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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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47-2783641
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(State of Incorporation
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(I.R.S. Employer
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or Organization)
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Identification No.)
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THE HARRIS BUILDING
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13024 BALLANTYNE CORPORATE PLACE, SUITE 700
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CHARLOTTE, NORTH CAROLINA
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28277
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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PAGE
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Three Months Ended
September 30, |
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Nine Months Ended September 30,
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||||||||||||
(Unaudited, in thousands, except per share amounts)
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2016
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2015
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2016
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2015
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||||||||
Revenues
|
$
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410,955
|
|
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$
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419,977
|
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$
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1,198,279
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$
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1,254,617
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of operations
|
337,198
|
|
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342,055
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1,018,314
|
|
|
1,011,414
|
|
||||
Research and development costs
|
2,361
|
|
|
3,977
|
|
|
8,273
|
|
|
12,457
|
|
||||
Losses (gains) on asset disposals and impairments, net
|
(2
|
)
|
|
10
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(17
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)
|
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9,037
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|
||||
Selling, general and administrative expenses
|
60,697
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|
|
62,637
|
|
|
182,761
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|
|
178,539
|
|
||||
Restructuring activities and spin-off transaction costs
|
2,395
|
|
|
2,713
|
|
|
38,021
|
|
|
11,279
|
|
||||
Total costs and expenses
|
402,649
|
|
|
411,392
|
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|
1,247,352
|
|
|
1,222,726
|
|
||||
Equity in income (loss) of investees
|
2,827
|
|
|
1,047
|
|
|
4,887
|
|
|
(57
|
)
|
||||
Operating income (loss)
|
11,133
|
|
|
9,632
|
|
|
(44,186
|
)
|
|
31,834
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
115
|
|
|
138
|
|
|
656
|
|
|
420
|
|
||||
Interest expense
|
(379
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)
|
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(389
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)
|
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(1,169
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)
|
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(673
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)
|
||||
Other – net
|
(241
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)
|
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(1,326
|
)
|
|
113
|
|
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(1,436
|
)
|
||||
Total other income (expense)
|
(505
|
)
|
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(1,577
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)
|
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(400
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)
|
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(1,689
|
)
|
||||
Income (loss) before income tax expense
|
10,628
|
|
|
8,055
|
|
|
(44,586
|
)
|
|
30,145
|
|
||||
Income tax expense (benefit)
|
1,617
|
|
|
1,770
|
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(790
|
)
|
|
8,381
|
|
||||
Income (loss) from continuing operations
|
9,011
|
|
|
6,285
|
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(43,796
|
)
|
|
21,764
|
|
||||
Income from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,803
|
|
||||
Net income (loss)
|
9,011
|
|
|
6,285
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(43,796
|
)
|
|
24,567
|
|
||||
Net income attributable to noncontrolling interest
|
(117
|
)
|
|
(116
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)
|
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(293
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)
|
|
(222
|
)
|
||||
Net income (loss) attributable to shareholders
|
$
|
8,894
|
|
|
$
|
6,169
|
|
|
$
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(44,089
|
)
|
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$
|
24,345
|
|
Amounts attributable to shareholders:
|
|
|
|
|
|
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|
||||||||
Income (loss) from continuing operations
|
$
|
8,894
|
|
|
$
|
6,169
|
|
|
$
|
(44,089
|
)
|
|
$
|
21,542
|
|
Income from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,803
|
|
||||
Net income (loss) attributable to shareholders
|
$
|
8,894
|
|
|
$
|
6,169
|
|
|
$
|
(44,089
|
)
|
|
$
|
24,345
|
|
|
|
|
|
|
|
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||||||||
Basic earnings (loss) per share - continuing operations
|
$
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0.18
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$
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0.11
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$
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(0.87
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)
|
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$
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0.40
|
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Basic earnings per share - discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Basic earnings (loss) per share
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
(0.87
|
)
|
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$
|
0.45
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|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share - continuing operations
|
$
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0.18
|
|
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$
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0.11
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.40
|
|
Diluted earnings per share - discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Diluted earnings (loss) per share
|
$
|
0.18
|
|
|
$
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0.11
|
|
|
$
|
(0.87
|
)
|
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$
|
0.45
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|
Shares used in the computation of earnings per share:
|
|
|
|
|
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||||||||
Basic
|
49,621
|
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53,758
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50,613
|
|
|
53,569
|
|
||||
Diluted
|
49,857
|
|
|
53,787
|
|
|
50,613
|
|
|
53,716
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Three Months Ended
September 30, |
|
Nine Months Ended September 30,
|
||||||||||||
(Unaudited, in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
9,011
|
|
|
$
|
6,285
|
|
|
$
|
(43,796
|
)
|
|
$
|
24,567
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Currency translation adjustments
|
2,811
|
|
|
(7,685
|
)
|
|
(7,015
|
)
|
|
(16,394
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on derivative financial instruments
|
1,419
|
|
|
4,360
|
|
|
5,476
|
|
|
1,363
|
|
||||
Income taxes
|
287
|
|
|
1,023
|
|
|
990
|
|
|
245
|
|
||||
Unrealized gains on derivative financial instruments, net of taxes
|
1,132
|
|
|
3,337
|
|
|
4,486
|
|
|
1,118
|
|
||||
Derivative financial instrument (gains) losses reclassified into net income
|
(1,519
|
)
|
|
(474
|
)
|
|
(3,516
|
)
|
|
1,672
|
|
||||
Income taxes
|
(272
|
)
|
|
(115
|
)
|
|
(615
|
)
|
|
453
|
|
||||
Reclassification adjustment for (gains) losses included in net income, net of taxes
|
(1,247
|
)
|
|
(359
|
)
|
|
(2,901
|
)
|
|
1,219
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Benefit obligations:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on benefit obligations
|
(25
|
)
|
|
31
|
|
|
(49
|
)
|
|
31
|
|
||||
Income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Unrealized gains (losses) on benefit obligations, net of taxes
|
(25
|
)
|
|
31
|
|
|
(49
|
)
|
|
31
|
|
||||
Amortization of benefit plan costs (benefits)
|
15
|
|
|
1,108
|
|
|
(294
|
)
|
|
1,337
|
|
||||
Income taxes
|
7
|
|
|
1,048
|
|
|
(421
|
)
|
|
1,140
|
|
||||
Amortization of benefit plan costs (benefits), net of taxes
|
8
|
|
|
60
|
|
|
127
|
|
|
197
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on investments
|
18
|
|
|
(65
|
)
|
|
53
|
|
|
(50
|
)
|
||||
Income taxes
|
—
|
|
|
(35
|
)
|
|
24
|
|
|
(30
|
)
|
||||
Unrealized gains (losses) on investments, net of taxes
|
18
|
|
|
(30
|
)
|
|
29
|
|
|
(20
|
)
|
||||
Investment gains reclassified into net income
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
||||
Income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Reclassification adjustments for losses included in net income, net of taxes
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss)
|
2,697
|
|
|
(4,646
|
)
|
|
(5,322
|
)
|
|
(13,847
|
)
|
||||
Total comprehensive income (loss)
|
11,708
|
|
|
1,639
|
|
|
(49,118
|
)
|
|
10,720
|
|
||||
Comprehensive loss attributable to noncontrolling interest
|
(218
|
)
|
|
(38
|
)
|
|
(370
|
)
|
|
(169
|
)
|
||||
Comprehensive income (loss) attributable to shareholders
|
$
|
11,490
|
|
|
$
|
1,601
|
|
|
$
|
(49,488
|
)
|
|
$
|
10,551
|
|
(Unaudited, in thousands, except per share amount)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Cash and cash equivalents
|
$
|
65,068
|
|
|
$
|
365,192
|
|
Restricted cash and cash equivalents
|
28,874
|
|
|
37,144
|
|
||
Accounts receivable – trade, net
|
304,425
|
|
|
291,242
|
|
||
Accounts receivable – other
|
66,750
|
|
|
44,765
|
|
||
Contracts in progress
|
168,647
|
|
|
128,174
|
|
||
Inventories
|
99,453
|
|
|
90,119
|
|
||
Other current assets
|
39,384
|
|
|
21,548
|
|
||
Total current assets
|
772,601
|
|
|
978,184
|
|
||
Property, plant and equipment - gross
|
336,946
|
|
|
330,021
|
|
||
Accumulated depreciation
|
(197,919
|
)
|
|
(184,304
|
)
|
||
Net property, plant and equipment
|
139,027
|
|
|
145,717
|
|
||
Goodwill
|
271,302
|
|
|
201,069
|
|
||
Deferred income taxes
|
185,525
|
|
|
190,656
|
|
||
Investments in unconsolidated affiliates
|
113,435
|
|
|
92,196
|
|
||
Intangible assets
|
82,025
|
|
|
37,844
|
|
||
Other assets
|
15,308
|
|
|
17,379
|
|
||
Total assets
|
$
|
1,579,223
|
|
|
$
|
1,663,045
|
|
|
|||||||
Revolving debt
|
$
|
44,703
|
|
|
$
|
2,005
|
|
Accounts payable
|
190,214
|
|
|
175,170
|
|
||
Accrued employee benefits
|
46,908
|
|
|
51,476
|
|
||
Advance billings on contracts
|
169,188
|
|
|
229,390
|
|
||
Accrued warranty expense
|
44,964
|
|
|
39,847
|
|
||
Other accrued liabilities
|
65,576
|
|
|
63,464
|
|
||
Total current liabilities
|
561,553
|
|
|
561,352
|
|
||
Accumulated postretirement benefit obligations
|
28,347
|
|
|
27,768
|
|
||
Pension liabilities
|
293,621
|
|
|
282,133
|
|
||
Other liabilities
|
53,287
|
|
|
43,365
|
|
||
Total liabilities
|
936,808
|
|
|
914,618
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Common stock, par value $0.01 per share, authorized 200,000 shares; issued 48,685 and 52,481 shares at September 30, 2016 and December 31, 2015, respectively
|
544
|
|
|
540
|
|
||
Capital in excess of par value
|
804,359
|
|
|
790,464
|
|
||
Treasury stock at cost, 5,592 and 1,376 shares at September 30, 2016 and
December 31, 2015, respectively
|
(103,799
|
)
|
|
(25,408
|
)
|
||
Retained earnings (deficit)
|
(43,124
|
)
|
|
965
|
|
||
Accumulated other comprehensive loss
|
(24,175
|
)
|
|
(18,853
|
)
|
||
Stockholders' equity attributable to shareholders
|
633,805
|
|
|
747,708
|
|
||
Noncontrolling interest
|
8,610
|
|
|
719
|
|
||
Total stockholders' equity
|
642,415
|
|
|
748,427
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,579,223
|
|
|
$
|
1,663,045
|
|
|
Nine Months Ended September 30,
|
||||||
(Unaudited, in thousands)
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
||||||
Net income (loss)
|
$
|
(43,796
|
)
|
|
$
|
24,567
|
|
Non-cash items included in net income (loss):
|
|
|
|
||||
Depreciation and amortization
|
27,413
|
|
|
28,885
|
|
||
(Income) loss of equity method investees, net of dividends
|
(4,887
|
)
|
|
57
|
|
||
Losses on asset disposals and impairments
|
14,906
|
|
|
11,335
|
|
||
Write-off of accrued claims receivable, net
|
—
|
|
|
7,832
|
|
||
Provision (benefit from) for deferred taxes
|
(7,613
|
)
|
|
(1,485
|
)
|
||
Recognition of losses for pension and postretirement plans
|
30,646
|
|
|
300
|
|
||
Stock-based compensation charges
|
13,899
|
|
|
2,482
|
|
||
Changes in assets and liabilities, net of effects of acquisition:
|
|
|
|
||||
Accounts receivable
|
49,082
|
|
|
(23,247
|
)
|
||
Accrued insurance receivable
|
(15,000
|
)
|
|
—
|
|
||
Contracts in progress and advance billings on contracts
|
(53,983
|
)
|
|
48,549
|
|
||
Inventories
|
(7,990
|
)
|
|
528
|
|
||
Income taxes
|
6,296
|
|
|
(12,235
|
)
|
||
Accounts payable
|
(32,390
|
)
|
|
(7,823
|
)
|
||
Accrued and other current liabilities
|
(3,733
|
)
|
|
26,872
|
|
||
Pension liabilities, accrued postretirement benefits and employee benefits
|
(21,206
|
)
|
|
(7,075
|
)
|
||
Other, net
|
8,601
|
|
|
(6,494
|
)
|
||
Net cash from operating activities
|
(39,755
|
)
|
|
93,048
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Decrease in restricted cash and cash equivalents
|
8,270
|
|
|
1,627
|
|
||
Purchase of property, plant and equipment
|
(20,376
|
)
|
|
(21,931
|
)
|
||
Acquisition of business, net of $26.0 million cash acquired
|
(142,980
|
)
|
|
—
|
|
||
Investment in equity method investees
|
(26,220
|
)
|
|
—
|
|
||
Purchases of available-for-sale securities
|
(30,738
|
)
|
|
(9,935
|
)
|
||
Sales and maturities of available-for-sale securities
|
20,986
|
|
|
5,997
|
|
||
Other
|
(556
|
)
|
|
(796
|
)
|
||
Net cash from investing activities
|
(191,614
|
)
|
|
(25,038
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under our revolving credit facilities
|
75,465
|
|
|
—
|
|
||
Repayments of our revolving credit facilities
|
(42,248
|
)
|
|
—
|
|
||
Repayments of SPIG revolving credit facilities after acquisition
|
(18,289
|
)
|
|
—
|
|
||
Net transfers from our former Parent
|
—
|
|
|
80,589
|
|
||
Repurchase of shares of our common stock
|
(78,391
|
)
|
|
(1,275
|
)
|
||
Other
|
(1,166
|
)
|
|
(256
|
)
|
||
Net cash from financing activities
|
(64,629
|
)
|
|
79,058
|
|
||
Effects of exchange rate changes on cash
|
(4,126
|
)
|
|
(6,360
|
)
|
||
Cash flow from continuing operations
|
(300,124
|
)
|
|
140,708
|
|
||
Cash flows from discontinued operations:
|
|
|
|
||||
Operating cash flows from discontinued operations, net
|
—
|
|
|
(25,194
|
)
|
||
Investing cash flows from discontinued operations, net
|
—
|
|
|
(23
|
)
|
||
Net cash flows from discontinued operations
|
—
|
|
|
(25,217
|
)
|
||
Net increase (decrease) in cash and equivalents
|
(300,124
|
)
|
|
115,491
|
|
||
Cash and equivalents, beginning of period
|
365,192
|
|
|
218,659
|
|
||
Cash and equivalents, end of period
|
$
|
65,068
|
|
|
$
|
334,150
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands, except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Income (loss) from continuing operations
|
$
|
8,894
|
|
|
$
|
6,169
|
|
|
$
|
(44,089
|
)
|
|
$
|
21,542
|
|
Income from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,803
|
|
||||
Net income attributable to Babcock & Wilcox Enterprises, Inc.
|
$
|
8,894
|
|
|
$
|
6,169
|
|
|
$
|
(44,089
|
)
|
|
$
|
24,345
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares used to calculate basic earnings per share
|
49,621
|
|
|
53,758
|
|
|
50,613
|
|
|
53,569
|
|
||||
Dilutive effect of stock options, restricted stock and performance shares
(1)
|
236
|
|
|
30
|
|
|
—
|
|
|
147
|
|
||||
Weighted average shares used to calculate diluted earnings per share
|
49,857
|
|
|
53,787
|
|
|
50,613
|
|
|
53,716
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.40
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Basic earnings (loss) per share
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.40
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
||||
Diluted earnings (loss) per share
|
$
|
0.18
|
|
|
$
|
0.11
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.45
|
|
(in thousands)
|
Estimated Acquisition Date Fair Value
|
||
Cash
|
$
|
25,994
|
|
Accounts receivable
|
58,843
|
|
|
Contracts in progress
|
61,155
|
|
|
Inventories
|
2,554
|
|
|
Other assets
|
7,341
|
|
|
Property, plant and equipment
|
6,104
|
|
|
Goodwill
|
69,862
|
|
|
Identifiable intangible assets
|
55,164
|
|
|
Deferred income tax assets
|
5,550
|
|
|
Revolving debt
|
(27,530
|
)
|
|
Current liabilities
|
(55,873
|
)
|
|
Advance billings on contracts
|
(15,226
|
)
|
|
Other noncurrent liabilities
|
(379
|
)
|
|
Deferred income tax liabilities
|
(16,831
|
)
|
|
Noncontrolling interest in joint venture
|
(7,754
|
)
|
|
Net acquisition cost
|
$
|
168,974
|
|
(in thousands)
|
Estimated
Fair Value
|
|
Weighted Average
Estimated Useful Life
(in Years)
|
||
Customer relationships
|
$
|
12,217
|
|
|
9
|
Backlog
|
17,769
|
|
|
2
|
|
Trade names / trademarks
|
8,885
|
|
|
20
|
|
Technology
|
14,438
|
|
|
10
|
|
Non-compete agreements
|
1,666
|
|
|
3
|
|
Internally-developed software
|
189
|
|
|
3
|
|
Total amortizable intangible assets
|
$
|
55,164
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Twelve Months Ended
December 31,
|
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
|
2015
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
$
|
462,954
|
|
|
$
|
1,941,987
|
|
|
$
|
1,321,446
|
|
|
$
|
1,362,864
|
|
Net income (loss) attributable to B&W
|
|
1,614
|
|
|
12,047
|
|
|
(48,168
|
)
|
|
12,051
|
|
||||
Basic earnings per common share
|
|
0.03
|
|
|
0.23
|
|
|
(0.95
|
)
|
|
0.22
|
|
||||
Diluted earnings per common share
|
|
0.03
|
|
|
0.22
|
|
|
(0.95
|
)
|
|
0.22
|
|
•
|
A net increase (decrease) in amortization expense related to timing of amortization of the fair value of identifiable intangible assets acquired of
$3.1 million
in the three months ended
September 30, 2015
,
$18.6 million
in the year ended
December 31, 2015
,
$(1.9) million
in the nine months ended
September 30, 2016
and
$16.3 million
in the nine months ended
September 30, 2015
.
|
•
|
Elimination of the historical interest expense recognized by SPIG of
$0.2 million
in the three months ended
September 30, 2015
,
$0.7 million
in the year ended
December 31, 2015
,
$0.6 million
nine months ended
September 30, 2016
and
$0.5 million
in the nine months ended
September 30, 2015
.
|
•
|
Elimination of
$6.5 million
and
$0.2 million
in transaction related costs recognized in the nine months ended
September 30, 2016
and the year ended
December 31, 2015
, respectively.
|
(in thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Definite-lived intangible assets
|
|
|
|
||||
Customer relationships
|
$
|
48,001
|
|
|
$
|
35,729
|
|
Unpatented technology
|
18,478
|
|
|
4,033
|
|
||
Patented technology
|
2,563
|
|
|
2,532
|
|
||
Tradename
|
18,813
|
|
|
9,909
|
|
||
Backlog
|
28,170
|
|
|
10,400
|
|
||
All other
|
10,167
|
|
|
7,504
|
|
||
Gross value of definite-lived intangible assets
|
126,192
|
|
|
70,107
|
|
||
Customer relationships amortization
|
(15,958
|
)
|
|
(12,509
|
)
|
||
Unpatented technology amortization
|
(2,349
|
)
|
|
(1,471
|
)
|
||
Patented technology amortization
|
(1,501
|
)
|
|
(1,406
|
)
|
||
Tradename amortization
|
(3,525
|
)
|
|
(2,883
|
)
|
||
Acquired backlog amortization
|
(16,489
|
)
|
|
(10,400
|
)
|
||
All other amortization
|
(5,650
|
)
|
|
(4,899
|
)
|
||
Accumulated amortization
|
(45,472
|
)
|
|
(33,568
|
)
|
||
Net definite-lived intangible assets
|
$
|
80,720
|
|
|
$
|
36,539
|
|
Indefinite-lived intangible assets:
|
|
|
|
||||
Trademarks and trade names
|
$
|
1,305
|
|
|
$
|
1,305
|
|
Total indefinite-lived intangible assets
|
$
|
1,305
|
|
|
$
|
1,305
|
|
|
Nine months ended
|
|
Twelve months ended
|
||||
(in thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Balance at beginning of period
|
$
|
37,844
|
|
|
$
|
50,646
|
|
Business acquisitions and adjustments
|
55,438
|
|
|
500
|
|
||
Amortization expense
|
(11,904
|
)
|
|
(11,445
|
)
|
||
Currency translation adjustments and other
|
647
|
|
|
(1,857
|
)
|
||
Balance at end of the period
|
$
|
82,025
|
|
|
$
|
37,844
|
|
Period ending
|
Amortization expense
|
||
Three months ending December 31, 2016
|
$
|
7,890
|
|
Twelve months ending December 31, 2017
|
15,474
|
|
|
Twelve months ending December 31, 2018
|
10,637
|
|
|
Twelve months ending December 31, 2019
|
8,831
|
|
|
Twelve months ending December 31, 2020
|
7,526
|
|
|
Twelve months ending December 31, 2021
|
7,259
|
|
|
Thereafter
|
23,103
|
|
•
|
Power:
Focused on the supply of and aftermarket services for steam-generating, environmental, and auxiliary equipment for power generation and other industrial applications.
|
•
|
Renewable:
Focused on the supply of steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries.
|
•
|
Industrial:
Focused on custom-engineered cooling, environmental, and other industrial equipment along with related aftermarket services.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Power
|
$
|
209,802
|
|
|
$
|
294,185
|
|
|
$
|
757,406
|
|
|
$
|
907,863
|
|
Renewable
|
124,344
|
|
|
86,896
|
|
|
293,593
|
|
|
223,371
|
|
||||
Industrial
|
76,809
|
|
|
38,896
|
|
|
147,280
|
|
|
123,383
|
|
||||
|
410,955
|
|
|
419,977
|
|
|
1,198,279
|
|
|
1,254,617
|
|
||||
Gross profit (loss):
|
|
|
|
|
|
|
|
||||||||
Power
|
48,896
|
|
|
47,601
|
|
|
170,903
|
|
|
176,266
|
|
||||
Renewable
|
18,592
|
|
|
17,453
|
|
|
14,468
|
|
|
36,565
|
|
||||
Industrial
|
14,601
|
|
|
13,379
|
|
|
33,506
|
|
|
37,548
|
|
||||
Intangible asset amortization
|
(7,752
|
)
|
|
(511
|
)
|
|
(8,833
|
)
|
|
(7,176
|
)
|
||||
Mark to market adjustments
|
(580
|
)
|
|
—
|
|
|
(30,079
|
)
|
|
—
|
|
||||
|
73,757
|
|
|
77,922
|
|
|
179,965
|
|
|
243,203
|
|
||||
Research and development costs
|
(2,361
|
)
|
|
(3,977
|
)
|
|
(8,273
|
)
|
|
(12,457
|
)
|
||||
Losses (gains) on asset disposals and impairments, net
|
2
|
|
|
(10
|
)
|
|
17
|
|
|
(9,037
|
)
|
||||
Selling, general and administrative expenses
|
(60,633
|
)
|
|
(62,637
|
)
|
|
(182,296
|
)
|
|
(178,539
|
)
|
||||
Restructuring activities and spin-off transaction costs
|
(2,395
|
)
|
|
(2,713
|
)
|
|
(38,021
|
)
|
|
(11,279
|
)
|
||||
Equity in income (loss) of investees
|
2,827
|
|
|
1,047
|
|
|
4,887
|
|
|
(57
|
)
|
||||
Mark to market adjustment included in SG&A
|
(64
|
)
|
|
—
|
|
|
(465
|
)
|
|
—
|
|
||||
Operating income (loss)
|
$
|
11,133
|
|
|
$
|
9,632
|
|
|
$
|
(44,186
|
)
|
|
$
|
31,834
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
(1)
|
$
|
11,984
|
|
|
$
|
2,183
|
|
|
$
|
740
|
|
|
$
|
5,086
|
|
Restructuring expense
(2)
|
1,792
|
|
|
1,277
|
|
|
19,816
|
|
|
2,476
|
|
||||
Payments
|
(10,422
|
)
|
|
(2,961
|
)
|
|
(17,202
|
)
|
|
(7,063
|
)
|
||||
Balance at September 30
|
$
|
3,354
|
|
|
$
|
499
|
|
|
$
|
3,354
|
|
|
$
|
499
|
|
(1)
|
For the three month periods ended
September 30, 2016
and
2015
, the balance at the beginning of the period is as of
June 30, 2016
and
2015
, respectively. For the nine month periods ended
September 30, 2016
and
2015
, the balance at the beginning of the period is as of December 31, 2015 and December 31, 2014, respectively.
|
(2)
|
Excludes charges for long-lived asset impairment of
$0.2 million
and
$14.8 million
for the three and
nine months ended
September 30, 2016
, respectively. Accelerated depreciation and long-lived asset impairment charges of
$6.3 million
were excluded from the
nine months ended
September 30, 2015. These non-cash charges did not impact the restructuring liability.
|
(In thousands)
|
Currency translation gain (loss)
|
|
Net unrealized gain (loss) on investments (net of tax)
|
|
Net unrealized gain (loss) on derivative instruments
|
|
Net unrecognized gain (loss) related to benefit plans (net of tax)
|
|
Total
|
||||||||||
Balance at December 31, 2015
|
$
|
(19,493
|
)
|
|
$
|
(44
|
)
|
|
$
|
1,786
|
|
|
$
|
(1,102
|
)
|
|
$
|
(18,853
|
)
|
Other comprehensive income (loss) before reclassifications
|
1,740
|
|
|
18
|
|
|
2,576
|
|
|
(61
|
)
|
|
4,273
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
1
|
|
|
(1,003
|
)
|
|
61
|
|
|
(941
|
)
|
|||||
Net current-period other comprehensive income
|
1,740
|
|
|
19
|
|
|
1,573
|
|
|
—
|
|
|
3,332
|
|
|||||
Balance at March 31, 2016
|
(17,753
|
)
|
|
(25
|
)
|
|
3,359
|
|
|
(1,102
|
)
|
|
(15,521
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
(11,566
|
)
|
|
(7
|
)
|
|
778
|
|
|
37
|
|
|
(10,758
|
)
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
—
|
|
|
(651
|
)
|
|
58
|
|
|
(593
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
(11,566
|
)
|
|
(7
|
)
|
|
127
|
|
|
95
|
|
|
(11,351
|
)
|
|||||
Balance at June 30, 2016
|
(29,319
|
)
|
|
(32
|
)
|
|
3,486
|
|
|
(1,007
|
)
|
|
(26,872
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
2,811
|
|
|
18
|
|
|
1,132
|
|
|
(25
|
)
|
|
3,936
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
—
|
|
|
(1,247
|
)
|
|
8
|
|
|
(1,239
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
2,811
|
|
|
18
|
|
|
(115
|
)
|
|
(17
|
)
|
|
2,697
|
|
|||||
Balance at September 30, 2016
|
$
|
(26,508
|
)
|
|
$
|
(14
|
)
|
|
$
|
3,371
|
|
|
$
|
(1,024
|
)
|
|
$
|
(24,175
|
)
|
(In thousands)
|
Currency translation gain (loss)
|
|
Net unrealized gain (loss) on investments (net of tax)
|
|
Net unrealized gain (loss) on derivative instruments
|
|
Net unrecognized gain (loss) related to benefit plans (net of tax)
|
|
Total
|
||||||||||
Balance at December 31, 2014
|
$
|
11,551
|
|
|
$
|
(22
|
)
|
|
$
|
(123
|
)
|
|
$
|
(1,032
|
)
|
|
$
|
10,374
|
|
Other comprehensive income (loss) before reclassifications
|
(10,923
|
)
|
|
(1
|
)
|
|
(215
|
)
|
|
—
|
|
|
(11,139
|
)
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
1
|
|
|
1,916
|
|
|
71
|
|
|
1,988
|
|
|||||
Net current-period other comprehensive income (loss)
|
(10,923
|
)
|
|
—
|
|
|
1,701
|
|
|
71
|
|
|
(9,151
|
)
|
|||||
Balance at March 31, 2015
|
628
|
|
|
(22
|
)
|
|
1,578
|
|
|
(961
|
)
|
|
1,223
|
|
|||||
Other comprehensive income (loss) before reclassifications
|
2,214
|
|
|
11
|
|
|
(2,004
|
)
|
|
—
|
|
|
221
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
1
|
|
|
(338
|
)
|
|
66
|
|
|
(271
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
2,214
|
|
|
12
|
|
|
(2,342
|
)
|
|
66
|
|
|
(50
|
)
|
|||||
Balance at June 30, 2015
|
2,842
|
|
|
(10
|
)
|
|
(764
|
)
|
|
(895
|
)
|
|
1,173
|
|
|||||
Other comprehensive income (loss) before reclassifications
|
(7,685
|
)
|
|
(30
|
)
|
|
3,337
|
|
|
31
|
|
|
(4,347
|
)
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
|
—
|
|
|
(359
|
)
|
|
60
|
|
|
(299
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
(7,685
|
)
|
|
(30
|
)
|
|
2,978
|
|
|
91
|
|
|
(4,646
|
)
|
|||||
Balance at September 30, 2015
|
$
|
(4,843
|
)
|
|
$
|
(40
|
)
|
|
$
|
2,214
|
|
|
$
|
(804
|
)
|
|
$
|
(3,473
|
)
|
AOCI Component
|
|
Line Items in the Condensed Consolidated and Combined Statements of Operations
Affected by Reclassifications
from AOCI
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
September 30, |
|
Nine Months Ended September 30,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||
Derivative financial instruments
|
|
Revenues
|
|
$
|
1,940
|
|
|
$
|
407
|
|
|
$
|
4,524
|
|
|
$
|
429
|
|
|
|
Cost of operations
|
|
24
|
|
|
53
|
|
|
57
|
|
|
151
|
|
||||
|
|
Other-net
|
|
(445
|
)
|
|
14
|
|
|
(1,065
|
)
|
|
(18
|
)
|
||||
|
|
Total before tax
|
|
1,519
|
|
|
474
|
|
|
3,516
|
|
|
562
|
|
||||
|
|
Provision for income taxes
|
|
272
|
|
|
115
|
|
|
615
|
|
|
120
|
|
||||
|
|
Net income (loss)
|
|
$
|
1,247
|
|
|
$
|
359
|
|
|
$
|
2,901
|
|
|
$
|
442
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service cost on benefit obligations
|
|
Cost of operations
|
|
$
|
(15
|
)
|
|
$
|
(1,139
|
)
|
|
$
|
294
|
|
|
$
|
(1,339
|
)
|
|
|
Provision for income taxes
|
|
(7
|
)
|
|
(1,048
|
)
|
|
421
|
|
|
(1,128
|
)
|
||||
|
|
Net income (loss)
|
|
$
|
(8
|
)
|
|
$
|
(91
|
)
|
|
$
|
(127
|
)
|
|
$
|
(211
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized gain on investments
|
|
Other-net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
|
Provision for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
|
|
Net income (loss)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
(In thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Held by foreign entities
|
$
|
64,107
|
|
|
$
|
221,151
|
|
Held by United States entities
|
961
|
|
|
144,041
|
|
||
Cash and cash equivalents
|
$
|
65,068
|
|
|
$
|
365,192
|
|
|
|
|
|
||||
Reinsurance reserve requirements
|
$
|
25,306
|
|
|
$
|
33,404
|
|
Restricted foreign accounts
|
3,568
|
|
|
3,740
|
|
||
Restricted cash and cash equivalents
|
$
|
28,874
|
|
|
$
|
37,144
|
|
(In thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Raw materials and supplies
|
$
|
69,234
|
|
|
$
|
68,684
|
|
Work in progress
|
9,929
|
|
|
7,025
|
|
||
Finished goods
|
20,290
|
|
|
14,410
|
|
||
Total inventories
|
$
|
99,453
|
|
|
$
|
90,119
|
|
|
Asset and Liability Derivatives
|
||||||
(In thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Derivatives designated as hedges:
|
|
|
|
||||
Foreign exchange contracts:
|
|
|
|
||||
Location of FX forward contracts designated as hedges:
|
|
|
|
||||
Accounts receivable-other
|
$
|
5,903
|
|
|
$
|
1,545
|
|
Other assets
|
64
|
|
|
688
|
|
||
Accounts payable
|
345
|
|
|
17
|
|
||
|
|
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
||||
Foreign exchange contracts:
|
|
|
|
||||
Location of FX forward contracts not designated as hedges:
|
|
|
|
||||
Accounts receivable-other
|
$
|
36
|
|
|
$
|
72
|
|
Other assets
|
6
|
|
|
—
|
|
||
Accounts payable
|
196
|
|
|
101
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
||||||||
Amount of gain (loss) recognized in other comprehensive income
|
$
|
1,419
|
|
|
$
|
4,360
|
|
|
$
|
5,476
|
|
|
$
|
4,001
|
|
Effective portion of gain (loss) reclassified from AOCI into earnings by location:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
1,940
|
|
|
407
|
|
|
4,524
|
|
|
429
|
|
||||
Cost of operations
|
24
|
|
|
53
|
|
|
57
|
|
|
151
|
|
||||
Other-net
|
(445
|
)
|
|
14
|
|
|
(1,065
|
)
|
|
(18
|
)
|
||||
Portion of gain (loss) recognized in income that is excluded from effectiveness testing by location:
|
|
|
|
|
|
|
|
||||||||
Other-net
|
1,607
|
|
|
(157
|
)
|
|
3,408
|
|
|
852
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||||||
Forward contracts
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in income by location:
|
|
|
|
|
|
|
|
||||||||
Other-net
|
$
|
(154
|
)
|
|
$
|
(188
|
)
|
|
$
|
(567
|
)
|
|
$
|
210
|
|
(in thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
Available-for-sale securities
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 2
|
||||||||
Commercial paper
|
$
|
7,259
|
|
|
$
|
—
|
|
|
$
|
7,259
|
|
|
$
|
3,996
|
|
Certificates of deposit
|
1,750
|
|
|
—
|
|
|
1,750
|
|
|
—
|
|
||||
Mutual funds
|
1,152
|
|
|
—
|
|
|
1,152
|
|
|
1,093
|
|
||||
Corporate bonds
|
1,251
|
|
|
1,251
|
|
|
—
|
|
|
—
|
|
||||
U.S. Government and agency securities
|
3,860
|
|
|
3,860
|
|
|
—
|
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
15,272
|
|
|
$
|
5,111
|
|
|
$
|
10,161
|
|
|
$
|
5,089
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
Forward contracts to purchase/sell foreign currencies
|
$5,469
|
|
$2,186
|
•
|
Cash and cash equivalents and restricted cash and cash equivalents
. The carrying amounts that we have reported in the accompanying condensed consolidated and combined balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
|
•
|
Revolving debt
. We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instruments approximated their carrying value at
September 30, 2016
and
December 31, 2015
.
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
39,847
|
|
|
$
|
37,735
|
|
Additions
|
19,201
|
|
|
14,250
|
|
||
Expirations and other changes
|
(2,945
|
)
|
|
(1,311
|
)
|
||
Payments
|
(10,922
|
)
|
|
(11,241
|
)
|
||
Translation and other
|
(217
|
)
|
|
(790
|
)
|
||
Balance at end of period
|
$
|
44,964
|
|
|
$
|
38,643
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended September 30,
|
|
Three Months Ended
September 30, |
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Service cost
|
$
|
548
|
|
|
$
|
2,555
|
|
|
$
|
1,137
|
|
|
$
|
9,329
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
Interest cost
|
10,086
|
|
|
12,253
|
|
|
30,890
|
|
|
36,017
|
|
|
206
|
|
|
249
|
|
|
629
|
|
|
748
|
|
||||||||
Expected return on plan assets
|
(15,925
|
)
|
|
(16,631
|
)
|
|
(46,107
|
)
|
|
(49,986
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Amortization of prior service cost
|
81
|
|
|
99
|
|
|
335
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Recognized net actuarial loss
|
645
|
|
|
—
|
|
|
30,545
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net periodic
benefit cost (benefit)
|
$
|
(4,565
|
)
|
|
$
|
(1,724
|
)
|
|
$
|
16,800
|
|
|
$
|
(4,341
|
)
|
|
$
|
212
|
|
|
$
|
249
|
|
|
$
|
647
|
|
|
$
|
748
|
|
|
Pension Benefits
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of operations
|
$
|
580
|
|
|
$
|
—
|
|
|
$
|
30,079
|
|
|
$
|
—
|
|
Selling, general and administrative expenses
|
64
|
|
|
—
|
|
|
465
|
|
|
—
|
|
||||
Total
|
$
|
644
|
|
|
$
|
—
|
|
|
$
|
30,544
|
|
|
$
|
—
|
|
(In thousands)
|
September 30, 2016
|
|
December 31, 2015
|
||||
United States
|
$
|
34,100
|
|
|
$
|
—
|
|
Foreign
|
10,603
|
|
|
2,005
|
|
||
Total
|
$
|
44,703
|
|
|
$
|
2,005
|
|
(in thousands)
|
|
2016
|
|
2015
|
||||
Income taxes (net of refunds)
|
|
$
|
11,289
|
|
|
$
|
4,540
|
|
(in thousands)
|
|
2016
|
|
2015
|
||||
Accrued capital expenditures in accounts payable
|
|
$
|
2,543
|
|
|
$
|
1,576
|
|
(In thousands)
|
Three Months Ended
June 30, 2015 |
|
Six Months Ended
June 30, 2015 |
||||
Sales to our former Parent
|
$
|
286
|
|
|
$
|
911
|
|
Corporate administrative expenses
|
17,332
|
|
|
35,343
|
|
(In thousands)
|
Six Months Ended
June 30, 2015 |
||
Sales to former Parent
|
$
|
911
|
|
|
|
||
Corporate administrative expenses
|
35,343
|
|
|
Income tax allocation
|
11,872
|
|
|
Cash pooling and general financing activities
|
(91,015
|
)
|
|
Cash contribution received at spin-off
|
125,300
|
|
|
Net transfer from former Parent per statement of cash flows
|
$
|
80,589
|
|
(In thousands)
|
Six Months Ended
June 30, 2015 |
||
Revenues
|
$
|
53,064
|
|
|
|
||
Income before income tax expense
|
3,358
|
|
|
Income tax expense
|
555
|
|
|
Income from discontinued operations, net of tax
|
$
|
2,803
|
|
•
|
Power:
Focused on the supply of and aftermarket services for steam-generating, environmental, and auxiliary equipment for power generation and other industrial applications.
|
•
|
Renewable:
Focused on the supply of steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries.
|
•
|
Industrial:
Focused on custom-engineered cooling, environmental, and other industrial equipment along with related aftermarket services.
|
•
|
$1.4 million
and
$30.8 million
of restructuring costs were recognized in the quarter and nine months ended
September 30, 2016
, respectively, related to a restructuring plan announced on June 28, 2016. These actions restructured our business that serves the power generation market in advance of lower demand now projected for U.S. power generation from coal. This restructuring reduced the size of our organization that supports the coal market by approximately 20% and reorganized how we support the power market. The new organizational structure includes a redesigned work flow to provide an efficient, flexible organization that can adapt to the changing market conditions and volumes.
|
•
|
$0.6 million
and
$30.5 million
of actuarially determined mark to market pension losses in the quarter and nine months ended
September 30, 2016
, respectively, were triggered by the closure of our West Point, MS manufacturing facility in May 2016 that resulted in a curtailment in our United States pension plan and lump sum payments from our Canadian pension plan in April and August 2016 that resulted in plan settlements.
|
•
|
$0.6 million
and
$3.8 million
of restructuring costs related to pre-2016 initiatives in the quarter and nine months ended
September 30, 2016
, respectively, compared to
$1.0 million
and
$8.7 million
in the quarter and nine months ended
September 30, 2015
, respectively. These previously announced restructuring initiatives were intended to better position us for growth and profitability through facility consolidation and organizational efficiency initiatives.
|
•
|
$0.4 million
and
$3.4 million
of costs directly related to the spin-off from our former Parent were incurred in the quarter and nine months ended
September 30, 2016
, respectively, compared to
$1.6 million
and
$2.5 million
in the quarter and nine months ended
September 30, 2015
, respectively. The costs were primarily attributable to employee retention awards and other spin-related costs. Approximately $1.8 million of these costs is remaining, of which $1.1 million is expected to be recognized during 2017 and $0.3 million in 2018.
|
•
|
$0.8 million
and
$2.8 million
of acquisition and integration costs related to SPIG in the quarter and nine months ended
September 30, 2016
, respectively, were included in selling, general and administrative expense.
|
•
|
$9.6 million of costs in the third quarter of 2015 were incurred related to a legal settlement, of which $7.8 million was reflected as a revenue reversal in the Power segment from the release of an accrued claims receivable, net of other remaining contract liabilities, and $1.8 million of legal costs was included in selling, general and administrative expense.
|
•
|
$9.0 million of impairment charges in the second quarter of 2015 were primarily related to research and development facilities and equipment dedicated to a carbon capture process that was determined not to be commercially viable.
|
•
|
$2.7 million of pre-spin allocations from our former Parent were included in selling, general and administrative expense in the six months ended June 30, 2015 related to the discontinued Nuclear Energy segment because allocations are not eligible for inclusion in the results of discontinued operations. The Nuclear Energy segment was distributed to the former Parent in the June 30, 2015 spin-off transaction.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||
(In thousands)
|
2016
|
2015
|
$ Change
|
|
2016
|
2015
|
$ Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||||||
Power
|
$
|
209,802
|
|
$
|
294,185
|
|
$
|
(84,383
|
)
|
|
$
|
757,406
|
|
$
|
907,863
|
|
$
|
(150,457
|
)
|
Renewable
|
124,344
|
|
86,896
|
|
37,448
|
|
|
293,593
|
|
223,371
|
|
70,222
|
|
||||||
Industrial
|
76,809
|
|
38,896
|
|
37,913
|
|
|
147,280
|
|
123,383
|
|
23,897
|
|
||||||
|
410,955
|
|
419,977
|
|
(9,022
|
)
|
|
1,198,279
|
|
1,254,617
|
|
(56,338
|
)
|
||||||
Gross profit (loss):
|
|
|
|
|
|
|
|
||||||||||||
Power
|
48,896
|
|
47,601
|
|
1,295
|
|
|
170,903
|
|
176,266
|
|
(5,363
|
)
|
||||||
Renewable
|
18,592
|
|
17,453
|
|
1,139
|
|
|
14,468
|
|
36,565
|
|
(22,097
|
)
|
||||||
Industrial
|
14,601
|
|
13,379
|
|
1,222
|
|
|
33,506
|
|
37,548
|
|
(4,042
|
)
|
||||||
Intangible asset amortization expense
|
(7,752
|
)
|
(511
|
)
|
(7,241
|
)
|
|
(8,833
|
)
|
(7,176
|
)
|
(1,657
|
)
|
||||||
Mark to market adjustments
|
(580
|
)
|
—
|
|
(580
|
)
|
|
(30,079
|
)
|
—
|
|
(30,079
|
)
|
||||||
|
73,757
|
|
77,922
|
|
(4,165
|
)
|
|
179,965
|
|
243,203
|
|
(63,238
|
)
|
||||||
Research and development costs
|
(2,361
|
)
|
(3,977
|
)
|
1,616
|
|
|
(8,273
|
)
|
(12,457
|
)
|
4,184
|
|
||||||
Losses (gains) on asset disposals and impairments, net
|
2
|
|
(10
|
)
|
12
|
|
|
17
|
|
(9,037
|
)
|
9,054
|
|
||||||
Selling, general and administrative expenses
|
(60,633
|
)
|
(62,637
|
)
|
2,004
|
|
|
(182,296
|
)
|
(178,539
|
)
|
(3,757
|
)
|
||||||
Restructuring activities and spin-off transaction costs
|
(2,395
|
)
|
(2,713
|
)
|
318
|
|
|
(38,021
|
)
|
(11,279
|
)
|
(26,742
|
)
|
||||||
Equity in income (loss) of investees
|
2,827
|
|
1,047
|
|
1,780
|
|
|
4,887
|
|
(57
|
)
|
4,944
|
|
||||||
Mark to market adjustment included in SG&A
|
(64
|
)
|
—
|
|
(64
|
)
|
|
(465
|
)
|
—
|
|
(465
|
)
|
||||||
Operating income (loss)
|
$
|
11,133
|
|
$
|
9,632
|
|
$
|
1,501
|
|
|
$
|
(44,186
|
)
|
$
|
31,834
|
|
$
|
(76,020
|
)
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
||||||||||||||
(In thousands)
|
2016
|
2015
|
$ Change
|
|
2016
|
2015
|
$ Change
|
||||||||||||
Revenues
|
$
|
209,802
|
|
$
|
294,185
|
|
$
|
(84,383
|
)
|
|
$
|
757,406
|
|
$
|
907,863
|
|
$
|
(150,457
|
)
|
Gross profit (loss)
|
$
|
48,896
|
|
$
|
47,601
|
|
$
|
1,295
|
|
|
$
|
170,903
|
|
$
|
176,266
|
|
$
|
(5,363
|
)
|
% of revenues
|
23.3
|
%
|
16.2
|
%
|
|
|
22.6
|
%
|
19.4
|
%
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
||||||||||||||
(In thousands)
|
2016
|
2015
|
$ Change
|
|
2016
|
2015
|
$ Change
|
||||||||||||
Revenues
|
$
|
124,344
|
|
$
|
86,896
|
|
$
|
37,448
|
|
|
$
|
293,593
|
|
$
|
223,371
|
|
$
|
70,222
|
|
Gross profit
|
$
|
18,592
|
|
$
|
17,453
|
|
$
|
1,139
|
|
|
$
|
14,468
|
|
$
|
36,565
|
|
$
|
(22,097
|
)
|
% of revenues
|
15.0
|
%
|
20.1
|
%
|
|
|
4.9
|
%
|
16.4
|
%
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
||||||||||||||
(In thousands)
|
2016
|
2015
|
$ Change
|
|
2016
|
2015
|
$ Change
|
||||||||||||
Revenues
|
$
|
76,809
|
|
$
|
38,896
|
|
$
|
37,913
|
|
|
$
|
147,280
|
|
$
|
123,383
|
|
$
|
23,897
|
|
Gross profit
|
$
|
14,601
|
|
$
|
13,379
|
|
$
|
1,222
|
|
|
$
|
33,506
|
|
$
|
37,548
|
|
$
|
(4,042
|
)
|
% of revenues
|
19.0
|
%
|
34.4
|
%
|
|
|
22.7
|
%
|
30.4
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Power
|
$
|
198
|
|
|
$
|
182
|
|
|
$
|
623
|
|
|
$
|
663
|
|
Renewable
|
(2
|
)
|
|
201
|
|
|
124
|
|
|
643
|
|
||||
Industrial
|
70
|
|
|
35
|
|
|
133
|
|
|
143
|
|
||||
Bookings
|
$
|
266
|
|
|
$
|
418
|
|
|
$
|
880
|
|
|
$
|
1,449
|
|
(In approximate millions)
|
September 30, 2016
|
|
December 31, 2015
|
|
September 30, 2015
|
||||||
Power
|
$
|
668
|
|
|
$
|
803
|
|
|
$
|
791
|
|
Renewable
|
1,289
|
|
|
1,458
|
|
|
1,559
|
|
|||
Industrial
|
233
|
|
|
67
|
|
|
92
|
|
|||
Backlog
|
$
|
2,190
|
|
|
$
|
2,328
|
|
|
$
|
2,442
|
|
(In approximate millions)
|
2016
|
|
2017
|
|
Thereafter
|
|
Total
|
||||||||
Power
|
$
|
171
|
|
|
$
|
259
|
|
|
$
|
238
|
|
|
$
|
668
|
|
Renewable
|
136
|
|
|
297
|
|
|
856
|
|
|
1,289
|
|
||||
Industrial
|
85
|
|
|
112
|
|
|
36
|
|
|
233
|
|
||||
Backlog
|
$
|
392
|
|
|
$
|
668
|
|
|
$
|
1,130
|
|
|
$
|
2,190
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of sales
|
$
|
7,752
|
|
|
$
|
511
|
|
|
$
|
8,833
|
|
|
$
|
7,176
|
|
SG&A
|
1,018
|
|
|
897
|
|
|
3,071
|
|
|
2,748
|
|
||||
|
8,770
|
|
|
1,408
|
|
|
11,904
|
|
|
9,924
|
|
|
Three months ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
||||||||||||||
(In thousands)
|
2016
|
2015
|
$ Change
|
|
2016
|
2015
|
$ Change
|
||||||||||||
Income from continuing operations before income taxes
|
$
|
10,628
|
|
$
|
8,055
|
|
$
|
2,573
|
|
|
$
|
(44,586
|
)
|
$
|
30,145
|
|
$
|
(74,731
|
)
|
Income tax provision
|
$
|
1,617
|
|
1,770
|
|
$
|
(153
|
)
|
|
$
|
(790
|
)
|
8,381
|
|
$
|
(9,171
|
)
|
||
Effective tax rate
|
15.2
|
%
|
22.0
|
%
|
|
|
1.8
|
%
|
27.8
|
%
|
|
|
Three months ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States
|
$
|
8,831
|
|
|
$
|
(5,780
|
)
|
|
$
|
(20,611
|
)
|
|
$
|
7,218
|
|
Other than United States
|
1,797
|
|
|
13,835
|
|
|
(23,975
|
)
|
|
22,927
|
|
||||
Income from continuing operations before income taxes
|
$
|
10,628
|
|
|
$
|
8,055
|
|
|
$
|
(44,586
|
)
|
|
$
|
30,145
|
|
Period
|
|
Total number of shares purchased
(1)
|
Average
price
paid
per share
|
Total number of
shares purchased as
part of publicly
announced plans or
programs
|
Approximate dollar value of shares that may
yet be purchased under
the plans or programs
(in thousands)
(2) (3)
|
||||||
July 1, 2016 - July 31, 2016
|
|
353,220
|
|
$15.18
|
350,650
|
|
$20,644
|
||||
August 1, 2016 - August 31, 2016
|
|
559,406
|
|
$16.23
|
557,787
|
|
$111,592
|
||||
September 1, 2016 - September 30, 2016
|
|
703,843
|
|
$16.60
|
698,264
|
|
$100,000
|
||||
Total
|
|
1,616,469
|
|
|
1,606,701
|
|
|
(1)
|
Includes 2,570, 1,619 and 1,390 shares repurchased during July, August and September 2016, respectively, pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.
|
(2)
|
On August 4, 2015, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $100 million in the open market during the period ending June 8, 2017.
|
(3)
|
On August 4, 2016, we announced that our board of directors authorized the repurchase of an indeterminate number of our shares of common stock in the open market at an aggregate market value of up to $100 million over the next twenty-four months. As of November 2, 2016, we have not made any share repurchases under the August 4, 2016 share repurchase authorization.
|
10.1
|
|
Form of Change in Control Severance Agreement, by and between Babcock & Wilcox Enterprises, Inc. and certain officers (for officers elected prior to August 4, 2016)
|
|
|
|
10.2
|
|
Form of Change in Control Severance Agreement, by and between Babcock & Wilcox Enterprises, Inc. and certain officers (for officers elected on or after August 4, 2016)
|
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer
|
|
|
|
32.1
|
|
Section 1350 certification of Chief Executive Officer
|
|
|
|
32.2
|
|
Section 1350 certification of Chief Financial Officer
|
|
|
|
95
|
|
Mine Safety Disclosure
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
November 2, 2016
|
|
|
BABCOCK & WILCOX ENTERPRISES, INC.
|
|
|
|
|
|
|
By:
|
/s/ Daniel W. Hoehn
|
|
|
|
Daniel W. Hoehn
|
|
|
|
Vice President, Controller & Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer and Duly Authorized Representative)
|
1.
|
DEFINITIONS
: Capitalized terms are defined in Exhibit A to this Agreement.
|
2.
|
SEVERANCE BENEFITS
: If Executive experiences a Covered Termination he or she will be entitled to the payments and benefits set forth below; provided that the benefits described in Sections 2(b), (c), (d), (e) and (f) shall only be payable if Executive executes a waiver and release prepared by the Company, which releases the Company and its affiliates, directors, officers and other customary persons from any claim or liability arising out of or related to Executive’s employment with or termination of employment from the Company or any of its affiliates (except for amounts to which Executive is legally entitled pursuant to employee benefit plans, Executive’s right to enforce this Agreement and rights to insurance coverage or indemnification) (the “
Release
”), which Release is not revoked within the time period provided therein, and the executed Release is delivered to the Company no later than forty-five (45) days after the Covered Termination.
|
(a)
|
Accrued Benefits
. The Accrued Benefits, payable within sixty (60) days after the effective date of the Covered Termination, or such earlier time as may be required by applicable law.
|
(b)
|
SERP
. As of the effective date of the Covered Termination, a fully vested and non-forfeitable interest in Executive’s account balance in the SERP and Restoration Plan (as applicable), payable in accordance with the terms of SERP and/or Restoration Plan, as applicable.
|
(c)
|
Unvested Equity Awards
. As of the effective date of the Covered Termination, unless otherwise settled in accordance with the provisions of Section 4 of this Agreement and the plans and agreements referred to therein, a fully vested and non-forfeitable interest in any outstanding unvested equity awards granted on Company Shares (“
Equity Awards
”), to be vested and, in the case of restricted stock units, settled, in any such case within the 60
th
day after the effective date of the Covered Termination; provided that no such Equity Award that is subject to Code Section 409A will be paid on a date earlier than is provided in the applicable Equity Award agreement to the extent necessary to avoid the imposition of tax penalties pursuant to Code Section 409A; provided further that any performance-based Equity Awards shall be settled with respect to the number of Company Shares earned based on the target rate of performance applicable to such award. In addition, any Equity Awards that are vested (including as a result of the foregoing provision) options to purchase Company Shares that Executive holds as of the date of his or her Covered Termination will remain exercisable through the expiration of the original term of such option.
|
(d)
|
Severance Payment Based on Salary
. An amount equal to [____] times the sum of Executive’s (x) Salary plus (y) the product of (1) Salary and (2) Target Bonus Percentage, paid in a lump sum in cash within sixty (60) days after the Covered Termination.
|
(e)
|
Severance Payment Based on Bonus
.
|
(1)
|
Covered Termination Performance Year
. An amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage, with the product of (A) and (B) prorated based on the number of days Executive was employed during the bonus year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the effective date of the Covered Termination.
|
(2)
|
Prior Performance Year
. If a bonus for the prior calendar year has not been paid under the Bonus Plan as of Executive’s effective date of the Covered
|
(f)
|
Health Care Benefits
. An amount equal to three (3) times the full annual cost that would be payable by Executive for continuation of coverage for medical, dental and vision benefits if elected by Executive for him/herself and his/her eligible dependents under COBRA for the year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the Covered Termination. For purposes of clarity, the payment contemplated by this Section 2(f) shall be paid to Executive irrespective of whether Executive elects COBRA and Executive shall not be obligated to use such amounts for payment of COBRA premiums (if so elected).
|
3.
|
LIMITATION ON PAYMENTS AND BENEFITS
: Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 3 to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that no such reduction shall be made if it is not thereby possible to eliminate all Excess Parachute Payments under this Agreement; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to he provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). Whether requested by Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of
|
4.
|
CHANGE IN CONTROL EQUITY-BASED BENEFITS
: If a Change in Control occurs, any benefits Executive may be entitled to with respect to any equity-based compensation (including any Equity Awards) shall be determined in accordance with the applicable plans and award agreements. In the event of any conflict between the terms of any such plans or award agreement and Section 2(c) of this Agreement, the terms of such plan or award agreement shall control to the extent such plan or award agreement provides for accelerated vesting or settlement in connection with a Change in Control (either upon the occurrence of such an event or thereafter). For the avoidance of doubt, if any given equity-based compensation award agreement is silent with respect to the effect of a Change in Control and the plan pursuant to which any such award agreement is granted does not contain provisions that would automatically apply to the given award, then Section 2(c) of this Agreement shall control.
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1.
|
ADDITIONAL BENEFIT
: As consideration for Executive entering into this Agreement and the amendment and restatement of the Original Agreement, the Company shall make available to Executive at the Company’s expense one (1) airline club membership in addition to that currently available to Executive beginning on the date of this Agreement and ending on the earlier of (i) the last day of Executive’s employment with the Company, or (ii) five (5) years after the date of this Agreement.
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2.
|
INTERNAL REVENUE CODE 409A
:
|
(a)
|
Compliance
. It is the intent of the parties that the provisions of this Agreement either comply with Code Section 409A and the Treasury regulations and guidance issued
|
(b)
|
Waiting Period for Specified Employees
. Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of Executive’s Covered Termination Date, then any amounts or benefits which are payable under this Agreement upon Executive’s “Separation from Service” (within the meaning of Code Section 409A), which are subject to the provisions of Code Section 409A and not otherwise exempt under Code Section 409A, and would otherwise be payable during the first six-month period following such Separation from Service, shall be paid on the first business day that (i) is at least six months after the date after Executive’s Covered Termination Date or (ii) follows Executive’s date of death, if earlier (the “
Waiting Period
”). The benefits in Sections 2(a), (d), (e) and (f) and certain of the benefits in Section 2(c) are intended to be exempt from Code Section 409A under the “short-term deferral exemption” and thus the Waiting Period is not intended to apply to such benefits.
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3.
|
CONFIDENTIALITY AND NON-DISCLOSURE
: Executive acknowledges that pursuant to this Agreement, the Company agrees to provide to him or her Confidential Information and has previously provided him or her other such Confidential Information. In return for this and other consideration, provided under this Agreement, Executive agrees that he/she will not, while employed by the Company or any Affiliate and thereafter, disclose or make available to any other person or entity, or use for his or her own personal gain, any Confidential Information, except for such disclosures as required in the performance of his or her duties hereunder as may otherwise be required by law or legal process (in which case Executive shall notify the Company of such legal or judicial proceeding as soon as practicable following his or her receipt of notice of such a proceeding, and permit the Company to seek to protect its interests and information).
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4.
|
RETURN OF PROPERTY
: Executive agrees that at the time of leaving his or her employ with the Company or an Affiliate, he/she will deliver to the Company (and will not keep in his or her possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property (including all reproductions of the aforementioned items) belonging to the Company or any of its Affiliates, regardless of whether such items were prepared by Executive.
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5.
|
NON-SOLICITATION AND NON-COMPETITION
:
|
(a)
|
For consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [___] months following a Separation from Service during the term of this Agreement he/she shall not, without the prior written consent of the General Counsel, directly or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice or solicit) any employee of the Company or any of its Affiliates or ventures to leave the employment of the Company or any of its Affiliates or ventures or (ii) solicit or attempt to solicit the business of any customer or acquisition prospect of the Company or any of its Affiliates or ventures with whom Executive had any actual contact or Confidential Information about, in any such case while employed by the Company or an Affiliate.
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(b)
|
Additionally, for consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [____] months following a Covered Termination he/she will not, without the prior written consent of the Company, acting alone or in conjunction with others, either directly or indirectly, engage in any business that is in competition with the Company or an Affiliate or accept employment with or render services at a comparable level of responsibility to such a business as an officer, agent, employee, independent contractor or consultant, or otherwise engage in activities that are in competition with the Company or an Affiliate.
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(c)
|
The restrictions contained in this Section 9 are limited to areas or territories within the United States and in any foreign country in which the Company or an Affiliate engages (or has definite plans to engage) in operations or the marketing of its products or services at the time of Executive’s Separation from Service.
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(d)
|
Executive acknowledges that these restrictive covenants under this Agreement, for which Executive received valuable consideration from the Company as provided in this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, are ancillary to otherwise enforceable provisions of this Agreement, that the consideration provided by the Company gives rise to the interest of each of the Company in restraining Executive from competing and that the restrictive covenants are designed to enforce Executive’s consideration or return promises under this Agreement. Additionally, Executive acknowledges that these restrictive covenants contain limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company, including, but not limited to, the Company’s need to protect its Confidential Information. Executive further acknowledges that a violation on Executive’s part of any of the restrictive covenants contained in Section 7 or this Section 9 of this Agreement would cause immeasurable and irreparable damage to the Company. Accordingly, Executive agrees that, in addition to any other remedy the Company may have for any such violation: (1) the Company shall be entitled to injunctive relief in any court of competent jurisdiction for any actual or threatened violation of any such covenant in addition to any other remedies it may have; and (2) in addition, if the General Counsel of the Company (or other similarly situated senior executive of the Company) reasonably and in good faith determines that Executive has materially breached any of these restrictive covenants contained in this Section 9 of the Agreement during the applicable period in which they are in effect, after written notice to Executive of such determination and a ten (10) day opportunity to cure such breach (if the General Counsel determines in good faith that such breach is curable), if such breach is not so cured to the reasonable satisfaction of the General Counsel, then Executive shall be required to promptly repay all net after-tax cash amounts previously paid under this Agreement to Executive, and Executive shall forfeit any Equity Awards he or she may then hold.
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6.
|
NOTICES
: For purposes of this Agreement, notices and all other communications must be in writing and will be deemed to have been given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
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7.
|
APPLICABLE LAW AND EXCLUSIVE VENUE
: The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware, but without giving effect to the principles of conflict of laws of such State.
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8.
|
SEVERABILITY
: If any provision of this Agreement is determined to be invalid or unenforceable (including for the avoidance of doubt any provision (or portion thereof) of Section 7, 8 or 9 of this Agreement), then the invalidity or unenforceability of that provision will not affect the validity or enforceability of any other provision of this Agreement and all other provisions will remain in full force and effect.
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9.
|
WITHHOLDING OF TAXES
: The Company may withhold from any payments under this Agreement all federal, state, local or other taxes as may be required pursuant to any law or governmental regulation or ruling. Executive acknowledges that other than the Company’s obligation to withhold and remit applicable income and/or employment taxes and pay its share of any applicable payroll taxes, Executive is solely responsible for any and all taxes, interest and penalties that may be imposed with respect to the payments and benefits provided under this Agreement (including and without limitation, any taxes imposed pursuant to Code Section 409A or the application of Code Sections 280G and 4999).
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10.
|
NO ASSIGNMENT; SUCCESSORS
: Executive’s right to receive payments or benefits under this Agreement will not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise, other than a transfer by will or by the laws of descent or distribution, and in the event of any attempted assignment or transfer contrary to this Section 14 the Company will have no liability to pay any amount so attempted to be assigned or transferred. This Agreement inures to the benefit of and is enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
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11.
|
NUMBER AND GENDER
: Wherever appropriate herein, words used in the singular will include the plural, the plural will include the singular, and the masculine gender will include the feminine gender.
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12.
|
CONFLICTS
: This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any other agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof; provided, that if Executive is a party to a Restructuring Transaction Retention Agreement, the terms of such agreement shall continue to apply if Executive experiences a Separation from Service prior to the occurrence of a Change in Control during the term of such agreement, as provided thereunder.
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13.
|
AMENDMENT AND WAIVER
: No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board.
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14.
|
COUNTERPARTS
: This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
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15.
|
TERM
: The effective date of this Agreement shall commence on June 30, 2015 (“
Effective Date
”) and shall end on the earlier of (a) subject to extension in order to give effect to the notice and cure provisions contained in the definition of Good Reason, the second anniversary of the date a Change in Control occurs, or (b) the date on which Executive experiences a Separation from Service under circumstances that do not constitute a Covered Termination; provided that terms of this Agreement which must survive the termination this Agreement in order to be effectuated (including the provisions of Sections 2, 3, 7, 8 and 9) will survive.
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16.
|
EFFECT ON ORIGINAL AGREEMENT
: This Agreement shall replace and supersede the Original Agreement, which shall be terminated and be of no force or effect. Executive shall not be entitled to any payments or benefits pursuant to such Original Agreement.
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i.
|
Any portion of Executive’s Salary earned through the Covered Termination Date and not yet paid;
|
ii
|
Reimbursement for any and all amounts advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive through the date of the Covered Termination Date in accordance with the Company’s policies and procedures on reimbursement of expenses;
|
iii
|
Any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time;
|
iv
|
If Executive participates in the Company’s financial planning program as of the date a Change in Control occurs, financial planning services through AYCO (or a successor) until the earlier of June 30 of the calendar year following the calendar year in which a Covered Termination occurs or the date such program terminates for all similarly situated employees; and
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v.
|
All other payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company that do not specify the time of distribution; provided that Accrued Benefits shall not include any entitlement to severance under any severance plan or policy of the Company.
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i.
|
the willful and continued failure of Executive to perform substantially Executive’s duties with the Company or an Affiliate (occasioned by reason other than physical or mental illness or disability of Executive) after a written demand for substantial performance is delivered to Executive by the Compensation Committee of the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Compensation Committee of the Board or the Chief Executive Officer believes that Executive has not substantially performed his
or her
duties, after which Executive shall have thirty days to defend or remedy such failure to substantially perform his
or her
duties;
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ii.
|
the willful engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or
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iii.
|
the conviction of Executive with no further possibility of appeal for, or plea of guilty or nolo contendere by Executive to, any felony.
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(a)
|
30% Ownership Change
: Any Person, other than an ERISA-regulated pension plan established by the Company or an Affiliate, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or
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(b)
|
Board Majority Change
: Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or
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(c)
|
Major Mergers and Acquisitions
: Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or
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(d)
|
Major Asset Dispositions
: Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.
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(2)
|
“
group
” is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;
|
(3)
|
“
beneficial owner
” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;
|
(4)
|
“
Outstanding Voting Stock
” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;
|
(5)
|
“
Incumbent Director
” means a member of the board of directors of the Company (x) who was a director of the Company on the Effective Date of this Agreement or (y) who becomes a member of the board of directors after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;
|
(6)
|
“
Business Combination
” means
|
(x)
|
a merger or consolidation involving the Company or its stock, or
|
(y)
|
an acquisition by the Company, directly or through one or more
Subsidiaries
, of another entity or its stock or assets;
|
(7)
|
“
parent corporation resulting from a Business Combination
” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more
Subsidiaries
; and
|
(8)
|
“
Major Asset Disposition
” means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its
Subsidiaries
on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.
|
(a)
|
a material diminution in the duties or responsibilities of Executive from those applicable immediately before the date on which a Change in Control occurs;
|
(b)
|
a material reduction in Executive’s annual rate of base salary or target bonus as in effect on the Change in Control or as either of the same may be increased from time to time thereafter;
|
(c)
|
a material reduction in the amount of Executive’s annual target long-term incentive compensation opportunity (whether payable in cash, Company Shares or a combination thereof) as in effect on the Change in Control or as the same may be increased from time to time thereafter, unless such material reduction applies to all similarly situated executives of the Company and the parent corporation resulting from the Business Combination; and provided that for the avoidance of doubt, a material reduction of such annual target long-term incentive compensation opportunity shall not be deemed to occur if such opportunity becomes payable solely in cash;
|
(d)
|
a change in the location of Executive’s principal place of employment with the Company by more than 50 miles from the location where Executive was principally employed immediately before the Change in Control without
Executive’s consent.
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1.
|
DEFINITIONS
: Capitalized terms are defined in Exhibit A to this Agreement.
|
2.
|
SEVERANCE BENEFITS
: If Executive experiences a Covered Termination he or she
will be entitled to the payments and benefits set forth below; provided that the benefits described in Sections 2(b), (c), (d), (e) and (f) shall only be payable if Executive executes a waiver and release prepared by the Company, which releases the Company and its affiliates, directors, officers and other customary persons from any claim or liability arising out of or related to Executive’s employment with or termination of employment from the Company or any of its affiliates (except for amounts to which Executive is legally entitled pursuant to employee benefit plans, Executive’s right to enforce this Agreement and rights to insurance coverage or indemnification) (the “
Release
”), which Release is not revoked within the time period provided therein, and the executed Release is delivered to the Company no later than forty-five (45) days after the Covered Termination.
|
(a)
|
Accrued Benefits
. The Accrued Benefits, payable within sixty (60) days after the effective date of the Covered Termination, or such earlier time as may be required by applicable law.
|
(b)
|
SERP
. As of the effective date of the Covered Termination, a fully vested and non-forfeitable interest in Executive’s account balance in the SERP and Restoration Plan
|
(c)
|
Unvested Equity Awards
. As of the effective date of the Covered Termination, unless otherwise settled in accordance with the provisions of Section 4 of this Agreement and the plans and agreements referred to therein, a fully vested and non-forfeitable interest in any outstanding unvested equity awards granted on Company Shares (“
Equity Awards
”), to be vested and, in the case of restricted stock units, settled, in any such case within the 60
th
day after the effective date of the Covered Termination; provided that no such Equity Award that is subject to Code Section 409A will be paid on a date earlier than is provided in the applicable Equity Award agreement to the extent necessary to avoid the imposition of tax penalties pursuant to Code Section 409A; provided further that any performance-based Equity Awards shall be settled with respect to the number of Company Shares earned based on the target rate of performance applicable to such award. In addition, any Equity Awards that are vested (including as a result of the foregoing provision) options to purchase Company Shares that Executive holds as of the date of his or her Covered Termination will remain exercisable through the expiration of the original term of such option.
|
(d)
|
Severance Payment Based on Salary
. An amount equal to [__] times the sum of Executive’s (x) Salary plus (y) the product of (1) Salary and (2) Target Bonus Percentage, paid in a lump sum in cash within sixty (60) days after the Covered Termination.
|
(e)
|
Severance Payment Based on Bonus
.
|
(1)
|
Covered Termination Performance Year
. An amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage, with the product of (A) and (B) prorated based on the number of days Executive was employed during the bonus year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the effective date of the Covered Termination.
|
(2)
|
Prior Performance Year
. If a bonus for the prior calendar year has not been paid under the Bonus Plan as of Executive’s effective date of the Covered Termination, then Executive will be entitled to the actual amount of the bonus determined under the Bonus Plan for such prior calendar year (such amount to be determined without the exercise of any downward discretion), paid in a lump sum in cash at the same time such bonus is paid to other Bonus Plan participants.
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(f)
|
Health Care Benefits
. An amount equal to three (3) times the full annual cost that would be payable by Executive for continuation of coverage for medical, dental and vision benefits if elected by Executive for him/herself and his/her eligible dependents under COBRA for the year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the Covered Termination. For purposes of clarity, the payment contemplated by this Section 2(f) shall be paid to Executive irrespective of whether Executive elects COBRA and Executive shall not be obligated to use such amounts for payment of COBRA premiums (if so elected).
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3.
|
LIMITATION ON PAYMENTS AND BENEFITS
: Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 3 to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that no such reduction shall be made if it is not thereby possible to eliminate all Excess Parachute Payments under this Agreement; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to he provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). Whether requested by Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by the Company’s independent accountants, which determination shall take into account a reasonable compensation analysis of the value of services provided or to be provided by Executive, including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant applicable to Executive (including, without limitation, those contemplated by Sections 6, 7 and 8 of this Agreement).
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4.
|
CHANGE IN CONTROL EQUITY-BASED BENEFITS
: If a Change in Control occurs, any benefits Executive may be entitled to with respect to any equity-based compensation (including any Equity Awards) shall be determined in accordance with the applicable plans and award agreements. In the event of any conflict between the terms of any such plans or award agreement and Section 2(c) of this Agreement, the terms of such plan or award agreement shall control to the extent such plan or award agreement provides for accelerated vesting or settlement in connection with a Change in Control (either upon the occurrence of such an event or thereafter). For the avoidance of doubt, if any given equity-based compensation award agreement is silent with respect to the effect of a Change in Control and the plan pursuant to which any such award agreement is granted does not contain provisions that would automatically apply to the given award, then Section 2(c) of this Agreement shall control.
|
5.
|
INTERNAL REVENUE CODE 409A
:
|
(a)
|
Compliance
. It is the intent of the parties that the provisions of this Agreement either comply with Code Section 409A and the Treasury regulations and guidance issued thereunder or that one or more elements of compensation or benefits be exempt from Code Section 409A. Accordingly, the parties intend that this Agreement be interpreted and operated in a manner consistent with such requirements in order to avoid the application of penalty taxes under Code Section 409A to the extent reasonably practicable. The Company shall neither cause nor permit: (i) any payment, benefit or consideration to be substituted for a benefit that is payable under this Agreement if such action would result in the failure of any amount that is subject to Code Section 409A to comply with the applicable requirements of Code Section 409A; or (ii) any adjustments to any equity interest to be made in a manner that would result in the equity interest’s becoming subject to Code Section 409A unless, after such adjustment, the equity interest is in compliance with the requirements of Code Section 409A to the extent applicable. A Covered Termination shall constitute an “involuntary separation from service” for purposes of Code Section 409A.
|
(b)
|
Waiting Period for Specified Employees
. Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of Executive’s Covered Termination Date, then any amounts or benefits which are payable under this Agreement upon Executive’s “Separation from Service” (within the meaning of Code Section 409A), which are subject to the provisions of Code Section 409A and not otherwise exempt under Code Section 409A, and would otherwise be payable during the first six-month period following such Separation from Service, shall be paid on the first business day that (i) is at least six months after the date after Executive’s Covered Termination Date or (ii) follows Executive’s date of death, if earlier (the “
Waiting Period
”). The benefits in Sections 2(a), (d), (e) and (f) and certain of the benefits in Section 2(c) are intended to be exempt from Code Section 409A under the “short-term deferral exemption” and thus the Waiting Period is not intended to apply to such benefits.
|
6.
|
CONFIDENTIALITY AND NON-DISCLOSURE
: Executive acknowledges that pursuant to this Agreement, the Company agrees to provide to him or her Confidential Information and has previously provided him or her other such Confidential Information. In return for this and other consideration, provided under this Agreement, Executive agrees that he/she will not, while employed by the Company or any Affiliate and thereafter, disclose or make available to any other person or entity, or use for his or her own personal gain, any Confidential Information, except for such disclosures as required in the performance of his or her duties hereunder as may otherwise be required by law or legal process (in which case
|
7.
|
RETURN OF PROPERTY
: Executive agrees that at the time of leaving his or her employ with the Company or an Affiliate, he/she will deliver to the Company (and will not keep in his or her possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property (including all reproductions of the aforementioned items) belonging to the Company or any of its Affiliates, regardless of whether such items were prepared by Executive.
|
8.
|
NON-SOLICITATION AND NON-COMPETITION
:
|
(a)
|
For consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [_____] months following a Separation from Service during the term of this Agreement he/she shall not, without the prior written consent of the General Counsel, directly or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice or solicit) any employee of the Company or any of its Affiliates or ventures to leave the employment of the Company or any of its Affiliates or ventures or (ii) solicit or attempt to solicit the business of any customer or acquisition prospect of the Company or any of its Affiliates or ventures with whom Executive had any actual contact or Confidential Information about, in any such case while employed by the Company or an Affiliate.
|
(b)
|
Additionally, for consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [_____] months following a Covered Termination he/she will not, without the prior written consent of the Company, acting alone or in conjunction with others, either directly or indirectly, engage in any business that is in competition with the Company or an Affiliate or accept employment with or render services at a comparable level of responsibility to such a business as an officer, agent, employee, independent contractor or consultant, or otherwise engage in activities that are in competition with the Company or an Affiliate.
|
(c)
|
The restrictions contained in this Section 8 are limited to areas or territories within the United States and in any foreign country in which the Company or an Affiliate engages (or has definite plans to engage) in operations or the marketing of its products or services at the time of Executive’s Separation from Service.
|
(d)
|
Executive acknowledges that these restrictive covenants under this Agreement, for which Executive received valuable consideration from the Company as provided in this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, are ancillary to otherwise enforceable provisions of this Agreement, that the consideration provided by the Company gives rise to the interest of each of the Company in restraining Executive from competing and that the restrictive covenants are designed to enforce Executive’s consideration or return promises under this Agreement. Additionally, Executive acknowledges that these restrictive covenants contain limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company, including, but not limited to, the Company’s need to protect its Confidential Information. Executive further acknowledges that a violation on Executive’s part of any of the restrictive covenants contained in Section 6 or this Section 8 of this Agreement would cause immeasurable and irreparable damage to the Company. Accordingly, Executive agrees that, in addition to any other remedy the Company may have for any such violation: (1) the Company shall be entitled to injunctive relief in any court of competent jurisdiction for any actual or threatened violation of any such covenant in addition to any other remedies it may have; and (2) in addition, if the General Counsel of the Company (or other similarly situated senior executive of the Company) reasonably and in good faith determines that Executive has materially breached any of these restrictive covenants contained in this Section 8 of the Agreement during the applicable period in which they are in effect, after written notice to Executive of such determination and a ten (10) day opportunity to cure such breach (if the General Counsel determines in good faith that such breach is curable), if such breach is not so cured to the reasonable satisfaction of the General Counsel, then Executive shall be required to promptly repay all net after-tax cash amounts previously paid under this Agreement to Executive, and Executive shall forfeit any Equity Awards he or she may then hold.
|
9.
|
NOTICES
: For purposes of this Agreement, notices and all other communications must be in writing and will be deemed to have been given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
|
10.
|
APPLICABLE LAW AND EXCLUSIVE VENUE
: The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware, but without giving effect to the principles of conflict of laws of such State.
|
11.
|
SEVERABILITY
: If any provision of this Agreement is determined to be invalid or unenforceable (including for the avoidance of doubt any provision (or portion thereof) of Section 6, 7 or 8 of this Agreement), then the invalidity or unenforceability of that provision will not affect the validity or enforceability of any other provision of this Agreement and all other provisions will remain in full force and effect.
|
12.
|
WITHHOLDING OF TAXES
: The Company may withhold from any payments under this Agreement all federal, state, local or other taxes as may be required pursuant to any law or governmental regulation or ruling. Executive acknowledges that other than the Company’s obligation to withhold and remit applicable income and/or employment taxes and pay its share of any applicable payroll taxes, Executive is solely responsible for any and all taxes, interest and penalties that may be imposed with respect to the payments and benefits provided under this Agreement (including and without limitation, any taxes imposed pursuant to Code Section 409A or the application of Code Sections 280G and 4999).
|
13.
|
NO ASSIGNMENT; SUCCESSORS
: Executive’s right to receive payments or benefits under this Agreement will not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise, other than a transfer by will or by the laws of descent or distribution, and in the event of any attempted assignment or transfer contrary to this Section 13 the Company will have no liability to pay any amount so attempted to be assigned or transferred. This Agreement inures to the benefit of and is enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
|
14.
|
NUMBER AND GENDER
: Wherever appropriate herein, words used in the singular will include the plural, the plural will include the singular, and the masculine gender will include the feminine gender.
|
15.
|
CONFLICTS
: This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any other agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof.
|
16.
|
AMENDMENT AND WAIVER
: No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board.
|
17.
|
COUNTERPARTS
: This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.
|
18.
|
TERM
: The effective date of this Agreement shall commence on the date first written above (“
Effective Date
”) and shall end on the earlier of (a) subject to extension in order to give effect to the notice and cure provisions contained in the definition of Good Reason, the second anniversary of the date a Change in Control occurs, or (b) the date on which Executive experiences a Separation from Service under circumstances that do not constitute a Covered Termination; provided that terms of this Agreement which must survive the termination this Agreement in order to be effectuated (including the provisions of Sections 2, 3, 6, 7 and 8) will survive.
|
i.
|
Any portion of Executive’s Salary earned through the Covered Termination Date and not yet paid;
|
ii
|
Reimbursement for any and all amounts advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive through the date of the Covered Termination Date in accordance with the Company’s policies and procedures on reimbursement of expenses;
|
iii
|
Any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time;
|
iv
|
If Executive participates in the Company’s financial planning program as of the date a Change in Control occurs, financial planning services through AYCO (or a successor) until the earlier of June 30 of the calendar year following the calendar year in which a Covered Termination occurs or the date such program terminates for all similarly situated employees; and
|
v.
|
All other payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company that do not specify the time of distribution; provided that Accrued Benefits shall not include any entitlement to severance under any severance plan or policy of the Company.
|
i.
|
the willful and continued failure of Executive to perform substantially Executive’s duties with the Company or an Affiliate (occasioned by reason other than physical or mental illness or disability of Executive) after a written demand for substantial performance is delivered to Executive by the Compensation Committee of the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Compensation Committee of the Board or the Chief Executive Officer believes that Executive has not substantially performed his
or her
duties, after which Executive shall have thirty days to defend or remedy such failure to substantially perform his
or her
duties;
|
ii.
|
the willful engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or
|
iii.
|
the conviction of Executive with no further possibility of appeal for, or plea of guilty or nolo contendere by Executive to, any felony.
|
(a)
|
30% Ownership Change
: Any Person, other than an ERISA-regulated pension plan established by the Company or an Affiliate, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or
|
(b)
|
Board Majority Change
: Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or
|
(c)
|
Major Mergers and Acquisitions
: Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or
|
(d)
|
Major Asset Dispositions
: Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.
|
(2)
|
“
group
” is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;
|
(3)
|
“
beneficial owner
” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;
|
(4)
|
“
Outstanding Voting Stock
” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;
|
(5)
|
“
Incumbent Director
” means a member of the board of directors of the Company (x) who was a director of the Company on the Effective Date of this Agreement or (y) who becomes a member of the board of directors after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;
|
(6)
|
“
Business Combination
” means
|
(x)
|
a merger or consolidation involving the Company or its stock, or
|
(y)
|
an acquisition by the Company, directly or through one or more
Subsidiaries
, of another entity or its stock or assets;
|
(7)
|
“
parent corporation resulting from a Business Combination
” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more
Subsidiaries
; and
|
(8)
|
“
Major Asset Disposition
” means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its
Subsidiaries
on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.
|
(a)
|
a material diminution in the duties or responsibilities of Executive from those applicable immediately before the date on which a Change in Control occurs;
|
(b)
|
a material reduction in Executive’s annual rate of base salary or target bonus as in effect on the Change in Control or as either of the same may be increased from time to time thereafter;
|
(c)
|
a material reduction in the amount of Executive’s annual target long-term incentive compensation opportunity (whether payable in cash, Company Shares or a combination thereof) as in effect on the Change in Control or as the same may be increased from time to time thereafter, unless such material reduction applies to all similarly situated executives of the Company and the parent corporation resulting from the Business Combination; and provided that for the avoidance of doubt, a material reduction of such annual target long-term incentive compensation opportunity shall not be deemed to occur if such opportunity becomes payable solely in cash;
|
(d)
|
a change in the location of Executive’s principal place of employment with the Company by more than 50 miles from the location where Executive was principally employed immediately before the Change in Control without
Executive’s consent.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 2, 2016
|
/s/ E. James Ferland
|
|
E. James Ferland
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 2, 2016
|
/s/ Jenny L. Apker
|
|
Jenny L. Apker
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
Dated: November 2, 2016
|
/s/ E. James Ferland
|
|
E. James Ferland
|
|
Chairman and Chief Executive Officer
|
(1)
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
Dated: November 2, 2016
|
/s/ Jenny L. Apker
|
|
Jenny L. Apker
|
|
Senior Vice President and Chief Financial Officer
|
Mine or Operating Name/MSHA Identification Number
|
Section 104 S&S Citations
(#)
|
Section 104(b) Orders
(#)
|
Section 104(d) Citations and Orders
(#)
|
Section 110(b)(2) Violations
(#)
|
Section 107(a) Orders
(#)
|
Total Dollar Value of MSHA Assessments Proposed
($)
|
Total Number of Mining Related Fatalities
#)
|
Received Notice of Pattern of Violations Under Section 104(e)
(yes/no)
|
Received Notice of Potential to Have Pattern Under Section 104(e)
(yes/no)
|
Legal Actions Pending as of 9/30/2014
(#)
|
Legal Actions Initiated During Period
(#)
|
Legal Actions Resolved During Period
(#)
|
Revloc Refuse Site
ID # 3608032
|
0
|
0
|
0
|
0
|
0
|
$342
|
0
|
No
|
No
|
0
|
0
|
0
|