USEC's financial situation is being scrutinized in Congress by Rep. Ted Strickland, whose Ohio district includes the Portsmouth plant.
By Joe Walker firstname.lastname@example.org
Earnings for USEC Inc. dropped $11.5 million during the past fiscal year as the average market price for uranium plummeted 22 percent.
During the fiscal year ending June 30, USEC, which operates the Paducah Gaseous Diffusion Plant, earned $109.1 million, or $1.20 per share, compared with $120.6 million, or $1.21 per share, the year before. The figures exclude $141.5 million in special charges related to USEC's decision to close Paducah's sister plant near Portsmouth, Ohio, next year, and the elimination of 575 jobs at the two plants this year.
USEC's dim financial picture remains under heavy scrutiny in Congress. Rep. Ted Strickland, whose Ohio district includes the Portsmouth plant, is fighting the shutdown and has filed a bill to return USEC to government control. House Commerce Committee Chairman Thomas Bliley, R-Va., is investigating alleged improprieties in how USEC was privatized.
USEC, which has called Strickland's efforts misguided, has pledged to continue looking for ways to cut costs and be more competitive. "We have made tough but necessary decisions for the future of our business as we now pursue the full range of actions necessary for a commercial enterprise," said William Timbers, president and chief executive officer.
Including the special charges and a $19.5 million adjustment in the value of USEC's natural uranium inventory, the company earned $8.9 million during the year. The devaluation was related to dwindling market prices.
Excluding the charges, USEC earned $37.8 million, or 45 cents per share, during the fourth quarter, compared with $63.7 million, or 64 cents per share, during the same period last year. Including the charges, USEC lost $62.4 million, or 74 cents per share.
Annual earnings reflected lower revenue from the anticipated drop in average prices billed to customers, the company said. Other factors were lower expenses for advanced technology, a drop in production and higher unit costs because of overpriced uranium purchased from dismantled Russian warheads.
The Russian uranium, priced higher than the plants' production costs, is being purchased at increasingly greater volume under a long-term contract. Russian material represented 41 percent of USEC's supply mix during the past fiscal year, up 10 percent from the year before. That factor, combined with lower production, increased USEC's sale costs by $54.3 million over 1999.
However, USEC has reached an agreement with Russia for market-based pricing starting in January 2002, Timbers said. "We expect to obtain approvals from both the United States and Russian governments for an agreement well before its implementation date," he said.
Yearly revenue was $1.49 million, down from $1.53 million in 1999. Revenue from enriched uranium dropped $87.2 million, showing a 7 percent decline in the average sale price. Overall, the average market price of uranium dropped 9 percent during the past fiscal year.
Meanwhile, USEC nearly doubled the sale of its natural uranium stockpile to generate cash flow. Sales rose from $53.6 million last year to $101.6 million this year.
USEC also is buying back another 20 million shares of common stock for a total of 30 million shares. So far, 17.8 million shares have been repurchased, including 8.1 million shares since the buyback was expanded Feb. 3.