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USEC Reports Financial Results For The Fourth Quarter And Full Year 2011

Stocks in this article: USU

USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.

Forward Looking Statements

This news release contains “forward-looking statements” – 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 ongoing transition of our business, including uncertainty regarding the continued operation of the Paducah gaseous diffusion plant beyond May 2012 and uncertainty regarding continued funding for the American Centrifuge project and the impact of decisions we may make in the near term on our business and prospects; the impact of the March 2011 earthquake and tsunami in Japan on the nuclear industry and on our business, results of operations and prospects; the impact of excess supply in the market and the lack of uncommitted demand for low enriched uranium over the next 2-4 years; the potential impacts of a decision to cease enrichment operations at Paducah; the outcome of ongoing discussions with the U.S. Department of Energy (“DOE”) regarding the research, development and demonstration (“RD&D”) program, including uncertainty regarding the timing, amount and availability of funding for such RD&D program and the dependency of government funding on Congressional appropriations and the potential for us to make a decision at any time to further reduce spending and demobilize the project based on the timing and likelihood of an agreement with DOE and any government funding; the impact of any conditions that are placed on us or on the American Centrifuge project in connection with or as a condition to the RD&D program or other funding, including a restructuring of our role and investment in the project; limitations on our ability to provide any required cost sharing under the RD&D program; the ultimate success of efforts to obtain a DOE loan guarantee for the American Centrifuge project, including the ability through the RD&D program or otherwise to address the concerns raised by DOE with respect to the financial and project execution depth of the project, and the timing and terms thereof; the impact of actions we have taken or may take to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees, and impacts to cost and schedule; the impact of delays in the American Centrifuge project and uncertainty regarding our ability to remobilize the project; the potential for DOE to seek to exercise its remedies under the June 2002 DOE-USEC agreement; risks related to the completion of the remaining two phases of the three-phased strategic investment by Toshiba Corporation (“Toshiba”) and Babcock & Wilcox Investment Company (“B&W”), including uncertainty regarding the potential participation of Toshiba and B&W in any potential project structure that may be required under the RD&D program, and the potential for immediate termination of the securities purchase agreement governing their investments; certain restrictions that may be placed on our business as a result of the transactions with Toshiba and B&W our ability to achieve the benefits of any strategic relationships with Toshiba and B&W our ability to extend, renew or replace our credit facility that matures on May 31, 2013 and the impact of a failure to timely renew on our ability to continue as a going concern; restrictions in our credit facility that may impact our operating and financial flexibility and spending on the American Centrifuge project; our ability to actively manage and enhance our liquidity and working capital and the potential adverse consequences of any actions taken on the long term value of our ongoing operations; uncertainty regarding the cost of electric power used at our gaseous diffusion plant; our dependence on deliveries of LEU from Russia under a commercial agreement (the “Russian Contract”) with a Russian government entity known as Techsnabexport (“TENEX”) and on a single production facility and the potential for us to cease commercial enrichment of uranium in the event of a decision to shut down Paducah enrichment operations; limitations on our ability to import the Russian LEU we buy under the new supply agreement into the United States and other countries; 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; movement and timing of customer orders; changes to, or termination of, our contracts with the U.S. government; risks related to delays in payment for our contract services work performed for DOE; changes in U.S. government priorities and the availability of government funding, including loan guarantees; our subsidiary NAC may not perform as expected; 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; the impact of volatile financial market conditions on our business, liquidity, prospects, pension assets and credit and insurance facilities; risks related to the underfunding of our defined benefit pension plans and the impact of the potential requirement to accelerate the funding of these obligations on our liquidity; uncertainty regarding the continued capitalization of certain assets related to the American Centrifuge Plant and the impact of a potential impairment of these assets on our results of operations; the impact of potential changes in the ownership of our stock on our ability to realize the value of our deferred tax benefits; the timing of recognition of previously deferred revenue; and other risks and uncertainties 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 OPERATIONS (Unaudited)
(millions, except per share data)
 
 
    Three Months Ended

December 31,

    Years Ended

December 31,

2011     2010 2011     2010
Revenue:
Separative work units $394.2 $519.6 $1,330.9 $1,521.4
Uranium 28.7 71.6 131.8 236.1
Contract services 39.5   75.2   209.1   277.9  
Total revenue 462.4   666.4   1,671.8   2,035.4  
Cost of sales:

Separative work units and uranium

416.8 546.0 1,391.1 1,623.2
Contract services 35.4   70.8   196.5   253.8  
Total cost of sales 452.2   616.8   1,587.6   1,877.0  
Gross profit 10.2 49.6 84.2 158.4
Advanced technology costs 187.0 29.9 273.2 110.2
Selling, general and administrative 14.3 15.5 62.1 58.9
Other (income) -   (12.0 ) (3.7 ) (44.4 )
Operating income (loss) (191.1 ) 16.2 (247.4 ) 33.7
Preferred stock issuance - 1.8 - 6.6
Interest expense 11.3 0.2 11.6 0.6
Interest (income) (0.1 ) -   (0.5 ) (0.4 )
Income before income taxes (202.3 ) 14.2 (258.5 ) 26.9
Provision for income taxes 293.7   5.2   282.2   19.4  
Net income (loss) $(496.0 ) $9.0   $(540.7 ) $7.5  
 
Net income (loss) per share – basic $(4.09 ) $.08 $(4.48 ) $.07
Net income (loss) per share – diluted $(4.09 ) $.05 $(4.48 ) $.05
Weighted average number of shares outstanding:
Basic 121.3 113.2 120.8 112.8
Diluted 121.3 177.6 120.8 166.6
 
 
USEC Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(millions, except share and per share data)
 
 

 

    December 31,
2011     2010
ASSETS

Current Assets

Cash and cash equivalents $37.6 $151.0
Accounts receivable, net 162.0 308.6
Inventories:
Separative work units 1,048.6 947.4
Uranium 690.0 562.5
Materials and supplies 13.4   12.6  
Total Inventories 1,752.0 1,522.5
Deferred income taxes, net of valuation allowance - 47.5
Deferred costs associated with deferred revenue 175.5 152.9
Other current assets 64.8   71.6  
Total Current Assets 2,191.9 2,254.1
Property, Plant and Equipment, net 1,187.1 1,231.4
Other Long-Term Assets
Deferred income taxes, net of valuation allowance - 204.5
Deposit for surety bonds 151.3 140.8
Deferred financing costs, net 12.2 10.6
Goodwill 6.8   6.8  
Total Other Long-Term Assets 170.3   362.7  
Total Assets $3,549.3   $3,848.2  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities $120.1 $172.4
Payables under Russian Contract 206.9 201.2
Inventories owed to customers and suppliers 870.1 715.8
Deferred revenue and advances from customers 205.2 179.1
Credit facility term loan 85.0 -
Convertible preferred stock, current, 85,900 shares issued 88.6   -  
Total Current Liabilities 1,575.9 1,268.5
Long-Term Debt 530.0 660.0
Convertible Preferred Stock, non-current, 75,800 shares issued - 78.2
Other Long-Term Liabilities
Depleted uranium disposition 145.2 125.4
Postretirement health and life benefit obligations 207.8 178.7
Pension benefit liabilities 258.3 145.4
Other liabilities 79.7   78.2  
Total Other Long-Term Liabilities 691.0 527.7
Stockholders’ Equity

Preferred stock, par value $1.00 per share, 25,000,000 shares authorized, no shares recorded as stockholders’ equity

- -

Common stock, par value $.10 per share, 250,000,000 shares authorized, 130,273,000 and 123,320,000 shares issued

13.0 12.3
Excess of capital over par value 1,212.5 1,172.8
Retained earnings (deficit) (210.8 ) 329.9
Treasury stock, 7,082,000 and 8,090,000 shares (49.4 ) (57.1 )
Accumulated other comprehensive loss, net of tax (212.9 ) (144.1 )
Total Stockholders’ Equity 752.4   1,313.8  
Total Liabilities and Stockholders’ Equity $3,549.3   $3,848.2  
 
 
USEC Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(millions)
 
 
   

Years Ended December 31,

2011     2010     2009
Cash Flows From Operating Activities
Net income (loss) $(540.7 ) $7.5 $58.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 50.1 43.3 31.9
Deferred income taxes 301.6 44.3 (1.6 )
Other non-cash income on release of disposal obligation (0.6 ) (44.4 ) -
Preferred stock issuance costs and capitalized dividends paid-in-kind 10.4 8.5 -
Expense of American Centrifuge capital assets 146.6 - -
Gain on extinguishment of convertible senior notes (3.1 ) - -
Changes in operating assets and liabilities:
Accounts receivable – (increase) decrease 146.6 (117.2 ) (37.3 )
Inventories, net – (increase) decrease (75.2 ) 25.1 269.9
Payables under Russian Contract – increase 5.7 66.4 13.3
Deferred revenue, net of deferred costs – increase (decrease) 5.2 (10.6 ) (3.9 )
Accrued depleted uranium disposition – increase (decrease) 19.8 (30.2 ) 36.1
Accounts payable and other liabilities – increase (decrease) (10.6 ) 23.5 44.6
Other, net 0.5   6.3   31.9  

Net Cash Provided by Operating Activities

56.3   22.5   443.4  
 
Cash Flows Used in Investing Activities
Capital expenditures (152.8 ) (162.2 ) (441.3 )
Deposits for surety bonds, net (increase) decrease (10.4 ) 17.6   (22.5 )
Net Cash (Used in) Investing Activities (163.2 ) (144.6 ) (463.8 )
 
Cash Flows Provided by (Used in) Financing Activities
Borrowings under credit facility 80.9 38.7 196.6
Repayments under credit facility (80.9 ) (38.7 ) (196.6 )
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 )
Payments for deferred financing costs and preferred stock issuance costs (5.0 ) (16.4 ) (0.7 )
Common stock issued (purchased), net (1.5 ) (1.8 ) (0.4 )
Net Cash Provided by (Used in) Financing Activities (6.5 ) 141.8   (96.8 )
Net Increase (Decrease) (113.4 ) 19.7 (117.2 )
Cash and Cash Equivalents at Beginning of Period 151.0   131.3   248.5  
Cash and Cash Equivalents at End of Period $37.6   $151.0   $131.3  
 
Supplemental Cash Flow Information
Interest paid, net of capitalized interest $4.5 $ - $0.7
Income taxes paid, net of refunds - 3.2 4.5
 




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