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USEC Reports $7.5 Million Net Income For 2010

Forward Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 – that is, statements related to future events. In this context, forward-looking statements may address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “will” and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For USEC, particular risks and uncertainties that could cause our actual future results to differ materially from those expressed in our forward-looking statements include, but are not limited to: risks related to the deployment of the American Centrifuge technology, including risks related to performance, cost, schedule and financing; our success in obtaining a loan guarantee from DOE for the American Centrifuge Plant, including our ability to address the technical and financial concerns raised by DOE and the timing of any loan guarantee; our ability to reach agreement with DOE on acceptable terms of a conditional commitment, including credit subsidy cost, and our ability to meet any required conditions to funding; our ability to obtain additional financing beyond the $2 billion of DOE loan guarantee funding for which we have applied, including our success in obtaining Japanese export credit agency financing of up to $1 billion; the impact of the demobilization of the American Centrifuge project and uncertainty regarding our ability to remobilize the project and the potential for termination of the project; restrictions in our credit facility that may impact our operating and financial flexibility and spending on the American Centrifuge project; risks related to the completion of the remaining two phases of the three-phased strategic investment by Toshiba Corporation and Babcock & Wilcox Investment Company, including our ability to satisfy the significant closing conditions in the securities purchase agreement governing the transactions and the impact of a failure to consummate the transactions on our business and prospects; uncertainty regarding the cost of electric power used at our gaseous diffusion plant; the economics of extended Paducah plant operations, including our ability to negotiate an acceptable power arrangement and our ability to obtain a contract to enrich DOE’s depleted uranium; our dependence on deliveries of LEU from Russia under the Russian Contract and on a single production facility; our inability under many existing long-term contracts to directly pass on to customers increases in our costs; the decrease or elimination of duties charged on imports of foreign-produced low enriched uranium; pricing trends and demand in the uranium and enrichment markets and their impact on our profitability; changes to, or termination of, our contracts with the U.S. government including uncertainty regarding the impacts on our business of the transition of government services performed by us at the former Portsmouth gaseous diffusion plant to the new decontamination and decommissioning contractor; limitations on our ability to compete for potential contracts with the U.S. government; changes in U.S. government priorities and the availability of government funding, including loan guarantees; the impact of government regulation by DOE and the U.S. Nuclear Regulatory Commission; the outcome of legal proceedings and other contingencies (including lawsuits and government investigations or audits); the competitive environment for our products and services; changes in the nuclear energy industry; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on our website at www.usec.com. Revenue and operating results can fluctuate significantly from quarter to quarter, and in some cases, year to year. We do not undertake to update our forward-looking statements except as required by law.

   
USEC Inc.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(millions, except per share data)
 
Three Months Ended Years Ended
December 31, December 31,

2010

 

2009

2010

 

2009

Revenue:
Separative work units $519.6 $380.8 $1,521.4 $1,647.0
Uranium 71.6 30.5 236.1 180.7
Contract services

75.2

 

56.3

 

277.9

 

209.1

 
Total revenue

666.4

 

467.6

 

2,035.4

 

2,036.8

 
Cost of sales:

Separative work units and uranium

546.0 372.2 1,623.2 1,640.3
Contract services

70.8

 

49.5

 

253.8

 

191.8

 
Total cost of sales

616.8

 

421.7

 

1,877.0

 

1,832.1

 
Gross profit 49.6 45.9 158.4 204.7
Special Charges - 1.6 - 4.1
Advanced technology costs 29.9 24.6 110.2 118.4
Selling, general and administrative 15.5 13.7 58.9 58.8
Other (income)

(12.0

)

(70.7

)

(44.4

)

(70.7

)

Operating income 16.2 76.7 33.7 94.1
Preferred stock issuance 1.8 - 6.6 -
Interest expense 0.2 0.2 0.6 1.2
Interest (income) - (0.1 ) (0.4 ) (1.3 )
Income before income taxes 14.2 76.6 26.9 94.2
Provision for income taxes 5.2   27.1   19.4   35.7  
Net income $9.0   $49.5   $7.5   $58.5  
 
Net income per share – basic $.08 $.44 $.07 $.53
Net income per share – diluted $.05 $.31 $.05 $.37
Weighted average number of shares outstanding:
Basic 113.2 111.8 112.8 111.4
Diluted 177.6 160.5 166.6 160.2
 
 
USEC Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(millions, except share and per share data)
 

 

December 31,
2010   2009
ASSETS
Current Assets
Cash and cash equivalents $151.0 $131.3
Accounts receivable, net 308.6 191.4
Inventories:
Separative work units 947.4 805.1
Uranium 562.5 482.1
Materials and supplies 12.6   14.0  
Total Inventories 1,522.5 1,301.2
Deferred income taxes 47.5 48.6
Deferred costs associated with deferred revenue 152.9 244.4
Other current assets 71.6   52.7  
Total Current Assets 2,254.1 1,969.6
Property, Plant and Equipment, net 1,231.4 1,115.1
Other Long-Term Assets
Deferred income taxes 204.5 270.3
Deposit for surety bonds 140.8 158.3
Deferred financing costs, net 10.6 12.0
Goodwill 6.8   6.8  
Total Other Long-Term Assets 362.7   447.4  
Total Assets $3,848.2   $3,532.1  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities $172.4 $153.4
Payables under Russian Contract 201.2 134.8
Inventories owed to customers and suppliers 715.8 469.4
Deferred revenue and advances from customers 179.1   325.0  
Total Current Liabilities 1,268.5 1,082.6
Long-Term Debt 660.0 575.0
Convertible Preferred Stock 78.2 -
Other Long-Term Liabilities
Depleted uranium disposition 125.4 155.6
Postretirement health and life benefit obligations 178.7 168.9
Pension benefit liabilities 145.4 176.6
Other liabilities 78.2   97.8  
Total Other Long-Term Liabilities 527.7 598.9
Stockholders’ Equity

Preferred stock, par value $1.00 per share, 25,000,000 shares authorized, none issued

- -

Common stock, par value $.10 per share, 250,000,000 shares authorized, 123,320,000 shares issued

12.3 12.3
Excess of capital over par value 1,172.8 1,179.6
Retained earnings 329.9 322.4
Treasury stock, 8,090,000 and 9,926,000 shares (57.1 ) (71.3 )
Accumulated other comprehensive loss, net of tax (144.1 ) (167.4 )
Total Stockholders’ Equity 1,313.8   1,275.6  
Total Liabilities and Stockholders’ Equity $3,848.2   $3,532.1  
 
USEC Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(millions)
 

 

Years Ended December 31,

2010   2009   2008
Cash Flows From Operating Activities
Net income $7.5 $58.5 $48.7
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 43.3 31.9 34.2
Deferred income taxes 44.3 (1.6 ) 3.1
Other non-cash income on release of disposal obligation (44.4 ) - -
Preferred stock issuance costs and capitalized paid-in-kind dividends 8.5 - -
Changes in operating assets and liabilities:
Accounts receivable – (increase) decrease (117.2 ) (37.3 ) 98.8
Inventories – net (increase) decrease 25.1 269.9 (270.6 )
Payables under Russian Contract – increase (decrease) 66.4 13.3 9.3
Deferred revenue, net of deferred costs – increase (decrease) (10.6 ) (3.9 ) 24.5
Accrued depleted uranium disposition – increase (decrease) (30.2 ) 36.1 21.2
Accounts payable and other liabilities – increase (decrease) 23.5 44.6 (31.2 )
Other, net 6.3   31.9   (42.9 )
Net Cash Provided by (Used in) Operating Activities

 

22.5   443.4   (104.9 )
 
Cash Flows Used in Investing Activities
Capital expenditures (162.2 ) (441.3 ) (441.9 )
Deposits for surety bonds, net (increase) decrease 17.6   (22.5 ) (35.3 )
Net Cash (Used in) Investing Activities (144.6 ) (463.8 ) (477.2 )
 
Cash Flows Provided by (Used in) Financing Activities
Borrowings under credit facility 38.7 196.6 48.3
Repayments under credit facility (38.7 ) (196.6 ) (48.3 )
Proceeds from credit facility term loan 85.0 - -
Proceeds from issuance of convertible preferred stock and warrants 75.0 - -
Repayment and repurchases of senior notes - (95.7 ) (54.3 )
Payments for deferred financing costs and preferred stock issuance costs (16.4 ) (0.7 ) (1.3 )
Common stock issued (purchased), net (1.8 ) (0.4 ) 0.1  
Net Cash Provided by (Used in) Financing Activities 141.8   (96.8 ) (55.5 )
Net Increase (Decrease) 19.7 (117.2 ) (637.6 )
Cash and Cash Equivalents at Beginning of Period 131.3   248.5   886.1  
Cash and Cash Equivalents at End of Period $151.0   $131.3   $248.5  
 
Supplemental Cash Flow Information
Interest paid, net of capitalized interest $ - $0.7 $15.9
Income taxes paid, net of refunds 3.2 4.5 50.0




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