Document zooKKwm2Ky80DoJbvVEqaqmkn

p- I The Babcock & Wilcox Company ig': *r::\.a ? x: * : for the year ended December 31,1969 1969 Highlights 2 Letter to Stockholders 3 Financial Statements 5 Ten-year Financial Comparisons 8 Review of Operations 13 I i I l I l /u.'i.i\i,' ./\im .'M'l'il]- iti Od/..- -im : mi: /;..,. /..>< -r..................:i.ir/r-/r iimW-'-! ./rimi" :iV m.\ ; />'! --'M. ii.. ` iii' - " --i.il .;//> -'ii/v/nv mil " '/;/' r.a h;.i//.-.. . % in Mm ,'i'iii'i.iiiii' i ;/><'. 171 .1 iri` it; .i- m,' m.n/i' ,' ;-.*/ ............ . . . i' ;''' .:/><'/'in//. 'Jim iil'-im. I !)< ! iio -\'.ls oi/ii, ;; -1:./.-mi '.w!/i //<;.i--, -i*//'- "-v '/:i!,> iy r.1117 ii"--1- .'//* . *1 i * - , I - '.'ilic'.*. I I I, JJ 1969 Highlights TOTALS Orders received....................................................... Unfilled orders......................................................... Sales (on percentage of completion method for long-term contracts) .......................................... Net income for the year........................................... Cash dividends declared........................................ Expenditures for property, plant and equipment Depreciation of plant and equipment................... Working capital....................................................... Stockholders' equity ................................................ Number of employees at year end............................ Number of common stockholders at year end......... Number of common shares issued at year end......... PER COMMON SHARE ISSUED Net income for the year........ Cash dividends declared...... Stockholders' equity ............ 1969 1968 $ 812,758,000 $ 911,082,000 1,747,787,000 1,653,595,000 718,566,000 5,725,000 16,752,000 50,523,000 13,439,000 141,205,000 277,216,000 647,613,000 25,242,000 16,726,000 37388,000 10,934,000 214,728,000 288,243,000 35,118 31,419 12,366,626 32,371 26,269 12,366,626 $ .46 136 22.42 $ 2.04 1.36 23.31 Letter to Stockholders To The Stockholders of The Babcock & Wilcox Company: Earnings for 1969 were drastically affected by the substantial losses that were absorbed in the atomic energy business of the Power Genera* tion division, together with reduced earnings from its fossil fuel business resulting from con gested facilities caused by the nuclear work. For the rest of the Company's diversified prod uct lines, the year was one of good perform ance with some equalling or exceeding their 1968 earnings. The utilities'sudden and widespread demand for nuclear power plants in the period 1966-67, stimulated by expected operating economies, resulted in orders unprecedented in volume and scope of work for, all the major suppliers. Delays have occurred and are expected to oc cur in many of the new plants for a variety of reasons in addition to manufacturing problems. These include delays in engineering and build ing construction, licensing procedures, trans portation and handling problems, site selec tion, and the gaining of public confidence. In the case of BfcW, the initial manufacturing problems caused by the rapid growth of the atomic business were further aggravated by a scarcity of skilled workers, strikes at various plants, and late delivery by vendors of critical machinery. viany corrective steps have been and will continue to be taken by management in an effort to improve performance in the Power Generation division. New leadership has been provided and the division has been reorgan ized on the basis of product lines with rede fined responsibilities and authority. Production capability has been improved by the addition ot machinery and facilities, by continuous train ing programs aimed at providing the skilled craftsmen needed for high quality nuclear wor::. and by improvements in the manufac turing organization. As noted in last year's Report, several of these corrective steps were initiated in 1968, particular ly in respect to the reactor vessel situ ation at our Mount Vernon plant. While prog ress was made during 1969, it became appar ent by mid-year that it would not be sufficient to alleviate the bottleneck which had devel oped because of initial delays. To improve this situation, orders for 14 vessels, in various stages of fabrication, are to be completed by other [toanuf :-;;>jrers. substantial costs in connection : -S were absorbed by B*W in 1969. To fcOate, Mount Vernon has manufactured and pec iix nuclear reactor vessels, three of iem in 1969. Twenty reactor vessels for com>ercial and other nuclear applications remain T*. order, seven of which are scheduled to be ?tpped in 1970, V' George G. Zip!, President ond Chiei Executive Oflicer Work on BtW's 11 nuclear steam supply systems, where the Company is the prime con tractor, is proceeding in accordance with re vised schedules which reflect varying degrees of delay from original expectations. The reactor vessel and the two steam generators for Duke Power Company's first unit at Oconee were shipped during the year. Other major compo nents will be shipped in 1970 and commercial operation of this plant remains scheduled by the customer for mid-1971. Only eight nuclear reactor systems were or dered by U.S. utilities in 1969, compared with 17 in 1968 and 30 in 1967. While we did not receive any of the business placed in 1969, we are presently discussing proposals with several utilities which have plants under consideration. BfcW intends to participate actively and profit ably in what is expected to be a growing busi ness. As the utility industry gains experience with nuclear power generation, and the many complex problem? of siting, licensing, and public confidence are solved, orders for.nu clear plants should resume their upward trend. Jn addition to its commercial atomic energy work, the Company is also producing a sub stantial volume of nuclear power plant com ponents and fuel for the Navy. Except for major areas of atomic activity, all of the Company's product lines operated prof itably in-1969, with shipments of refractories, machinery products, boiler cleaning equip ment, instruments, control systems, and naval nuclear fuel significantly higher than in 1968. Tubular and steel products also concluded a very good year despite the effects of strikes at the Alliance and Milwaukee plants. t>) Letter to Stockholders (continued) Capita! expenditures for all divisions and subsidiaries during 1969 totaled $50,523,000. The effects of these expenditures are expected to be reflected in improved schedules and pro duction efficiency as well as in the manufac ture of new products. It is estimated that 1970 capital expenditures will exceed $30,000,000. The approximate distribution of our 1969 and 1968 shipments by industry was as follows: 1969 1968 Electric Utilities ......................... 40% Government................................. 18 Warehouse and Distributors. .. 9 Machinery....................................... 9 Transportation .............................. 6 Primary Metals.............................. 4 Pulp and Paper.............................. 4 Fabricated Metal Products....... 3 Chemical and Petroleum.......... 2 Miscellaneous................................ 5 100% 43% 13 11 10 6 4 2 2 2 7 100% All major product lines, with the exception of atomic energy,. registered increased book ings in 1969 and new orders for the year totaled $812,758,000. The backlog at the end of the year rose to $1,747,787,000. Of the backlog, approximately one-half is for atomic energy work. A substantial part of the balance is for fossil fuel steam generating equipment sched uled for shipment in the next two years and the outlook for continuing business in this product line is excellent. There have been many changes in Company management at all levels during the year. Ellis T. Cox joined the Company in September 1969 as Vice President in charge of the Power Gener ation division. He brings to this assignment a background of accomplishments in engineer ing and managerial capacities in various areas, including nuclear programs. Paul S. Dickey retired as Chairman of Bailey Meter Company in April 1969 after a 44 year career with that subsidiary, which is under the direction of J. H. Dennis, President. R. A. Barr retired as a Vice President of the Company in June and R. P. Stuntz, General Manager, as sumed his duties as head of the Refractories division. M. Nielsen, who served as Chief Executive Officer from April 1957 to September 1968, re tired as an active employee of the Company on May 1,1969. He continues as Chairman of the Board of Directors. During his 45 years of active service, Mr. Nielsen made many signifi cant contributions to the Company's progress. Auguste G. Pratt, Chairman Emeritus and Honorary Director of the Company passed away on January 22,1970. Mr. Pratt served the Com pany for 65 years. Its growth during that period is a tribute to his inspired leadership. We shall 4 miss the counsel of this outstanding man. Donald N. Frey, President of General Cable Corporation, was elected a member of the Board of Directors on February 27, 1969. Sam uel H. Wooley, Chairman of The Bank of New York, was elected a Director on January 29, 1970. The resignation of J. C. Traphagen, who has rendered distinguished service as a Board member since 1944, was accepted on January 29, and he has been appointed an Honorary Director. The number of people owning stock in the Company increased steadily throughout 1969. On December 31, 1969, there were 31,419 stockholders, compared with 26,269 at the end of the previous year--an increase of 20per cent. The Company has been going through a lengthy period of identifying problems in an important area of its business and taking affirm ative action to deal with them. There are un certainties ahead such as the impact of labor negotiations, the effects of strikes which began on February 15 at five of our plants, and the general level of national economic activity. There also may be possible additional costs and expenses, including claims, resulting from delays in the atomic energy business, although management does not expect that amounts, if any, will be material. We believe that the basis has been established for a more profitable fu ture and current indications are that results for 1970 will show a significant improvement over those for 1969. At its February meeting the Board of Direc tors declared a regular quarterly dividend of 34 cents per share payable April 1 to shareholders of record on March 9,1970. Many dedicated and loyal employees through out the organization are working to continue improving our operations, and I want to express my thanks for their efforts. The support of our many stockholders and customers is also very much appreciated. Ceorcje C. lipi President and C'niei E.xecut/ve Ztiicer . .JVC ^nsolidBted StatementsSource and Apprication of Funds Eor the .CalendarYear i KmCING CAPITAL^BECINNII&OF^^............ ......... 1969 . $214,728,409 1968 $180735,127; JURCES: :- |Net income............................................................................................................................... epredation |tet increase in noncurrentindebtedness...-.'..:;....... t increase in nonctment deferred income taxes- 5724,758 13,438^34 5,015,000 25742729 10,933721 44,800,000 3,925,000 PLICATIONS: f- Jdidons to property, plant and equipment- dividends declared- st decrease in noncurrent indebtednessi, net. 24,178792 50723/415 16,752,000 31700700 (773,485) 84,900750 37788,445 16,726,404 (3707,381) DECREASE) INCREASE IN WORKING CAPITAL jNC CAPITAL AT END OF YEAR........................ 97701,930 (73723738) $141704,771 50,907,468 33,993782 $214,728,409 Consolidated Balance Sheet -K ASSETS CURRENT ASSETS Cash............................. -.......................................................................... Marketable securities./ at cost (approximate market}....................... Accounts receivable.......... ....... ..................................................... Unbilled sales (Note 2) -....:..TM-..................................................3 Inventories, including long-term contract costs (less advance payments on contracts) (Note 2)........................... TOTAL CURRENT ASSETS................................................... NONCURRENT RECEIVABLES.................... .......... .................................. INVESTMENTS, at cost....... ........ ......................................................... PROPERTY, PLANT AND EQUIPMENT, at cost less accumulated depredation and amortization (Note 4)PREPAID EXPENSES AND OTHER ASSETS............................................. TOTAL ASSETS- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable (Note 5)--................................................................................ Accounts .payable and accrued liabilities................................................... Cash dividends payable--..................-.......................................................... U.S. and foreign income taxes..................................................................... TOTAL CURRENT LIABILITIES......... ........................................... NONCURRENT INDEBTEDNESS (Note 5) -............................... -3R....... DEFERRED INCOME TAXES-,......... --..................................................... MINORITY INTERESTS IN SUBSIDIARY COMPANIES............................. TOTAL LIABILITIES.................................................................. STOCKHOLDERS' EQUITY Capital Stock: Preferred, cumulative, ho par; authorized and unissued 2,000,000 shares Common, par value $4.50; authorized 18,000,000 shares, issued 12,366,626 shares (amounts include $26,681,610 excess over par value-capital surplus)............. Retained earnings- . TOTAL STOCKHOLDERS' EQUITY- TOTAL LlABILlTlESsfcND STOCKHOLDERS' EQUITY-- At December 31 1969 $ 13,548,645 . 1,912,761 113,877,797 84,578,157 1968 $ 16,198,612 1,265,724 98,984,964 67,071,328 170,1St365 384,068,925 1,348,245 340,492 202,647,504 4,566,447 $592,971,613 160,300,471 343,821,099 2,016,649 -j . 340,514/1 165^637,835 J 4,216,705-1 $516,032,802 : $ 86,339,851 139,366,858 4,188,696 12,968,749 242,864,154 56,000,000 8,940,000 7,951,522 315,755,676 $ 6,760,67298,228,74& 4,183,93419,919,338^ 129,092,690 87,200,000! 3,925/0003 7,571,5 227,789 82,331,427 194,884,510 277,215,937 $592,971,613 82,331 205;.911* 268,243, $516,032 Opinion of Independent Accountants To the Stockholders and Directors of The Babcock & Wilcox Company: In our opinion, the accompanying consolidated balance sheet and statements of income and retained earnings and source and application of funds present fairly the financial position of The Babcock & Wilcox Company and its subsidiaries at December 31,1969, the results of their operations and the supplementary information on funds for the year, in conformity with generally accepted accounting principles applied on a basis consist ent with chat of the preceding year. Our examination of these statements was made in accordance with gener ally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. 6 New York, N. Y., February 13,1970 PRICE WATERHOUSE & CO. , . . .... e* iQri-^unjsonr--* peted^mjj^idui^png*f^^Stra^^j^fi^eacH^atper]od' t&ibaseSlupon'esCmS^t^fom'glg't^^^'.dstimates larere- ^^ed:perk>dicafJyas.tHe?yyo^:p:rogress^:and!'ad]ciSbrients/'if ^proportionatejo-iheperceDtggfcb^GOmpietion-arereflected ^period v^er'su^'estimatera^reyis^J^j'^^^.i": 'V'. jK^cdmpieted .contrarf^^6d.*is?fdM6.wi& -for-income tax g--4 _*K' ~ ' * ,** '.* . .. * . ^ujjpsesandprovisionismadecurTently^drtaxpaymentsthereby fe/ayed:(i969-^$8,963>oo^T9^$To^^ - ______ 0__ ....w'vviivncu'uiiuer tne,oanK.-Joan;agreement-.-.r" are convertible upon election:ofcthe Company pnor'iq^D^cenv-^Jijii -ber.31,'T970 into.term-loans-payabfe-qua'rfierjyOyer.a^ffirrnOntf^x^ period with interest atVtof T% in excess of'thetheh primesrateAj.''.;^ . - Certain of the agreenientsPohtain>- among other. things>?re-^-|: quirements as to consolidated'workingcapitaT; as.defined^and'l'^i dividend declarations. At December 31,T969;all such reqUire-i':f-^- ments have been met. " .V , -,'. ;.A-.` ..r,?*3i: i3--The 1969 results reflect cdstsihd'ekpehses incurred from ertain actions taken to alleviate delays arid the-effects of delays Vcanying out some long-term nuclear contracts.Additional costs adexpenses, including clalms/mayTesultfrom delays butman- *ementdoes not expect thatamounts, if any,will be material. Note 6--The Company has several pension plans, principally v. non-contributory, covering substantially all employees. The total. pension expense funded and charged-to income in 1969 was ' 58,366,000 which includes amortization of prior service cost over a period of forty years. The unfunded prior service cost at December 31,1969 was approximately $40,000,000. :4--Ftxed assets which are carried at cost less accumulated predation may be summarized as follows: 1969' 1966 nd................................ .......... . $ 5,353,000 Ridings..................................... 110,925,000 '"'hinery and Equipment..... 251^)03^000 ^instruction in progress......... 16,074,000 S 4,838,000 90,841,000 216,464,000 22,413,000 . 383355,000 334,556,000 g/nulated depreciation..... 180,707,000 168,918,000 $202,648,000 5165,638,000 Note 7--Transactions in 1969 under the stock option plans ap proved by the stockholders in 1958 and 1963 are summarized as follows: Shares Options outstanding 1958 Plan 1963 Plan on January 1,1969.............................. 39,096 Options granted........................................ -- 300,364 Options exercised......................:.......... (12,892) Options lapsed..................................... (500) Options outstanding on December 31,1969........................ 25,704 (740) (92,024) 207.600 No further options may be granted under either plan. come & Retained Earnings -Year Comparison (in thousands ofdollars) " /' For the CalendarYear es (on percentage of completion method for long-term contracts)......................... sts and expenses except depreciation..........................................................-............... predation and amortization.......................................................................................... :ome from operations......... -.................. ...................... :................................... ............ :ome from investments and marketable securities............ ........................................ erest expense......... ...............................................................'......................... .................. -ome before taxes and minority interests...................................................................... >. and foreign taxes on income............................................................................. ,........ tome applicable to minority interests....... ............................................................. :t income for the year i--........ ...... ....... ...'._`:..v...l.................................................... -- jity in earnings of subsidiary-prior to obtaining majority control........... --......... sh dividends declared ..i........... ..V:.........'.:.-..;.................................................................. mainder added to retained earnings..... .................................................................-..... Gained earnings at beginning of year.................................................................... :........ tained earnings at end of year....................................................................................... .1969 '1968 $718,566 690,111 13,439 703,550 15,016 505 (9,022) 6,499 190 6,309 (584) 5,725.' $647,613 584,522 10,934 595,456 52,157 -928 - (3,3915 49,694 23,710 25,984 (742) 25,242 5,725 16,752 (11,0275. 205,911 $194,884 7 25,242 ' 16,726 8)516 197395 $205,911 i^s 1967 $624,723 545,935 16,436 562,371 62,352 305 (1,412)' 61,245 27,260 33,985 (770) 33315 33315 16,681 . 16,534 180,861 $197,395 1966 $561,627 - 485,628 I 14,778 500,406" jfcggf 61,221 j5: 2,095 )p (838 62,478 ff-5( 2671c E2( 33,768 k3( (7& Kj . 33,0! * 33#d 163^3 Si 60,8a ource and Application of Funds n-Year Comparison (in thousands of dollars) - > ' For the CalendarYear ORKING CAPITAL AT BEGINNING OF YEAR........................................................... ;URCES: Net income............................. ....... ........ .................... :....................................... ............ Depreciation and amortization .......................... .-........................................................ Net increase in noncurrent indebtedness................................................................... Net increase in noncurrent deferred income taxes........................................ ............. Working capital of subsidiary initially consolidated................................................... 'PLICATIONS: Additions to property, plant and equipment --........... ................ ............................... Cash dividends declared......................................................................................... ....... Net decrease in noncurrent indebtedness ...;.......... -................................................... Net increase (decrease) in noncurrentreceivables..................................................... Other (net).................................. -..................................................................................... ET INCREASE (DECREASE) IN WORKING CAPITAL.................................................... /ORKING CAPITAL AT END OF YEAR.................... 1969. $214,728 1968 $180,735 V.532S 13,439 . -5,015 .25342 : *:.10,934 . 44,800 - 3,925 ' : 24,179 84,901 = 50,523--. -37388 - ' 16,726 . 31300 > . - . *4 ' (669). (1,612) (104) (1394) 97,702 50,908 (73523) 33,993 $141305 $214,728 33315 16,436 25,800 75,451 33509 16,681 1547 (300) 51,437 24,014 $180,735 Slf -'*j ' ia m a 3 $8 statistics icome from operations before taxes--% of sales..................................... >et income for year--% stockholders' equity first of year....................... Orders received--thousands of dollars........................................................ JnfiJIed orders--thousands of dollars..............................:........................... Jommon shares issued end of year............................................................... 'er common share issued (adjusted for stock split--12,366,626 shares): Income for year.......................................................... .......................... Cash dividends declared........................................................................ Stockholders' equity................................. ........................................ 1969 2.1% 2.0% $ 812358 $1,747,787 12366526 1968 8.1% 9.0% $ 911,082 $1,653595 12366,626 1967 10.0% 12.6% $1399395 $1390,127 12366,626 $ .46 136 22.42 $ 2.04 1.36 2331 S 2.69 136 22.62 966 627 %481 ^OOr:--' $430;9W^tr$377>684",:,'^330^74 623]^2,487;;- '- -37033Si-^^2*392^l-';*^77345' \y -.-268,721 .770 ffe/S#^__ 12,825 ,10335-^v:-<.-^ 8;673 |%2&0{D6g-v' 383,160V . 332,619-: -- 7V,287380 -. "":7377;394 >>196of> $310,999' . 266,749: ':8343' 275392'.-- . SALES {Shipments) . X'^ill/oKioT'' 650-'; g50v: . 26^25:V^^|p^^S^i^^%./:i20^41 . . .37;817l> #?2v;-y S'i'<oi5-; r'11^392 7,180 y~ 133,165- :' 321398'' .'^t1079/^- 99/405 ,172 $147,180--,. $133/165 ^$121.^98-' - $110,797 ,10,185 89,220 $ 99-,405 i 'tel I-- so ^ ^ > v0~;^ .'60 '61 '62 '6?-'64- 'S5 '60 '67. '66 _'6s NET INCOME '.vMJIUofticrf'-> :: 25;i96;:fAS^^:k^^20j860 V. .12,825:Vi^11,227 <^10335 ~ 20,241 .8,673 S9T 79 5;064 r:~r^"v :V"r^43,105- - ' ^. -r32-,974. -h 1 : 31,195 : 12,265 v r : ^^6r.%^:?55^62 12311 - \!v.l10,480 i ::4ft>9759 -2--2--0--0- * y.-z%* 2200' : 9227J. 28,914 >,188 8,849 4,400 25,246 17,859 $137710 42,996 - 47346 ' :f10,022) . ' ?v;(16,651) .$119351 -,-*4129373 19,554 9360 $146324 26,360 6,105 7,632 2200 16,649 9,711 $137,164 1964 1963 ; 1962 1961 11.1% . '#11.9% ;t-\-'M3.o%:' 13.1% 11.7% ,J. 10.6% ; :;/>'io3% - 11.1% $525,814 7 \ ` $398,990 ,; ;?;$348,907 ` : J $361385 S467323 ` $372,666 - ' $351360 $333,027 12366,626 6,183313. `.6,183313 6,183313 J.V 3 2.04 Jr; $ 1.76 .$1.69 ^fS:1836 -'36 : 30 ::J:j:-T7j43^ ;.:-':Vjl631 $ 1.64 .73 15.62 1960 11.5% 10.4% $301,146 $291,095 6,183313 $ 1.44 .63 14.70 For .the ; yeir .'60 J61 '62 '63 '64 '65 `66 '67 ,'6S '69 EARNINCS PER SHARE ANO CASH DIVIDENDS DECLARED PER SHARE (edpji>ed<6''Kfc9ltt) Dotltn Earning} Dividends' 3.00 ' '.. 27S': iso r 225 2.00 US ' 1.50 tor the yew '60 '61 '62 '63 '64 '65 '66 '67 '68 '69 JS Balance;She^$S^^g:v;.v,s "Ten -Year Comparison' (irStKouMn^o^bliarS).>- . CURRENT ASSETS Cash................ : .ASSETS .... Inventories, ney-bf^S^n^-^^fents TOTaF^RRE^^ETS .......... ..............- NONCURRENT. RECEIVABLE INVETMENTS;...:~^.\%J^^^.......... PROPERTY, PLANT.^^EQUiHiiENT ............... PREPAID EXPENSES ANa^THER ASSETS.-1'..................... TOTAL ASSETST^-::^:...:..:..^;.................. At Decem&erJT. ,r1969- . -;1968 ` 1967 . * ' $ 13,549 ' $ 16,199 1,912 : ' 1;266 : 113)878 98,985 84^78 .;. - 67,071 170,152 160,300 384,069 1,348 343,821 .2,017 .-,:,-.'-.V340' . ' 340 202,648 165,638 4367 4317 $592,972 $516,033 $ 12,839 $ 15 .5397 85)525 47,841 138,625 16 75 . 35 ns 290,127 . 262 3,629 2 r 341 . 139,415 . V'- -122 5,157 $438,669 $392 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable.......... :............................................................................. Accounts payable and accrued liabilities........................................... Cash dividends payable.............................................-........................ U.S. and foreign income taxes............................................................ TOTAL-CURRENT LABILITIES....................................... NONCURRENT. iNttpTEpNESS^.iv.:..................................................... DEFERRED tNCOMfTAXE^:.,..:;..-........:........................................... MINORITY INTERESTS IN:SUBSIDIARYCOMPANIES.......................... TOTAL LIABILITIES.......................................................... STOCKHOLDERS'EQUITY Preferred stock authorized and unissued......................................... Common stock including capital surplus......................................... Retained earnings .....v......... --............................................................... TOTAL-STOCKHOLDERS' EQUITY.............................. TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86^40 139367 4,188 12,969 242364 56,000 8,940 7,952 315,756 $ 6,761 98329 4,184 19,919 129,093 87300 ' 3,925 7,572 227,790 82332 194384 277316 $592,972 82332 205,911 288343 $516,033 ..i $ 3,658 80,281 4,176 21,277 109392 42,400 S S Tl. "'I :4 TCS :'4 7,150 158,942 82,332 197395 279,727 $438,669 T2g I <3* Property, Plant & Equipment Ten-Year Comparison (in thousands of dollars) COST At beginning of ....................................................... Expenditures during^ear................................................. Other additions--initial consolidation of subsidiaries.. Retired or sold during year............................................... At end of year...................... .............................................. DEPRECIATION AND AMORTIZATION At beginning of year.......................................................... Charged to operations during year................................ Accumulated--initial consolidation of subsidiaries...... Accumulated on property retired or sold during year At end of year..................................................................... NET BOOK VALUE...................................... For the Calendar Year 1969 1968 1967 $334356 50323 $298317 37388 (1,724) 383355 (1.149) 334356 $266,404 33309 444 (2,040) 298317 168,918 13,439 158,902 10,934 (1,650) 180,707 $202,648 (918) 168,918 $165,638 144,012 16,436 247 (1,793); 158,902 $139,415 --j Fossil fuels provide a major portion of the steam used to generate electricity. Three B&W units with a combined capacity of 2,500,000 kilowatts are in operation at TVA's Paradise station in western Kentucky. The largest of the three, a 7,750JX30 kilowatt unit, went on line in 1969. Review of operations Steam generating equipment The heavy demand for all types of electric pow er generation equipment except nuclear con tinued during 1969. However, die continuing utility interest in nuclear plants indicates that this form of power generation will in time re sume a steady growth pattern and the Company expects to be an important participant in this developing business. Work on then nuclear steam supply systems which utilities have ordered from B*W is pro gressing. During the year, the pressure vessel and two steam generators for the first of three nuclear steam supply systems for the Duke Power Company were shipped and installation at the site is underway. Bailey Meter will sup ply integrated control systems for the reactors, steam generators and turbines, as well as emer gency reactor protection equipmentand exten sive instrumentation. Control rod drives and special closed-circuit television cameras wi!( be furnished by Diamond Power. Earlier in this Report, the production prob lems involved in nuclear work were discussed in the President's letter. At present the Company has a full order book for large utility-type fossil-fueled steam gen erating units scheduled for shipment through 1971, and there is every reason to expect that the demand for this equipment will continue into the future. 13: F A/ B&W Cdn.it/j hjs pc'icctcd the forming of header and drum nozzles by ihe eiectrosiag welding process. This advanced technique has increased the quality and productivity of nozzle fabrication. B/ Machining ij a cdfic.if aspeef 0/ lubrication on nuclear component. A section lor one ol then nuclear steam systems B&W has told to utilities is checked at a new S10 million machining center opened this year. Seven B&W Universal Pressure steam gener ators ordered by utilities in 1969 included four 1,300,000 kilowatt units purchased by Ameri can Electric Power Company which are the largest units ever sold. Detroit Edison ordered a fourth 800,000 kilowatt B&W Universal Pres sure boiler for its Monroe station which will rank it among the world's largest power plants. Erection was completed during the year on 11 Universal Pressure boilers and nine Radiant boilers totalling more than 8,300,OGu kilowatts, versus 7,000,000 kilowatts installed by BtW during the preceding year. Boiler sales for a wide variety of industrial applications continued at the high level of the past several years. Package boilers, assembled by BtW in the shop for shipment, found new applications in diverse industrial and commer cial environments. In 1969 BtW sold eight process recovery boilers to the rapidly expanding pulp and paper industry, a large user of steam power. Three of the four units sold for installation overseas were designed to control odor emission through a process developed by BtW which replaces accessory equipment responsible for much of the odor associated with kraft paper manufacture. The process also increases boiler efficiency. further evidence of the success of BtW boiler designs is the interest of foreign utilities. Three boilers of BtW's Radiant type are being built for two Spanish electric companies. These units, of 566,000 kilowatts each, are the largest Radiant boilers BtW has designed. Italian util ity purchases last year brought to 18 the num ber of Universal Pressure steam generators sold in Italy since 1962. BtW Canada ltd. registered its largest single export order to date with the sale of two Radiant boilers to Israel Electric. BtW had sold identical units to the utility in 1966 and 1967. BtW Canada Ltd. also increased sales by ex panding its line of pumps to include utility applications and by broadening its market to include pump sales in the United States. To meet current and future demand f' steam generating equipment the Company centrated a major percentage of its $.0 mill: 1969 capital facilities program on esjundt and modernizing manufacturing capabil5 within the Power Generation division. Aaji tion of a Canton, Ohio, plant in eariy 1. increased the division's manufacturing by almost 600,000 square feet and added than 800 skilled men to B*W's work forte, duction at Canton is now approaching ca" At Wilmington, North Carolina, 48.rt)0 feet of manufacturing space was added year to help meet the growing need tor assembled boilers. Additions or tions at every other manufacturing t*al the Power Generation division were in 1969 or are presently underway. 1>V Steel products Sales of steel and tubular products compared favorably with 1968 performance. There was a high level of demand for both mechanical and pressure tubing, and orders throughout the range of products required near maximum use of production capacity. 8 lW tubular products find application where high quality is required in such diversified mar kets as the transportation, machinery, construc tion, metalworking, oil, gas and chemical indlstries. The division employs integrated pro duction facilities to achieve efficiency and quality goals. One important application of tubing is in the he; ^changers used extensively in most proc ess i.'fustries. In 1969, the Tubular Products division began manufacture of integral finned tubing which permits the use of smaller heat exchangers by increasing heat absorbing efficienev. Market acceptance for this product is growing steadily. Tne Company also extended its product line to incrude the high-alloy, small-diameter tub,n8 '! in nuclear steam generators and a r'" been completed at Beaver Falls, Penn'iT - " manufacture the large quantities of ,in3 required for this application. has tested and perfected a technique manufacture of seamless tubing which jlts in kfe straightness previously unattain- > "e industry.This achievement promises I I i I i to reduce long-standing maintenance and re pair problems_ior heavy equipment customers producing hydraulic cylinders from tubing. Production machinery Despite a genera! slackening of orders in thej machine too! industry during the year, the exist-] ing and new products of the Automated chine division were well received and tot sales and backlog increased. Long a supplier of mass production machii ery widely used in automobile production, division is increasing its emphasis on the; ufacture of more versatile machine tools serve a wide range of industries. At the. time the Bivision is working in close tion with Bailey Meter tcTdevelop com? integrated metalworking systems. Such: will include machines to do the work.mac to handle and move the work, and com? to control the machines. A major achievement in this effort was; introduction to the automotive industry transfer line which is controlled by a gram system. It induces a computer is capable of detecting more than 6S of machine and control malfunctions! before they occur. During the year. 8*V\ sold a high l!*6 of the continuous broaching machines w ^sae&il Al Broaching is the fastest precision metal cutting method known. These three exposed broaching tools are designed with a graduated series ol teeth--each removing a little more metal as it is pulled over or through the part being cut. Sales oi B&W broaching machines and tools were at record levels in 1969. 8f The Tubular Products division supplied over tour miles ol casing tubing lor one ol the deepest and highestpressure gas welfs in the world-known as "#7 Creen" -f,-. --in western Oklahoma. by U.S. industry. One of the largest was built for a farm equipment manufacturer to perform nine separate operations on 180 parts per hour. Previously this would have required eight verti cal broaching machines. Since entering the large surface broaching machine field two years ago, B*W has made significant marketing progress. In 1969, die Companyaccounted for a sizable share of these machines shipped in the U.S. The broaches used in broaching machines must be replaced periodically and represent a growing source of |r business. In 1969 the division established rec ord oroach sales, and constructed a new manufac;:..-ing facility in Puerto Rico to handle ^ some ?r this expanding business. Principally through its experience with hy drostatic bearings and complex electronic sys- sms, the Automated Machine division has lined a reputation for being able to supply the jgh precision equipment increasingly in deand. This skill was demonstrated during the ar by the manufacture of three of the largest, *gh prec-Mon internal grinders ever built Or- we-? received for two similar grinders for jumo -jet aircraft production program, lie shipments included an all-hydrostatic line ror boring V~Q engine blocks and the of nine computer-controlled gages using .technology to measure dimensions within 'millionths of an inch. Computers and control equipment New opportunities have been created for Bailey Meter with the emergence of the digital con trol computer as an accepted, sought-after too! for the process control engineer. This new computer field ofifers a potential for growth far beyond that available with Bailey's traditional products. The subsidiary is moving to exploit these opportunities in both new and established markets. The BaiSey 855 computer has already established itself in utility power plants and models are being added to the com puter line that are geared to the smaller proc ess control jobs. One of the 19 Bailey 855 sys tems sold to date will control and document testing of truck engines coming off a produc tion line. This installation is expected to help the customer improve quality, increase pro duction and reduce costs. Fluidic devices using flowing air rather than electric current as a medium of control have been developed by Bailey engineers to extend control capability. Having no moving parts, fluidic components are ideally suited for the input and output functions of automatic ma chinery where their high reliability and low maintenance under severe operating condi tions cannot be matched by standard electrical equipment fiJ New B&W engineers undergo an intensive companywide orientation program. In 1969, over 100 who will be part oI the management nucleus ol the 'seventies and'eighties took the course. B/ Fuel elements lor nuclear reactor cores are assembled at the Power Cenerat/on division's new commercial nuclear luel plant in Lynchburg, Va. CJ Reactor operators will be trained on industry's first pressurized water reactor simulator at the Lynchburg, Virginia, headquarters of the nuclear power generation department. Progress through training Technology ts advancing so rapidly that those adequately trained only a few years ago are in danger of becoming victims of educational obsolescence. Planned restraining of employ ees is essential if a company is to contribute to the continuing advancement of technology. Training is also important to B&W as a method of filling its need for people with greater and more specialized skills. It is becom ing increasingly difficult to obtain from out side the Company the large numbers of highly qualified people needed to assure continued progress in highly complex and specialized fields. Training people from within is thus an important policy for B&W and attractive to our employees. The Company's extensive training efforts for employees at all levels include both on-the-job and in-class programs. Among oth ers, a significant and effective training activity is currently underway at the Naval Nuclear Fuel division, where each new employee spends four weeks in an intensified formal training program prior to assignment. Because of the growing sophistication of its products, B&W has initiated a number of cus tomer training programs. A Bailey school offers instructions in programming and computer ap plications. Utilities which have purchased B&W nuclear systems will soon be sending prospec tive reactor operators to train on a nuclear reactor simulator housed in the Compass new engineering building at Lynchburg, Vir ginia. The simulator is capable of qualifying up to 200 reactor operators per year. Progress through research j B&W progresses through research on two fronts. At separate research facilities inAlliance^ C^jwyand Lynchburg, Virginia, specialized fr ctHties, and professional personnel are devoted to development of new technologies which cart be brought to bear on the needs and goals operating units. At the same time, operat divisions and subsidiaries maintain in-plant grams designed to improve products and p esses and broaden their application. The work at both levels is complemenand efforts are closely coordinated. Some standing results of this combined reseat^* tivity include BaW^ nuclear steam system, the 855 computer series, a new analyzer, and a silicon transducer for measurement Company scientists and engineers are' advancing die capability of many current ^ ucts including the 8&W nuclear steam A five-year R&D program to define of reactor performance is expected to significant increase in system power Modifications in the internal arrang the reactor and the steam generator;. A/ At (he Alliance Research Center (he properties oI Kaowool, a Refractories division product, are investigated and developed, leading to new product forms and applications. 8/ Researchers at Alliance, Ohio, probe the innc-struc ture of metals and ceramics with an electron microscope to uncover problem causes and improve product performance. CJ The special strengths of analog and digital computers are combined at the Alliance Research Center in a hybrid computer, bringing maximum problem solving capability to bear on countless engineering problems. 0/ CrindabiHly of various coals and performance of coal pulverizer designs are analyzed at die Alliance Research Center. including additional alterations, should result in further power upgrading. Technology is advancing at an ever-increas ing rate on all fronts. Large-scale use of elec tricity for heating, transportation and industrial automation, in addition to population growth, will cause our consumption of electric power to double about every 10 years into the next century. Nuclear power will meet a sizable share of this demand for energy, freeing more fossil fuels for conversion to petrochemicals, fluid fuels, and other organic products. Changes in 8 *W's other areas of activity will be equally dramatic. The trend to fully in tegrated control of machine tools will accel erate. In the process control field, computer functions will be extended to higher levels of process optimization and new forms of adap tive control. Refractory and steel products will become increasingly specialized as routine ap plications become the exception. B*W has traditionally sought out involve ment in fields of business that pose a consider able technological challenge and a correspond ingly high reward for success. Today virtually every aspect of the Company's operation offers significant opportunity to meet the challenge of changing technology with superior products, systems and services. t.-'&V Pec.rpm(iter at (he Nuclear Development Center in Lynchburg aids in (he development oi nuclear luels lot Advanced reactor < fesijjns. F! D/asooaj.ou-ers, used in boilers ol various size and design, result in more chicient boiler operation. Cl Caro^ shapes made by SAW at Augusta, " 3iee^' ceram/c and process industries in pro-fired shapes. HI A QSW designed c/osecf-orcu/t transfer machine was sold (o a major auto> err> monitor machine performance and reduce downtime by pinpointing trouble area. i