog with the U.S.

Government was $9.5 million , $0.1 million of which had not yet been funded.

Government was $18.6 million, all of which has been funded.

Major new awards from the U.S.

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The primary bases of limited competition for this segment are price, high capital investment, technical capabilities, high regulatory licensing costs and quality of products and services.

In addition, a significant portion of the designs, processing and final product are classified by the U.S.

In addition, significant portions of the designs, processing and final product are classified by the U.S.

Government, requiring applicable personnel to obtain and maintain U.S.

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Our Nuclear Power Group segment supplies heavy nuclear components, specialized engineering and maintenance services, nuclear fuel, fuel handling systems and tooling delivery systems for CANDU reactors.

This segment competes with a number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation, Doosan Heavy Industries & Construction, E.S.

This segment competes with a number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation, Doosan Heavy Industries & Construction Co., Ltd., E.S.

Fox Limited, AECON Group Inc., Bechtel National, Inc., Westinghouse Electric Corporation and SNC-Lavalin Group, Inc.

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The primary bases of competition for this segment are experience, past performance, availability of key personnel and technical capabilities.

The Nuclear Services Group segment is also engaged in the commercial nuclear industry primarily in the U.S.

This portion of the segment competes with a number of companies specializing in commercial nuclear engineering and maintenance services including Framatome, Westinghouse Electric Corporation and other third-tier service suppliers.

The primary bases of competition for this segment are price, technical capabilities, quality, timeliness of performance, breadth of products and services and willingness to accept project risks.

Joint Ventures

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however, we believe the suppliers of these materials are reliable.

At December 31, 2019 , we employed approximately 6,450 persons worldwide.

Approximately 1,750 of our employees were members of labor unions at December 31, 2019 .

Human Capital Management

At December 31, 2020, we employed approximately 6,700 persons worldwide, predominantly in the U.S.

(5,400 employees) and Canada (1,300 employees).

Many of our operations are subject to union contracts, which we customarily renew periodically.

At December 31, 2020, approximately 1,700 of our employees were members of labor unions.

We consider our relationships with our employees to be satisfactory.

Diversity and Inclusion .

We value the diversity of our employees and are committed to providing an engaging and inclusive atmosphere for all employees that promotes productivity and encourages creativity and innovation.

We strive to maintain a highly-skilled and diverse workforce where employees are hired, retained, compensated and promoted based on their performance and contribution to the Company.

Employee Development and Retention .

The attraction, development and retention of our employees is a key focus for our Company.

We offer online and in-person training programs to enhance the knowledge, skills and advancement opportunities for our employees.

Our goal is to be the employer of choice within our industry and the communities in which we operate.

We focus on maintaining a solid pipeline of talent throughout our organization and continually developing the capabilities and skills needed for the future of our business.

Work Environment .

We believe that maintaining a work environment that recognizes effort and teamwork, values mutual respect and open communication, and demonstrates care and concern for our employees is essential to an engaged and productive workforce.

In furtherance of this objective, we provide regular Code of Business Conduct training for our employees to identify and prevent misconduct and report situations that violate our policies and/or negatively impact our work environment.

We investigate and take prompt action to correct conduct that is inconsistent with our Code of Business Conduct and other policies.

Health and Safety .

The safety of our employees is critical to our success as a specialty manufacturer of nuclear components and an operator of high-consequence nuclear and national security facilities for the U.S.

As such, we are committed to maintaining the highest safety, security, ethical and environmental standards.

We take pride in the fact that we operate NRC Category 1 and Canadian Nuclear Safety Commission ("CNSC") licensed facilities and have instilled as a core value a culture that prioritizes safety with a vision of zero accidents at these and all of our work locations.

In pursuit of an injury-free workplace, we constantly monitor and assess all injuries and "near misses" for any lessons we can learn and leverage to reduce the risk inherent in occupational activities.

We use this information to further develop our safety program in an effort to prevent future occupational and environmental incidents to help us achieve our safety goals.

During 2020, as an essential business we implemented safety protocols and new procedures to protect our employees and contractors in response to the novel strain of coronavirus ("COVID-19") pandemic.

These protocols included complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

For a detailed discussion of the impact of the COVID-19 pandemic, see "COVID-19 Assessment" in Item 7 of this Report.

Patents and Technology Licenses

We currently hold a large number of U.S.

and foreign patents and have patent applications pending.

and foreign patents and have patent applications pending in certain technologies, including nuclear reactor systems, components and fuel, advanced and additive manufacturing, space nuclear propulsion, and radioisotope production.

We acquire patents and technology licenses and grant licenses to others when we consider it advantageous for us to do so.

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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.

These activities include the development of medical radioisotope technology and a variety of advanced technologies in the areas of additive manufacturing, machine learning, modular reactors, nuclear thermal propulsion and high temperature gas reactors, among others.

These activities include the development of isotope production, medical radiochemical and radiopharmaceutical production and a variety of advanced technologies in the areas of additive and autonomous manufacturing, space nuclear power and propulsion, and high-temperature gas-cooled reactors, among others.

These projects are sponsored and funded through internal research and development and by a number of commercial and government customers.

We charge the costs of research and development unrelated to specific contracts as incurred.

Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2019, 2018 and 2017 related to the development of technologies in the area of medical and industrial radioisotopes.

Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2020, 2019 and 2018 related to the development of technologies in the area of medical and industrial radioisotopes and additive and autonomous manufacturing.

Contractual arrangements for customer-sponsored research and development can vary on a case-by-case basis and include contracts, cooperative agreements and grants.

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Risks that we have frequently found difficult to cost-effectively insure against include, but are not limited to, property losses from wind, flood and earthquake events, nuclear hazards and war, pollution liability, liabilities related to occupational health exposures (including asbestos), liability related to our executives, professional liability/errors and omissions coverage, the failure, misuse or unavailability of our information technology systems, the failure of security measures designed to protect our information technology systems from security breaches and liability related to risk of loss of our work in progress.

In cases where we purchase insurance, we are subject to the credit worthiness of the relevant insurer(s), the available limits of the coverage, our retention under the relevant policy, exclusions in the policy and gaps in coverage.

In cases where we purchase insurance, we are subject to the creditworthiness of the relevant insurer(s), the available limits of the coverage, our retention under the relevant policy, exclusions in the policy and gaps in coverage.

Our operations in designing, engineering, manufacturing, constructing and servicing nuclear power equipment and components for our commercial nuclear utility customers subject us to various risks, including, without limitation, damage to our customers' property and third-party claims for personal injury, environmental liability, death and property damage.

To protect against liability for damage to a customer's property, we endeavor to obtain waivers of liability and subrogation from

the customer and its insurer.

To protect against liability for damage to a customer's property, we endeavor to obtain waivers of liability and subrogation from the customer and its insurer.

We also attempt to cap our overall liability in our contracts.

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Instead, we rely on government contractual agreements and insurance purchased specifically for a site.

Government has historically fulfilled its contractual agreement to reimburse its contractors for covered claims, and we expect it to continue this process during our participation in the administration of these facilities.

However, in most of these situations in which the U.S.

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These insurance rights provided coverage for, among other things, asbestos and other personal injury claims, subject to the terms and conditions of the policies.

The contribution of these insurance rights was made in

exchange for the agreement on the part of the representatives of the asbestos claimants, including the representative of future claimants, to the entry of a permanent injunction, pursuant to Section 524(g) of the U.S.

The contribution of these insurance rights was made in exchange for the agreement on the part of the representatives of the asbestos claimants, including the representative of future claimants, to the entry of a permanent injunction, pursuant to Section 524(g) of the U.S.

Bankruptcy Code, to channel to the asbestos trust all asbestos-related general liability claims against our subsidiaries and former subsidiaries arising out of, resulting from or attributable to their operations, and the implementation of related releases and indemnification provisions protecting those subsidiaries and their affiliates from future liability for such claims.

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We are currently in the process of investigating and remediating some of our current and former operating sites.

Although we have recorded reserves in connection with certain of these environmental matters, due to the uncertainties associated with

environmental remediation, there can be no assurance that the actual costs resulting from these remediation matters will not exceed the recorded reserves.

Although we have recorded reserves in connection with certain of these environmental matters, due to the uncertainties associated with environmental remediation, there can be no assurance that the actual costs resulting from these remediation matters will not exceed the recorded reserves.

Our compliance with federal, foreign, state and local environmental control and protection regulations resulted in pre-tax charges of approximately $16.3 million, $15.9 million and $14.7 million in the years ended December 31, 2020, 2019 and 2018, respectively.

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We have not been determined to be a major contributor of wastes to any of these sites.

On the basis of our relative contribution of waste to each site, we expect our share of the ultimate liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows in any given year.

On the basis of the relative contribution of waste to each site by potentially responsible parties, as well as the financial solvency of other potentially responsible parties, we expect our share of the ultimate liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows in any given year.

Environmental remediation projects have been and continue to be undertaken at certain of our current and former facilities.

In 2002, Congress directed the U.S.

Army Corps of Engineers ("Army Corps") to clean up radioactive waste at the Shallow Land Disposal Area located in Parks Township, Armstrong County, Pennsylvania (the "SLDA"), consistent with the Memorandum of Understanding between the NRC and the Army Corps for Coordination on Cleanup and Decommissioning of the Formerly Utilized Sites Remedial Action Program Sites with NRC-Licensed Facilities, dated July 5, 2001 (the "MOU").

the Formerly Utilized Sites Remedial Action Program Sites with NRC-Licensed Facilities, dated July 5, 2001 (the "MOU").

From 1961 to 1970, the SLDA was operated by the Nuclear Materials and Equipment Corporation ("NUMEC") pursuant to Atomic Energy Commission ("AEC") License SNM-145.

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As a result of these activities, we are subject to continuing reviews by governmental agencies, including the U.S.

Environmental Protection Agency (the "EPA") and the NRC.

We are also involved in manufacturing activities at licensed facilities in Canada that are also subject to continuing reviews by governmental agencies in Canada, including the Canadian Nuclear Safety Commission ("CNSC").

Environmental Protection Agency and the NRC.

We are also involved in manufacturing activities at licensed facilities in Canada that are also subject to continuing reviews by governmental agencies in Canada, including the CNSC.

The NRC's decommissioning regulations require our Nuclear Operations Group segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its two licensed facilities at the end of their service lives.

We provided financial assurance totaling $61.8 million and $56.2 million during the years ended December 31, 2019 and 2018 ,

respectively, with surety bonds for the ultimate decommissioning of these licensed facilities.

We provided financial assurance totaling $61.8 million during the years ended December 31, 2020 and 2019 with surety bonds for the ultimate decommissioning of these licensed facilities.

These facilities have provisions in their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations are covered by the DOE, including the costs to complete the decommissioning projects underway at the facility in Erwin, Tennessee.

These surety bonds are to cover decommissioning required pursuant to work not subject to this DOE obligation.

The surety bonds noted above are to cover decommissioning required pursuant to work not subject to this DOE obligation.

In Canada, the CNSC's decommissioning regulations require our Nuclear Power Group segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service lives.

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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.

Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income and capital spending, strategic investments, acquisitions or divestitures, return of capital activities or margin improvement initiatives are examples of forward-looking statements.

Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income and capital spending, strategic investments, acquisitions or divestitures, return of capital activities, margin improvement initiatives or impacts of the COVID-19 pandemic are examples of forward-looking statements.

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.

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In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate.

For example, the extent to which the COVID-19 outbreak will continue to impact our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the length and severity of the COVID-19 health crisis, and the actions to contain its impact, in addition to the potential recurrence or subsequent waves or strains of COVID-19 or similar diseases.

While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in the section labeled Item 1A, "Risk Factors" of this Report, 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.

We have discussed many of these factors in more detail elsewhere in this Report.

We have discussed many of these factors in more detail elsewhere in this Report, including under the heading "COVID-19 Assessment" in Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part II of this Report.

These factors are not necessarily all the factors that could affect us.

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The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

We have also posted on our website

We have also posted on our website our:

Corporate Governance Principles;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business