ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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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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52-2107911
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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Financial Statements:
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PART II – OTHER INFORMATION
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||
June 30,
2011
|
December 31,
2010
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 340.2 | $ | 151.0 | ||||
Accounts receivable, net
|
134.0 | 308.6 | ||||||
Inventories
|
1,717.2 | 1,522.5 | ||||||
Deferred income taxes
|
22.7 | 47.5 | ||||||
Deferred costs associated with deferred revenue
|
152.5 | 152.9 | ||||||
Other current assets
|
95.4 | 71.6 | ||||||
Total Current Assets
|
2,462.0 | 2,254.1 | ||||||
Property, Plant and Equipment, net
|
1,286.7 | 1,231.4 | ||||||
Other Long-Term Assets
|
||||||||
Deferred income taxes
|
219.5 | 204.5 | ||||||
Deposits for surety bonds
|
140.8 | 140.8 | ||||||
Deferred financing costs, net
|
11.6 | 10.6 | ||||||
Goodwill
|
6.8 | 6.8 | ||||||
Total Other Long-Term Assets
|
378.7 | 362.7 | ||||||
Total Assets
|
$ | 4,127.4 | $ | 3,848.2 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$ | 141.9 | $ | 172.4 | ||||
Payables under Russian Contract
|
145.2 | 201.2 | ||||||
Inventories owed to customers and suppliers
|
1,084.4 | 715.8 | ||||||
Deferred revenue and advances from customers
|
188.5 | 179.1 | ||||||
Credit facility term loan
|
85.0 | - | ||||||
Total Current Liabilities
|
1,645.0 | 1,268.5 | ||||||
Long-Term Debt
|
530.0 | 660.0 | ||||||
Convertible Preferred Stock
|
83.3 | 78.2 | ||||||
Other Long-Term Liabilities
|
||||||||
Depleted uranium disposition
|
135.3 | 125.4 | ||||||
Postretirement health and life benefit obligations
|
184.8 | 178.7 | ||||||
Pension benefit liabilities
|
145.8 | 145.4 | ||||||
Other liabilities
|
78.1 | 78.2 | ||||||
Total Other Long-Term Liabilities
|
544.0 | 527.7 | ||||||
Commitments and Contingencies (Note 13)
|
||||||||
Stockholders’ Equity
|
1,325.1 | 1,313.8 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 4,127.4 | $ | 3,848.2 |
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenue:
|
||||||||||||||||
Separative work units
|
$ | 330.3 | $ | 331.0 | $ | 638.8 | $ | 597.6 | ||||||||
Uranium
|
67.8 | 69.6 | 81.8 | 85.2 | ||||||||||||
Contract services
|
56.3 | 59.1 | 114.3 | 121.6 | ||||||||||||
Total revenue
|
454.4 | 459.7 | 834.9 | 804.4 | ||||||||||||
Cost of sales:
|
||||||||||||||||
Separative work units and uranium
|
368.6 | 358.6 | 675.8 | 625.8 | ||||||||||||
Contract services
|
52.6 | 57.0 | 112.0 | 107.8 | ||||||||||||
Total cost of sales
|
421.2 | 415.6 | 787.8 | 733.6 | ||||||||||||
Gross profit
|
33.2 | 44.1 | 47.1 | 70.8 | ||||||||||||
Advanced technology costs
|
33.5 | 26.0 | 60.2 | 51.7 | ||||||||||||
Selling, general and administrative
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16.7 | 14.3 | 32.2 | 29.4 | ||||||||||||
Other (income)
|
- | (10.3 | ) | (3.7 | ) | (20.0 | ) | |||||||||
Operating income (loss)
|
(17.0 | ) | 14.1 | (41.6 | ) | 9.7 | ||||||||||
Interest expense
|
0.1 | 0.1 | 0.1 | 0.1 | ||||||||||||
Interest (income)
|
(0.1 | ) | (0.1 | ) | (0.3 | ) | (0.2 | ) | ||||||||
Income (loss) before income taxes
|
(17.0 | ) | 14.1 | (41.4 | ) | 9.8 | ||||||||||
Provision (benefit) for income taxes
|
4.2 | 6.9 | (3.6 | ) | 12.3 | |||||||||||
Net income (loss)
|
$ | (21.2 | ) | $ | 7.2 | $ | (37.8 | ) | $ | (2.5 | ) | |||||
Net income (loss) per share – basic
|
$ | (.18 | ) | $ | .06 | $ | (.31 | ) | $ | (.02 | ) | |||||
Net income (loss) per share – diluted
|
$ | (.18 | ) | $ | .04 | $ | (.31 | ) | $ | (.02 | ) | |||||
Weighted-average number of shares outstanding:
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||||||||||||||||
Basic
|
121.1 | 112.9 | 120.3 | 112.3 | ||||||||||||
Diluted
|
121.1 | 161.4 | 120.3 | 112.3 |
Six Months Ended
June 30,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net (loss)
|
$ | (37.8 | ) | $ | (2.5 | ) | ||
Adjustments to reconcile net (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
30.2 | 19.5 | ||||||
Deferred income taxes
|
7.3 | 14.5 | ||||||
Other non-cash income on release of disposal obligation
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(0.6 | ) | (20.0 | ) | ||||
Capitalized convertible preferred stock dividends paid-in-kind
|
5.1 | - | ||||||
Gain on extinguishment of convertible senior notes
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(3.1 | ) | - | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable – decrease
|
174.6 | 70.3 | ||||||
Inventories, net – decrease
|
173.9 | 44.3 | ||||||
Payables under Russian Contract – increase (decrease)
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(56.0 | ) | 53.8 | |||||
Deferred revenue, net of deferred costs – increase
|
10.2 | 31.6 | ||||||
Accrued depleted uranium disposition – increase (decrease)
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9.9 | (40.6 | ) | |||||
Accounts payable and other liabilities – (decrease)
|
(8.2 | ) | (3.0 | ) | ||||
Other, net
|
(19.9 | ) | 5.3 | |||||
Net Cash Provided by Operating Activities
|
285.6 | 173.2 | ||||||
Cash Flows Used in Investing Activities
|
||||||||
Capital expenditures
|
(91.0 | ) | (87.9 | ) | ||||
Deposits for surety bonds – net decrease
|
- | 3.0 | ||||||
Net Cash (Used in) Investing Activities
|
(91.0 | ) | (84.9 | ) | ||||
Cash Flows Used in Financing Activities
|
||||||||
Borrowings under revolving credit facility
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- | 38.2 | ||||||
Repayments under revolving credit facility
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- | (38.2 | ) | |||||
Payments for deferred financing costs
|
(3.7 | ) | (9.6 | ) | ||||
Common stock issued (purchased), net
|
(1.7 | ) | (2.5 | ) | ||||
Net Cash (Used in) Financing Activities
|
(5.4 | ) | (12.1 | ) | ||||
Net Increase
|
189.2 | 76.2 | ||||||
Cash and Cash Equivalents at Beginning of Period
|
151.0 | 131.3 | ||||||
Cash and Cash Equivalents at End of Period
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$ | 340.2 | $ | 207.5 | ||||
Supplemental Cash Flow Information:
|
||||||||
Interest paid, net of amount capitalized
|
$ | - | $ | - | ||||
Income taxes paid, net of refunds
|
2.1 | 15.5 |
June 30,
2011
|
December 31,
2010
|
|||||||
(millions)
|
||||||||
Accounts receivable (1):
|
||||||||
Utility customers:
|
||||||||
Trade receivables
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$ | 39.1 | $ | 249.1 | ||||
Uranium loaned to customer (2)
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41.2 | - | ||||||
Unbilled revenue (3)
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0.3 | 0.4 | ||||||
80.6 | 249.5 | |||||||
Contract services, primarily Department of Energy (4):
|
||||||||
Billed revenue
|
17.8 | 34.8 | ||||||
Unbilled revenue
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35.6 | 24.3 | ||||||
53.4 | 59.1 | |||||||
$ | 134.0 | $ | 308.6 |
(1)
|
Accounts receivable are net of valuation allowances and allowances for doubtful accounts totaling $17.8 million at June 30, 2011 and $18.6 million at December 31, 2010.
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(2)
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The loan period for the investment grade-rated utility customer ends in the third quarter of 2011.
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(3)
|
Unbilled revenue for utility customers represents price adjustments for past deliveries that are not yet billable under the applicable contracts.
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(4)
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Billings for contract services related to the U.S. Department of Energy (“DOE”) are invoiced based on provisional billing rates approved by DOE. Unbilled revenue represents the difference between actual costs incurred, prior to incurred cost audit and notice by DOE authorizing final billing, and provisional billing rate invoiced amounts. USEC expects to invoice and collect the unbilled amounts as billing rates are revised, submitted to and approved by DOE.
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June 30,
2011
|
December 31,
2010
|
|||||||
Current assets:
|
||||||||
Separative work units
|
$ | 914.2 | $ | 947.4 | ||||
Uranium
|
790.5 | 562.5 | ||||||
Materials and supplies
|
12.5 | 12.6 | ||||||
1,717.2 | 1,522.5 | |||||||
Current liabilities:
|
||||||||
Inventories owed to customers and suppliers
|
(1,084.4 | ) | (715.8 | ) | ||||
Inventories, net
|
$ | 632.8 | $ | 806.7 |
December 31,
2010
|
Capital Expenditures
(Depreciation)
|
Transfers
and
Retirements
|
June 30,
2011
|
|||||||||||||
Construction work in progress
|
$ | 1,126.3 | $ | 90.9 | $ | (16.7 | ) | $ | 1,200.5 | |||||||
Leasehold improvements
|
187.3 | - | 2.4 | 189.7 | ||||||||||||
Machinery and equipment
|
269.1 | 0.7 | 0.9 | 270.7 | ||||||||||||
1,582.7 | 91.6 | (13.4 | ) | 1,660.9 | ||||||||||||
Accumulated depreciation and amortization
|
(351.3 | ) | (26.7 | ) | 3.8 | (374.2 | ) | |||||||||
$ | 1,231.4 | $ | 64.9 | $ | (9.6 | ) | $ | 1,286.7 |
June 30,
2011
|
December 31,
2010
|
|||||||
(millions)
|
||||||||
Deferred revenue
|
$ | 158.5 | $ | 176.1 | ||||
Advances from customers
|
30.0 | 3.0 | ||||||
$ | 188.5 | $ | 179.1 | |||||
Deferred costs associated with deferred revenue
|
$ | 152.5 | $ | 152.9 |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(millions)
|
||||||||
Borrowings under the revolving credit facility
|
$ | - | $ | - | ||||
Term loan
|
85.0 | 85.0 | ||||||
Letters of credit
|
7.3 | 17.3 | ||||||
Available credit
|
217.7 | 207.7 |
Requirement
|
Outcome
|
Availability ≥ $100 million
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If not maintained, then the aggregate amount of spending on the American Centrifuge project (1) made in any calendar month shall not exceed $5 million and (2) made in the aggregate shall not exceed $25 million until the 60th consecutive day after minimum Availability is restored.
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•
|
Level 1 – quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 – inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
•
|
Level 3 – unobservable inputs in which little or no market data exists.
|
Fair Value Measurements
(in millions)
|
||||||||||||||||||||||||||||||||
June 30, 2011
|
December 31, 2010
|
|||||||||||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||
Deferred compensation asset (a)
|
- | $ | 2.3 | - | $ | 2.3 | - | $ | 1.8 | - | $ | 1.8 | ||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||
Deferred compensation obligation (a)
|
- | 2.5 | - | 2.5 | - | 2.0 | - | 2.0 | ||||||||||||||||||||||||
Convertible preferred stock (b)
|
- | - | 83.3 | 83.3 | - | - | 78.2 | 78.2 |
(a) The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is informally funded through a rabbi trust using variable universal life insurance. The cash surrender value of the life insurance policies is designed to track the deemed investments of the plan participants. Investment crediting options consist of institutional and retail investment funds. The deemed investments are classified within Level 2 of the valuation hierarchy because (i) of the indirect method of investing and (ii) unit prices of institutional funds are not quoted in active markets; however, the unit prices are based on the underlying investments which are traded in active markets.
|
(b) The estimated fair value of the convertible preferred stock is based on a market approach using a discount rate of 12.75%, which is unobservable (Level 3) since the instruments do not trade. Dividends on the convertible preferred stock are paid as additional shares of convertible preferred stock on a quarterly basis at an annual rate of 12.75%, which is consistent with current market prices and other market benchmarks. The estimated fair value equals the liquidation value of $1,000 per share.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Convertible preferred stock:
|
||||||||||||||||
Beginning balance
|
$ | 80.7 | $ | - | $ | 78.2 | $ | - | ||||||||
Less: paid-in-kind dividends payable, beginning balance
|
(2.5 | ) | - | (2.4 | ) | - | ||||||||||
Issuances
|
2.5 | - | 4.9 | - | ||||||||||||
Paid-in-kind dividends payable
|
2.6 | - | 2.6 | - | ||||||||||||
Total gains or losses (realized/unrealized)
|
- | - | - | - | ||||||||||||
Ending balance
|
$ | 83.3 | $ | - | $ | 83.3 | $ | - |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
|||||||||||||
Credit facility term loan, due May 31, 2012
|
$ | 85.0 | $ | 85.4 | $ | 85.0 | $ | 85.6 | ||||||||
3.0% convertible senior notes, due October 1, 2014
|
530.0 | 379.0 | 575.0 | 517.9 |
|
Defined Benefit Pension Plans
|
Postretirement Health and Life Benefits Plans
|
||||||||||||||||||||||||||||||
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||||||||
Service costs
|
$ | 3.2 | $ | 4.9 | $ | 8.0 | $ | 9.7 | $ | 1.4 | $ | 1.3 | $ | 2.7 | $ | 2.5 | ||||||||||||||||
Interest costs
|
12.5 | 12.2 | 25.1 | 24.4 | 3.1 | 2.9 | 6.1 | 5.9 | ||||||||||||||||||||||||
Expected return on plan assets
(gains)
|
(13.5 | ) | (12.3 | ) | (26.9 | ) | (24.4 | ) | (0.9 | ) | (0.9 | ) | (1.8 | ) | (1.8 | ) | ||||||||||||||||
Amortization of prior service costs (credits)
|
0.4 | 0.5 | 0.8 | 0.9 | - | (2.1 | ) | - | (4.2 | ) | ||||||||||||||||||||||
Amortization of actuarial losses
|
2.2 | 4.0 | 4.7 | 8.0 | 0.6 | 0.6 | 1.3 | 1.3 | ||||||||||||||||||||||||
Curtailment losses
|
- | - | 3.2 | - | 1.9 | - | 1.9 | - | ||||||||||||||||||||||||
Net benefit costs
|
$ | 4.8 | $ | 9.3 | $ | 14.9 | $ | 18.6 | $ | 6.1 | $ | 1.8 | $ | 10.2 | $ | 3.7 |
Common Stock,
Par Value
$.10 per Share
|
Excess of
Capital over
Par Value
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
|||||||||||||||||||
Balance at December 31, 2010
|
$ | 12.3 | $ | 1,172.8 | $ | 329.9 | $ | (57.1 | ) | $ | (144.1 | ) | $ | 1,313.8 | ||||||||||
Amortization of actuarial losses and prior service costs (credits), net of income tax of $2.5 million
|
- | - | - | - | 4.3 | 4.3 | ||||||||||||||||||
Net (loss)
|
- | - | (37.8 | ) | - | - | (37.8 | ) | ||||||||||||||||
Comprehensive (loss)
|
(33.5 | ) | ||||||||||||||||||||||
Common stock issued in exchange for convertible senior notes
|
0.7 | 40.5 | - | - | - | 41.2 | ||||||||||||||||||
Restricted and other common stock issued, net of amortization
|
- | (2.9 | ) | - | 6.5 | - | 3.6 | |||||||||||||||||
Balance at June 30, 2011
|
$ | 13.0 | $ | 1,210.4 | $ | 292.1 | $ | (50.6 | ) | $ | (139.8 | ) | $ | 1,325.1 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(millions)
|
||||||||||||||||
Total stock-based compensation costs:
|
||||||||||||||||
Restricted stock and restricted stock units
|
$ | 2.1 | $ | 2.0 | $ | 4.4 | $ | 4.9 | ||||||||
Stock options, performance awards and other
|
0.3 | 0.4 | 0.8 | 1.1 | ||||||||||||
Less: costs capitalized as part of inventory
|
(0.1 | ) | (0.1 | ) | (0.4 | ) | (0.2 | ) | ||||||||
Expense included in selling, general and administrative and advanced technology costs
|
$ | 2.3 | $ | 2.3 | $ | 4.8 | $ | 5.8 | ||||||||
Total after-tax expense
|
$ | 1.5 | $ | 1.4 | $ | 3.1 | $ | 3.7 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Risk-free interest rate
|
-
|
-
|
-
|
1.4%
|
Expected dividend yield
|
-
|
-
|
-
|
-
|
Expected volatility
|
-
|
-
|
-
|
72%
|
Expected option life
|
-
|
-
|
-
|
4 years
|
Weighted-average grant date fair value
|
-
|
-
|
-
|
$2.81
|
Options granted
|
0
|
0
|
0
|
766,050
|
·
|
Total stock return volatility based on historical volatility over one year using daily stock price observations,
|
·
|
Risk-free interest rate reflecting the yield on the one-year Treasury bonds on grant date,
|
·
|
Beta calculated using one year of daily returns and comparing the risk of the individual securities to the Russell 2000 Index, and
|
·
|
For USEC and each of the companies in the Russell 2000 index, actual stock return from the beginning of the performance period through the grant date (January 1, 2011 – March 1, 2011) has been incorporated in the projection of the ultimate payout.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(in millions)
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net income (loss)
|
$ | (21.2 | ) | $ | 7.2 | $ | (37.8 | ) | $ | (2.5 | ) | |||||
Net interest expense on convertible notes and convertible preferred stock dividends (a)
|
(b)
|
- |
(b)
|
(b)
|
||||||||||||
Net income (loss) if-converted
|
$ | (21.2 | ) | 7.2 | $ | (37.8 | ) | (2.5 | ) | |||||||
Denominator:
|
||||||||||||||||
Weighted average common shares
|
122.8 | 114.9 | 122.1 | 114.3 | ||||||||||||
Less: Weighted average unvested restricted stock
|
1.7 | 2.0 | 1.8 | 2.0 | ||||||||||||
Denominator for basic calculation
|
121.1 | 112.9 | 120.3 | 112.3 | ||||||||||||
Weighted average effect of dilutive securities:
|
||||||||||||||||
Stock compensation awards
|
(b)
|
0.4 |
(b)
|
(b)
|
||||||||||||
Convertible preferred stock
|
(b)
|
- |
(b)
|
- | ||||||||||||
Convertible notes
|
(b)
|
48.1 |
(b)
|
(b)
|
||||||||||||
Denominator for diluted calculation
|
121.1 | 161.4 | 120.3 | 112.3 | ||||||||||||
Net income (loss) per share – basic
|
$ | (.18 | ) | $ | .06 | $ | (.31 | ) | $ | (.02 | ) | |||||
Net income (loss) per share – diluted
|
$ | (.18 | )(b) | $ | .04 | $ | (.31 | )(b) | $ | (.02 | )(b) |
(a)
|
Interest expense on convertible notes and convertible preferred stock dividends net of amount capitalized and net of tax.
|
(b)
|
No dilutive effect of convertible notes or stock compensation awards is recognized in a period in which a net loss has occurred.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Options excluded from diluted earnings per share
|
2.2
|
1.8
|
2.2
|
2.6
|
Warrants excluded from diluted earnings per share
|
6.3
|
-
|
6.3
|
-
|
Exercise price of excluded options
|
$5.00 to
|
$5.86 to
|
$5.00 to
|
$5.00 to
|
$14.28
|
$16.90
|
$14.28
|
$16.90
|
|
Exercise price of excluded warrants
|
$7.50
|
-
|
$7.50
|
-
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(millions)
|
||||||||||||||||
Revenue
|
||||||||||||||||
LEU segment:
|
||||||||||||||||
Separative work units
|
$ | 330.3 | $ | 331.0 | $ | 638.8 | $ | 597.6 | ||||||||
Uranium
|
67.8 | 69.6 | 81.8 | 85.2 | ||||||||||||
398.1 | 400.6 | 720.6 | 682.8 | |||||||||||||
Contract services segment
|
56.3 | 59.1 | 114.3 | 121.6 | ||||||||||||
$ | 454.4 | $ | 459.7 | $ | 834.9 | $ | 804.4 | |||||||||
Segment Gross Profit
|
||||||||||||||||
LEU segment
|
$ | 29.5 | $ | 42.0 | $ | 44.8 | $ | 57.0 | ||||||||
Contract services segment
|
3.7 | 2.1 | 2.3 | 13.8 | ||||||||||||
Gross profit
|
33.2 | 44.1 | 47.1 | 70.8 | ||||||||||||
Advanced technology costs
|
33.5 | 26.0 | 60.2 | 51.7 | ||||||||||||
Selling, general and administrative
|
16.7 | 14.3 | 32.2 | 29.4 | ||||||||||||
Other (income)
|
- | (10.3 | ) | (3.7 | ) | (20.0 | ) | |||||||||
Operating income (loss)
|
(17.0 | ) | 14.1 | (41.6 | ) | 9.7 | ||||||||||
Interest expense (income), net
|
- | - | (0.2 | ) | (0.1 | ) | ||||||||||
Income (loss) before income taxes
|
$ | (17.0 | ) | $ | 14.1 | $ | (41.4 | ) | $ | 9.8 |
·
|
supply LEU to both domestic and international utilities for use in about 150 nuclear reactors worldwide;
|
·
|
are deploying what we believe is the world’s most advanced uranium enrichment technology, known as the American Centrifuge;
|
·
|
enrich uranium at the Paducah gaseous diffusion plant (“GDP”) that we lease from the U.S. Department of Energy (“DOE”);
|
·
|
are the exclusive executive agent for the U.S. government under a nuclear nonproliferation program with Russia, known as Megatons to Megawatts;
|
·
|
perform contract work for DOE and its contractors at the Paducah and Portsmouth sites; and
|
·
|
provide transportation and storage systems for spent nuclear fuel and provide nuclear and energy consulting services.
|
·
|
To negotiate and close on a $2 billion DOE loan guarantee and other financing necessary to complete the ACP, as discussed in “American Centrifuge Plant Update” and “Liquidity and Capital Resources”;
|
·
|
To pursue new power purchase contracts and other arrangements to support Paducah operations during the transition to the ACP; and
|
·
|
To successfully manage the transition of our cold shutdown work at the Portsmouth site and enhance the opportunities of our NAC International subsidiary.
|
·
|
sales of the SWU component of LEU,
|
·
|
sales of both the SWU and uranium components of LEU, and
|
·
|
sales of uranium.
|
June 30,
|
December 31,
|
June 30,
|
||||||||||
2011
|
2010
|
2010
|
||||||||||
Long-term SWU price indicator ($/SWU)
|
$ | 158.00 | $ | 158.00 | $ | 160.00 | ||||||
UF6:
|
||||||||||||
Long-term price composite ($/KgU)
|
193.67 | 190.07 | 168.27 | |||||||||
Spot price indicator ($/KgU)
|
145.50 | 173.00 | 116.00 |
No. of Employees
|
|||||||||
Location
|
June 30, 2011
|
Dec. 31, 2010
|
|||||||
Paducah GDP
|
Paducah, KY
|
1,188 | 1,185 | ||||||
Portsmouth site
|
Piketon, OH
|
620 | 1,157 | ||||||
American Centrifuge
|
Primarily Oak Ridge, TN and Piketon, OH
|
454 | 453 | ||||||
NAC
|
Primarily Norcross, GA
|
65 | 60 | ||||||
Headquarters
|
Bethesda, MD
|
95 | 94 | ||||||
Total Employees
|
2,422 | 2,949 |
Six Months
Ended June 30,
|
Cumulative
as of
June 30,
|
|||||||||||
2011
|
2010
|
2011
|
||||||||||
Amount expensed (A)
|
$ | 59.5 | $ | 50.7 | $ | 826.9 | ||||||
Amount capitalized (B)
|
70.8 | 63.6 | 1,249.0 | |||||||||
Total ACP expenditures, including accruals (C)
|
$ | 130.3 | $ | 114.3 | $ | 2,075.9 | ||||||
(A) Expense included as part of Advanced Technology Costs.
|
||||||||||||
(B) Amounts capitalized as part of property, plant and equipment total $1,213.9 million as of June 30, 2011, including capitalized interest of $101.1 million. Prepayments to suppliers for services not yet performed totaled $35.1 million as of June 30, 2011.
|
||||||||||||
(C) Total ACP expenditures are all American Centrifuge costs including, but not limited to, demonstration facility, licensing activities, commercial plant facility, program management, interest related costs and accrued asset retirement obligations capitalized. This includes $8.7 million of accruals at June 30, 2011.
|
Three Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
Change
|
%
|
|||||||||||||
LEU segment
|
||||||||||||||||
Revenue:
|
||||||||||||||||
SWU revenue
|
$ | 330.3 | $ | 331.0 | $ | (0.7 | ) | - | ||||||||
Uranium revenue
|
67.8 | 69.6 | (1.8 | ) | (3 | )% | ||||||||||
Total
|
398.1 | 400.6 | (2.5 | ) | (1 | )% | ||||||||||
Cost of sales
|
368.6 | 358.6 | (10.0 | ) | (3 | )% | ||||||||||
Gross profit
|
$ | 29.5 | $ | 42.0 | $ | (12.5 | ) | (30 | )% | |||||||
Contract services segment
|
||||||||||||||||
Revenue
|
$ | 56.3 | $ | 59.1 | $ | (2.8 | ) | (5 | )% | |||||||
Cost of sales
|
52.6 | 57.0 | 4.4 | 8 | % | |||||||||||
Gross profit
|
$ | 3.7 | $ | 2.1 | $ | 1.6 | 76 | % | ||||||||
Total
|
||||||||||||||||
Revenue
|
$ | 454.4 | $ | 459.7 | $ | (5.3 | ) | (1 | )% | |||||||
Cost of sales
|
421.2 | 415.6 | (5.6 | ) | (1 | )% | ||||||||||
Gross profit
|
$ | 33.2 | $ | 44.1 | $ | (10.9 | ) | (25 | )% |
Six Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
Change
|
%
|
|||||||||||||
LEU segment
|
||||||||||||||||
Revenue:
|
||||||||||||||||
SWU revenue
|
$ | 638.8 | $ | 597.6 | $ | 41.2 | 7 | % | ||||||||
Uranium revenue
|
81.8 | 85.2 | (3.4 | ) | (4 | )% | ||||||||||
Total
|
720.6 | 682.8 | 37.8 | 6 | % | |||||||||||
Cost of sales
|
675.8 | 625.8 | (50.0 | ) | (8 | )% | ||||||||||
Gross profit
|
$ | 44.8 | $ | 57.0 | $ | (12.2 | ) | (21 | )% | |||||||
Contract services segment
|
||||||||||||||||
Revenue
|
$ | 114.3 | $ | 121.6 | $ | (7.3 | ) | (6 | )% | |||||||
Cost of sales
|
112.0 | 107.8 | (4.2 | ) | (4 | )% | ||||||||||
Gross profit
|
$ | 2.3 | $ | 13.8 | $ | (11.5 | ) | (83 | )% | |||||||
Total
|
||||||||||||||||
Revenue
|
$ | 834.9 | $ | 804.4 | $ | 30.5 | 4 | % | ||||||||
Cost of sales
|
787.8 | 733.6 | (54.2 | ) | (7 | )% | ||||||||||
Gross profit
|
$ | 47.1 | $ | 70.8 | $ | (23.7 | ) | (33 | )% |
Three Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
Change
|
%
|
|||||||||||||
Gross profit
|
$ | 33.2 | $ | 44.1 | $ | (10.9 | ) | (25 | )% | |||||||
Advanced technology costs
|
33.5 | 26.0 | (7.5 | ) | (29 | )% | ||||||||||
Selling, general and administrative
|
16.7 | 14.3 | (2.4 | ) | (17 | )% | ||||||||||
Other (income)
|
- | (10.3 | ) | (10.3 | ) | - | ||||||||||
Operating income (loss)
|
(17.0 | ) | 14.1 | (31.1 | ) | (221 | )% | |||||||||
Interest expense
|
0.1 | 0.1 | - | - | ||||||||||||
Interest (income)
|
(0.1 | ) | (0.1 | ) | - | - | ||||||||||
Income (loss) before income taxes
|
(17.0 | ) | 14.1 | (31.1 | ) | (221 | )% | |||||||||
Provision for income taxes
|
4.2 | 6.9 | 2.7 | 39 | % | |||||||||||
Net income (loss)
|
$ | (21.2 | ) | $ | 7.2 | $ | (28.4 | ) | (394 | )% |
Six Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
Change
|
%
|
|||||||||||||
Gross profit
|
$ | 47.1 | $ | 70.8 | $ | (23.7 | ) | (33 | )% | |||||||
Advanced technology costs
|
60.2 | 51.7 | (8.5 | ) | (16 | )% | ||||||||||
Selling, general and administrative
|
32.2 | 29.4 | (2.8 | ) | (10 | )% | ||||||||||
Other (income)
|
(3.7 | ) | (20.0 | ) | (16.3 | ) | (82 | )% | ||||||||
Operating income (loss)
|
(41.6 | ) | 9.7 | (51.3 | ) | (529 | )% | |||||||||
Interest expense
|
0.1 | 0.1 | - | - | ||||||||||||
Interest (income)
|
(0.3 | ) | (0.2 | ) | 0.1 | 50 | % | |||||||||
Income (loss) before income taxes
|
(41.4 | ) | 9.8 | (51.2 | ) | (522 | )% | |||||||||
Provision (benefit) for income taxes
|
(3.6 | ) | 12.3 | 15.9 | 129 | % | ||||||||||
Net (loss)
|
$ | (37.8 | ) | $ | (2.5 | ) | $ | (35.3 | ) | (1412 | )% |
·
|
Changes to the electric power fuel cost adjustment or changes to our power purchases from our current projection;
|
·
|
Closing out contract services work at Portsmouth and recognition of estimated contract closeout costs to be recovered from DOE as well as amounts previously billed and owed;
|
·
|
Movement and timing of customer orders;
|
·
|
Actions by DOE regarding financing of the American Centrifuge and supporting its continued development;
|
·
|
Ongoing review and evaluation of the value of capitalized costs that are part of ACP construction that could be charged to expense;
|
·
|
Changes to SWU and uranium price indicators, and changes in inflation that can affect the price of SWU billed to customers; and
|
·
|
The timing of recognition of previously deferred revenue.
|
Six Months Ended June 30,
|
||||||||
2011
|
2010
|
|||||||
Net Cash Provided by Operating Activities
|
$ | 285.6 | $ | 173.2 | ||||
Net Cash (Used in) Investing Activities
|
(91.0 | ) | (84.9 | ) | ||||
Net Cash (Used in) Financing Activities
|
(5.4 | ) | (12.1 | ) | ||||
Net Increase in Cash and Cash Equivalents
|
$ | 189.2 | $ | 76.2 |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(millions)
|
||||||||
Cash and cash equivalents
|
$ | 340.2 | $ | 151.0 | ||||
Accounts receivable, net
|
134.0 | 308.6 | ||||||
Inventories, net
|
632.8 | 806.7 | ||||||
Credit facility term loan, current
|
(85.0 | ) | - | |||||
Other current assets and liabilities, net
|
(205.0 | ) | (280.7 | ) | ||||
Working capital
|
$ | 817.0 | $ | 985.6 |
·
|
the greater of (1) the JPMorgan Chase Bank prime rate (with a floor of 3%) plus 6.5%, (2) the federal funds rate plus ½ of 1% (with a floor of 3%) plus 6.5%, or (3) an adjusted 1-month LIBO Rate plus 1% (with a floor of 3%) plus 6.5%; or
|
·
|
the adjusted LIBO Rate (with a floor of 2%) plus 7.5%.
|
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Borrowings under the revolving credit facility
|
$ | - | $ | - | ||||
Term loan due May 31, 2012
|
85.0 | 85.0 | ||||||
Letters of credit
|
7.3 | 17.3 | ||||||
Available credit
|
217.7 | 207.7 |
|
·
|
the sum of (1) the greater of a) the JPMorgan Chase Bank prime rate, b) the federal funds rate plus ½ of 1%, or c) an adjusted 1-month LIBO Rate plus 1% plus (2) a margin ranging from 2.25% to 2.75% based upon availability, or
|
|
·
|
the sum of the adjusted LIBO Rate plus a margin ranging from 4.0% to 4.5% based upon availability.
|
Requirement
|
Outcome
|
Availability ≥ $100 million
|
If not maintained, then the aggregate amount of spending on the American Centrifuge project (1) made in any calendar month shall not exceed $5 million and (2) made in the aggregate shall not exceed $25 million until the 60th consecutive day after minimum Availability is restored.
|
Previous Requirement
|
New Requirement
|
Outcome
|
Availability ≥ greater of 10% of aggregate lender commitments or $32.5 million
|
Availability ≥ the sum of (a) greater of (i) 10% of aggregate lender commitments or (ii) $32.5 million plus (b) $17.5 million
|
If not met at any time, an event of default is triggered.
|
Availability ≥ $75.0 million`
|
Availability ≥ $100.0 million
|
If not met at any time, fixed charge ratio required to be 1.00 to 1.00 until the 90th consecutive day Availability is restored.
|
December 31, 2010
|
Additions
|
Amortization
|
June 30,
2011
|
|||||||||||||
Other current assets:
|
||||||||||||||||
Bank credit facilities
|
$ | 7.4 | $ | 0.5 | $ | (2.6 | ) | $ | 5.3 | |||||||
Deferred financing costs (long-term):
|
||||||||||||||||
Convertible notes
|
$ | 8.1 | $ | - | $ | (1.6 | ) | $ | 6.5 | |||||||
ACP project
|
2.5 | 2.6 | - | 5.1 | ||||||||||||
Deferred financing costs
|
$ | 10.6 | $ | 2.6 | $ | (1.6 | ) | $ | 11.6 |
|
•
|
commodity price risk for electric power requirements for the Paducah GDP (refer to “Overview – Cost of Sales for SWU and Uranium” and “Results of Operations – Cost of Sales”),
|
|
•
|
interest rate risk relating to the outstanding term loan and any outstanding borrowings at variable interest rates under our credit facility (refer to “Liquidity and Capital Resources – Capital Structure and Financial Resources”), and
|
|
•
|
interest rate and other market risks relating to the valuation of our convertible preferred stock (refer to “Liquidity and Capital Resources – Capital Structure and Financial Resources”).
|
(c) Total Number
|
(d) Maximum Number
|
|||||||
(a) Total
|
(b)
|
of Shares (or Units)
|
(or Approximate Dollar
|
|||||
Number of
|
Average
|
Purchased as Part
|
Value) of Shares (or
|
|||||
Shares (or
|
Price Paid
|
of Publicly
|
Units) that May Yet Be
|
|||||
Units)
|
Per Share
|
Announced Plans
|
Purchased Under the
|
|||||
Period
|
Purchased(1)
|
(or Unit)
|
or Programs
|
Plans or Programs
|
||||
April 1 – April 30
|
-
|
-
|
-
|
-
|
||||
May 1 – May 31
|
2,669
|
$4.30
|
-
|
-
|
||||
June 1 – June 30
|
-
|
-
|
-
|
-
|
||||
Total
|
2,669
|
$4.30
|
-
|
-
|
(1)
|
These purchases were not made pursuant to a publicly announced repurchase plan or program. Represents 2,669 shares of common stock surrendered to USEC to pay withholding taxes on shares of restricted stock under the Company’s equity incentive plan.
|
|
10.1
|
Summary Sheet for 2011 Non-Employee / Non-Investor Director Compensation.
|
|
10.2
|
Amendment dated as of April 28, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
|
10.3
|
Amendment No. 2 dated as of May 19, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
|
10.4
|
Amendment No. 3 dated as of June 7, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
|
10.5
|
Amendment No. 4 dated as of June 30, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
|
10.6
|
First Amendment to Limited Liability Company Agreement of American Centrifuge Manufacturing, LLC, dated as of April 29, 2011, by American Centrifuge Holdings, LLC and Babcock & Wilcox Technical Services Group, Inc.
|
|
10.7
|
Equipment Supply Agreement dated May 1, 2011 between American Centrifuge Enrichment, LLC and American Centrifuge Manufacturing, LLC (Certain information has been omitted and filed separately pursuant to a request for confidential treatment under Rule 24b-2).
|
|
10.8
|
First Amendment to Third Amended and Restated Credit Agreement, dated as of June 20, 2011, among USEC Inc., United States Enrichment Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative and collateral agent, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 21, 2011 (Commission file number 1-14287).
|
|
10.9
|
Standstill Agreement dated as of June 30, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company and USEC Inc., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 30, 2011 (Commission file number 1-14287).
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
|
32.1
|
Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350.
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
USEC Inc.
|
|||
August 4, 2011
|
By:
|
/s/ John C. Barpoulis
|
|
John C. Barpoulis
|
|||
Senior Vice President and Chief Financial Officer
|
|||
(Principal Financial Officer)
|
10.1
|
Summary Sheet for 2011 Non-Employee / Non-Investor Director Compensation.
|
10.2
|
Amendment dated as of April 28, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
10.3
|
Amendment No. 2 dated as of May 19, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
10.4
|
Amendment No. 3 dated as of June 7, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
10.5
|
Amendment No. 4 dated as of June 30, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company, and USEC Inc. to the Investor Rights Agreement dated as of September 2, 2010 by and among USEC Inc., Toshiba Corporation, and Babcock & Wilcox Investment Company.
|
10.6
|
First Amendment to Limited Liability Company Agreement of American Centrifuge Manufacturing, LLC, dated as of April 29, 2011, by American Centrifuge Holdings, LLC and Babcock & Wilcox Technical Services Group, Inc.
|
10.7
|
Equipment Supply Agreement dated May 1, 2011 between American Centrifuge Enrichment, LLC and American Centrifuge Manufacturing, LLC (Certain information has been omitted and filed separately pursuant to a request for confidential treatment under Rule 24b-2).
|
10.8
|
First Amendment to Third Amended and Restated Credit Agreement, dated as of June 20, 2011, among USEC Inc., United States Enrichment Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative and collateral agent, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 21, 2011 (Commission file number 1-14287).
|
10.9
|
Standstill Agreement dated as of June 30, 2011 by and among Toshiba America Nuclear Energy Corporation, Babcock & Wilcox Investment Company and USEC Inc., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 30, 2011 (Commission file number 1-14287).
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
|
32.1
|
Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
Annual Retainer
|
$200,000 paid at the beginning of the service year. $80,000 of the retainer is paid in cash and $120,000 of the retainer is paid in the form of restricted stock units, although a director may elect to receive a greater proportion of the retainer in restricted stock units. Restricted stock units vest one year from the date of grant, however, vesting is accelerated upon (1) the director attaining eligibility for Retirement, (2) termination of the director’s service by reason of death or disability, or (3) a change in control.
|
Chairman Fees
|
$100,000 annual fee for Chairman of the Board. $20,000 annual fee for Audit and Finance Committee chairman. $10,000 annual fee for Compensation Committee chairman. $7,500 annual fee for all other committees’ chairman. Chairman fees are paid in cash at the beginning of the service year, although a director may elect to receive their chairman fee in restricted stock units.
|
Incentive Restricted Stock Unit Awards
|
If a director chooses to receive restricted stock units as payment for the part of the annual retainer or chairman fees that they are otherwise entitled to receive in cash, he or she will receive an incentive payment of restricted stock units equal to 20% of the portion of the annual retainer and chairman fees that the director elects to take in restricted stock units in lieu of cash. These incentive restricted stock units will vest in equal annual installments over three years from the date of grant, however, vesting is accelerated upon (1) the director attaining eligibility for Retirement, (2) termination of the director’s service by reason of death or disability, or (3) a change in control. Incentive restricted stock units are granted at the time the annual retainer is paid.
|
1.
|
TANE, B&W, and USEC each hereby agree that the reference to “Filing Date” in Section 4.1(a) of the Agreement shall be replaced by “May 20, 2011” so that the amended Section 4.1(a) shall read, in its entirety, as follows:
|
2.
|
Except as expressly amended hereby, the Agreement shall remain unchanged and, as amended hereby, the Agreement shall remain in full force and effect. Upon the effectiveness of this Amendment, all references to the Agreement shall be to the Agreement as amended hereby.
|
3.
|
Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.
|
4.
|
This Amendment shall first become effective upon the delivery by each Party to each other Party of a duly executed counterpart hereof, which delivery shall be effected pursuant to the notice provisions of the Agreement. This Amendment may be signed in counterparts
|
1.
|
TANE, B&W, and USEC each hereby agree that the reference to “Filing Date” in Section 4.1(a) of the Original Agreement, shall be replaced by “June 10, 2011” so that the amended Section 4.1(a) shall read, in its entirety, as follows:
|
2.
|
Except as expressly amended hereby, the Original Agreement shall remain unchanged and, as amended hereby, the Original Agreement shall remain in full force and effect. Upon the effectiveness of this Amendment No.2, all references to the Agreement shall be to the Original Agreement as amended hereby.
|
3.
|
Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Original Agreement.
|
4.
|
This Amendment No.2 shall first become effective upon the delivery by each Party to each other Party of a duly executed counterpart hereof, which delivery shall be effected pursuant to the notice provisions of the Original Agreement. This Amendment No.2 may be signed in counterparts.
|
1.
|
TANE, B&W, and USEC each hereby agree that the reference to “Filing Date” in Section 4.1(a) of the Original Agreement, shall be replaced by “July 1, 2011” so that the amended Section 4.1(a) shall read, in its entirety, as follows:
|
2.
|
Notwithstanding anything in any of the Transaction Documents to the contrary, including without limitation Section 9.2 of the Securities Purchase Agreement dated May 25, 2010, by and among USEC, B&W and TANE (as assignee), neither B&W nor TANE shall have any obligation to take any actions or make any efforts (commercially reasonable or otherwise) related to selling any shares of Common Stock or entering into a Sales Plan (as defined in the Certificates of Designation) prior to the date that the Initial Shelf is declared effective under the Securities Act or during the pendency of the period that B&W or TANE agrees not to sell any shares of Common Stock pursuant to Section 4.7 of the Original Agreement.
|
3.
|
Except as expressly amended hereby, the Original Agreement shall remain unchanged and, as amended hereby, the Original Agreement shall remain in full force and effect. Upon the effectiveness of this Amendment No.3, all references to the Agreement shall be to the Original Agreement as amended hereby. Nothing herein shall be deemed to modify or limit in any respect any rights or remedies of TANE or B&W under any provision of the Original Agreement other than Section 4.1(a), or under any provision of any other agreement entered into between the Parties, whether in connection with the Original Agreement or otherwise.
|
4.
|
Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Original Agreement.
|
5.
|
This Amendment No. 3 shall first become effective upon the delivery by each Party to each other Party of a duly executed counterpart hereof, which delivery shall be effected pursuant to the notice provisions of the Original Agreement. This Amendment No. 3 may be signed in counterparts.
|
1.
|
TANE, B&W, and USEC each hereby agree that the reference to “Filing Date” in Section 4.1(a) of the Original Agreement, shall be replaced by “August 15, 2011” so that the amended Section 4.1(a) shall read, in its entirety, as follows:
|
2.
|
Notwithstanding anything in any of the Transaction Documents to the contrary, including without limitation Section 9.2 of the Securities Purchase Agreement dated as of May 25, 2010, by and among USEC, B&W and TANE (as assignee), neither B&W nor TANE shall have any obligation to take any actions or make any efforts (commercially reasonable or otherwise) related to selling any shares of Common Stock or entering into a Sales Plan (as defined in the Certificates of Designation) prior to the date that the Initial Shelf is declared effective under the Securities Act or during the pendency of the period that B&W or TANE agrees not to sell any shares of Common Stock pursuant to Section 4.7 of the Original Agreement.
|
3.
|
Except as expressly amended hereby, the Original Agreement shall remain unchanged and, as amended hereby, the Original Agreement shall remain in full force and effect. Upon the effectiveness of this Amendment No. 4, all references to the Agreement shall be to the Original Agreement as amended hereby. Nothing herein shall be deemed to modify or limit in any respect any rights or remedies of TANE or B&W under any provision of the Original Agreement other than Section 4.1(a), or under any provision of any other agreement entered into between the Parties, whether in connection with the Original Agreement or otherwise.
|
4.
|
Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Original Agreement.
|
5.
|
This Amendment No. 4 shall first become effective upon the delivery by each Party to each other Party of a duly executed counterpart hereof, which delivery shall be effected pursuant to the notice provisions of the Original Agreement. This Amendment No. 4 may be signed in counterparts.
|
1.
|
Section 1.1(u) of the Agreement is hereby deleted and replaced in its entirety with the following:
|
2.
|
Section 1.1(z) of the Agreement is hereby deleted and replaced in its entirety with the following:
|
3.
|
Section 2.6 of the Agreement is hereby deleted and replaced in its entirety with the following:
|
4.
|
Section 4.3 of the Agreement is hereby amended by adding at the end of Section 4.3 the following:
|
|
5.
|
Section 4.8 of the Agreement is hereby amended by adding at the end of Section 4.8 the following:
|
|
or (d) substantially all of the ESA has been suspended by ACE for 6 months or more or (e) an event of Force Majeure (as defined in the ESA) excusing performance of substantially all of the ESA has occurred and continued for 12 months or more.
|
7.
|
Section 5.8 of the Agreement is hereby amending by adding at the end thereof the following:
|
8.
|
Clause 1 of Section 7.1(e) of the Agreement is hereby deleted and replaced in its entirety with the following:
|
9.
|
Section 9.1(f) of the Agreement is hereby deleted and replaced in its entirety with the following:
|
10.
|
Section 9.5 of the Agreement is hereby deleted in its entirety.
|
11.
|
Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.
|
1
|
DEFINITIONS
|
2
|
PURPOSE AND SCOPE; STATEMENT OF WORK
|
3
|
FINALIZING TARGET COST AND CEILING COST
|
4
|
PERIOD OF PERFORMANCE
|
5
|
EMPLOYEE PROTECTION
|
6
|
SUBCONTRACTS AND CONSULTANTS
|
7
|
ALLOWABLE COST
|
8
|
FEE
|
9
|
PAYMENT
|
10
|
TAXES
|
11
|
LIQUIDATED DAMAGES AND BUFFER
|
12
|
STRATEGIC SUPPLIER AGREEMENTS
|
13
|
CONTRACTOR AND OWNER REPRESENTATIONS
|
14
|
STANDARDS OF PERFORMANCE
|
15
|
DELIVERY
|
16
|
INSPECTION AND REJECTION OF DELIVERABLES
|
17
|
WARRANTIES
|
18
|
LIMITATION OF LIABILITY
|
19
|
TITLE AND RISK OF LOSS
|
20
|
INDEMNIFICATION AND INSURANCE
|
21
|
CONTRACT MANAGEMENT
|
22
|
CONTRACT MODIFICATIONS
|
23
|
DISPUTE RESOLUTION
|
24
|
TERMINATION AND SUSPENSION OF THIS CONTRACT
|
25
|
APPLICABLE LAW
|
26
|
COMPLIANCE WITH LAWS
|
27
|
FURNISHED PROPERTY
|
28
|
NON WAIVER OR DEFAULT
|
29
|
SURVIVAL
|
30
|
HEADINGS
|
31
|
CONTRACTOR STATUS
|
32
|
THIRD PARTY BENEFICIARIES
|
33
|
SEVERABILITY
|
34
|
PRECEDENCE
|
35
|
CONFIDENTIALITY
|
36
|
INTELLECTUAL PROPERTY
|
37
|
SECURITY OF CLASSIFIED INFORMATION AND CONTROLLED AREAS
|
38
|
WAIVER FOR CLAIMS DUE TO NUCLEAR INCIDENTS
|
39
|
MISCELLANEOUS
|
40
|
PRICE-ANDERSON INDEMNIFICATION
|
41
|
OWNER RULES AND REGULATIONS
|
42
|
COMPLIANCE WITH NUCLEAR SAFETY AND SAFEGUARDS AND SECURITY REQUIREMENTS
|
43
|
CODE OF CONDUCT
|
44
|
PREEXISTING CONDITIONS
|
45
|
NOTICES
|
46
|
FINANCING
|
47
|
AGENT FOR OWNER
|
48
|
ENTIRE AGREEMENT
|
49
|
ASSIGNMENT
|
50
|
CERTIFICATE OF CONFORMANCE
|
51
|
LIST OF EXHIBITS
|
Exhibit
|
Document Title
|
|
A
|
Statement of Work
|
|
B
|
Baseline Delivery Schedule
|
|
C
|
Work Breakdown Structure and Earned Value
|
|
D
|
G&A Costs
|
|
E
|
Fixed Fee
|
|
F
|
Incentive Fee
|
|
G
|
Reserved
|
|
H
|
Cash Flow Schedule
|
|
I
|
ACO Fixed Repair Rates
|
1.0
|
SCOPE
|
1.1
|
OWNER POINTS OF CONTACT
|
|
General Points of Contact
|
|
Piketon Points of Contact
|
|
Oak Ridge Points of Contact
|
1.2
|
Contractor shall optimize cost and manufacturing efficiencies, communication and coordination through structured relationships with its subcontractors and suppliers, bringing together the organizations, resources and processes to efficiently meet the Owner’s schedule.
|
1.3
|
Contractor will manufacture and deliver Centrifuge Machines meeting requirements specified in Appendix A and in accordance with the Baseline Delivery Schedule in Exhibit B to the ESA.
|
1.4
|
Contractor shall develop and apply industry practices (Six Sigma, LEAN manufacturing, or equivalent) and manufacturing techniques that will attempt to:
|
1.4.1
|
Reduce acquisition and supportability costs.
|
1.4.2
|
Reduce manufacturing and repair cycle time.
|
1.4.3
|
Implement the manufacture of design changes as directed by Owner and in accordance with the ESA, and transition these changes to production.
|
1.4.4
|
Improve the quality, productivity, technological capability and practices of businesses, workers and suppliers.
|
1.5
|
Interim operations for Centrifuge Machine assembly will be conducted in the Centrifuge Test and Training Facility (CTTF) until operations can be transferred to the Recycle/Assembly (R/A) area in the ACP Facility in Piketon Ohio. It is anticipated that this transfer shall be accomplished by ***** and that, prior to transfer, the R/A assembly facility shall be fully tested and qualified by Owner and available for production use.
|
1.6
|
During the period ending *****, Contractor and Owner shall conduct technology transfer of the Machine Assembly function at the Piketon ACP facility in preparation for Contractor assuming full responsibility for Machine Assembly. During this period, Contractor shall observe and support the Machine Assembly function with the understanding that Contractor shall assume full responsibility for this function on *****.
|
2.0
|
REFERENCES
|
2.1
|
Contractor shall comply with those rules, procedures and policies that relate to the work being performed at Owner’s Facilities.
|
2.2
|
Owner will provide Contractor with training requirements for work being performed at Owner’s Facilities. Owner will also provide Contractor, for their use, access to procedures and policies that provide more detailed instruction on training required to perform work at Owner’s Facilities.
|
3.0
|
TRAINING & QUALIFICATIONS
|
3.1
|
General
|
3.1.1
|
Contractor shall comply with Owner training requirements for site access and work at Owner’s Facilities as specified in Section 3.2 (below).
|
3.1.2
|
Contractor shall be responsible for other personnel training necessary to ensure safe efficient production in compliance with applicable Federal, state and local laws and regulations.
|
3.1.3
|
When requested by the Owner, Contractor shall provide documented proof of training and qualifications. At the request of Contractor, Owner may, in its sole discretion approve a waiver.
|
3.2
|
At Owner’s Piketon ACP Facility, each Contractor employee performing Work at such facility must have a Training Requirements Matrix (TRM) established with the Owner’s training organization. The TRM establishes and tracks training requirements for the individuals work location and activities. The Owner will provide the Contractor access to monthly Training Status Reports for Contractor employees with established Piketon TRMs. Prior to the commencement of Work at Owner’s Piketon ACP Facility, Owner shall provide training to Contractor employees and subcontractor employees that is required for such employees to have access to Owner’s Facility provided that Contractor has identified the employees requiring access and made the employees available for such training prior to the date access is required. Contractor shall ensure that Contractor’s employees and subcontractor’s employees performing Work at the Owner’s Piketon ACP Facility have the necessary training or shall ensure that appropriate work restrictions are in place.
|
4.0
|
CONTRACTOR EQUIPMENT REQUIREMENTS
|
4.1
|
General
|
4.1.1
|
Manufacturing/Assembly Equipment and Tooling/Material. Except for items provided by Owner, the Contractor shall procure, store, install, test and maintain manufacturing, tooling, testing and other specialized tools, equipment and material, required for the manufacture and assembly of the parts and machines. Owner will have title to all equipment, tooling, material, computer equipment, and peripherals procured by the Contractor that has been paid for by the Owner and as provided for in the ESA.
|
4.1.2
|
Contractor shall perform routine installation, testing, repair and preventative maintenance of equipment in accordance with equipment manufacturer’s recommendations and reasonable commercial practice. Inspection and testing of centrifuge parts, assemblies and material shall be in accordance with the ESA and the Drawings, Specifications, procedures and other technical requirements as specified in Appendix A. Contractor is responsible for replacement of tooling and equipment needed for centrifuge parts and assemblies at the American Centrifuge Manufacturing Technology Manufacturing Center (ACMTMC) in Oak Ridge, TN. At Piketon, these activities shall be performed in accordance with “Use and Access Agreement Between American Centrifuge Operations LLC and ACM” and the “Nonexclusive Use and Access Agreement Between American Centrifuge Operations LLC and ACM” (the “Use and Access Agreements”) and “Facility Use Roles and Responsibilities for Centrifuge Assembly at Piketon”, which is maintained by the Owner’s Piketon Operations Point of Contact, and Contractor shall be provided reasonable access thereto. At the Oak Ridge ACMTMC, these activities shall be performed in accordance with the “Lease Agreement between USEC Inc. and ACM.” (the “Lease Agreement”).
|
4.1.3
|
Contractor shall provide personal protective equipment (including personal radiological protective equipment) required for the activities covered by this SOW that complies with site environmental safety and health procedures and programs. Radiation dosimeters required for Contractor employees at the Piketon ACP Facility shall be provided by Owner.
|
4.1.4
|
Contractor shall provide computers and any peripherals needed to perform the Work (unless stated elsewhere in this SOW that Owner shall provide).
|
4.1.5
|
Contractor shall provide software for the management of production and the delivery of Centrifuge Machines, as well as other software associated with this effort. Contractor shall supply to the Owner, Certificates of Conformance pursuant to the requirements of the ESA and electronic Build Books as mutually agreed by Owner and Contractor.
|
4.2
|
Owner’s Facilities
|
4.2.1
|
Contractor use of the Owner’s Facilities shall be governed by the Lease Agreement (for the ACMTMC) and the Use and Access Agreements (for the ACP Piketon facility) which shall take precedence over any conflicting requirements contained herein.
|
4.2.2
|
Any civil, structural, or electrical physical modification made to any facility owned, leased or operated on behalf of Owner (the “Owner’s Facilities”), other than those physical modifications implemented pursuant to the Stage I ESA or permitted pursuant to the Lease Agreement and the Use and Access Agreements, must be approved in writing by Owner. Any physical modification to the ACP Piketon facilities must have the approval of the Piketon Technical Services Manager (the design authority) prior to modifications to ensure compliance with NRC license requirements.
|
4.2.3
|
Owner shall maintain responsibility for all integrated system testing and test plans for the Owner’s Facilities at Piketon.
|
4.2.4
|
Contractor shall comply with the requirements of the Fire Safety/ Emergency Management Program as contained in the TRM, and applicable NFPA Codes and Standards. Contractor shall ensure personnel are familiar with the requirements for welding, burning, and hot work activities, including the requirements for performing fire watch.
|
4.2.5
|
Any new Work activities which may increase the combustible loading within Owner’s Facilities beyond that currently identified in the License application and supporting Fire Hazard Analysis must be approved by Owner.
|
5.0
|
OWNER SUPPLIED REQUIREMENTS
|
5.1
|
The ACMTMC, and all facilities included therein, will be provided for Contractor’s use pursuant to the Lease Agreement. The ACMTMC is to be secured, maintained and operated by the Contractor in accordance with the Lease Agreement and the requirements set forth in this SOW.
|
5.2
|
At Owner’s ACP Piketon facility, Owner will provide work areas (office areas, machine assembly work areas, etc.), telephone, utilities, physical security of facilities, required for receipt, storage, and control of parts and assembly of Centrifuge Machines as described in the Use and Access Agreements.
|
5.3
|
Owner shall provide Contractor with copies of site procedures or electronic access to site procedures, applicable to Work performed by Contractor at the Owner’s Facilities.
|
5.4
|
Owner will provide all manufacturing tooling, testing, and other specialized tools, equipment, and material required for assembly of Centrifuge Machines at the CTTF prior to transfer of machine assembly responsibility under Section 1.6 above.
|
5.5
|
Owner shall provide Contractor copies of and electronic access to all required technical design documents (Drawings, Specifications, quality requirements, etc.) governing the manufacture, inspection and acceptance of centrifuge components, assemblies and machines, and all applicable documents will be provided or referenced in Appendix A of this SOW.
|
5.6
|
Prior to providing access to any electronic or data systems provided by owner, Contractor personnel shall obtain the appropriate security clearance and must have the required training for access to such systems and information.
|
6.0
|
QUALITY REQUIREMENTS
|
6.1
|
Contractor shall permit Owner, and regulatory agencies (e.g., NRC, DOE, EPA, etc.), unrestricted access to both their and their subcontractor’s facilities and to records related to items provided or services performed for Owner upon reasonable notification by Owner or as soon as reasonably possible upon notification by a Regulator and subject to compliance with applicable security clearance requirements. Contractor shall not be required to provide Owner with information that Owner is not entitled to under the terms of the ESA but will provide information to the NRC, the DOE, or other regulatory agency).
|
6.2
|
Contractor must be on and remain on the Owner’s ACP Approved Supplier List (ASL). The Contractor shall implement and maintain an NQA-1 based Quality Assurance Program and any changes to Contractor’s Quality Assurance Program Manual during the life of this ESA must be reported to Owner.
|
6.3
|
Contractor shall establish programs, processes, and procedures to ensure that equipment delivered to Owner meets the requirements as specified in Appendix A.
|
6.4
|
Contractor shall perform the Work in accordance with its Owner-approved QA/QC Program and with associated Contractor implementing procedures.
|
6.5
|
Owner may monitor Contractor work under this SOW at any site where such Work takes place. Such monitoring shall include, but not be limited to observing work activities, interviewing Contractor employees, and review of records.
|
6.6
|
Contractor shall ensure that any design changes proposed by Contractor have been evaluated, documented, and approved in writing by Owner pursuant the ESA before implementing such design changes. Contractor shall also ensure that Owner provided design changes are evaluated, documented and contractually authorized in writing pursuant to the ESA prior to proceeding with the implementation of such design changes. All substitutions of items specified by procurement or design documents require prior Owner approval.
|
6.7
|
Contractor must pass down all applicable technical and quality requirements specified in the ESA and the Drawings and Specifications as specified in Appendix A to any subtier supplier providing items or services. The Contractor shall, in accordance with their approved QA Program, control subtier suppliers providing these items or services and shall establish and maintain its own “Evaluated Suppliers List.”
|
6.8
|
Receipt, in-process, and final inspections for QL-2 items shall be performed as specified in the ESA and the Drawings, and Specifications as specified in Appendix A by Contractor personnel who are qualified in accordance with NQA-1-2004 Requirement 2, which has been determined to be equivalent to NQA-1-1994, Supplement 2S-1.
|
6.9
|
In addition to the procurement and inspection requirements stated in Appendix A for QL-2 items, Contractor shall ensure that QL-2 items are marked as such and are segregated from QL-3 items.
|
6.10
|
Contractor shall provide a description of methods for collection, storage, and maintenance of records. Records are to be retained by Contractor per the requirements established in the Contractor’s Quality Assurance Program and dispositioned as approved by Owner or as permitted under the Owner’s QA Program.
|
6.11
|
Contractor shall review all documentation provided to Owner under this SOW to verify compliance with specification requirements.
|
6.12
|
Contractor shall identify, report, and recommend disposition of all nonconforming conditions associated with this SOW to Owner using Contractor’s Non-Conformance and Waiver Procedures Approved by Owner. Dispositions that leave any remaining nonconformity for a Critical or Unreleased Major feature must be submitted to the Owner as prescribed in Contractor’s Non-Conformance and Waiver Procedures. The Contractor shall identify the Quality Level associated with the nonconforming condition. Contractor will have a process in place for notifying Owner of any non-conformance in a Centrifuge Machine that is delivered to Owner for operation so that Owner may evaluate the nonconformance on operability and for potential compliance with applicable regulatory requirements and/or reportability to the NRC..
|
6.13
|
Contractor shall address discrepancies identified by the Owner prior to acceptance by the Owner in accordance with the terms of the ESA.
|
6.14
|
Contractor shall participate in Owner’s Industry Experience/Lessons Learned (IE/LL) program for applicable NRC-regulated activities.
|
6.15
|
Contractor shall provide change control information needed to identify and resolve changes made to centrifuge parts, assemblies, and machines and any revisions made to configuration management programs.
|
7.0
|
DELIVERABLES AND MANUFACTURING REQUIREMENTS
|
7.1
|
*****
|
7.2
|
*****
|
7.3
|
*****
|
7.4
|
*****
|
7.5
|
*****
|
7.6
|
*****
|
7.7
|
*****
|
7.8
|
*****
|
7.9
|
*****
|
7.10
|
*****
|
7.11
|
*****
|
7.12
|
*****
|
8.0
|
CONTRACTOR POINTS OF CONTACT
|
Name
|
Position
|
Location
|
Phone
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
9.0
|
SECURITY REQUIREMENTS
|
9.1
|
General
|
9.1.1
|
The USEC Director Regulatory and Quality Assurance will serve as the primary point of contact with the Cognizant Security Agency (CSA). Contractor’s written communications to and from the CSA will be coordinated through the primary point of contact.
|
9.1.2
|
If the Contractor deems a particular CSA Security Directive is not feasible or possible to implement, Contractor will coordinate response to the CSA through the USEC Director Regulatory and Quality Assurance and the Corporate Security Director or their designee. Nothing in this provision shall be construed as permitting Contractor to fail to comply with applicable regulatory requirements.
|
9.1.3
|
Other than the Owner’s Facilities at Piketon, OH, Contractor shall develop a security program for each site or subcontractor which must possess classified information.
|
9.1.4
|
Contractor shall ensure applicable CSA Security and Classified Information Systems Security Directives flow down to subcontractors (suppliers) who are authorized to possess classified information.
|
9.1.5
|
Contractor shall ensure that subcontractors dealing with Sensitive Unclassified Information (SUI) and material, such as Export Control Information (ECI), Unclassified Controlled Nuclear Information (UCNI), and Security Related Sensitive Information (SRSI) are trained and compliant with requirements for the safeguard and handling of such material.
|
9.1.6
|
Contractor shall develop a program to assist and monitor subcontractors (suppliers) internal security programs.
|
9.1.7
|
Contractor shall keep the USEC Corporate Security Director advised of the status and activities of the ACM Security Program.
|
9.1.8
|
Contractor shall comply with current USEC Security directives or procedures in effect at the time of the receipt of the Notice to Proceed under the ESA that supplement or enhance CSA Security Directives including the USEC Unclassified Information Identification and Protection Policy, USEC Identification and Control of Export Controlled Information (ECI), Identification and Control of Sensitive Unclassified Information (SUI), Identification and Control of Security Related Sensitive Information (SRSI) and Technical Surveillance and Countermeasures Program (TSCM). Any revisions to such documents shall be evaluated by Contractor for cost impact and feasibility prior to implementation.
|
9.1.9
|
Contractor shall support and participate in USEC or American Centrifuge Program (ACP) wide Security and Education initiatives such as the Classification and Derivative Classifier Education Program, ECI Program, and CI Education and Awareness Program.
|
9.1.10
|
The ACP Security Manager will provide general oversight to security activities conducted at facilities operating under the Owner’s security program in the NRC license application. When required, Owner will provide training to Contractor personnel to ensure Contractor awareness of pertinent security requirements.
|
9.2
|
Owner Facilities
|
9.2.1
|
All Contractor activities at the Owner’s Facilities will be performed in accordance with the Owner’s security program and associated policies and procedures as specified in Appendix A.
|
9.2.2
|
The Owner will manage all facility access control systems, badging and physical security patrol/response activities for the ACP Piketon Facility.
|
9.2.3
|
Contractor shall ensure security measures taken for the protection of centrifuge parts and equipment at the Piketon ACP Facility is coordinated with the Owner’s Fire Safety/Emergency Management Group.
|
10.0
|
SPECIAL PROVISIONS
|
10.1
|
Contractor shall comply with pertinent environmental and safety requirements, including applicable controls associated with radiological safety as specified in Appendix A for the introduction of hazardous materials onto Owner’s Facilities.
|
10.2
|
Contractor shall provide technical assessments and recommendations for design and assembly improvements as requested and coordinated by Owner.
|
10.3
|
Contractor shall participate in the Owner’s Integrated Product Team Program and assist the Owner in identifying and assessing manufacturing technology and development initiatives.
|
10.4
|
Contractor shall assess supplier manufacturing capabilities for affordability of various technologies and recommend and implement programs to improve the competitiveness and quality of the Contractor’s supplier base.
|
10.5
|
Contractor shall notify Owner of events at Owner’s Facilities which require reporting to a Regulator in accordance with ACD2-RG-044, Nuclear Regulatory Event Reporting within the applicable reporting time frame.
|
10.6
|
Contractor’s classified and unclassified computer systems for network installation at Piketon shall comply with Owner requirements and Contractor shall ensure that Owner is apprised of any planned system installation or changes prior to implementation. Contractor’s unclassified network and the Oak Ridge classified network will continue to follow currently approved cyber security plans.
|
10.7
|
Owner Facility
|
10.7.1
|
Contractor shall not make changes to communications infrastructure between buildings or within the facilities at the Piketon ACP Facility unless approved in advance by Owner or permitted pursuant to the terms of the Use and Access Agreements.
|
10.7.2
|
Contractor shall comply with the requirements of Owner’s Emergency Plan and Emergency Plan Implementing Procedures provided to Contractor for the Piketon ACP Facility including participation in periodic drills and exercises at the Owner’s Facility. Owner shall provide applicable employee training for Contractor personnel performing work on Owner’s facilities and Contractor shall ensure personnel are familiar with local alarm signals, processes for notification of the emergency response organization, evacuation, personnel accountability reporting, and protective actions for severe weather.
|
10.7.3
|
Contractor shall ensure transient combustibles are controlled in accordance with Owner fire protection requirements as specified in Appendix A.
|
11.0
|
ACCEPTANCE OF SERVICES
|
11.1
|
Contractor shall verify and document that all Deliverables (including QA records and a Certificate of Conformance) have been received and that pertinent requirements have been satisfied as set forth in the ESA and the Drawings and Specifications as set forth in Appendix A. The Piketon Operations Point of Contact (or designee) will approve the completed electronic build book for each assembled Centrifuge Machine on behalf of the Technical Representative in accordance with the requirements set forth in the ESA.
|
11.2
|
Specifications and Acceptance Criteria. Contractor shall manufacture parts and assemblies and shall assemble and deliver Centrifuge Machines in accordance with the AC100 technical design documents set forth in APPENDIX A (SPECIFICATIONS AND ACCEPTANCE DOCUMENTS).
|
12.0
|
REPORTING REQUIREMENTS
|
1.0
|
MONTHLY PROGRAM PERFORMANCE REPORT.
|
1.1
|
Monthly and cumulative BCWS, BCWP, ACWP, Schedule Variance, Cost Variance (CV), Schedule Performance Index (SPI), Cost Performance Index (CPI), Variance Explanations as required by established thresholds for each WBS Element described in Section 7.0 (Deliverables and Manufacturing Requirements), as described below.
|
1.2
|
A statused Primavera schedule shall be provided as described below.
|
1.3
|
A Trend Log as described below.
|
1.4
|
Proposed baseline changes as described below.
|
2.0
|
MONTHLY PERFORMANCE REPORTING. The Monthly Program Performance Report shall consist of:
|
2.1
|
Monthly Schedule Performance. A monthly schedule status shall be reported each month, based on the WBS schedule, to show progress against the baseline. Monthly schedule status shall include:
|
2.1.1
|
Percentage of completion for each activity, including dates for completion of activities
|
2.1.2
|
Revised forecast dates to reflect project progress
|
2.1.3
|
Revised monthly ETC for the Program, in order to account for the remainder of the program schedule.
|
2.1.4
|
A Primavera report comparing Forecast vs. Baseline dates (see monthly report example)
|
2.2
|
Budgeted Cost of Work Performed (BCWP)/Earned Value calculation. Based on schedule activity budgets established in section 1.1 and the activity percent complete calculation in section 2.1.1 a monthly (BCWP) (Earned Value) calculation will be required for each WBS/WBS. The statused schedule shall serve as the supporting documentation for the BCWP calculation.
|
2.3
|
Actual Cost of Work Performed (ACWP). Suppliers should provide the monthly ACWP. Cost should include all markups and fee. Cost can be summarized at the WBS level. This ACWP calculation does not replace invoicing requirements discussed elsewhere in contract language.
|
2.4
|
Monthly Variance /Performance Indices Calculations. Based on the monthly BCWS established in 1.1, the BCWP calculation in 2.2 and the ACWP calculation in 2.c suppliers shall provide the following calculations:
|
2.4.1
|
Cost Variance: CV is the BCWP – ACWP
|
2.4.2
|
Cost Performance Index: CPI is the BCWP/ACWP
|
2.4.3
|
Schedule Variance: SV is the BCWP – BCWS
|
2.4.4
|
Schedule Performance Index: SPI is the BCWP/BCWS
|
2.5
|
Variance Narrative Explanations. A monthly SPI or CPI of less than .90 or more than 1.1 will require a variance explanation.
|
2.6
|
Monthly Trend Log. A monthly Trend Log will be utilized by the Contractor to identify, by WBS element, any potential cost, scope and schedule changes. The purpose of the Trend Log is for suppliers to communicate to Owner changes that have the potential for occurring. Entries in the Trend Log do not constitute changes to the cost, schedule or scope baseline.
|
2.7
|
Safety Statistics
|
2.7.1
|
Case rate
|
2.7.2
|
Recordable case rate
|
2.7.3
|
Lost time incident rate
|
2.8
|
Monthly Quality Statistics. A monthly summary of quality statistics will be submitted to the Owner in a rolling six-month format for comparison of the following data:
|
2.8.1
|
Number of NCRs Opened
|
2.8.2
|
Number of NCRs Closed
|
2.8.3
|
Average Age of NCRs
|
2.8.4
|
Number of Waivers Initiated
|
2.8.5
|
Average Time to Process a Waiver
|
2.8.6
|
Breakdown of NCR dispositions
|
2.8.7
|
Breakdown of Causes for Waivers
|
2.8.8
|
Adverse Trends (Thresholds to be determined based on cost impact of time and material)
|
3.0
|
BASELINE CHANGES
|
3.1
|
The Program Baseline as documented in the budget-loaded schedule will be managed under the Baseline Management and Change Control and Trend Procedure, ACP 10-222, Rev.1.
|
3.2
|
Baseline Change Proposals/Trends covering any element of the baseline (scope, schedule, cost estimates or time phasing, etc.) shall be submitted through the Site Technical Representative in accordance with the Baseline Management and Change Control and Trend Procedure, ACP 10-222, Rev.1.
|
3.3
|
Receipt by Owner of Baseline Change Proposals/Trends does not constitute acceptance by Owner. Owner approval of specific proposals shall be communicated in writing to the Contractor.
|
4.0
|
MONTHLY PROJECT REVIEWS
|
BCWS
|
|
BCWP
|
|
ACWP
|
|
SV ($)
|
|
SV (%)
|
|
SPI
|
|
CV ($)
|
|
CV (%)
|
|
CPI
|
BCWS
|
|
BCWP
|
|
ACWP
|
|
SV ($)
|
|
SV (%)
|
|
SPI
|
|
CV ($)
|
|
CV (%)
|
|
CPI
|
2011
|
||||||||||||||||||
Monthly
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
Total
|
2012
|
2013
|
2014
|
2015
|
Total
|
BCWS
|
||||||||||||||||||
BCWP
|
||||||||||||||||||
ACWP
|
||||||||||||||||||
SV%
|
||||||||||||||||||
SV$
|
||||||||||||||||||
SPI
|
||||||||||||||||||
CV%
|
||||||||||||||||||
CV$
|
||||||||||||||||||
CPI
|
||||||||||||||||||
2011
|
||||||||||||||||||
Cumulative
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
Total
|
2012
|
2013
|
2014
|
2015
|
Total
|
BCWS
|
||||||||||||||||||
BCWP
|
||||||||||||||||||
ACWP
|
||||||||||||||||||
SV%
|
||||||||||||||||||
SV$
|
||||||||||||||||||
SPI
|
||||||||||||||||||
CV%
|
||||||||||||||||||
CV$
|
||||||||||||||||||
CPI
|
Costs in '000 vs. Rebaseline
|
Total
|
Probability % 25/50/75/100
|
Notes
|
||||||||||
Trend No.
|
Date Entered
|
WBS Number
|
Trend Title
|
Trend Description
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|||
1.0
|
*****
|
2.0
|
*****
|
3.0
|
*****
|
4.0
|
*****
|
5.0
|
*****
|
6.0
|
*****
|
11651
|
||
Production/Delivery Schedules
|
||
ACM Oak Ridge Build Schedule
|
ACM Piketon Final Assembly Build Schedule
|
|
Month
|
Production Units Required
|
Monthly
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
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*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
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*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
Month
|
Monthly
G&A
Payment
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
Month
|
Monthly
G&A
Payment
|
Month
|
Monthly
G&A
Payment
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
Month
|
Monthly
Fixed Fee
Payment
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
Month
|
Monthly
Fixed Fee
Payment
|
Month
|
Monthly
Fixed Fee
Payment
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
Month
|
Monthly
Fixed Fee
Payment
|
Month
|
Monthly
Fixed Fee
Payment
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
*****
|
|
*****
|
*****
|
*****
|
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*****
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*****
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*****
|
*****
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*****
|
*****
|
|
EXHIBIT 31.1
|
1.
|
I have reviewed this quarterly report on Form 10-Q of USEC 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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.
|
August 4, 2011
|
/s/ John K. Welch
|
John K. Welch
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of USEC 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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.
|
August 4, 2011
|
/s/ John C. Barpoulis
|
John C. Barpoulis
|
|
Senior Vice President and Chief Financial Officer
|
August 4, 2011
|
/s/ John K. Welch
|
John K. Welch
|
|
President and Chief Executive Officer
|
August 4, 2011
|
/s/ John C. Barpoulis
|
John C. Barpoulis
|
|
Senior Vice President and Chief Financial Officer
|
Stock-Based Compensation (Assumptions Used in the Black-Scholes Option Pricing Model) (Details) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2010
|
|
Stock-Based Compensation | |
Risk-free interest rate | 1.40% |
Expected volatility | 72.00% |
Expected option life, years | 4 |
Weighted-average grant date fair value | $ 2.81 |
Options granted | 766,050 |
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Revenue: | ||||
Separative work units | $ 330.3 | $ 331.0 | $ 638.8 | $ 597.6 |
Uranium | 67.8 | 69.6 | 81.8 | 85.2 |
Contract services revenue | 56.3 | 59.1 | 114.3 | 121.6 |
Total revenue | 454.4 | 459.7 | 834.9 | 804.4 |
Cost of sales: | ||||
Separative work units and uranium | 368.6 | 358.6 | 675.8 | 625.8 |
Contract services costs | 52.6 | 57.0 | 112.0 | 107.8 |
Total cost of sales | 421.2 | 415.6 | 787.8 | 733.6 |
Gross profit | 33.2 | 44.1 | 47.1 | 70.8 |
Advanced technology costs | 33.5 | 26.0 | 60.2 | 51.7 |
Selling, general and administrative | 16.7 | 14.3 | 32.2 | 29.4 |
Other (income) | (10.3) | (3.7) | (20.0) | |
Operating income (loss) | (17.0) | 14.1 | (41.6) | 9.7 |
Interest expense | 0.1 | 0.1 | 0.1 | 0.1 |
Interest (income) | (0.1) | (0.1) | (0.3) | (0.2) |
Income (loss) before income taxes | (17.0) | 14.1 | (41.4) | 9.8 |
Provision (benefit) for income taxes | 4.2 | 6.9 | (3.6) | 12.3 |
Net income (loss) | $ (21.2) | $ 7.2 | $ (37.8) | $ (2.5) |
Net income (loss) per share - basic | $ (0.18) | $ 0.06 | $ (0.31) | $ (0.02) |
Net income (loss) per share - diluted | $ (0.18) | $ 0.04 | $ (0.31) | $ (0.02) |
Weighted-average number of shares outstanding: | ||||
Basic | 121.1 | 112.9 | 120.3 | 112.3 |
Diluted | 121.1 | 161.4 | 120.3 | 112.3 |
Net Income Per Share (Options and Warrants Excluded From the Calculation) (Details) (USD $)
In Millions, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Maximum [Member] | Stock Options [Member]
|
||||
Exercise price of excluded options | $ 14.28 | $ 16.90 | $ 14.28 | $ 16.90 |
Minimum [Member] | Stock Options [Member]
|
||||
Exercise price of excluded options | $ 5.00 | $ 5.86 | $ 5.00 | $ 5.00 |
Stock Options [Member]
|
||||
Antidilutive securities excluded from computation of earnings per share | 2.2 | 1.8 | 2.2 | 2.6 |
Warrants [Member]
|
||||
Antidilutive securities excluded from computation of earnings per share | 6.3 | 6.3 | ||
Exercise price of excluded warrants | $ 7.50 | $ 7.50 |
Debt (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Credit Facility |
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
|
Document and Entity Information | ||
Entity Registrant Name | USEC INC | |
Entity Central Index Key | 0001065059 | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2011 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 121,978,453 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 |
Stock-Based Compensation (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Stock-Based Compensation | ||
Stock options exercised | 22,876 | |
Cash received from the exercise of the options | $ 0.1 | |
Upper limit of intrinsic value of stock options exercised | 0.1 | |
Unrecognized compensation cost | 10.6 | |
Weighted-average period in years of costs to be recognized | 1.9 | |
Unrecognized compensation cost restricted stock and restricted stock units | 9.3 | |
Unrecognized compensation cost stock options | $ 1.3 |
Stockholders' Equity (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Stockholders' Equity |
|
Stockholders' Equity (Changes in Stockholders' Equity) (Parenthetical) (USD $)
In Millions |
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Stockholders' Equity | |
Amortization of actuarial losses and prior service costs (credits), income tax amount | $ 2.5 |
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Fair Value Measurements
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 8. FAIR VALUE MEASUREMENTS
Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, consideration is given to the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.
Fair Value Hierarchy
The accounting guidance for fair value measurement also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:
Financial Instruments Recorded at Fair Value
The following is a reconciliation of the beginning and ending balances for items measured at fair value using significant unobservable inputs (Level 3) (in millions):
Other Financial Instruments
As of June 30, 2011 and December 31, 2010, the balance sheet carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and payables under the Russian Contract approximate fair value because of the short-term nature of the instruments.
The balance sheet carrying amounts and estimated fair values of USEC's debt follow (in millions):
The estimated fair value of the term loan is based on the change in market value of an index of loans of similar credit quality based on published credit ratings. The estimated fair value of the convertible notes is based on the trading price as of the balance sheet date. |
Stock-Based Compensation (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Stock-Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Costs |
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Schedule of Assumptions in the Option Pricing Model |
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Fair Value Measurements (Table) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Fair Value | ||
Credit facility term loan | $ 85.0 | |
Credit facility term loan, non-current | 85.0 | |
Credit facility term loan, fair value | 85.4 | 85.6 |
Convertible senior notes | 530.0 | 575.0 |
Convertible senior notes, fair value | $ 379.0 | $ 517.9 |
Portsmouth Transition of Services (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2011
|
Dec. 31, 2010
|
Jun. 30, 2011
|
|
Portsmouth Transition of Services | |||
Estimated maximum potential severance liability | $ 2.0 | $ 25.0 | $ 2.0 |
Expense of prior service costs | 0.4 | ||
Defined benefit plans, curtailment losses | $ 1.9 | $ 5.1 |
Pension and Postretirement Health and Life Benefits (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Net Benefit Costs |
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Commitments and Contingencies
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6 Months Ended |
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Jun. 30, 2011
|
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Commitments and Contingencies | |
Commitments and Contingencies | 13. COMMITMENTS AND CONTINGENCIES
American Centrifuge Plant
Project Funding
USEC needs significant additional financing in order to complete the American Centrifuge Plant ("ACP"). USEC believes a loan guarantee under the DOE Loan Guarantee Program, which was established by the Energy Policy Act of 2005, is essential to obtaining the funding needed to complete the ACP. In July 2008, USEC applied under the DOE Loan Guarantee Program for $2 billion in U.S. government guaranteed debt financing for the ACP. In August 2009, DOE and USEC announced an agreement to delay a final review of USEC's loan guarantee application to provide additional time to address technical and financial concerns raised by DOE. In the following months, USEC focused on addressing DOE's concerns and, based on its progress in reducing program risks, submitted a comprehensive update to its application in July 2010. USEC has been working with DOE since October 2010 on the terms for a conditional commitment for a $2 billion loan guarantee. In April 2011, the DOE Loan Guarantee Program Office substantially completed the due diligence and negotiation stage of the application process, including a draft term sheet, and advanced the ACP application to the next phase for review in parallel by DOE's credit group and by the Office of Management and Budget ("OMB"), the Department of the Treasury and the National Economic Council ("NEC"). This review includes the establishment of an estimated range of credit subsidy cost. As discussed below, on June 30, 2011, USEC entered into a standstill agreement with Toshiba Corporation ("Toshiba") and Babcock & Wilcox Investment Company ("B&W") through August 15, 2011, to provide an additional limited period of time to complete this review process and obtain a decision from DOE on the conditional commitment. DOE has recently indicated that it believes that USEC needs to further improve its financial and project execution depth to achieve a manageable credit subsidy cost estimate and to proceed with the DOE loan guarantee. USEC is working with DOE and DOE's advisors on reviewing structuring options to address DOE's remaining concerns in order to move forward on the American Centrifuge Project and to obtain a conditional commitment and DOE loan guarantee. In addition, USEC has retained financial and other advisors to assist USEC in this review of structuring options and in reviewing and pursuing strategic alternatives.
In May 2010, Toshiba and B&W signed a securities purchase agreement to make a $200 million investment in USEC. Under the terms of the agreement, Toshiba and B&W will each invest $100 million over three phases, each of which is subject to specific closing conditions. In September 2010, the first closing of $75 million occurred. The second closing of the strategic investment by Toshiba and B&W of $50 million is conditioned on USEC having entered into a conditional commitment in an amount of not less than $2 billion for the American Centrifuge project with DOE. The securities purchase agreement provides that if the second closing did not occur by June 30, 2011, the agreement may be terminated by USEC or each of the investors (as to such investor's obligations). USEC did not receive a conditional commitment from DOE by June 30th and therefore did not close on the second phase of the strategic investment by that date. On June 30, 2011, USEC entered into a standstill agreement with Toshiba and B&W whereby each of the parties agreed not to exercise its right to terminate prior to August 15, 2011.
USEC is continuing discussions with Toshiba and B&W with respect to the status and timing of the DOE loan guarantee process and its impact on closing of the next phase of the Toshiba and B&W investment and on the current standstill agreement. However, USEC has no assurance that a structuring option to address DOE's remaining concerns or a strategic alternative transaction will be achieved or the timing thereof, that any extension or other modifications to the standstill agreement will be agreed, that the terms USEC has negotiated with the DOE Loan Guarantee Program Office will be approved or that the credit subsidy cost will be reasonable. After obtaining a conditional commitment, USEC will need to conclude final documentation and satisfy any technical, financial and other conditions to funding in order to close on financing. Funding under a DOE loan guarantee will only occur following conditional commitment, final documentation and satisfaction of conditions to funding, which are subject to uncertainty.
To complete the project, USEC will require additional capital beyond the $2 billion DOE loan guarantee, proceeds from the $200 million investment from Toshiba and B&W and internally generated cash flow.
USEC also continues discussions with Japanese export credit agencies regarding financing $1 billion of the cost of completing the ACP. However, USEC has no assurance that it will be successful in obtaining any or all of the financing it is seeking or that it will not need additional capital.
Milestones under the 2002 DOE-USEC Agreement
In 2002, USEC and DOE signed an agreement (such agreement, as amended, the "2002 DOE-USEC Agreement") in which USEC and DOE made long-term commitments directed at resolving issues related to the stability and security of the domestic uranium enrichment industry. The 2002 DOE-USEC Agreement contains specific project milestones relating to the ACP. In February 2011, USEC and DOE amended the 2002 DOE-USEC Agreement to revise the remaining four milestones relating to the financing and operation of the ACP. The amendment extended by one year to November 2011 the financing milestone that required that USEC secure firm financing commitment(s) for the construction of the commercial American Centrifuge Plant with an annual capacity of approximately 3.5 million SWU per year. The remaining three milestones were also adjusted by the February 2011 amendment. In addition, DOE and USEC agreed to discuss adjustment of the remaining three milestones as may be appropriate based on a revised deployment plan to be submitted to DOE by USEC by January 30, 2012 following the completion of the November 2011 financing milestone. In the February 2011 amendment to the 2002 DOE-USEC Agreement, DOE and USEC re-iterated their acknowledgment that USEC's obligations with respect to the ACP milestones under the 2002 DOE-USEC Agreement are not dependent on the issuance by DOE of a loan guarantee to USEC. However, USEC communicated to DOE that its ability to meet the remaining milestones is dependent on its obtaining a timely commitment and funding for a loan guarantee from DOE. USEC will also need additional financing commitments beyond a DOE loan guarantee to meet the November 2011 financing milestone.
The 2002 DOE-USEC Agreement provides DOE with specific remedies if USEC fails to meet a milestone that would materially impact USEC's ability to begin commercial operations of the American Centrifuge Plant on schedule and such delay was within USEC's control or was due to USEC's fault or negligence. These remedies could include terminating the 2002 DOE-USEC Agreement, revoking USEC's access to DOE's U.S. centrifuge technology that USEC requires for the success of the American Centrifuge project and requiring USEC to transfer certain of its rights in the American Centrifuge technology and facilities to DOE, and to reimburse DOE for certain costs associated with the American Centrifuge project. DOE could also recommend that USEC be removed as the sole U.S. Executive Agent under the nonproliferation program between the United States and the Russian Federation known as "Megatons to Megawatts". As the U.S. Executive Agent, USEC signed a commercial agreement ("Russian Contract") in 1994 with a Russian government entity known as Techsnabexport ("TENEX") to implement the program. USEC currently purchases about one-half of its SWU supply from Russia under the Russian Contract. The 20-year Russian Contract expires at the end of 2013. Under the terms of a 1997 memorandum of agreement between USEC and the U.S. government, USEC can be terminated, or resign as the U.S. Executive Agent, or one or more additional executive agents may be named. If USEC were removed as the sole U.S. Executive Agent, it could reduce or terminate USEC's access to Russian LEU under the Megatons to Megawatts program in future years. However, under the 1997 memorandum of agreement, USEC has the right and obligation to pay for and take delivery of LEU that is to be delivered in the year of the date of termination and in the following year if USEC and TENEX have agreed on a price and quantity. Any of these remedies under the 2002 DOE-USEC Agreement could have a material adverse impact on USEC's business.
The 2002 DOE-USEC Agreement provides that if a delaying event beyond the control and without the fault or negligence of USEC occurs which would affect USEC's ability to meet an ACP milestone, DOE and USEC will jointly meet to discuss in good faith possible adjustments to the milestones as appropriate to accommodate the delaying event.
USEC's right to continue operating the Paducah GDP under its lease with DOE is not subject to meeting the ACP milestones. In addition, the new Russian Supply Agreement described below is not subject to any of the remedies related to the ACP under the 2002 DOE-USEC Agreement.
Russian Supply Agreement
On March 23, 2011, USEC signed a new multi-year contract with TENEX for the 10-year supply of Russian LEU beginning in 2013. Under the terms of the new contract, the supply of LEU to USEC will begin in 2013 and increase until it reaches a level in 2015 that includes a quantity of SWU equal to approximately one-half the level currently supplied by TENEX to USEC under the Megatons to Megawatts program. TENEX and USEC also may mutually agree to increase the purchases and sales of SWU by certain additional optional quantities of SWU up to an amount beginning in 2015 equal to the amount USEC now purchases each year under the Megatons to Megawatts program. Unlike the Megatons to Megawatts program, the quantities supplied under the new contract will come from Russia's commercial enrichment activities rather than from downblending of excess Russian weapons material. As this new agreement is separate from the Megatons to Megawatts program, remedies provided to DOE under the 2002 DOE-USEC Agreement related to USEC's role under the Megatons to Megawatts program do not apply to the new purchase agreement. However, the LEU USEC obtains from TENEX under the new agreement will be subject to quotas and other restrictions applicable to commercial Russian LEU that do not apply to LEU supplied to USEC under the Megatons to Megawatts program.
Deliveries under the new supply contract are expected to continue through 2022. USEC will purchase the SWU component of the LEU and deliver natural uranium to TENEX for the LEU's uranium component. The pricing terms for SWU under the contract are based on a mix of market-related price points and other factors.
The new supply contract between TENEX and USEC was approved by the Russian State Atomic Energy Corporation ("Rosatom") on May 11, 2011. The effectiveness of the new contract is subject to completion of administrative arrangements between the U.S. and Russian governments under the agreement for cooperation in nuclear energy between the United States and the Russian Federation which, among other things, provides the framework for the return to Russia of natural uranium delivered by USEC to TENEX.
Legal Matters
USEC is subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, USEC does not believe that the outcome of any of these legal matters will have a material adverse effect on its results of operations or financial condition.
In June 2011, a complaint was filed in Federal court against USEC by a current Portsmouth GDP employee claiming that USEC owes or will owe severance benefits to him and other similarly situated employees that have transitioned or will transition to the DOE decommissioning and decontamination contractor. USEC believes it has meritorious defenses against the suit and has not accrued any amounts for this matter. An estimate of the possible loss or range of loss from the litigation cannot be made because, among other things, (i) the plaintiff has failed to state the amount of damages sought, (ii) the plaintiff purports to represent a class of claimants the size and composition of which remains unknown and (iii) the certification of the class is uncertain. As disclosed in its Annual Report on Form 10-K for the year ended December 31, 2010, USEC's severance liability could have been up to $25 million if severance was required to be paid to all employees ceasing employment with USEC as a result of the transition to the DOE D&D contractor. In such an event, DOE would have owed a portion of this amount, estimated at $18.5 million. As employees have transitioned or are currently expected to transition, the potential severance liability associated with the transition of services at the Portsmouth site is currently estimated to be less than $2 million, but due to continued uncertainty no costs have been accrued for severance liability as of June 30, 2011. This $2 million estimate is an estimate of potential severance liability associated with the transition of services at the Portsmouth site and is not an estimate of the possible loss or range of loss from the litigation which cannot be made at this time for the reasons listed above. |
Property, Plant and Equipment
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Property, Plant and Equipment | 4. PROPERTY, PLANT AND EQUIPMENT
A summary of changes in property, plant and equipment follows (in millions):
Capital expenditures include items in accounts payable and accrued liabilities at June 30, 2011 for which cash is paid in subsequent periods.
USEC is working to deploy the American Centrifuge technology at the American Centrifuge Plant ("ACP") in Piketon, Ohio. Capital expenditures related to the ACP, which is primarily included in the construction work in progress balance, totaled $1,213.9 million at June 30, 2011 and $1,143.8 million at December 31, 2010. Capitalized asset retirement obligations included in construction work in progress totaled $19.3 million at June 30, 2011 and $19.3 million at December 31, 2010.
During the second quarter of 2011, USEC expensed $9.6 million of previously capitalized construction work in progress costs. This expense was charged to advanced technology costs on the consolidated statement of operations and relates to a number of centrifuge machines and the related capitalized interest allocated to the centrifuge machines. The centrifuge machines expensed are no longer considered to have future economic benefit because they were irreparably damaged during lead cascade operations. There is no machine technology, machine design or machine manufacturing issue associated with this expense.
In addition, USEC is currently evaluating the ongoing utility of a number of earlier AC100 centrifuge machines that may not be compatible with the current commercial plant design that were previously capitalized as part of construction work in progress. If it is determined that these centrifuge machines have no future economic benefit, then USEC would expense up to $100 million in a subsequent quarter. USEC is evaluating several potential uses of these machines and the related economics for each scenario, such as use in the commercial plant as a production line, use of certain parts or subassemblies as operating spares, and for operator training. The evaluation of these centrifuge machines is expected to be completed by the end of the fourth quarter of 2011. |
Stockholders' Equity
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Stockholders' Equity | 10. STOCKHOLDERS' EQUITY
Changes in stockholders' equity were as follows (in millions, except per share data):
Amortization of actuarial losses and prior service costs (credits), net of tax, are those related to pension and postretirement health and life benefits as presented on a pre-tax basis in Note 9. |
Accounts Receivable (Tables)
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Schedule of Accounts Receivable |
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Stock-Based Compensation
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Stock-Based Compensation | 11. STOCK-BASED COMPENSATION
There were no stock options exercised in the six months ended June 30, 2011. There were 22,876 stock options exercised in the six months ended June 30, 2010. Cash received from the exercise of the options was $0.1 million. The intrinsic value of the options exercised was less than $0.1 million.
Assumptions used in the Black-Scholes option pricing model to value option grants follow. There were no stock options granted in the three and six months ended June 30, 2011 or the three months ended June 30, 2010.
As of June 30, 2011, there was $10.6 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based payments granted, of which $9.3 million relates to restricted shares and restricted stock units, and $1.3 million relates to stock options. That cost is expected to be recognized over a weighted-average period of 1.9 years.
Revised Long-Term Incentive Program
In February 2011, the Board of Directors approved a revised long-term incentive program under the 2009 Equity Incentive Plan for certain participating executives. The revised long-term incentive plan has three components: (1) time-based restricted stock that vests over three years, (2) performance-based restricted stock that, subject to being earned, vests over three years, and (3) a three-year performance-based cash incentive program.
The performance-based restricted stock vests over three years and is subject to being earned based on performance during 2011. Actual awards will be determined by performance during the period January 1, 2011 through December 31, 2011 against a performance goal relating to USEC's total shareholder return compared to the Russell 2000 total shareholder return (without dividends). This award is classified as equity and is valued at the award date using a Monte Carlo model. The target number of shares of restricted stock was calculated based on USEC's stock price on March 1, 2011. Award valuation factors associated with the underlying performance of USEC's stock price and shareholder returns over the term of the award include:
The new three-year performance-based cash incentive program includes a new overlapping three-year performance period each year. The first performance period runs from January 1, 2011 through December 31, 2013. Actual payout of awards will be determined by the performance of the Company during the performance period against two pre-determined performance goals. Cash awards earned will be granted following the completion of the performance period. This award is classified as a liability. The liability will be re-measured each reporting period based on the status of the performance against the performance goals. |
Inventories (Narrative) (Details) (USD $)
In Billions, unless otherwise specified |
6 Months Ended | |
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Jun. 30, 2011
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Dec. 31, 2011
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Inventories | ||
Inventories provided by customers and suppliers | $ 2.5 | $ 3.3 |
Decline in Uranium Spot Price Indicator | 16.00% | |
Decline in Uranium Quantities Provided by Customers and Suppliers | 11.00% |
Pension and Postretirement Health and Life Benefits
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Pension and Postretirement Health and Life Benefits | 9. PENSION AND POSTRETIREMENT HEALTH AND LIFE BENEFITS
The components of net benefit costs for pension and postretirement health and life benefit plans were as follows (in millions):
USEC expects total cash contributions to the plans in 2011 will be as follows: $14.6 million for the defined benefit pension plans and $4.8 million for the postretirement health and life benefit plans. Of those amounts, contributions made as of June 30, 2011 were $9.0 million and $3.2 million related to the defined benefit pension plans and postretirement health and life benefit plans, respectively.
The elimination of expected years of future service for certain employees at the Portsmouth site (see Note 6) in the actuarial calculation resulted in a curtailment loss of $3.2 million for the defined benefit pension plan in the first quarter of 2011. Similarly, a curtailment loss of $1.9 million for the postretirement health and life benefit plans was recognized in the second quarter of 2011 based on greater clarity of employee decisions regarding the plan offered by the new employer and further refinement of actuarial assumptions. The curtailment losses are included in cost of sales for the contract services segment. |
Net Income Per Share (Schedule of Income Per Share) (Details) (USD $)
In Millions, except Per Share data |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Net Income Per Share | ||||
Net income (loss) | $ (21.2) | $ 7.2 | $ (37.8) | $ (2.5) |
Net income (loss) if-converted | $ (21.2) | $ 7.2 | $ (37.8) | $ (2.5) |
Weighted average common shares | 122.8 | 114.9 | 122.1 | 114.3 |
Less: Weighted average unvested restricted stock | 1.7 | 2.0 | 1.8 | 2.0 |
Denominator for basic calculation | 121.1 | 112.9 | 120.3 | 112.3 |
Stock compensation awards | 0.4 | |||
Convertible notes | 48.1 | |||
Denominator for diluted calculation | 121.1 | 161.4 | 120.3 | 112.3 |
Net income (loss) per share - basic | $ (0.18) | $ 0.06 | $ (0.31) | $ (0.02) |
Net income (loss) per share - diluted | $ (0.18) | $ 0.04 | $ (0.31) | $ (0.02) |
Accounts Receivable
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Accounts Receivable | 2. ACCOUNTS RECEIVABLE
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Deferred Revenue and Advances From Customers
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Deferred Revenue and Advances From Customers | 5. DEFERRED REVENUE AND ADVANCES FROM CUSTOMERS
Advances from customers included $26.9 million as of June 30, 2011 and $1.2 million as of December 31, 2010 for services to be provided for DOE in our contract services segment. DOE funded this work through an arrangement whereby DOE transferred uranium to USEC which USEC immediately sold in the market.
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Debt (Schedule of Revolving Credit Facility) (Details) (USD $)
In Millions |
Jun. 30, 2011
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Dec. 31, 2010
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Debt | ||
Borrowings under the revolving credit facility | $ 0 | $ 0 |
Credit facility term loan | 85.0 | |
Credit facility term loan, non-current | 85.0 | |
Letters of credit outstanding, amount | 7.3 | 17.3 |
Available credit | $ 217.7 | $ 207.7 |
Accounts Receivable (Table) (Details) (USD $)
In Millions |
Jun. 30, 2011
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Dec. 31, 2010
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Accounts Receivable | ||
Utility Trade Receivables | $ 39.1 | $ 249.1 |
Uranium Loaned To Customers | 41.2 | |
Utility Unbilled Revenue | 0.3 | 0.4 |
Utility Customer Receivables | 80.6 | 249.5 |
Contract Services Billed Revenue | 17.8 | 34.8 |
Contract Services Unbilled Revenue | 35.6 | 24.3 |
Contract Services Customer Receivables | 53.4 | 59.1 |
Accounts Receivable, Net | $ 134.0 | $ 308.6 |
Net Income Per Share (Narrative) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2011
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Jun. 30, 2010
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Upper limit of net interest expense on convertible notes | 0.1 | ||
Stock Compensation Plan [Member]
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Antidilutive securities excluded from computation of earnings per share | 0.1 | 3.1 | 0.4 |
Convertible Preferred Stock [Member]
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Antidilutive securities excluded from computation of earnings per share | 17.4 | 15.5 | |
Convertible Debt Securities [Member]
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Antidilutive securities excluded from computation of earnings per share | 44.3 | 44.6 | 48.1 |
Portsmouth Transition of Services
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6 Months Ended |
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Jun. 30, 2011
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Portsmouth Transition of Services | |
Portsmouth Transition of Services | 6. PORTSMOUTH TRANSITION OF SERVICES
USEC ceased uranium enrichment operations at the Portsmouth GDP, located in Piketon, Ohio, in 2001. USEC's contract to maintain the facility for DOE in a state of "cold shutdown" expired on March 28, 2011. As previously reported, DOE awarded a contract for the decontamination and decommissioning ("D&D") of the Portsmouth site in August 2010 to a joint venture between Fluor Corp. and The Babcock & Wilcox Company. In connection with the expiration of the cold shutdown contract, USEC entered into an agreement with DOE in which USEC agreed to de-lease and return to DOE all remaining facilities at the Portsmouth site in Ohio except for those facilities leased for the ACP. In that agreement, DOE agreed to provide infrastructure services in support of the construction and operation of the ACP and to permit USEC's re-lease of certain facilities in the event they are needed to provide utility services to the ACP. The de-lease of these facilities will be completed when all relevant regulatory approvals have been obtained. This is anticipated to occur in the third quarter of 2011. However, if the full de-lease does not occur prior to September 30, 2011 the agreement will expire unless extended by mutual agreement of the parties. At the time of de-lease of the remaining facilities and their return to DOE, regulatory responsibility for the de-leased facilities will be transferred from the U.S. Nuclear Regulatory Commission ("NRC") to DOE. Until the facilities are de-leased, USEC will continue to operate such facilities and provide services to DOE and its contractors under cost reimbursement type contracts.
Employee Transition
Under the Worker Adjustment and Retraining Notification Act ("WARN Act"), notifications of potential mass layoffs are required to be issued by an employer 60 days in advance. Accordingly, in anticipation of the transition to the new D&D contractor, WARN Act notifications were provided on January 24, 2011 to USEC employees providing services under the DOE contract. An agreement was reached with the D&D contractor and the United Steel Workers ("USW") Local 5-689 allowing the transition from USEC of all Portsmouth workers represented by the USW to the D&D contractor on March 28, 2011. Under that agreement, no severance benefits were payable as a result of the transition. On March 8, 2011, WARN Act notifications were provided for members of the Security, Police, Fire Professionals of America ("SPFPA") Local 66. Negotiations continue between SPFPA and the D&D contractor to transition employees represented by SPFPA when the facilities are de-leased and returned to DOE. Salaried Portsmouth site workers needed to maintain the facilities returned to DOE, including most managers and supervisors, will transition to the D&D contractor upon de-lease of the facilities. Since these salaried employees have received, or are expected to receive, substantially equivalent offers of employment, they would not be eligible to receive severance benefits upon their transition to the D&D contractor. The potential severance liability associated with the transition of services at the Portsmouth site is currently estimated to be less than $2 million, but due to continued uncertainty no costs have been accrued for severance liability as of June 30, 2011.
Pension and Postretirement Benefit Costs
The cessation of certain U.S. government contract activities, the transfer of employees, and the pending transfer of certain other employees in Portsmouth triggered certain curtailment charges related to USEC's defined benefit pension plan and postretirement health and life benefit plan. Since a substantial number of employees were expected to be leaving USEC as a result of the transitioning of the government services work to the D&D contractor, USEC recognized approximately $0.4 million in cost of sales in December 2010 related to unamortized prior service costs based on the employee population at Portsmouth. USEC recognized an additional $5.1 million in cost of sales in 2011, including $1.9 million in the three months ended June 30, 2011, for curtailment charges related to the pension plan and postretirement benefit plan based on additional information and clarification on the timing and number of employees leaving USEC and refined actuarial estimates. |
Fair Value Measurements (Reconciliation of Fair Value Using Significant Unobservable Inputs ) (Details) (Convertible Preferred Stock [Member], USD $)
In Millions |
3 Months Ended | 6 Months Ended |
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Jun. 30, 2011
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Jun. 30, 2011
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Convertible Preferred Stock [Member]
|
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Beginning balance | $ 80.7 | $ 78.2 |
Less: paid-in-kind dividends payable, beginning balance | (2.5) | (2.4) |
Issuances | 2.5 | 4.9 |
Paid-in-kind dividends payable | 2.6 | 2.6 |
Ending balance | $ 83.3 | $ 83.3 |
Net Income Per Share (Tables)
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Schedule of Net Income Per Share |
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Schedule of Securities Excluded From Earnings Per Share |
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Inventories (Table) (Details) (USD $)
In Millions |
Jun. 30, 2011
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Dec. 31, 2010
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Inventories | ||
Separative work units | $ 914.2 | $ 947.4 |
Uranium | 790.5 | 562.5 |
Materials and supplies | 12.5 | 12.6 |
Inventories | 1,717.2 | 1,522.5 |
Inventories owed to customers and suppliers | (1,084.4) | (715.8) |
Inventories, net | $ 632.8 | $ 806.7 |
Fair Value Measurements (Financial Instruments Recorded at Fair Value) (Details) (USD $)
In Millions |
Jun. 30, 2011
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Dec. 31, 2010
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Deferred compensation asset | $ 2.3 | $ 1.8 |
Deferred compensation obligation | 2.5 | 2.0 |
Convertible preferred stock | 83.3 | 78.2 |
Level 2 [Member]
|
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Deferred compensation asset | 2.3 | 1.8 |
Deferred compensation obligation | 2.5 | 2.0 |
Level 3 [Member]
|
||
Convertible preferred stock | $ 83.3 | $ 78.2 |
Accounts Receivable (Narrative) (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
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Accounts Receivable | ||
Valuation Allowances and Allowances for Doubtful Accounts | $ 17.8 | $ 18.6 |
Segment Information
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Segment Information | 14. SEGMENT INFORMATION
USEC has two reportable segments: the LEU segment with two components, SWU and uranium, and the contract services segment. The LEU segment is USEC's primary business focus and includes sales of the SWU component of LEU, sales of both the SWU and uranium components of LEU, and sales of uranium. The contract services segment includes work performed for DOE and DOE contractors at the Portsmouth site and the Paducah GDP as well as nuclear energy services and technologies provided by NAC International Inc. Gross profit is USEC's measure for segment reporting. Intersegment sales between the reportable segments were less than $0.1 million in each period presented below and have been eliminated in consolidation.
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Debt
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Debt | 7. DEBT
Revolving Credit Facility and Term Loan due May 31, 2012
Utilization of the credit facility at June 30, 2011 and December 31, 2010 follows:
The credit facility is secured by assets of USEC Inc. and its subsidiaries, excluding equity in, and assets of, subsidiaries created to carry out future commercial American Centrifuge activities. In addition to the $85.0 million term loan, the credit facility includes aggregate lender commitments under the revolving credit facility of $225.0 million, including up to $150.0 million in letters of credit. Borrowings under the credit facility are subject to limitations based on established percentages of qualifying assets such as eligible accounts receivable and inventory. The interest rate on the term loan as of June 30, 2011 was 9.5%.
On June 20, 2011, the credit facility agreement was amended to provide increased flexibility for continued investment in the American Centrifuge project. Before the amendment, the credit facility agreement permitted USEC to spend up to $165 million in the aggregate over the term of the credit facility on the American Centrifuge project, subject to certain limitations and exceptions. The amendment removes this spending restriction. The credit facility agreement, as amended, instead restricts spending on the American Centrifuge project if Availability (as defined in the credit facility agreement) falls below $100 million, as described below:
Availability was $216.9 million as of June 30, 2011 and $206.8 million as of December 31, 2010.
Convertible Senior Notes due 2014
Convertible senior notes amounted to $530.0 million as of June 30, 2011 and $575.0 million as of December 31, 2010. The convertible senior notes are due October 1, 2014. Interest of 3.0% is payable semi-annually in arrears on April 1 and October 1 of each year. The notes were not eligible for conversion to common stock as of June 30, 2011 or December 31, 2010.
In January 2011, USEC executed an exchange with a noteholder whereby USEC received convertible notes with a principal amount of $45 million in exchange for 6,952,500 shares of common stock and cash for accrued but unpaid interest on the convertible notes. In connection with this exchange, USEC recognized a gain on debt extinguishment of $3.1 million. |
Property, Plant and Equipment (Tables)
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Summary of Changes in Property, Plant and Equipment |
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Segment Information (Tables)
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Segment Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information |
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Basis of Presentation
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6 Months Ended |
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Jun. 30, 2011
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Basis of Presentation | |
Basis of Presentation | 1. BASIS OF PRESENTATION
The unaudited consolidated condensed financial statements as of and for the three and six months ended June 30, 2011 and 2010 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The unaudited consolidated condensed financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial results for the interim period. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been omitted pursuant to such rules and regulations.
Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes and management's discussion and analysis of financial condition and results of operations included in the annual report on Form 10-K for the year ended December 31, 2010.
New Accounting Standards
In May 2011, the Financial Accounting Standards Board ("FASB") amended its guidance on fair value measurements and related disclosures. The new guidance represents the converged guidance of the FASB and the International Accounting Standards Board and provides a consistent definition of fair value and common requirements for measurement and disclosure of fair value between GAAP and International Financial Reporting Standards ("IFRS"). The new guidance also changes some fair value measurement principles and enhances disclosure requirements related to activities in Level 3 of the fair value hierarchy. The provisions of this new guidance are effective for fiscal years and interim periods beginning after December 15, 2011 and are applied prospectively. This requirement will become effective for USEC beginning with the first quarter of 2012 and USEC is evaluating the impact of adopting this guidance on its financial statements.
In June 2011, the FASB amended its guidance on the presentation of comprehensive income. The new guidance requires companies to present the components of net income and other comprehensive income either in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. The new guidance does not change the items that must be reported in other comprehensive income or the requirement to report reclassifications of items from other comprehensive income to net income. The provisions of this new guidance are effective for fiscal years and interim periods beginning after December 15, 2011 and are applied retrospectively for all periods presented. This requirement will become effective for USEC beginning with the first quarter of 2012 and USEC is evaluating the impact of adopting this guidance on its financial statements. |
Deferred Revenue and Advances From Customers (Tables)
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Schedule of Deferred Revenue and Advances from Customers |
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Pension and Postretirement Health and Life Benefits (Narrative) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended |
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Jun. 30, 2011
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Jun. 30, 2011
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Curtailment losses | $ 1.9 | $ 5.1 |
Defined Benefit Pension Plans [Member]
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Expected defined benefit plan contributions for current fiscal year | 14.6 | 14.6 |
Defined benefit plan contributions | 9.0 | |
Curtailment losses | 3.2 | |
Postretirement Health and Life Benefits Plans [Member]
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Expected defined benefit plan contributions for current fiscal year | 4.8 | 4.8 |
Defined benefit plan contributions | 3.2 | |
Curtailment losses | $ 1.9 | $ 1.9 |
Fair Value Measurements (Tables)
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Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Instruments Recorded at Fair Value |
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Reconciliation of Fair Value Using Significant Unobservable Inputs |
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Inventories
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Jun. 30, 2011
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Inventories | 3. INVENTORIES
USEC is a supplier of low enriched uranium ("LEU") for nuclear power plants. LEU consists of two components: separative work units ("SWU") and uranium. SWU is a standard unit of measurement that represents the effort required to transform a given amount of natural uranium into two components: enriched uranium having a higher percentage of U235 and depleted uranium having a lower percentage of U235. The SWU contained in LEU is calculated using an industry standard formula based on the physics of enrichment. The amount of enrichment deemed to be contained in LEU under this formula is commonly referred to as its SWU component and the quantity of natural uranium used in the production of LEU under this formula is referred to as its uranium component.
USEC holds uranium, principally at the Paducah gaseous diffusion plant ("GDP"), in the form of natural uranium and as the uranium component of LEU. USEC holds SWU as the SWU component of LEU. USEC may also hold title to the uranium and SWU components of LEU at fabricators to meet book transfer requests by customers. Fabricators process LEU into fuel for use in nuclear reactors. Components of inventories follow:
Inventories Owed to Customers and Suppliers
Inventories owed to customers and suppliers relate primarily to SWU and uranium inventories owed to fabricators. Fabricators process LEU into fuel for use in nuclear reactors. Under inventory optimization arrangements between USEC and domestic fabricators, fabricators order bulk quantities of LEU from USEC based on scheduled or anticipated orders from utility customers for deliveries in future periods. As delivery obligations under actual customer orders arise, USEC satisfies these obligations by arranging for the transfer to the customer of title to the specified quantity of LEU at the fabricator. USEC's balances of SWU and uranium vary over time based on the timing and size of the fabricator's LEU orders from USEC. Balances can be positive or negative at the discretion of the fabricator. Fabricators have other inventory supplies and, where a fabricator has elected to order less material from USEC than USEC is required to deliver to its customers at the fabricator, the fabricator will use these other inventories to satisfy USEC's customer order obligations on USEC's behalf. In such cases, the transfer of title of LEU from USEC to the customer results in quantities of SWU and uranium owed by USEC to the fabricator. The amounts of SWU and uranium owed to fabricators are satisfied as future bulk deliveries of LEU are made.
Uranium Provided by Customers and Suppliers
USEC held uranium with estimated fair values of approximately $2.5 billion at June 30, 2011, and $3.3 billion at December 31, 2010, to which title was held by customers and suppliers and for which no assets or liabilities were recorded on the balance sheet. The reduction reflects a 16% decline in the uranium spot price indicator and an 11% decline in quantities. Utility customers provide uranium to USEC as part of their enrichment contracts. Title to uranium provided by customers generally remains with the customer until delivery of LEU at which time title to LEU is transferred to the customer, and title to uranium is transferred to USEC.
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Net Income Per Share
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Jun. 30, 2011
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Net Income Per Share | 12. NET INCOME PER SHARE
Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period, excluding any unvested restricted stock.
In calculating diluted net income per share, the numerator is increased by interest expense on the convertible notes, net of amount capitalized and net of tax, and the denominator is increased by the weighted average number of shares resulting from potentially dilutive securities, assuming full conversion, consisting of stock compensation awards, convertible notes, convertible preferred stock and warrants.
In the three months ended June 30, 2011, there was no net interest expense on convertible notes and the weighted average number of shares for stock compensation awards, convertible preferred stock and convertible notes was 0.1 million, 17.4 million and 44.3 million, respectively.
In the six months ended June 30, 2011, there was no net interest expense on convertible notes and the weighted average number of shares for stock compensation awards, convertible preferred stock and convertible notes was 3.1 million, 15.5 million and 44.6 million, respectively.
In the six months ended June 30, 2010, net interest expense on convertible notes was less than $0.1 million and the weighted average number of shares for stock compensation awards and convertible notes was 0.4 million and 48.1 million, respectively.
Options and warrants to purchase shares of common stock having an exercise price greater than the average share market price are excluded from the calculation of diluted earnings per share (options and warrants in millions):
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Segment Information (Segment Reporting Information) (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Segment Information | ||||
Separative work units | $ 330.3 | $ 331.0 | $ 638.8 | $ 597.6 |
Uranium | 67.8 | 69.6 | 81.8 | 85.2 |
Revenue LEU Segment | 398.1 | 400.6 | 720.6 | 682.8 |
Contract services revenue | 56.3 | 59.1 | 114.3 | 121.6 |
Total revenue | 454.4 | 459.7 | 834.9 | 804.4 |
LEU segment gross profit | 29.5 | 42.0 | 44.8 | 57.0 |
Contract services segment gross profit | 3.7 | 2.1 | 2.3 | 13.8 |
Gross profit | 33.2 | 44.1 | 47.1 | 70.8 |
Advanced technology costs | 33.5 | 26.0 | 60.2 | 51.7 |
Selling, general and administrative | 16.7 | 14.3 | 32.2 | 29.4 |
Other (income) | (10.3) | (3.7) | (20.0) | |
Operating income (loss) | (17.0) | 14.1 | (41.6) | 9.7 |
Interest expense (income), net | (0.2) | (0.1) | ||
Income (loss) before income taxes | (17.0) | 14.1 | (41.4) | 9.8 |
Upper limit of intersegment sales between the reportable segments | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
Property, Plant and Equipment (Narrative) (Details) (USD $)
In Millions |
6 Months Ended | |
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Jun. 30, 2011
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Property, Plant and Equipment | ||
Capital expenditures for American Centrifuge Project | $ 1,213.9 | $ 1,143.8 |
Capitalized asset retirement obligations | 19.3 | 19.3 |
Expensed centrifuge machines | 9.6 | |
Upper range of potential future expense for centrifuge machine disposal | $ 100.0 |
Inventories (Tables)
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Jun. 30, 2011
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Schedule of Inventories |
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Deferred Revenue and Advances from Customers (Narrative) (Details) (USD $)
In Millions |
Jun. 30, 2011
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Dec. 31, 2010
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Advances from customers | $ 30.0 | $ 3.0 |
DOE [Member]
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Advances from customers | $ 26.9 | $ 1.2 |