Delaware | 52-2107911 | |
(State of incorporation) | (I.R.S. Identification No.) |
Title of Each Class | Name of Exchange on Which Registered | |
Common Stock, par value $.10 per share | New York Stock Exchange | |
Preferred Stock Purchase Rights | New York Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
Page | ||||
|
PART I | |||
Items 1 and 2.
|
Business and Properties | 3 | ||
Item 1A.
|
Risk Factors | 20 | ||
Item 1B.
|
Unresolved Staff Comments | 31 | ||
Item 3.
|
Legal Proceedings | 31 | ||
Item 4.
|
Submission of Matters to a Vote of Security Holders | 32 | ||
|
Executive Officers of the Company | 32 | ||
|
||||
|
PART II | |||
Item 5.
|
Market for Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities | 34 | ||
Item 6.
|
Selected Financial Data | 36 | ||
Item 7.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations | 38 | ||
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk | 62 | ||
Item 8.
|
Consolidated Financial Statements and Supplementary Data | 62 | ||
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 62 | ||
Item 9A.
|
Controls and Procedures | 63 | ||
Item 9B.
|
Other Information | 64 | ||
|
||||
|
PART III | |||
Item 10.
|
Directors and Executive Officers of the Registrant | 64 | ||
Item 11.
|
Executive Compensation | 64 | ||
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 64 | ||
Item 13.
|
Certain Relationships and Related Transactions | 64 | ||
Item 14.
|
Principal Accountant Fees and Services | 64 | ||
|
||||
|
PART IV | |||
Item 15.
|
Exhibits and Financial Statement Schedules | 65 | ||
Signatures | 66 | |||
Consolidated Financial Statements | 67 101 | |||
Glossary | 102 | |||
Exhibit Index | 105 |
2
| supply LEU to both domestic and international utilities for use in about 150 nuclear reactors worldwide, | ||
| are the exclusive executive agent for the U.S. government for a nuclear nonproliferation program with Russia, known as Megatons to Megawatts, | ||
| are in the process of demonstrating, and plan to deploy, what we expect to be the worlds most efficient uranium enrichment technology known as the American Centrifuge, | ||
| perform contract work for the U.S. Department of Energy (DOE) and DOE contractors at the Paducah and Portsmouth plants, and | ||
| provide transportation and storage systems for spent nuclear fuel and provide nuclear and energy consulting services, including nuclear materials tracking. |
| Mining and Milling Natural or unenriched uranium is removed from the earth in the form of ore and then crushed and concentrated. |
3
| Conversion Uranium concentrates are combined with fluorine gas to produce uranium hexafluoride, a powder at room temperature and a gas when heated. Uranium hexafluoride is shipped to an enrichment plant. | ||
| Enrichment Uranium hexafluoride is enriched in a process that increases the concentration of U 235 isotopes in the uranium hexafluoride from its natural state of 0.711% up to 5%, which is usable as a fuel for commercial nuclear power reactors. Depleted uranium is a by-product of the uranium enrichment process. USEC has the only commercial uranium enrichment plant operating in the United States. The standard measure of uranium enrichment is a separative work unit (SWU). A SWU represents the effort that is required to transform a given amount of natural uranium into two streams of uranium, one enriched in the U 235 isotope and the other depleted in the U 235 isotope. SWUs are measured using a standard formula derived from the physics of uranium enrichment. The amount of enrichment contained in LEU under this formula is commonly referred to as its SWU component. | ||
| Fuel Fabrication LEU is converted to uranium oxide and formed into small ceramic pellets by fabricators. The pellets are loaded into metal tubes that form fuel assemblies, which are shipped to nuclear power plants. | ||
| Nuclear Power Plant The fuel assemblies are loaded into nuclear reactors to create energy from a controlled chain reaction. Nuclear power plants generate about 16% of the worlds electricity. | ||
| Consumers Businesses and homeowners rely on the steady, baseload electricity supplied by nuclear power and value its clean air qualities. |
4
| sales of the SWU component of LEU, | ||
| sales of both the SWU and uranium components of LEU, and | ||
| sales of uranium. |
| maintaining the Portsmouth gaseous diffusion plant in a state of readiness or cold standby, | ||
| processing out-of-specification uranium, | ||
| refurbishing centrifuge process buildings, and | ||
| providing infrastructure support services. |
| design, fabrication and implementation of spent nuclear fuel technologies, | ||
| nuclear materials transportation, and | ||
| nuclear fuel cycle consulting services. |
5
Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
United States
|
$ | 1,074.1 | $ | 918.2 | $ | 919.0 | ||||||
Foreign:
|
||||||||||||
Japan
|
224.2 | 215.2 | 266.7 | |||||||||
Other
|
261.0 | 283.8 | 251.0 | |||||||||
|
||||||||||||
|
485.2 | 499.0 | 517.7 | |||||||||
|
||||||||||||
|
$ | 1,559.3 | $ | 1,417.2 | $ | 1,436.7 | ||||||
|
6
| except as provided in the DOE-USEC Agreement, we have the right to renew the lease at either plant indefinitely and can adjust the property under lease to meet our changing requirements; | ||
| we may leave the property in an as is condition at termination of the lease, but must remove wastes we generate and must place the plants in a safe shutdown condition; | ||
| the U.S. government is responsible for environmental liabilities associated with plant operations prior to July 28, 1998 except for liabilities relating to the disposal of some identified wastes generated by USEC and stored at the plants; | ||
| DOE is responsible for the costs of decontamination and decommissioning of the plants; | ||
| title to capital improvements not removed by USEC will transfer to DOE at the end of the lease term, and if removal of any of our capital improvements increases DOEs decontamination and decommissioning costs, we are required to pay the difference; | ||
| DOE must indemnify us for costs and expenses related to claims asserted against or incurred by us arising out of the U.S. governments operation, occupation, or use of the plants prior to July 28, 1998; and | ||
| DOE must indemnify USEC against claims for public liability from a nuclear incident or precautionary evacuation in connection with activities under the lease. Under the Price Anderson Act, DOEs financial obligations under the indemnity are capped at $9.4 billion for each nuclear incident or precautionary evacuation occurring inside the United States. |
7
8
9
10
11
12
| terminate the DOE-USEC Agreement, | ||
| require us to reimburse DOE for increased costs caused by DOE expediting decontamination and decommissioning of facilities used by us for the centrifuge technology, | ||
| require us to transfer our rights to the centrifuge technology and data in the field of uranium enrichment to DOE royalty-free, | ||
| require us to return any leased facilities where the centrifuge technology project was being or was intended to be constructed, and | ||
| except for plant facilities being operated, require us to waive our exclusive rights to lease the Paducah and Portsmouth plants. |
13
Milestones under DOE-USEC Agreement | Milestone Date | Date Achieved | ||
Begin
refurbishment of K-1600 centrifuge testing
|
||||
facility in Oak Ridge,
Tennessee
|
December 2002 | December 2002 | ||
|
||||
Build and begin testing a centrifuge end cap
|
January 2003 | January 2003 | ||
|
||||
Submit license application for Lead Cascade to NRC
|
April 2003 | February 2003 | ||
|
||||
NRC dockets Lead Cascade application
|
June 2003 | March 2003 | ||
|
||||
First rotor tube manufactured
|
November 2003 | September 2003 | ||
|
||||
Centrifuge testing begins
|
January 2005 | January 2005 | ||
|
||||
Submit license application for commercial plant to NRC
|
March 2005 | August 2004 | ||
|
||||
NRC dockets commercial plant application
|
May 2005 | October 2004 | ||
|
||||
Begin Lead Cascade centrifuge manufacturing
|
June 2005 | April 2005 | ||
|
||||
Satisfactory reliability and performance data
|
||||
obtained from Lead Cascade
|
October 2006 | |||
|
||||
Financing commitment secured for a 1 million SWU
|
||||
centrifuge plant
|
January 2007 | |||
|
||||
Begin commercial plant construction and
|
||||
refurbishment
|
June 2007 |
14
Milestones under DOE-USEC Agreement | Milestone Date | Date Achieved | ||
Begin American Centrifuge commercial plant
|
||||
operations at facility in Piketon, Ohio
|
January 2009 | |||
|
||||
American Centrifuge Plant capacity at one million
|
||||
SWU per year
|
March 2010 | |||
|
||||
American
Centrifuge Plant (if expanded at USECs option)
|
||||
projected to have an annual capacity of
3.5 million SWU
|
September 2011 |
15
| USEC, | ||
| Urenco, a consortium of companies owned or controlled by the British and Dutch governments and by two private German utilities, | ||
| Eurodif, a multinational consortium controlled by AREVA, a company principally owned by the French government, and | ||
| the Russian Federal Agency for Atomic Energy, which sells LEU through TENEX, a Russian government-owned entity. |
16
17
| SWU contracts were sales of services, not merchandise, and thus were not subject to the U.S. antidumping law, and | ||
| a subsidy provided through government payments under SWU contracts at above-market prices is not subject to the countervailing duty law. |
18
No. of Employees | ||||||||||||
at December 31, | ||||||||||||
Location | 2005 | 2004 | ||||||||||
Paducah Plant
|
Paducah, KY | 1,170 | 1,269 | |||||||||
Portsmouth Plant
|
Piketon, OH | 1,204 | 1,215 | |||||||||
NAC
|
Atlanta, GA | 73 | 83 | |||||||||
American Centrifuge
|
Primarily Oak Ridge, TN | |||||||||||
|
and Piketon, OH | 230 | 186 | |||||||||
Headquarters
|
Bethesda, MD | 85 | 118 | |||||||||
|
||||||||||||
|
Total Employees | 2,762 | 2,871 |
Number | Contract | |||||||
of Employees | Term | |||||||
Paducah plant:
|
||||||||
USW Local 5-550
|
545 | July 2011 | ||||||
SPFPA Local 111
|
88 | March 2007 | ||||||
|
||||||||
Portsmouth plant:
|
||||||||
USW Local 5-689
|
587 | May 2010 | ||||||
SPFPA Local 66
|
97 | August 2007 |
19
20
| equipment breakdowns, | ||
| interruptions of electric power, or an inability to purchase electric power at an acceptable price, | ||
| regulatory enforcement actions, | ||
| labor disruptions, | ||
| unavailability or inadequate supply of uranium feedstock or coolant, | ||
| natural or other disasters, including seismic activity in the vicinity of the Paducah plant, which is located near the New Madrid fault line, or | ||
| accidents or other incidents. |
21
22
| our ability to secure long-term SWU purchase commitments from customers at adequate prices, | ||
| downgrades in our credit rating, | ||
| market price and volatility of our common stock, | ||
| general economic and capital market conditions, | ||
| conditions in energy markets, | ||
| regulatory developments, | ||
| investor confidence in the industry and in us, | ||
| our perceived competitive position, | ||
| the expected success of our deployment of the American Centrifuge and its expected costs and timing, | ||
| the continued success of our current operations, and | ||
| restrictive covenants that limit our operating and financial flexibility. |
23
| SWU and uranium production levels and costs in the industry, | ||
| supply and demand shifts, | ||
| actions taken by governments to regulate, protect or promote trade in nuclear material, including but not limited to the continuation of existing restrictions on unfairly priced imports, | ||
| actions of competitors, | ||
| exchange rates, | ||
| availability of alternate fuels, and | ||
| inflation. |
24
25
| accidents, terrorism or other incidents, at nuclear facilities or involving shipments of nuclear materials, | ||
| regulatory actions or changes in regulations by nuclear regulatory bodies, | ||
| disruptions in other areas of the nuclear fuel cycle, such as uranium supplies or conversion, | ||
| civic opposition to, or changes in government policies regarding, nuclear operations, | ||
| business decisions concerning reactors or reactor operations, | ||
| the need for generating capacity, or | ||
| consolidation within the electric power industry. |
| leases for the gaseous diffusion plants and American Centrifuge Demonstration facilities, | ||
| the Executive Agent MOA under which we are designated the U.S. Executive Agent and purchase the SWU component of LEU under the Russian Contract, | ||
| the DOE-USEC Agreement and other agreements that address issues relating to the domestic uranium enrichment industry and centrifuge technology, | ||
| electric power purchase agreements with the Tennessee Valley Authority and DOE, | ||
| agreements under which DOE takes certain quantities of depleted uranium we generate, | ||
| contract work for DOE and DOE contractors at the Portsmouth and Paducah plants, including contracts for maintenance of the Portsmouth plant in cold standby or cold shutdown states, | ||
| an agreement with DOE for the transfer and downblending of highly enriched uranium, and | ||
| an agreement with DOE transferring uranium to us as a payment-in-kind for contract work to process and clean up out-of-specification uranium for DOE. |
26
27
28
29
30
31
32
33
Name
Age
Position
55
President and Chief Executive Officer
42
Senior Vice President, General Counsel and Secretary
59
Senior Vice President, American Centrifuge and Russian
HEU
44
Senior Vice President, Uranium Enrichment
52
Senior Vice President and Chief Financial Officer
58
Senior Vice President, Human Resources and Administration
41
Vice President and Treasurer
41
Vice President, Marketing and Sales
55
Vice President, American Centrifuge
58
Vice President, Government Relations
63
Vice President, Operations
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
Cash
Dividends
High
Low
Paid
$
18.69
$
9.39
$
.1375
16.95
11.94
.1375
16.25
9.79
.1375
12.95
9.05
.1375
$
8.93
$
7.60
$
.1375
8.98
6.88
.1375
10.47
8.00
.1375
11.14
9.35
.1375
Number of
Number of
securities to be
Weighted-average
securities
issued upon exercise
exercise price of
remaining available
of outstanding
outstanding
for future issuance
options, warrants
options, warrants
under equity
Plan category
and rights
and rights
compensation plans
1,355,000
$
8.97
8,050,000
(1)
1,355,000
8,050,000
(1)
Includes 7,846,000 shares available for issuance under the USEC Inc. 1999 Equity
Incentive Plan (net of awards which terminate or are cancelled without being exercised or
that are settled for cash) and 204,000 shares available for issuance under the Employee
Stock Purchase Plan.
(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
2,620
$
12.19
2,620
$
12.19
(1)
These purchases were not made pursuant to a publicly announced repurchase plan or
program. Represents 2,620 shares of common stock surrendered to USEC to pay withholding
taxes in connection with the vesting of restricted stock under the 1999 Equity Incentive
Plan.
Six-Month
Period Ended
Fiscal Years Ended
Years Ended December 31,
December 31,
June 30,
2005
2004
2003
2002
2002
2002
2001
(Unaudited)
(millions, except per share data)
$
1,085.6
$
1,027.3
$
1,110.8
$
1,181.5
$
668.0
$
1,289.3
$
1,057.3
261.3
224.0
159.9
75.3
43.2
116.9
84.3
212.4
165.9
166.0
123.4
69.6
102.6
35.3
1,559.3
1,417.2
1,436.7
1,380.2
780.8
1,508.8
1,176.9
1,148.4
1,071.6
1,124.1
1,174.2
675.2
1,305.7
989.8
181.4
151.5
150.2
115.2
66.0
100.9
38.1
1,329.8
1,223.1
1,274.3
1,289.4
741.2
1,406.6
1,027.9
229.5
194.1
162.4
90.8
39.6
102.2
149.0
7.3
(1)
(6.7
)(2)
(6.7
)(2)
94.5
58.5
44.8
22.9
16.0
12.6
11.4
61.9
64.1
69.4
54.1
27.6
50.7
48.8
(1.0
)(3)
(1.7
)(4)
66.8
73.2
48.2
20.5
(4.0
)
45.6
88.8
40.0
40.5
38.4
36.5
18.6
36.3
35.2
(10.5
)
(3.9
)
(5.4
)
(7.0
)
(3.2
)
(8.7
)
(10.9
)
37.3
36.6
15.2
(9.0
)
(19.4
)
18.0
64.5
15.0
13.1
6.2
(5.0
)
(6.7
)
4.5
(13.6
)(5)
$
22.3
$
23.5
$
9.0
$
(4.0
)
$
(12.7
)
$
13.5
$
78.1
$
.26
$
.28
$
.11
$
(.05
)
$
(.16
)
$
.17
$
.97
$
.55
$
.55
$
.55
$
.55
$
.275
$
.55
$
.55
December 31,
June 30,
2005
2004
2003
2002
2002
2001
(millions)
$
259.1
$
174.8
$
249.1
$
171.1
$
279.2
$
122.5
974.3
1,009.4
883.2
862.1
889.7
1,137.5
71.4
156.2
266.1
390.2
415.5
420.2
2,080.8
2,003.4
2,134.8
2,108.4
2,228.2
2,251.4
288.8
150.0
475.0
500.0
500.0
500.0
500.0
270.2
244.4
256.0
265.0
263.2
307.6
907.6
918.7
923.6
953.5
986.4
1,012.6
(1)
The plan to restructure headquarters and field operations resulted in special charges of
$7.3 million ($4.5 million or $.05 per share after tax) related to termination benefits,
principally consisting of severance benefits.
(2)
The special credit of $6.7 million ($4.2 million or $.05 per share after tax) in the fiscal
year ended June 30, 2002, represented a change in estimate of costs for consolidating plant
operations originally accrued in the fiscal year ended June 30, 2000.
(3)
Other income in 2005 includes $1.0 million ($0.6 million or $.01 per share after tax) from
customs duties paid to USEC as a result of trade actions.
(4)
Other income in 2004 includes income of $4.4 million ($2.7 million or $.03 per share after
tax) from customs duties paid to USEC as a result of trade actions, partly offset by an
expense of $2.7 million (or $.03 per share) for acquired-in-process research and development
expense relating to the acquisition of NAC.
(5)
The provision (credit) for income taxes in the fiscal year ended June 30, 2001 includes a
special income tax credit of $37.3 million (or $.46 per share) for deferred income tax
benefits that arose from the transition to taxable status. The special tax credit represents
a change in estimate resulting from a reassessment of certain deductions for which related
income tax savings were not certain.
supply LEU to both domestic and international utilities for use in about 150 nuclear
reactors worldwide,
are the exclusive executive agent for the U.S. government under a nuclear
nonproliferation program with Russia, known as Megatons to Megawatts,
are in the process of demonstrating, and plan to deploy, what we expect to be the
worlds most efficient uranium enrichment technology, known as the American Centrifuge,
perform contract work for the U.S. Department of Energy (DOE) and DOE contractors at
the Paducah and Portsmouth plants, and
provide transportation and storage systems for spent nuclear fuel and provide nuclear
and energy consulting services, including nuclear materials tracking.
sales of the SWU component of LEU,
sales of both the SWU and uranium components of LEU, and
sales of uranium.
Cumulative
as of
December
2005
2004
2003
31, 2005 (C)
$
108.7
$
64.2
$
40.0
$
226.2
$
92.7
$
58.1
$
40.0
$
204.1
$
16.0
$
6.1
$
$
22.1
(A)
Total expenditures are all American Centrifuge costs including demonstration facility,
licensing activities, commercial plant facility, program management, and interest related
costs.
(B)
Cumulative capitalized costs include interest of approximately $0.9 million and $0.2 million
at December 31, 2005 and 2004, respectively.
(C)
To-date amounts include $13.3 million expensed in years prior to 2003.
SWU contracts were sales of services, not merchandise, and thus were not subject to
the U.S. antidumping law, and
a subsidy provided through government payments under SWU contracts at above-market
prices is not subject to the countervailing duty law.
The expected return on plan assets was 8.5% for 2005 and is 8.0% for 2006. The expected
return is based on historical returns and expectations of future returns for the
composition of the plans equity and debt securities. Pension plan assets amounted to
$684.7 million at December 31, 2005, and projected pension benefit obligations were 94%
funded. Postretirement health and life benefit obligations, typically funded on a
pay-as-you go basis, were 34% funded. A 0.5% change in the expected return on plan assets
would affect pension costs by $3.3 million and postretirement health and life costs by $0.3
million.
A discount rate of 5.50% was used at December 31, 2005 to calculate the net present
value of benefit obligations. The rate is determined based on the investment yield of high
quality corporate bonds. A 0.5% reduction in the discount rate would affect the valuation
of pension benefit obligations by $50.5 million and postretirement health and life benefit
obligations by $10.9 million, and the resulting changes in the valuations would affect
pension costs by
$5.6 million and postretirement health and life costs by $1.3 million.
The healthcare costs trend rates are 9% projected in 2006 reducing to 5% in 2010. The
healthcare costs trend rate represents our estimate of the annual rate of increase in the
gross cost of providing benefits. The trend rate is a reflection of health care inflation
assumptions, changes in healthcare utilization and delivery patterns, technological
advances, and changes in the health status of our plan participants. A 1% increase in the
healthcare cost trend rates would affect postretirement health benefit obligations by about
$12.1 million and would affect costs by about $3.6 million.
U.S. Government
LEU Segment
Contracts Segment
Total
$
1,346.9
$
212.4
$
1,559.3
1,148.4
181.4
1,329.8
$
198.5
$
31.0
$
229.5
7.3
94.5
61.9
(1.0
)
$
66.8
40.0
(10.5
)
$
37.3
15.0
$
22.3
$
1,251.3
$
165.9
$
1,417.2
1,071.6
151.5
1,223.1
$
179.7
$
14.4
$
194.1
58.5
64.1
(1.7
)
$
73.2
40.5
(3.9
)
$
36.6
13.1
$
23.5
$
1,270.7
$
166.0
$
1,436.7
1,124.1
150.2
1,274.3
$
146.6
$
15.8
$
162.4
44.8
69.4
$
48.2
38.4
(5.4
)
$
15.2
6.2
$
9.0
Total
SWU
Uranium
LEU
Revenue
Revenue
Revenue
$
1,085.6
$
261.3
$
1,346.9
1,027.3
224.0
1,251.3
$
58.3
$
37.3
$
95.6
6
%
17
%
8
%
$
1,027.3
$
224.0
$
1,251.3
1,110.8
159.9
1,270.7
($
83.5
)
$
64.1
($
19.4
)
-8
%
40
%
-2
%
Years Ended December 31,
2005
2004
2003
$
22.3
$
23.5
$
9.0
11.6
30.6
21.0
35.0
(35.0
)
8.0
52.9
7.6
140.2
(58.7
)
94.2
6.8
(30.7
)
13.1
$
188.9
$
52.6
$
109.9
Years Ended December 31,
2005
2004
2003
$
(26.3
)
$
(20.2
)
$
(24.9
)
(14.1
)
$
(26.3
)
$
(34.3
)
$
(24.9
)
Years Ended December 31,
2005
2004
2003
$
(47.3
)
$
(46.3
)
$
(45.2
)
8.8
14.3
3.2
(3.5
)
(36.3
)
(25.6
)
$
(78.3
)
$
(57.6
)
$
(42.0
)
December 31,
2005
2004
(millions)
$
259.1
$
174.8
256.7
238.5
974.3
1,009.4
(288.8
)
(338.6
)
(299.1
)
$
862.7
$
1,123.6
the sum of (x) the greater of the JPMorgan Chase Bank prime rate and the federal funds
rate
plus
1
/
2
of 1% plus (y) a margin ranging from 0.25% to 0.75% based upon collateral
availability, or
the sum of LIBOR plus a margin ranging from 2.0% to 2.5% based on collateral
availability.
Standard & Poors
Moodys
B+
B1
B
B2
Negative
Stable
2006
2007
2008
2009
2010
Thereafter
Total
$
288.8
$
$
$
150.0
$
$
$
438.8
19.7
10.1
10.1
5.1
45.0
308.5
10.1
10.1
155.1
483.8
145.5
145.5
25.6
25.6
7.5
6.6
6.0
2.7
1.6
1.7
26.1
7.3
7.3
7.3
9.1
41.8
197.4
270.2
185.9
13.9
13.3
11.8
43.4
199.1
467.4
523.1
514.2
525.2
509.0
520.0
1,579.0
4,170.5
$
1,017.5
$
538.2
$
548.6
$
675.9
$
563.4
$
1,778.1
$
5,121.7
(1)
We paid the 6.625% senior notes balance amount of $288.8 million on the scheduled
maturity date of January 20, 2006. The 6.750% senior notes amounting to $150.0 million are
due January 20, 2009.
(2)
We purchase more than 80% of the electric power for the Paducah plant under a power purchase
agreement with TVA. Capacity and prices are fixed through May 2006. We expect to contract for
electric power for the period subsequent to May 2006.
(3)
Purchase commitments are enforceable and legally binding and consist of purchase orders or
contracts issued to vendors and suppliers to procure materials and services.
(4)
Other long-term liabilities reported on the balance sheet include postretirement health and
life benefit obligations amounting to $153.9 million, accrued depleted uranium disposition
costs of
$47.0 million, and the long-term portion of accrued lease turnover costs of $52.4 million.
(5)
Commitments to purchase SWU and uranium for resale include commitments to purchase SWU under
the Russian Contract and other commitments to downblend highly enriched uranium from DOE and
to purchase uranium from suppliers. We have agreed to purchase 5.5 million SWU each year for
the remaining term of the Russian Contract through 2013. Over the life of the 20-year Russian
Contract, we expect to purchase 92 million SWU contained in LEU derived from 500 metric tons
of highly enriched uranium. Prices are determined using a discount from an index of
international and U.S. price points, including both long-term and spot prices. A multi-year
retrospective of the index is used to minimize the disruptive effect of any short-term price
swings. Actual amounts will vary based on changes in the price points.
Maturity Dates
December 31, 2005
January 20,
January 20,
Balance Sheet
Fair
2006
2009
Carrying Amount
Value
$
288.8
$
288.8
$
288.8
$
150.0
150.0
144.0
$
438.8
$
432.8
commodity price risk subsequent to May 2006 for electric power requirements for the
Paducah plant, for which almost all of the electric power is purchased from TVA at fixed
prices through May 2006 (refer to Overview Cost of Sales and Results of Operations
Cost of Sales), and
interest rate risk relating to any outstanding borrowings at variable interest rates
under the $400.0 million revolving credit agreement (refer to Liquidity and Capital
Resources Capital Structure and Financial Resources).
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
USEC Inc.
/s/ John K. Welch
John K. Welch
President and Chief Executive Officer
Signature
Title
Date
/s/ John K. Welch
President and Chief Executive Officer
(Principal Executive Officer) and Director
February 24, 2006
/s/ Ellen C. Wolf
Senior Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer)
February 24, 2006
/s/ James R. Mellor
Chairman of the Board
February 24, 2006
/s/ Michael H. Armacost
Director
February 24, 2006
/s/ Joyce F. Brown
Director
February 24, 2006
/s/ John R. Hall
Director
February 24, 2006
/s/ W. Henson Moore
Director
February 24, 2006
/s/ Joseph F. Paquette, Jr.
Director
February 24, 2006
/s/ James D. Woods
Director
February 24, 2006
Page
68
70
71
72
73
74 101
over financial reporting, evaluating managements assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other procedures as we
consider necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinions.
McLean, Virginia
February 24, 2006
CONSOLIDATED BALANCE SHEETS
(millions, except share and per share data)
CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share data)
Years Ended December 31,
2005
2004
2003
$
1,085.6
$
1,027.3
$
1,110.8
261.3
224.0
159.9
212.4
165.9
166.0
1,559.3
1,417.2
1,436.7
1,148.4
1,071.6
1,124.1
181.4
151.5
150.2
1,329.8
1,223.1
1,274.3
229.5
194.1
162.4
7.3
94.5
58.5
44.8
61.9
64.1
69.4
(1.0
)
(1.7
)
66.8
73.2
48.2
40.0
40.5
38.4
(10.5
)
(3.9
)
(5.4
)
37.3
36.6
15.2
15.0
13.1
6.2
$
22.3
$
23.5
$
9.0
$
.26
$
.28
$
.11
$
.55
$
.55
$
.55
86.1
84.1
82.2
86.6
84.8
82.6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
Years Ended December 31,
2005
2004
2003
$
22.3
$
23.5
$
9.0
35.0
31.8
29.3
19.8
(3.8
)
(5.4
)
(43.2
)
2.6
(2.9
)
35.0
(35.0
)
(18.2
)
16.0
1.5
76.3
(17.0
)
117.7
21.9
(29.6
)
12.7
(33.2
)
42.0
(12.1
)
(36.2
)
26.2
36.9
6.1
6.8
2.5
13.1
188.9
52.6
109.9
(26.3
)
(20.2
)
(24.9
)
(8.1
)
(6.0
)
(26.3
)
(34.3
)
(24.9
)
(47.3
)
(46.3
)
(45.2
)
(36.3
)
(25.6
)
(3.5
)
8.8
14.3
3.2
(78.3
)
(57.6
)
(42.0
)
84.3
(39.3
)
43.0
174.8
214.1
171.1
$
259.1
$
174.8
$
214.1
$
32.6
$
35.2
$
34.7
38.7
3.6
(10.0
)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(millions, except per share data)
Accumu-
lated
Common
Other
Stock,
Excess of
Compre-
Compre-
Par Value
Capital
hensive
Total
hensive
$.10 per
over
Retained
Treasury
Deferred
Income
Stockholders
Income
Share
Par Value
Earnings
Stock
Compensation
(Loss)
Equity
(Loss)
$
10.0
$
1,054.8
$
23.8
$
(133.5
)
$
(1.6
)
$
$
953.5
$
(.6
)
5.8
1.1
6.3
(45.2
)
(45.2
)
9.0
9.0
10.0
1,009.0
32.8
(127.7
)
(.5
)
923.6
$
.5
12.5
13.0
.7
6.0
(1.1
)
5.6
(46.3
)
(46.3
)
(.7
)
(.7
)
(.7
)
23.5
23.5
23.5
10.0
963.9
56.3
(109.2
)
(1.6
)
(.7
)
918.7
$
22.8
.3
5.1
5.4
6.4
4.6
(1.1
)
9.9
(47.3
)
(47.3
)
(1.4
)
(1.4
)
(1.4
)
22.3
22.3
22.3
$
10.0
$
970.6
$
31.3
$
(99.5
)
$
(2.7
)
$
(2.1
)
$
907.6
$
20.9
Capital
Transfers
Capital
Transfers,
December 31,
Expenditures
and
December 31,
Expenditures
Retirements,
December 31,
2002
(Depreciation)
Retirements
2003
(Depreciation)
and Other
2004
$
14.3
$
21.9
$
(27.1
)
$
9.1
$
19.2
$
(15.0
)
$
13.3
148.3
3.1
151.4
5.7
157.1
134.7
3.0
22.4
160.1
1.0
13.2
174.3
297.3
24.9
(1.6
)
320.6
20.2
3.9
344.7
(106.4
)
(29.3
)
.2
(135.5
)
(31.8
)
.6
(166.7
)
$
190.9
$
(4.4
)
$
(1.4
)
$
185.1
$
(11.6
)
$
4.5
$
178.0
Capital
Transfers
December 31,
Expenditures
and
December 31,
2004
(Depreciation)
Retirements
2005
$
13.3
$
28.0
$
(12.3
)
$
29.0
157.1
4.4
161.5
174.3
.4
5.0
179.7
344.7
28.4
(2.9
)
370.2
(166.7
)
(34.7
)
2.4
(199.0
)
$
178.0
$
(6.3
)
$
(.5
)
$
171.2
Years Ended December 31,
2005
2004
2003
$
22.3
$
23.5
$
9.0
3.0
3.3
2.8
(6.0
)
(5.1
)
(4.3
)
$
19.3
$
21.7
$
7.5
$
.26
$
.28
$
.11
$
.22
$
.26
$
.09
$
4.07
$
1.60
$
1.04
3.8
%
3.0
%
3.5
%
4
%
7
%
8
%
42
%
40
%
35
%
3.5
years
4
years
6
years
Years Ended December 31,
2005
2004
2003
(in millions)
86.1
84.1
82.2
.5
.7
.4
86.6
84.8
82.6
December 31,
2005
2004
$
7.5
$
3.8
3.6
.5
$
11.1
$
4.3
Year Ended
Year Ended
December 31, 2005
December 31, 2004
Gross
Gross
Carrying
Accumulated
Carrying
Accumulated
Amount
Amortization
Net
Amount
Amortization
Net
$
3.9
$
(.3
)
$
3.6
$
.5
$
$
.5
Amortization
Expense
$
.4
.4
.3
.3
.3
1.9
December 31,
2005
2004
(millions)
$
207.0
$
195.9
1.5
8.6
208.5
204.5
33.6
25.8
14.6
8.2
48.2
34.0
$
256.7
$
238.5
$
55.7
$
19.6
13.0
13.6
6.0
$
68.7
$
39.2
$
86.9
$
103.5
13.5
14.1
37.4
20.8
79.6
63.9
$
217.4
$
202.3
(1)
Billings under government contracts are invoiced based on provisional billing rates
approved by DOE. Unbilled revenue represents the difference between actual costs incurred and
invoiced amounts. USEC expects to invoice and collect the unbilled amounts as provisional
billing rates are revised, submitted to and approved by DOE.
December 31,
2005
2004
(millions)
$
790.3
$
740.6
171.3
212.2
39.4
12.7
17.2
974.3
1,009.4
28.5
37.6
51.7
33.8
76.0
71.4
156.2
$
1,045.7
$
1,165.6
Years Ended December 31,
2005
2004
2003
$
51.7
$
8.8
$
8.0
6.5
1.7
1.1
58.2
10.5
9.1
(42.4
)
2.9
(2.0
)
(.8
)
(.3
)
(.9
)
(43.2
)
2.6
(2.9
)
$
15.0
$
13.1
$
6.2
December 31,
2005
2004
$
23.2
$
23.3
45.9
37.5
23.5
15.4
16.6
6.4
4.8
19.0
14.1
1.8
2.0
1.9
5.6
4.2
1.3
1.6
143.5
104.6
(2.3
)
(2.3
)
141.2
102.3
1.5
1.8
3.9
1.5
5.7
$
139.7
$
96.6
Years Ended December 31,
2005
2004
2003
35
%
35
%
35
%
2
3
3
(1
)
(2
)
(1
)
(6
)
(3
)
(5
)
(4
)
3
2
3
4
12
1
1
40
%
36
%
41
%
December 31,
2005
2004
(millions)
$
288.8
$
325.0
150.0
150.0
$
438.8
$
475.0
the sum of (x) the greater of the JPMorgan Chase Bank prime rate and the federal funds
rate
plus
1
/
2
of 1% plus (y) a margin ranging from .25% to .75% based upon collateral availability,
or
the sum of LIBOR plus a margin ranging from 2.0% to 2.5% based on collateral
availability.
December 31,
2005
2004
$
106.8
$
20.6
8.3
8.2
17.8
$
132.9
$
28.8
$
$
6.9
Balance
Special
Paid and
December 31,
Charge
Utilized
2005
$
2.8
$
(1.5
)
$
1.3
4.5
(2.7
)
1.8
$
7.3
$
(4.2
)
$
3.1
Balance
Paid
Balance
Paid
Balance
December 31,
Charge
and
December 31,
and
December 31,
2002
(Credit)
Utilized
2003
Utilized
2004
$
6.3
$
1.3
$
(7.6
)
16.5
(.8
)
(2.8
)
$
12.9
$
(12.9
)
$
22.8
$
.5
$
(10.4
)
$
12.9
$
(12.9
)
$
$
7.5
6.6
6.0
2.7
1.6
1.7
$
26.1
Postretirement Health
Defined Benefit Pension Plans
and Life Benefit Plans
Years Ended
Years Ended
December 31,
December 31,
2005
2004
2005
2004
$
678.9
$
602.3
$
253.8
$
234.6
28.4
46.3
1.3
4.7
11.9
(66.4
)
(.4
)
.1
16.3
14.1
7.2
7.3
39.0
37.3
14.4
14.0
(33.5
)
(33.0
)
(7.7
)
(6.8
)
728.7
678.9
202.7
253.8
657.4
611.1
64.5
57.1
52.9
71.5
4.7
5.8
7.9
7.9
8.1
8.4
(33.5
)
(33.0
)
(7.7
)
(6.8
)
684.7
657.5
69.6
64.5
(44.0
)
(21.4
)
(133.1
)
(189.3
)
11.5
13.5
(66.4
)
(.9
)
115.7
88.0
45.6
45.0
$
83.2
$
80.1
$
(153.9
)
$
(145.2
)
$
86.2
$
82.9
$
$
(6.4
)
(3.9
)
(153.9
)
(145.2
)
3.4
1.1
$
83.2
$
80.1
$
(153.9
)
$
(145.2
)
5.50
%
5.75
%
5.50
%
5.75
%
3.75
3.75
3.75
3.75
Postretirement Health
Defined Benefit Pension Plans
and Life Benefit Plans
Years Ended
Years Ended
December 31,
December 31,
2005
2004
2003
2005
2004
2003
$
16.3
$
14.1
$
11.5
$
7.2
$
7.3
$
6.3
39.1
37.3
35.3
14.4
14.0
13.2
(54.9
)
(50.9
)
(44.5
)
(5.5
)
(4.8
)
(3.6
)
1.6
1.3
.2
(.9
)
(2.4
)
(2.4
)
2.1
1.5
4.8
1.5
1.4
.6
.1
$
4.8
$
3.3
$
7.3
$
16.8
$
15.5
$
13.5
5.75
%
6.00
%
6.75
%
5.75
%
6.00
%
6.75
%
8.50
8.50
9.00
8.50
8.50
9.00
3.75
4.00
4.25
3.75
4.00
4.25
Postretirement Health
Benefit Plans
December 31,
2005
2004
9
%
10
%
5
%
5
%
2010
2010
One Percentage Point
Increase
Decrease
$
12.1
$
(11.4
)
3.6
(2.9
)
Percentage of
Target
Plan Assets
Allocation
December 31,
Range
2005
2004
2005
66
%
65
%
50 70
%
34
35
30 50
100
%
100
%
66
%
66
%
55 75
%
34
34
25 45
100
%
100
%
Postretirement
Expected
Defined Benefit
Health and Life
Subsidies
Pension Plans
Benefit Plans
From Medicare
$
33.9
$
9.0
$
.2
34.6
10.6
.3
35.6
12.0
.4
36.8
13.5
.5
38.4
15.1
.6
231.0
93.7
5.8
Shares
Treasury
Shares
Issued
Stock
Outstanding
100,320
(18,547
)
81,773
781
781
100,320
(17,766
)
82,554
2,595
2,595
100,320
(15,171
)
85,149
1,422
1,422
100,320
(13,749
)
86,571
Shares
Stock Options Outstanding
Available for
Weighted-
Grant of
Average
Stock Options
Shares
Exercise Price
2,137
4,328
6.63
(728
)
728
6.97
(264
)
5.19
85
(85
)
10.16
1,494
4,707
6.70
2,805
(688
)
688
8.02
(1,746
)
6.70
1,806
(1,806
)
6.53
5,417
1,843
7.36
(361
)
361
15.01
(704
)
6.66
145
(145
)
5.20
5,201
1,355
8.97
Stock
Stock
Exercise
Options
Remaining
Options
Price
Outstanding
Life in Years
Exercisable
$
3.63 to $6.97
193
4.9
193
7.00
116
7.6
67
7.02 to 7.13
294
6.3
294
8.05
271
3.2
149
8.50
150
5.6
150
10.44 to 14.00
134
4.6
33
16.90
197
4.3
197
1,355
5.0
1,083
Years Ended December 31,
2005
2004
2003
$
1,074.1
$
918.2
$
919.0
224.2
215.2
266.7
261.0
283.8
251.0
485.2
499.0
517.7
$
1,559.3
$
1,417.2
$
1,436.7
Years Ended December 31,
2005
2004
2003
(millions)
$
1,085.6
$
1,027.3
$
1,110.8
261.3
224.0
159.9
1,346.9
1,251.3
1,270.7
212.4
165.9
166.0
$
1,559.3
$
1,417.2
$
1,436.7
$
198.5
$
179.7
$
146.6
31.0
14.4
15.8
229.5
194.1
162.4
94.5
58.5
44.8
61.9
64.1
69.4
6.3
(1.7
)
66.8
73.2
48.2
29.5
36.6
33.0
$
37.3
$
36.6
$
15.2
December 31,
2005
2004
2003
(millions)
$
2,008.5
$
1,952.1
$
2,076.7
72.3
51.3
58.1
$
2,080.8
$
2,003.4
$
2,134.8
March 31,
June 30,
Sept. 30,
Dec. 31,
Year
2005
2005
2005
2005
2005
$
311.2
$
277.4
$
421.0
$
549.7
$
1,559.3
263.5
235.2
384.5
446.6
1,329.8
47.7
42.2
36.5
103.1
229.5
4.5
2.8
7.3
22.7
23.9
20.5
27.4
94.5
15.2
14.0
12.3
20.4
61.9
(1.0
)(1)
(1.0
)(1)
9.8
4.3
(.8
)
53.5
66.8
8.7
9.1
9.0
13.2
40.0
(1.9
)
(3.2
)
(2.3
)
(3.1
)
(10.5
)
2.1
1.4
(2.3
)
13.8
15.0
$
.9
$
(3.0
)
$
(5.2
)
$
29.6
$
22.3
$
.01
$
(.03
)
$
(.06
)
$
.34
$
.26
85.5
86.2
86.3
86.5
86.1
86.0
86.2
86.3
86.9
86.6
March 31,
June 30,
Sept. 30,
Dec. 31,
Year
2004
2004
2004
2004
2004
$
210.3
$
302.5
$
255.9
$
648.5
$
1,417.2
192.5
254.0
218.5
558.1
1,223.1
17.8
48.5
37.4
90.4
194.1
9.4
10.6
16.4
22.1
58.5
16.0
15.9
15.3
16.9
64.1
(1.7
)(2)
(1.7
)(2)
(7.6
)
22.0
5.7
53.1
73.2
9.4
10.4
10.0
10.7
40.5
(.7
)
(.8
)
(1.2
)
(1.2
)
(3.9
)
(6.5
)
5.0
(.8
)
15.4
13.1
$
(9.8
)
$
7.4
$
(2.3
)
$
28.2
$
23.5
$
(.12
)
$
.09
$
(.03
)
$
.33
$
.28
83.0
84.0
84.4
85.0
84.1
83.0
84.5
84.4
85.9
84.8
(1)
Other income in the three months and year ended December 31, 2005, includes $1.0 million
from customs duties paid to USEC as a result of trade actions.
(2)
Other income in the three months and year ended December 31, 2004, includes income of $4.4
million from customs duties paid to USEC as a result of trade actions, partly offset by
expense of $2.7 million for acquired-in-process research and development expense relating to
the acquisition of NAC.
(3)
No dilutive effect of stock compensation awards is recognized in those periods in which a net
loss has occurred.
uranium.
Exhibit
No.
Description
Certificate of Incorporation of USEC Inc., incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-1, filed June 29, 1998 (Commission file number 333-57955).
Amended and Restated Bylaws of USEC Inc., dated September 13, 2000, incorporated by
reference to Exhibit 3.3 of the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000 (Commission file number 1-14287).
Indenture, dated January 15, 1999, between USEC Inc. and First Union National Bank,
incorporated by reference to Exhibit 4.2 of the Annual Report on Form 10-K for the fiscal
year ended June 30, 1999 (Commission file number 1-14287).
Rights Agreement, dated April 24, 2001, between USEC Inc. and Fleet National Bank, as Rights
Agent, including the form of Certificate of Designation, Preferences and Rights as Exhibit
A, the form of Rights Certificates as Exhibit B and the Summary of Rights as Exhibit C,
incorporated by reference to Exhibit 4.3 of the Registration Statement on Form 8-A filed
April 24, 2001 (Commission file number 1-14287).
Lease Agreement between the United States Department of Energy and the United States
Enrichment Corporation, dated as of July 1, 1993, including notice of exercise of option to
renew, incorporated by reference to Exhibit 10.1 of the Registration Statement on Form S-1,
filed June 29, 1998 (Commission file number 333-57955).
Memorandum of Agreement between the United States Department of Energy and the United States
Enrichment Corporation for electric power, entered into as of July 1, 1993, incorporated by
reference to Exhibit 10.11 of the Registration Statement on Form S-1, filed June 29, 1998
(Commission file number 333-57955).
Contract between United States Enrichment Corporation, Executive Agent of the United States
of America, and AO Techsnabexport, Executive Agent of the Ministry of Atomic Energy,
Executive Agent of the Russian Federation, dated January 14, 1994, as amended, incorporated
by reference to Exhibit 10.17 of the Registration Statement on Form S-1, filed June 29, 1998
(Commission file number 333-57955).
Amendment No. 11, dated June 1998, to Contract between United States Enrichment Corporation,
Executive Agent of the United States of America, and Techsnabexport Co. Ltd., Executive
Agent of the Ministry of Atomic Energy, Executive Agent of the Russian Federation, dated
January 14, 1994. (a)
Amendment No. 12, dated March 4, 1999, to Contract between United States Enrichment
Corporation, Executive Agent of the United States of America, and Techsnabexport Co. Ltd.,
Executive Agent of the Ministry of Atomic Energy, Executive Agent of the Russian Federation,
dated January 14, 1994, incorporated by reference to Exhibit 10.36 of the Annual Report on
Form 10-K for the fiscal year ended June 30, 1999 (Commission file number 1-14287).
Amendment No. 13, dated November 11, 1999, to Contract between United States Enrichment
Corporation, Executive Agent of the United States of America, and AO Techsnabexport,
Executive Agent of the Ministry of Atomic Energy, Executive Agent of the Russian Federation,
dated January 14, 1994. (a)
Amendment No. 14, dated October 27, 2000, to Contract between United States Enrichment
Corporation, Executive Agent of the United States of America, and Joint Stock Company
Techsnabexport, Executive Agent of the Ministry of Atomic Energy, Executive Agent of the
Russian Federation, dated January 14, 1994. (a)
Amendment No. 15, dated January 18, 2001, to Contract between United States Enrichment
Corporation, Executive Agent of the United States of America, and Joint Stock Company
Techsnabexport, Executive Agent of the Ministry of Atomic Energy, Executive Agent of the
Russian Federation, dated January 14, 1994. (a)
Memorandum of Agreement, dated April 6, 1998, between the Office of Management and Budget
and United States Enrichment Corporation relating to post-privatization liabilities,
incorporated by reference to Exhibit 10.18 of the Registration Statement on Form S-1, filed
June 29, 1998 (Commission file number 333-57955).
Exhibit
No.
Description
Memorandum of Agreement, dated April 20, 1998, between the United States Department of
Energy and United States Enrichment Corporation for transfer of natural uranium and highly
enriched uranium and for blending down of highly enriched uranium, incorporated by reference
to Exhibit 10.20 of the Registration Statement on Form S-1, filed June 29, 1998 (Commission
file number 333-57955).
Memorandum of Agreement entered into as of April 18, 1997, between the United States, acting
by and through the United States Department of State and the United States Department of
Energy, and United States Enrichment Corporation for United States Enrichment Corporation to
serve as the United States Governments Executive Agent under the Agreement between the
United States and the Russian Federation concerning the disposal of highly enriched uranium
extracted from nuclear weapons, incorporated by reference to Exhibit 10.26 of the
Registration Statement on Form S-1/A, filed July 21, 1998 (Commission file number
333-57955).
Memorandum of Agreement, entered into as of June 30, 1998, between the United States
Department of Energy and United States Enrichment Corporation regarding certain worker
benefits, incorporated by reference to Exhibit 10.28 of the Registration Statement on Form
S-1/A, filed July 21, 1998 (Commission file number 333-57955).
Power Contract between Tennessee Valley Authority and United States Enrichment Corporation,
dated July 11, 2000, incorporated by reference to Exhibit 10.45 of the Annual Report on Form
10-K for the fiscal year ended June 30, 2000 (Commission file number 1-14287). (Certain
information has been omitted and filed separately pursuant to confidential treatment under
Rule 24b-2).
Agreement, dated June 17, 2002, between U.S. Department of Energy and USEC Inc.,
incorporated by reference to Exhibit 10.54 of the current report on Form 8-K filed June 21,
2002 (Commission file number 1-14287).
Modification 1 to Agreement dated June 17, 2002 between U.S. Department of Energy and USEC
Inc., dated August 20, 2002. (a)
Cooperative Research and Development Agreement, Development of an Economically Attractive
Gas Centrifuge Machine and Enrichment Process, by and between UT-Battelle, LLC, under its
U.S. Department of Energy Contract, and USEC Inc., dated June 30, 2000, Amendment A, dated
July 12, 2002, and Amendment B, dated September 11, 2002, incorporated by reference to
Exhibit 10.58 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2002
(Commission file number 1-14287).
Administrative Order on Consent for Removal Action in the Matter of Starmet CMI, dated
February 6, 2004, between the United States Environmental Protection Agency, United States
Enrichment Corporation, United States Department of Energy and United States Department of
the Army, incorporated by reference to Exhibit 10.64 of the Annual Report on Form 10-K for
the year ended December 31, 2003 (Commission file number 1-14287).
Agreement, dated February 17, 2004, between the U.S. Department of Energy and the United
States Enrichment Corporation Concerning the Temporary Lease of Certain Facilities In
Support of the American Centrifuge Program, incorporated by reference to Exhibit 10.66 of
the Annual Report on Form 10-K for the year ended December 31, 2003 (Commission file number
1-14287).
Stock Purchase Agreement, dated July 29, 2004, by and among Pinnacle West Capital
Corporation, El Dorado Investment Company and USEC Inc., incorporated by reference to
Exhibit 10.67 of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004
(Commission file number 1-14287).
Amendment to the Stock Purchase Agreement, dated November 18, 2004, by and among USEC Inc.,
Pinnacle West Capital Corporation and El Dorado Investment Company, incorporated by
reference to Exhibit 10.74 of the current report on Form 8-K filed November 19, 2004
(Commission file number 1-14287).
Memorandum of Understanding between USEC Inc. and the United States Department of Energy,
dated October 22, 2004, Effectuating the Transfer of Natural Uranium Hexafluoride for
Affected Inventory, incorporated by reference to Exhibit 10.68 of the current report on Form
8-K filed October 28, 2004 (Commission file number 1-14287).
Memorandum of Agreement between USEC Inc. and the United States Department of Energy, dated
as of December 10, 2004, for the Continued Operation of Portsmouth S&T Facilities for the
Processing of Affected Inventory in Fiscal Year 2005 and Thereafter, incorporated by
reference to Exhibit 10.75 of the current report on Form 8-K filed December 16, 2004
(Commission file number 1-14287).
Amendment No. 1 to the December 10, 2004 Memorandum of Agreement between the United States
Department of Energy and USEC Inc., dated May 16, 2005. (a)
Exhibit
No.
Description
Amended and Restated Revolving Credit Agreement dated as of August 18, 2005 among USEC Inc.,
United States Enrichment Corporation, the lenders named therein, JPMorgan Chase Bank, N.A.,
as administrative and collateral agent, J.P. Morgan Securities, Inc., Merrill Lynch Capital
and Goldman Sachs Credit Partners, L.P., as joint book managers and joint lead arrangers,
Merrill Lynch Capital and Goldman Sachs Credit Partners, L.P., as co-syndication agents,
GMAC Commercial Finance LLC and Wachovia Bank, National Association, as co-documentation
agents, and CIT Capital Securities, LLC, as co-agent, incorporated by reference to Exhibit
10.83 of the Current Report on Form 8-K filed on August 23, 2005 (Commission file number
1-14287).
Amended and Restated Omnibus Pledge and Security agreement dated as of August 18, 2005 by
USEC Inc., United States Enrichment Corporation, NAC Holding Inc. and NAC International
Inc., in favor of JPMorgan Chase Bank, N.A., as administrative and collateral agent for the
lenders, incorporated by reference to Exhibit 10.84 of the Current Report on Form 8-K filed
on August 23, 2005 (Commission file number 1-14287).
Form of Director and Officer Indemnification Agreement, incorporated by reference to Exhibit
10.25 of the Registration Statement on Form S-1/A, filed July 21, 1998 (Commission file
number 333-57955). (b)
Form of Change in Control Agreement with executive officers, incorporated by reference to
Exhibit 10.40 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
(Commission file number 1-14287). (b)
Form of Change in Control Agreement with senior executive officers, incorporated by
reference to Exhibit 10.82 to the quarterly report on Form 10-Q for the quarter ended June
30, 2005 (Commission file number 1-14287). (b)
USEC Inc. 1999 Equity Incentive Plan, incorporated by reference to Exhibit 10.35 of the
Registration Statement on Form S-8, No. 333-71635, filed February 2, 1999. (b)
First Amendment to the USEC Inc. 1999 Equity Incentive Plan, incorporated by reference to
Annex B of Schedule 14A filed March 31, 2004, with respect to the 2004 annual meeting of
shareholders (Commission file number 1-14287). (b)
Form of Employee Nonqualified Stock Option Agreement, incorporated by reference to Exhibit
4.4 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004
(Commission file number 1-14287). (b)
Form of Employee Nonqualified Stock Option Agreement in connection with an employment
agreement, incorporated by reference to Exhibit 4.5 of the Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004 (Commission file number 1-14287). (b)
Form of Employee Restricted Stock Award Agreement (stock in lieu of annual incentive),
incorporated by reference to Exhibit 4.6 of the Annual Report on Form 10-K for the year
ended December 31, 2004 (Commission file number 1-14287). (b)
Form of Employee Restricted Stock Award Agreement (three year vesting), incorporated by
reference to Exhibit 4.7 of the Annual Report on Form 10-K for the year ended December 31,
2004 (Commission file number 1-14287). (b)
Form of Non-Employee Director Nonqualified Stock Option Agreement, incorporated by reference
to Exhibit 4.8 of the Annual Report on Form 10-K for the year ended December 31, 2004
(Commission file number 1-14287). (b)
Form of Non-Employee Director Restricted Stock Award Agreement Founders Stock and
Incentive Stock, incorporated by reference to Exhibit 4.9 of the Annual Report on Form 10-K
for the year ended December 31, 2004 (Commission file number 1-14287). (b)
Form of Non-Employee Director Restricted Stock Award Agreement Annual Retainers and
Meeting Fees, incorporated by reference to Exhibit 4.10 of the Annual Report on Form 10-K
for the year ended December 31, 2004 (Commission file number 1-14287). (b)
USEC Inc. Pension Restoration Plan, dated September 1, 1999, incorporated by reference to
Exhibit 10.39 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
(Commission file number 1-14287). (b)
USEC Inc. 401(k) Restoration Plan, incorporated by reference to Exhibits 10.41(a) through
(f) of the Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 (Commission
file number 1-14287). (b)
Exhibit
No.
Description
USEC Inc. Supplemental Executive Retirement Plan, dated April 7, 1999 and amended April 25,
2001, incorporated by reference to Exhibit 10.51 of the Annual Report on Form 10-K for the
fiscal year ended June 30, 2001 (Commission file number 1-14287). (b)
Employment Agreement between USEC Inc. and Lisa E. Gordon-Hagerty, Executive Vice President
and Chief Operating Officer, dated December 15, 2003, incorporated by reference to Exhibit
10.63 of the Annual Report on Form 10-K for the year ended December 31, 2003. (b)
Amended and Restated Employment Agreement, dated July 29, 2004, between USEC Inc. and
William H. Timbers, President and Chief Executive Officer, incorporated by reference to
Exhibit 10.69 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004
(Commission file number 1-14287). (b)
Agreement, dated July 29, 2004, between USEC Inc. and James R. Mellor, Chairman of the
Board, incorporated by reference to Exhibit 10.70 of the Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004 (Commission file number 1-14287). (b)
Agreement and General Release, dated September 21, 2004, between USEC Inc. and Sydney M.
Ferguson, Senior Vice President, incorporated by reference to Exhibit 10.71 of the Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004 (Commission file number
1-14287). (b)
Severance Agreement and General Release, dated November 15, 2004, between USEC Inc. and
Timothy B. Hansen, Senior Vice President, General Counsel and Secretary, incorporated by
reference to Exhibit 10.73 of the current report on Form 8-K filed November 19, 2004
(Commission file number 1-14287). (b)
Letter Agreement, dated February 23, 2005, by and between USEC Inc. and James R. Mellor,
Chairman of the Board, President and Chief Executive Officer, incorporated by reference to
Exhibit 10.76 of the current report on Form 8-K filed February 28, 2005 (Commission file
number 1-14287). (b)
Summary Sheet for 2005 Non-Employee Director Compensation, incorporated by reference to
Exhibit 10.77 to the Current Report on Form 8-K filed on April 27, 2005 (Commission file
number 1-14287). (b)
Summary Sheet for 2006 Non-Employee Director Compensation, incorporated by reference to
Exhibit 10.92 to the Current Report on Form 8-K filed on December 15, 2005 (Commission file
number 1-14287). (b)
Summary of 2005 Annual Performance Objectives for Executive Officers, incorporated by
reference to Exhibit 10.81 to the Current Report on Form 8-K filed on June 20, 2005
(Commission file number 1-14287). (b)
Severance Agreement and General Release dated September 12, 2005 by and between the Company
and Lisa Gordon-Hagerty, incorporated by reference to Exhibit 10.89 of the Current Report on
Form 8-K filed on September 13, 2005 (Commission file number 1-14287). (b)
Summary of Compensation Arrangements for Certain Executive Officers, incorporated by
reference to Exhibit 10.90 of the Current Report on Form 8-K filed on September 16, 2005
(Commission file number 1-14287). (b)
Letter Agreement dated December 1, 2005, by and between USEC Inc. and James R. Mellor,
Chairman of the Board, incorporated by reference to Exhibit 10.91 of the Current Report on
Form 8-K filed on December 6, 2005 (Commission file number 1-14287). (b)
Subsidiaries of USEC Inc. (a)
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. (a)
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). (a)
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a). (a)
Certification of CEO and CFO
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (a)
Exhibit
No.
Description
Letter from U.S. Department of State, dated August 23, 2002, in compliance with Rule 0-6 of
the Securities Exchange Act of 1934, incorporated by reference to Exhibit 99.4 of the Annual
Report on Form 10-K for the fiscal year ended June 30, 2002 (Commission file number
1-14287).
Annual CEO Certification, dated May 24, 2005, as filed with the New York Stock Exchange. (a)
(a)
Filed herewith
(b)
Management contracts and compensatory plans and arrangements required to be filed as
exhibits pursuant to Item 15(b) of this report.
UNITED STATES ENRICHMENT
CORPORATION |
AO TECHSNABEXPORT | |||||||
|
||||||||
By:
|
George Rifakes | By: | Albert Schishkin | |||||
|
||||||||
|
||||||||
|
By: | Alexei A. Grigoriev | ||||||
|
Page 1 of 3
Page 2 of 3
UNITED STATES ENRICHMENT
CORPORATION |
AO TECHSNABEXPORT | |||||||
|
||||||||
By:
|
/s/ Philip G. Sewell | By: | /s/ Revmir G. Fraishtout | |||||
|
||||||||
|
(Philip G. Sewell) | (Revmir G. Fraishtout) | ||||||
|
||||||||
|
By: | /s/ Alexei A. Grigoriev | ||||||
|
||||||||
|
(Alexei A. Grigoriev) |
Page 3 of 3
UNITED STATES ENRICHMENT
CORPORATION |
JOINT STOCK COMPANY TECHSNABEXPORT | |||||||
By:
|
/s/ Philip G. Sewell | By: | /s/ Alexei A. Grigoriev | |||||
|
Assay of U-235 in | Quantity of SWU, | Quantity in kilograms | ||||||
LEU, weight percents: | deemed to be | of uranium as | ||||||
contained in one | UF 6nat , | |||||||
kilogram of uranium | deemed to be | |||||||
as LEU of given | contained in one | |||||||
assay: | kilogram of uranium | |||||||
as LEU of given | ||||||||
assay: | ||||||||
3.20%
|
3.787 | 7.056 | ||||||
3.60%
|
4.525 | 8.029 | ||||||
4.00%
|
5.276 | 9.002 | ||||||
4.40%
|
6.039 | 9.976 | ||||||
4.95%
|
7.101 | 11.314 |
Assay of U-235 in LEU, weight percents: | Quantity in kilograms of uranium | |||
as LEU, deemed to be contained in | ||||
one kilogram of UF 6 : | ||||
3.20%
|
0.67611 | |||
3.60%
|
0.67610 |
Assay of U-235 in LEU, weight percents: | Quantity in kilograms of uranium | |||
as LEU, deemed to be contained in | ||||
one kilogram of UF 6 : | ||||
4.00%
|
0.67609 | |||
4.40%
|
0.67607 | |||
4.95%
|
0.67606 |
UNITED STATES ENRICHMENT
CORPORATION |
JOINT STOCK COMPANY TECHSNABEXPORT | |||||||
By:
|
Philip G. Sewell | By: | Alexei A. Grigoriev | |||||
|
||||||||
Title:
|
Senior Vice President | Title: | Deputy General Director | |||||
|
1
2
3
/s/ Lee Liberman Otis
|
/s/ William H. Timbers | |
|
||
Lee Liberman Otis
|
William H. Timbers | |
General Counsel
|
President and Chief Executive Officer | |
U.S. Department of Energy
|
USEC Inc. |
4
Table 1. Bounding concentrations of dispersed transuranic and
99
TC contamination in the DUF
6
tails cylinders
Contaminant
ppb
u
0.00012
0.043
5.2
15.9
0.0013
UNITED STATES DEPARTMENT
OF ENERGY |
USEC INC. | |||||||
|
||||||||
By:
|
/s/ William E. Murphie | By: | /s Philip G. Sewell | |||||
|
||||||||
Title:
|
Manager | Title: | Senior Vice President | |||||
|
||||||||
Date:
|
May 16, 2005 | Date: | May 16, 2005 | |||||
|
Name of Subsidiary
State of Incorporation
Delaware
Delaware
U.S. Virgin Islands
Delaware
Delaware
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
February 24, 2006 | /s/ John K. Welch | |||
John K. Welch | ||||
President and Chief Executive Officer | ||||
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
February 24, 2006 | /s/ Ellen C. Wolf | |||
Ellen C. Wolf | ||||
Senior Vice President and Chief Financial Officer | ||||
February 24, 2006 | /s/ John K. Welch | |||
John K. Welch | ||||
President and Chief Executive Officer | ||||
February 24, 2006 | /s/ Ellen C. Wolf | |||
Ellen C. Wolf | ||||
Senior Vice President and Chief Financial Officer | ||||
As the Chief Executive Officer of
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USEC Inc. | , | ||||
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||||||
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(Name of the Company) |
By
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/s/ James R. Mellor | |||
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Print Name:
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James R. Mellor | |||
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Title:
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Chairman, President & Chief Executive Officer | |||
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Date:
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May 24, 2005 | |||
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