October 23, 1999
USEC earnings rise by $10 million-plus in fiscal 1999
By Joe Walker
Offsetting a sharp, seasonal drop in sales of enriched uranium, Paducah Gaseous Diffusion Plant operator USEC Inc. earned $25.2 million before taxes during the past quarter, compared with $14.9 million during the same period a year ago.
Sales of enriched uranium declined by $102.5 million during the comparative quarters, but USEC offset that by cutting $62.2 million in power, labor and other costs, and $30.2 million by suspending research of a laser enrichment process called AVLIS. It also boosted the sale of natural uranium by $25.5 million.
After-tax income was $16.1 million, or 16 cents per share. That compares with last year's $8.6 million, or 9 cents per share, excluding a special income tax benefit.
USEC income became taxable July 28, 1998, when the firm sold stock to go from a government operation to a private company. Including a tax benefit of $54.5 million applied during the comparative quarter a year ago, earnings were $63.1 million, or 63 cents per share.
The past quarter, ending Sept. 30, actually is USEC's first quarter of the fiscal year.
Enriched uranium revenue for the quarter was $205.2 million, down from $307.7 million last year. USEC said the drop reflected the timing of customer nuclear reactor refueling orders that come in heavily in the spring.
However, the sale of natural uranium rose from $200,000 to $25.7 million during the comparative periods, and USEC saved money by cutting cost of sales by 25 percent.
Electricity, the largest production expense, declined in cost by $20.9 million quarter-on-quarter as USEC sharply cut production last summer. The move was to reduce exposure to high-cost, non-firm electrical power.
Labor costs declined 8 percent during the comparative quarters, reflecting a planned work-force reduction of about 250 people at the Paducah plant, and about the same at its sister plant near Portsmouth, Ohio, a year ago.
Comparative quarterly project development expenses also were down significantly from $31.6 million to $1.4 million. That was because USEC in June suspended research of AVLIS.
This fiscal year, project development costs are expected to be $18 million as USEC considers another laser process, SILEX, or an older technology, gas centrifuge, as eventual replacement for expensive gaseous diffusion used here and at Portsmouth.
During the past quarter, USEC began a program approved June 9 by the board of directors to repurchase as many as 10 million shares during two years. As of Sept. 30, USEC had bought 9.5 million shares back, leaving nearly 90.6 million shares of common stock outstanding.
The buyback "represented an attractive use of our strong cash flow,"
said William Timbers Jr., president and chief executive officer. "At
recent price levels, we viewed USEC stock as an excellent value, and so
we were very active in buying back our shares."