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USEC Reports Financial Results For The Fourth Quarter And Full Year 2012

Stocks in this article: USU

Additional Information

USEC filed its annual report on Form 10-K with the Securities and Exchange Commission today. This report is available in the Investor Relations section of the USEC website, www.usec.com. USEC has also issued a separate news release on the status of the American Centrifuge program.

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” 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 ongoing transition of our business, including uncertainty regarding the transition of the Paducah gaseous diffusion plant and uncertainty regarding continued funding for the American Centrifuge project; the impact of a potential balance sheet restructuring on the holders of our common stock and convertible notes; risks related to the need to restructure the investments by Toshiba Corporation (“Toshiba”) and Babcock & Wilcox Investment Company (“B&W”); risks related to the underfunding of our defined benefit pension plans and the impact of the potential requirement for us to place an amount in escrow or purchase a bond with respect to such underfunding; the impact of a potential de-listing of our common stock on the NYSE, including the potential for the holders of our convertible notes to require the Company to repurchase their notes in the event of a de-listing; the impact of uncertainty regarding our ability to continue as a going concern on our liquidity and prospects; our dependency on the multi-party arrangement with Energy Northwest, the Bonneville Power Administration, the Tennessee Valley Authority and DOE to support enrichment at the Paducah gaseous diffusion plant and the expiration of such agreement on May 31, 2013; 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 and potential extended duration of the current supply/demand imbalance in the market for LEU; our ability to manage the transition costs and other impacts of ceasing enrichment at Paducah; uncertainty regarding the timing, amount and availability of additional funding for the RD&D program and the dependency of government funding on Congressional appropriations; restrictions in our credit facility on our spending on the American Centrifuge project and the potential for us to demobilize the project; limitations on our ability to provide any required cost sharing under the RD&D program; uncertainty concerning our ability through the RD&D program to demonstrate the technical and financial readiness of the centrifuge technology for commercialization; uncertainty concerning the ultimate success of our efforts to obtain a DOE loan guarantee and other financing for the American Centrifuge project and the timing and terms thereof; potential changes in our anticipated ownership of or role in the American Centrifuge project, including as a result of the need to raise additional capital to finance the project; 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; changes in U.S. government priorities and the availability of government funding, including loan guarantees; our ability to extend, renew or replace our credit facility that matures on September 30, 2013; restrictions in our credit facility that may impact our operating and financial flexibility; 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; our dependence on deliveries of LEU from Russia under a commercial agreement (the “Russian Contract”) with a Russian government entity known as Techsnabexport (“TENEX”) that expires in 2013 and under a new commercial supply agreement with Russia (the “Russian Supply Agreement”) and limitations on our ability to import the Russian LEU we buy under Russian 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; 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; 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 discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K that is 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,

2012   2011 2012   2011
Revenue:
Separative work units $ 377.2 $ 394.2 $ 1,821.8 $ 1,330.9
Uranium 22.4 28.7 26.0 131.8
Contract services   21.7     39.5     70.3     209.1  
Total revenue   421.3     462.4     1,918.1     1,671.8  
Cost of sales:

Separative work units and uranium

354.1

416.8

1,718.5

1,391.1

Contract services

  17.8     35.4     61.6     196.5  
Total cost of sales   371.9     452.2     1,780.1     1,587.6  
Gross profit 49.4 10.2 138.0 84.2
Advanced technology costs 1,146.4 187.0 1,314.0 273.2
Selling, general and administrative 13.6 14.3 56.1 62.1
Special charge - workforce reductions and advisory costs 1.2 - 12.3 -
Other (income)   (47.5 )   -     (92.1 )   (3.7 )
Operating income (loss)

(1,064.3

)

(191.1 ) (1,152.3 ) (247.4 )
Preferred stock issuance costs - - - -
Interest expense 12.7 11.3 50.4 11.6
Interest (income)   (1.5 )   (0.1 )   (1.9 )   (0.5 )
Income (loss) before income taxes (1,075.5 ) (202.3 )

(1,200.8

)

(258.5 )
Provision (benefit) for income taxes   8.8     244.1     (0.2 )   232.6  
Net income (loss) $ (1,084.3 ) $ (446.4 ) $ (1,200.6 ) $ (491.1 )
 
Net income (loss) per share – basic $ (8.84 ) $ (3.68 ) $ (9.84 ) $ (4.07 )
Net income (loss) per share – diluted $ (8.84 ) $ (3.68 ) $ (9.84 ) $ (4.07 )
Weighted average number of shares outstanding:
Basic 122.6 121.3 120.0 120.8
Diluted 122.6 121.3 120.0 120.8
 
 
USEC Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(millions, except share and per share data)
 

 

December 31,
2012   2011
ASSETS
Current Assets
Cash and cash equivalents $ 292.9 $ 37.6
Accounts receivable, net 134.8 162.0
Inventories:
Separative work units 880.9 1,048.6
Uranium 703.7 690.0
Materials and supplies   8.6     13.4  
Total Inventories 1,593.2 1,752.0
Deferred costs associated with deferred revenue 116.8 175.5
Other current assets   19.2     64.8  
Total Current Assets 2,156.9 2,191.9
Property, Plant and Equipment, net 51.0 1,187.1
Other Long-Term Assets
Deposit for surety bonds 22.3 151.3
Goodwill 6.8 6.8
Other assets   29.4     12.2  
Total Other Long-Term Assets   58.5     170.3  
Total Assets $ 2,266.4   $ 3,549.3  
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued liabilities $ 145.8 $ 120.1
Payables under Russian Contract 209.8 206.9
Inventories owed to customers and suppliers 950.0 870.1
Deferred revenue and advances from customers 125.5 205.2
Credit facility term loan 83.2 85.0

Convertible preferred stock and accrued dividends payable-in-kind, 85,900 shares issued

  100.5     88.6  
Total Current Liabilities 1,614.8 1,575.9
Long-Term Debt 530.0 530.0
Other Long-Term Liabilities
Depleted uranium disposition 0.2 145.2
Postretirement health and life benefit obligations 207.2 207.8
Pension benefit liabilities 321.7 258.3
Other liabilities   65.4     79.7  
Total Other Long-Term Liabilities 594.5 691.0
Stockholders’ Equity (Deficit)
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 shares issued 13.0 13.0
Excess of capital over par value 1,200.8 1,212.5
Retained earnings (deficit) (1,361.8 ) (161.2 )
Treasury stock, 5,071,000 and 7,082,000 shares (33.0 ) (49.4 )
Accumulated other comprehensive loss, net of tax   (291.9 )   (262.5 )
Total Stockholders’ Equity (Deficit)   (472.9 )   752.4  
Total Liabilities and Stockholders’ Equity (Deficit) $ 2,266.4   $ 3,549.3  
 
 
USEC Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(millions)
 

Years Ended December 31,

2012   2011   2010
Cash Flows From Operating Activities
Net income (loss) $ (1,200.6 ) $ (491.1 ) $ 7.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 37.5 50.1 43.3
Transfers and retirements of property, plant and equipment 47.4 - -
Expense of American Centrifuge capital assets 1,092.3 146.6 -
Deferred income taxes - 252.0 44.3
Other non-cash income on release of disposal obligation (92.1 ) (0.6 ) (44.4 )

Preferred stock issuance costs and capitalized dividends paid- or payable-in-kind

11.9 10.4 8.5
Gain on extinguishment of convertible senior notes - (3.1 ) -
Changes in operating assets and liabilities:
Accounts receivable – (increase) decrease 1.4 146.6 (117.2 )
Inventories, net – (increase) decrease 238.7 (75.2 ) 25.1
Payables under Russian Contract – increase 2.9 5.7 66.4
Deferred revenue, net of deferred costs – increase (decrease) 90.3 5.2 (10.6 )
Accrued depleted uranium disposition – increase (decrease) (145.0 ) 19.8 (30.2 )
Accounts payable and other liabilities – increase (decrease) 27.2 (10.6 ) 23.5
Other, net   31.0     0.5     6.3  
Net Cash Provided by Operating Activities

 

  142.9     56.3     22.5  
 
Cash Flows Provided by (Used in) Investing Activities
Capital expenditures (4.3 ) (152.8 ) (162.2 )
Deposits for surety bonds, net (increase) decrease   129.1     (10.4 )   17.6  
Net Cash Provided by (Used in) Investing Activities   124.8     (163.2 )   (144.6 )
 
Cash Flows Provided by (Used in) Financing Activities
Borrowings under credit facility 123.6 80.9 38.7
Repayments under credit facility (123.6 ) (80.9 ) (38.7 )
Proceeds from (repayment of) credit facility term loan (1.8 ) - 85.0
Proceeds from issuance of convertible preferred stock and warrants - - 75.0
Payments for deferred financing costs and preferred stock issuance costs (10.1 ) (5.0 ) (16.4 )
Common stock issued (purchased), net   (0.5 )   (1.5 )   (1.8 )
Net Cash Provided by (Used in) Financing Activities (12.4 ) (6.5 ) 141.8
Net Increase (Decrease) 255.3 (113.4 ) 19.7
Cash and Cash Equivalents at Beginning of Period   37.6     151.0     131.3  
Cash and Cash Equivalents at End of Period $ 292.9   $ 37.6   $ 151.0  
 
Supplemental Cash Flow Information
Interest paid, net of capitalized interest $ 27.5 $ 4.5 $ -
Income taxes paid, net of refunds - - 3.2
 




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