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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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o
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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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ý
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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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Successor
|
|
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Predecessor
|
||||
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September 30,
2014 |
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|
December 31,
2013 |
||||
ASSETS
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
105.4
|
|
|
|
$
|
314.2
|
|
Accounts receivable
|
90.0
|
|
|
|
163.0
|
|
||
Inventories
|
499.4
|
|
|
|
967.6
|
|
||
Deferred costs associated with deferred revenue
|
—
|
|
|
|
165.5
|
|
||
Other current assets
|
21.6
|
|
|
|
21.7
|
|
||
Total current assets
|
716.4
|
|
|
|
1,632.0
|
|
||
Property, plant and equipment
|
3.7
|
|
|
|
7.9
|
|
||
Deferred income taxes
|
26.4
|
|
|
|
—
|
|
||
Deposits for surety bonds
|
35.9
|
|
|
|
39.8
|
|
||
Intangible assets
|
123.5
|
|
|
|
—
|
|
||
Excess reorganization value
|
137.2
|
|
|
|
—
|
|
||
Other long-term assets
|
20.5
|
|
|
|
25.8
|
|
||
Total Assets
|
$
|
1,063.6
|
|
|
|
$
|
1,705.5
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
79.5
|
|
|
|
$
|
114.5
|
|
Payables under Russian Contract
|
47.3
|
|
|
|
340.7
|
|
||
Deferred income taxes
|
26.4
|
|
|
|
—
|
|
||
Inventories owed to customers and suppliers
|
173.1
|
|
|
|
499.7
|
|
||
Deferred revenue
|
0.7
|
|
|
|
195.9
|
|
||
Convertible senior notes (Predecessor)
|
—
|
|
|
|
530.0
|
|
||
Convertible preferred stock (Predecessor), 85,900 shares issued
|
—
|
|
|
|
113.9
|
|
||
Total current liabilities
|
327.0
|
|
|
|
1,794.7
|
|
||
Long-term debt
|
240.4
|
|
|
|
—
|
|
||
Postretirement health and life benefit obligations
|
211.6
|
|
|
|
195.0
|
|
||
Pension benefit liabilities
|
174.1
|
|
|
|
121.2
|
|
||
Other long-term liabilities
|
51.2
|
|
|
|
52.8
|
|
||
Total liabilities
|
1,004.3
|
|
|
|
2,163.7
|
|
||
Commitments and contingencies (Note 19)
|
|
|
|
|
|
|
||
Stockholders’ Equity (Deficit)
|
|
|
|
|
||||
Preferred stock (Predecessor), par value $1.00 per share, 25,000,000 shares authorized, no shares recorded as stockholders’ equity at December 31, 2013
|
—
|
|
|
|
—
|
|
||
Common stock (Predecessor), par value $0.10 per share, 25,000,000 shares authorized, 5,211,000 shares issued at December 31, 2013
|
—
|
|
|
|
0.5
|
|
||
Preferred stock (Successor), par value $1.00 per share, 20,000,000 shares authorized, none issued at September 30, 2014
|
—
|
|
|
|
—
|
|
||
Common stock (Successor), par value $0.10 per share, 100,000,000 shares authorized, 9,000,000 shares issued at September 30, 2014
|
0.9
|
|
|
|
—
|
|
||
Excess of capital over par value
|
58.4
|
|
|
|
1,216.4
|
|
||
Retained earnings (deficit)
|
—
|
|
|
|
(1,520.7
|
)
|
||
Treasury stock, no shares at September 30, 2014 and 226,000 shares at December 31, 2013
|
—
|
|
|
|
(34.3
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
—
|
|
|
|
(120.1
|
)
|
||
Total stockholders’ equity (deficit)
|
59.3
|
|
|
|
(458.2
|
)
|
||
Total Liabilities and Stockholders’ Equity (Deficit)
|
$
|
1,063.6
|
|
|
|
$
|
1,705.5
|
|
|
Predecessor
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Separative work units
|
$
|
97.4
|
|
|
$
|
295.8
|
|
|
$
|
347.5
|
|
|
$
|
853.4
|
|
Uranium
|
—
|
|
|
3.8
|
|
|
—
|
|
|
45.3
|
|
||||
Contract services
|
23.3
|
|
|
4.2
|
|
|
43.0
|
|
|
10.3
|
|
||||
Total revenue
|
120.7
|
|
|
303.8
|
|
|
390.5
|
|
|
909.0
|
|
||||
Cost of Sales:
|
|
|
|
|
|
|
|
|
|
||||||
Separative work units and uranium
|
103.3
|
|
|
330.4
|
|
|
369.4
|
|
|
962.4
|
|
||||
Contract services
|
22.8
|
|
|
3.4
|
|
|
43.9
|
|
|
10.2
|
|
||||
Total cost of sales
|
126.1
|
|
|
333.8
|
|
|
413.3
|
|
|
972.6
|
|
||||
Gross profit (loss)
|
(5.4
|
)
|
|
(30.0
|
)
|
|
(22.8
|
)
|
|
(63.6
|
)
|
||||
Advanced technology costs
|
5.3
|
|
|
44.5
|
|
|
56.6
|
|
|
150.0
|
|
||||
Selling, general and administrative
|
10.4
|
|
|
11.2
|
|
|
32.2
|
|
|
36.0
|
|
||||
Special charges for workforce reductions and advisory costs
|
0.1
|
|
|
3.5
|
|
|
2.1
|
|
|
9.6
|
|
||||
Other (income)
|
(4.8
|
)
|
|
(35.9
|
)
|
|
(39.4
|
)
|
|
(124.2
|
)
|
||||
Operating (loss)
|
(16.4
|
)
|
|
(53.3
|
)
|
|
(74.3
|
)
|
|
(135.0
|
)
|
||||
Interest expense
|
4.7
|
|
|
9.5
|
|
|
14.0
|
|
|
32.1
|
|
||||
Interest (income)
|
(0.1
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
(0.4
|
)
|
||||
Reorganization items, net
|
(440.0
|
)
|
|
—
|
|
|
(426.9
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
419.0
|
|
|
(62.8
|
)
|
|
339.1
|
|
|
(166.7
|
)
|
||||
Provision (benefit) for income taxes
|
0.1
|
|
|
(18.5
|
)
|
|
(1.0
|
)
|
|
(57.8
|
)
|
||||
Income (loss) from continuing operations
|
418.9
|
|
|
(44.3
|
)
|
|
340.1
|
|
|
(108.9
|
)
|
||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
21.7
|
|
||||
Net income (loss)
|
$
|
418.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
340.1
|
|
|
$
|
(87.2
|
)
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) per share (Note 18)
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
85.49
|
|
|
$
|
(9.04
|
)
|
|
$
|
69.41
|
|
|
$
|
(22.22
|
)
|
Net income (loss)
|
$
|
85.49
|
|
|
$
|
(9.04
|
)
|
|
$
|
69.41
|
|
|
$
|
(17.79
|
)
|
Weighted-average number of shares outstanding
|
4.9
|
|
|
4.9
|
|
|
4.9
|
|
|
4.9
|
|
||||
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
55.51
|
|
|
$
|
(9.04
|
)
|
|
$
|
45.93
|
|
|
$
|
(22.22
|
)
|
Net income (loss)
|
$
|
55.51
|
|
|
$
|
(9.04
|
)
|
|
$
|
45.93
|
|
|
$
|
(17.79
|
)
|
Weighted-average number of shares outstanding
|
7.6
|
|
|
4.9
|
|
|
7.6
|
|
|
4.9
|
|
|
Predecessor
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income (loss)
|
$
|
418.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
340.1
|
|
|
$
|
(87.2
|
)
|
Other comprehensive income, before tax (Note 20):
|
|
|
|
|
|
|
|
|
|||||||
Gain arising during the period included in other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
138.3
|
|
||||
Curtailment (gain) recognized in net income
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
||||
Amortization of actuarial (gains) losses, net
|
0.3
|
|
|
2.6
|
|
|
0.9
|
|
|
15.5
|
|
||||
Amortization of prior service costs (credits)
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
0.7
|
|
||||
Other comprehensive income (loss), before tax
|
(2.0
|
)
|
|
2.6
|
|
|
(1.6
|
)
|
|
154.5
|
|
||||
Income tax expense related to items of other comprehensive income
|
0.1
|
|
|
(1.5
|
)
|
|
—
|
|
|
(58.0
|
)
|
||||
Other comprehensive income (loss), net of tax
|
(1.9
|
)
|
|
1.1
|
|
|
(1.6
|
)
|
|
96.5
|
|
||||
Elimination of Predecessor Company accumulated other comprehensive loss
|
121.7
|
|
|
—
|
|
|
121.7
|
|
|
—
|
|
||||
Comprehensive income (loss)
|
$
|
538.7
|
|
|
$
|
(43.2
|
)
|
|
$
|
460.2
|
|
|
$
|
9.3
|
|
|
Predecessor
|
||||||
|
Nine Months Ended
September 30, |
||||||
|
2014
|
|
2013
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
340.1
|
|
|
$
|
(87.2
|
)
|
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
4.2
|
|
|
22.8
|
|
||
Non-cash reorganization items
|
(442.5
|
)
|
|
—
|
|
||
Transfers and retirements of machinery and equipment
|
—
|
|
|
19.3
|
|
||
Convertible preferred stock dividends payable-in-kind
|
—
|
|
|
9.9
|
|
||
Gain on sales of assets and subsidiary
|
(5.7
|
)
|
|
(35.6
|
)
|
||
Inventory valuation adjustments reflecting declines in market price indicators
|
—
|
|
|
15.0
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable – (increase) decrease
|
79.0
|
|
|
(23.9
|
)
|
||
Inventories, net – (increase) decrease
|
177.0
|
|
|
(72.7
|
)
|
||
Payables under Russian Contract – increase (decrease)
|
(293.4
|
)
|
|
115.0
|
|
||
Deferred revenue, net of deferred costs – increase (decrease)
|
(9.7
|
)
|
|
17.6
|
|
||
Accrued depleted uranium disposition - increase (decrease)
|
(0.6
|
)
|
|
0.3
|
|
||
Accounts payable and other liabilities – (decrease)
|
(65.8
|
)
|
|
(80.4
|
)
|
||
Other, net
|
(2.9
|
)
|
|
(4.7
|
)
|
||
Net Cash (Used in) Operating Activities
|
(220.3
|
)
|
|
(104.6
|
)
|
||
|
|
|
|
||||
Cash Flows Provided by Investing Activities
|
|
|
|
|
|
||
Deposits for surety bonds - net (increase) decrease
|
3.9
|
|
|
(17.5
|
)
|
||
Proceeds from sales of assets and subsidiary
|
8.4
|
|
|
43.2
|
|
||
Net Cash Provided by Investing Activities
|
12.3
|
|
|
25.7
|
|
||
|
|
|
|
||||
Cash Flows Used in Financing Activities
|
|
|
|
|
|
||
Repayment of credit facility term loan
|
—
|
|
|
(83.2
|
)
|
||
Payments for deferred financing costs
|
(0.7
|
)
|
|
(2.2
|
)
|
||
Common stock issued (purchased), net
|
(0.1
|
)
|
|
(0.2
|
)
|
||
Net Cash (Used in) Financing Activities
|
(0.8
|
)
|
|
(85.6
|
)
|
||
Net (Decrease)
|
(208.8
|
)
|
|
(164.5
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
314.2
|
|
|
292.9
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
105.4
|
|
|
$
|
128.4
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
|
|
||
Interest paid
|
$
|
15.9
|
|
|
$
|
20.7
|
|
Income taxes paid, net of refunds
|
—
|
|
|
0.4
|
|
|
Common Stock,
Par Value
$.10 per Share
|
|
Excess of
Capital over
Par Value
|
|
Retained
Earnings
(Deficit)
|
|
Treasury
Stock
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
Total
|
||||||||||||
Balance at December 31, 2012 (Predecessor)
|
$
|
0.5
|
|
|
$
|
1,213.3
|
|
|
$
|
(1,361.8
|
)
|
|
$
|
(33.0
|
)
|
|
$
|
(291.9
|
)
|
|
$
|
(472.9
|
)
|
Other comprehensive income, net of tax (Note 20)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96.5
|
|
|
96.5
|
|
||||||
Restricted and other common stock issued, net of amortization
|
—
|
|
|
2.9
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
1.5
|
|
||||||
Net (loss)
|
—
|
|
|
—
|
|
|
(87.2
|
)
|
|
—
|
|
|
—
|
|
|
(87.2
|
)
|
||||||
Balance at September 30, 2013 (Predecessor)
|
$
|
0.5
|
|
|
$
|
1,216.2
|
|
|
$
|
(1,449.0
|
)
|
|
$
|
(34.4
|
)
|
|
$
|
(195.4
|
)
|
|
$
|
(462.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2013 (Predecessor)
|
$
|
0.5
|
|
|
$
|
1,216.4
|
|
|
$
|
(1,520.7
|
)
|
|
$
|
(34.3
|
)
|
|
$
|
(120.1
|
)
|
|
$
|
(458.2
|
)
|
Other comprehensive income, net of tax (Note 20)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
||||||
Restricted and other common stock issued, net of amortization
|
—
|
|
|
1.1
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
1.0
|
|
||||||
Surrender of restricted stock
|
—
|
|
|
4.4
|
|
|
—
|
|
|
(4.4
|
)
|
|
—
|
|
|
—
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
340.1
|
|
|
—
|
|
|
—
|
|
|
340.1
|
|
||||||
Elimination of Predecessor Company equity
|
(0.5
|
)
|
|
(1,221.9
|
)
|
|
1,180.6
|
|
|
38.8
|
|
|
121.7
|
|
|
118.7
|
|
||||||
Issuance of Successor Company common stock and excess of capital over par value
|
0.9
|
|
|
58.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59.3
|
|
||||||
Balance at September 30, 2014 (Predecessor)
|
$
|
0.9
|
|
|
$
|
58.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at September 30, 2014 (Successor)
|
$
|
0.9
|
|
|
$
|
58.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59.3
|
|
•
|
The holders of the Old Notes received, on a pro rata basis, in exchange for claims on account of their
$530 million
in outstanding principal amount of Old Notes:
|
◦
|
79.04%
of the New Common Stock, subject to dilution on account of a new management incentive plan;
|
◦
|
cash for interest payable on the Old Notes accrued from October 1, 2013, the date of the last semi-annual interest payment, to the Effective Date, totaling $15.9 million; and
|
◦
|
$200 million
in principal amount of New Notes.
|
•
|
Babcock & Wilcox Investment Company ("B&W") and Toshiba America Nuclear Energy Corporation ("Toshiba"
)
each received, in exchange and on account of their shares of Old Preferred Stock (as of December 31, 2013, there were
85,903
shares of Old Preferred Stock outstanding with an aggregate liquidation preference of
$113.9 million
including accrued paid-in-kind dividends) and warrants dated September 2, 2010 to purchase up to
250,000
shares of USEC’s Old Common Stock (the "Warrants"):
|
◦
|
7.98%
of the New Common Stock (
15.96%
in the aggregate), subject to dilution on account of a new management incentive plan; and
|
◦
|
$20.19 million
in principal amount of New Notes (
$40.38 million
in the aggregate).
|
•
|
B&W and Toshiba have agreed to enter into good faith negotiations to each invest $20.19 million (for an aggregate investment of $40.38 million) of equity in the American Centrifuge project in the future, upon mutually agreed upon terms and conditions, but in any event contingent upon the funding for the American Centrifuge Plant ("ACP") of not less than $1.5 billion of debt supported by the U.S. Department of Energy ("DOE") loan guarantee program or other government support or funding in such amount.
|
•
|
The Class B Common Stock issued to B&W and Toshiba has the same rights, powers, preferences and restrictions and ranks equally in all matters with the Class A Common Stock issued to former holders of the Old Notes, except voting. Holders of the Class B Common Stock are entitled to elect, in the aggregate, two members of the Board of Directors of Centrus Energy Corp., subject to certain holding requirements and other restrictions as described in the Amended and Restated Centrus Energy Corp. Certificate of Incorporation.
|
•
|
The former holders of Old Common Stock received, on a pro rata basis,
5%
of the Class A Common Stock, subject to dilution on account of a new management incentive plan.
|
•
|
All secured claims were reinstated and otherwise not impaired and all liens were continued until the claims are paid in full.
|
•
|
All other general unsecured claims of the Company were unimpaired and were either reinstated or paid in full in the ordinary course of business upon the later of the Effective Date or when such obligation becomes due according to its terms.
|
•
|
On the Effective Date, Centrus Energy Corp. obtained a new secured intercompany financing of $48.0 million from Enrichment Corp. (the "Intercompany Note") to provide funds necessary to make payments of $35.3 million required under the Plan, as well as $12.7 million available for working capital and other general corporate purposes of the Company. Payments required under the Plan included the repayment of borrowings under the former debtor-in-possession credit facility from Enrichment Corp. (the “DIP Facility”) of
$16.3 million
, interest payments of $15.9 million to former holders of the Old Notes, as described above, and $3.1 million in professional fees and other expenses.
|
•
|
The reorganization value, which represents the enterprise value and non-interest bearing liabilities, was allocated to the Successor Company's assets based on their estimated fair values. The reorganization value exceeded the sum of the fair value assigned to assets. This excess reorganization value was recorded as part of the Successor Company assets at September 30, 2014.
|
•
|
Each liability existing as of the fresh start accounting date, other than deferred taxes and pension and other postretirement benefit obligations, has been stated at the fair value, and determined at appropriate risk adjusted interest rates.
|
•
|
Deferred taxes were reported in conformity with applicable income tax accounting standards. Deferred tax assets and liabilities have been recognized for differences between the assigned values and the tax basis of the recognized assets and liabilities.
|
•
|
The actuarial value of pension and other postretirement benefit obligations were determined based on applicable retirement benefits standards.
|
Enterprise value
|
$
|
299.7
|
|
Less: Fair value of debt
|
240.4
|
|
|
Fair value of Successor common stock
|
$
|
59.3
|
|
Shares outstanding at September 30, 2014
|
9.0
|
|
|
Per share value
|
$
|
6.59
|
|
Enterprise value
|
$
|
299.7
|
|
Plus non-debt liabilities
|
763.9
|
|
|
Reorganization value of Successor assets
|
$
|
1,063.6
|
|
(a)
|
The cash payments recorded on the Effective Date from implementation of the Plan include the following (in millions):
|
Payment of claims for interest payable on the Old Notes at the non-default rate
|
$
|
15.9
|
|
Payment of professional fees
|
1.5
|
|
|
Payment of unsecured pre-petition claims
|
1.6
|
|
|
Net decrease in cash
|
$
|
19.0
|
|
(b)
|
Represents payment in advance of the fees and expenses for the trustee and collateral agent for the New Notes issued at the Effective Date.
|
(c)
|
Represents
$0.7 million
of debt issuance cost incurred on the New Notes. These costs will be amortized using the straight-line method, which approximates the effective interest method, over the life of the New Notes.
|
(d)
|
Primarily represents success fees accrued upon emergence from Chapter 11 bankruptcy that have been included in Reorganization Items, Net in the Condensed Consolidated Statements of Operations.
|
(e)
|
Adjustment reflects the issuance of the $240.4 million in New Notes to holders of the Old Notes and Old Preferred Stock.
|
(f)
|
The adjustment to liabilities subject to compromise relates to the extinguishment of the Old Notes, the Old Preferred Stock and unsecured general claims. The holders of Old Notes received New Notes, cash on interest accrued at the non-default rate to the Effective Date and New Common Stock. The holders of Old Preferred Stock received New Notes and Class B Common Stock. The holders of unsecured general claims received cash outlays on the Effective Date.
|
(g)
|
Represents the cancellation of the unamortized restricted stock and restricted stock units of the Predecessor Company.
|
(h)
|
Upon the Effective Date, the Company froze benefit accruals under the supplemental executive retirement plans (“SERP”). The $2.2 million adjustment reflects the curtailment related to the freeze of the benefits under these plans.
|
(i)
|
Pursuant to the Plan, the Company issued 9 million shares of New Common Stock. This adjustment records the Successor Company’s New Common Stock and additional paid in capital of $59.3 million, which represents the fair value of the New Common Stock for financial statement reporting purposes.
|
(j)
|
As a result of the Plan, the adjustment to the accumulated deficit equaled the gain on extinguishment of debt, offset by the issuance of the Successor Company’s New Notes, New Common Stock and cash payments as follows (in millions):
|
(k)
|
Inventories were mainly valued using a net realizable value method which utilizes the expected selling prices to customers as a basis for valuing finished goods. An adjustment of
$35.4 million
was recorded to increase the book value of SWU inventories to fair value.
|
(l)
|
The adjustment reflects the elimination of deferred costs associated with deferred revenue and of the deferred revenue of
$73.9 million
and
$94.0 million
, respectively, resulting in a gain of
$20.1 million
recorded in Reorganization Items, Net, and the establishment of the remaining performance obligation of the Successor Company.
|
(m)
|
Reflects the tax effects of the fresh start adjustments at statutory tax rates applicable to such adjustments, net of adjustments to the valuation allowance.
|
(n)
|
The adjustment reflects the fair value of identifiable intangible assets of
$123.5 million
, determined as follows:
|
•
|
Forecasted sales
and profit margins associated with contracts in place for the period ranging from October 1, 2014 to December 31, 2022; and
|
•
|
Discount rate of 9.0%, based on the after-tax weighted-average cost of capital.
|
•
|
Estimate of sales from existing customers representing 65% of projected non-contractual sales over the remaining economic life of the existing customers, which was comprised of a discrete forecast from October 1, 2014 to December 31, 2022 and an expectation of sales beyond 2022, in consideration of the identifiable customer base, sales experience, and forecast market demand;
|
•
|
Forecasted profit margins associated with the existing customer base for the period ranging from October 1, 2014 to December 31, 2022; and
|
•
|
Discount rate of 10.0%, based on the after-tax weighted-average cost of capital, adjusted for perceived business risk associated with this intangible asset.
|
(o)
|
The adjustment records the reorganization value of assets in excess of amounts allocated to identified tangible and intangible assets as follows (in millions).
|
Enterprise value
|
$
|
299.7
|
|
Add: Fair value of liabilities excluded from enterprise value
|
763.9
|
|
|
Less: Fair value of tangible assets
|
(802.9
|
)
|
|
Less: Fair value of identified intangible assets
|
(123.5
|
)
|
|
Reorganization value of Successor assets in excess of amounts allocated to identified tangible and intangible assets
|
$
|
137.2
|
|
(p)
|
The adjustment reflects an aggregate increase of $94.7 million in pension and postretirement benefit obligations based on a remeasurement at the Effective Date. The remeasurement of plan obligations include revised mortality rate and discount rate assumptions. Further details are provided in Note 14.
|
(q)
|
The Predecessor Company’s accumulated deficit and accumulated other comprehensive income is eliminated in conjunction with the adoption of fresh start accounting. Also, pursuant to the Plan, the Old Common Stock and related additional paid in capital were eliminated to retained earnings as all of the Predecessor Company equity interests were cancelled. The Predecessor Company recognized a gain of $99.8 million related to the fresh start accounting adjustments as follows (in millions):
|
Establishment of Successor Company’s excess reorganization value
|
$
|
137.2
|
|
Establishment of Successor Company’s other intangible assets
|
123.5
|
|
|
Inventory fair value adjustments
|
35.4
|
|
|
Deferred costs and deferred revenue fair value adjustments
|
20.1
|
|
|
Pension and postretirement remeasurement
|
(94.7
|
)
|
|
Gain on revaluation of assets and liabilities
|
$
|
221.5
|
|
Cancellation of accumulated other comprehensive income
|
(121.7
|
)
|
|
Total gain on fresh start accounting adjustments
|
$
|
99.8
|
|
Cancellation of Predecessor Company equity
|
1,183.6
|
|
|
Total adjustment to retained deficit (earnings)
|
$
|
1,283.4
|
|
|
Predecessor
|
||||||
|
Three Months Ended
September 30, 2014 |
|
Nine Months Ended
September 30, 2014 |
||||
Professional fees
|
$
|
10.4
|
|
|
$
|
22.3
|
|
Expense of deferred financing costs on convertible senior notes
|
—
|
|
|
1.2
|
|
||
Effects of Plan:
|
|
|
|
||||
Gain on cancellation of convertible senior notes, net
|
(284.7
|
)
|
|
(284.7
|
)
|
||
Gain on cancellation of convertible preferred stock, net
|
(64.1
|
)
|
|
(64.1
|
)
|
||
Expense of unamortized restricted stock
|
0.4
|
|
|
0.4
|
|
||
Gain related to the freeze of SERP benefits
|
(2.2
|
)
|
|
(2.2
|
)
|
||
Fresh Start Adjustments:
|
|
|
|
||||
Revaluation of deferred revenue, net of deferred costs
|
(20.1
|
)
|
|
(20.1
|
)
|
||
Revaluation of inventory
|
(35.4
|
)
|
|
(35.4
|
)
|
||
Valuation of intangible assets
|
(260.7
|
)
|
|
(260.7
|
)
|
||
Remeasurement of pension and postretirement benefit obligations
|
94.7
|
|
|
94.7
|
|
||
Elimination of Predecessor Company accumulated other comprehensive loss related to pension and postretirement benefit obligations
|
121.7
|
|
|
121.7
|
|
||
Reorganization items, net
|
$
|
(440.0
|
)
|
|
$
|
(426.9
|
)
|
-
|
Site expenses, including lease turnover activities and Paducah and Portsmouth retiree benefit costs, of
$15.6 million
and
$51.3 million
in the three and nine months ended September 30, 2014, compared to
$37.4 million
and
$63.8 million
in the corresponding periods of 2013. Following the cessation of enrichment at the Paducah GDP, costs for plant activities that formerly were capitalized as production costs have been charged directly to cost of sales including inventory management and disposition, ongoing regulatory compliance, utility requirements for operations, security, and other site management activities related to transition of facilities and infrastructure;
|
-
|
Inventory charges of
$1.8 million
and
$13.5 million
in the three and nine months ended September 30, 2014, compared to
$5.0 million
and
$15.0 million
in the three and nine months ended September 30, 2013. The Company incurred charges for residual uranium in cylinders transferred to DOE and inventories that had been deployed for cascade drawdown, assay blending and repackaging. The Company determined that it was uneconomic to recover resulting residual quantities for resale. In the prior year periods, charges included a uranium inventory valuation adjustment of
$5.0 million
to reflect declines in uranium market price indicators.
|
-
|
Accelerated asset charges of $0.1 million and
$1.9 million
in the three and nine months ended September 30, 2014, compared to
$5.3 million
and
$13.5 million
in the corresponding periods of 2013. Beginning in the fourth quarter of 2012, the expected productive life of property, plant and equipment at the Paducah GDP was reduced from the lease term ending June 2016 to an accelerated basis ending December 2014. Beginning in the third quarter of 2012, costs that would have been previously treated as construction work in progress were treated similar to maintenance and repair costs because of the shorter expected productive life of the Paducah GDP. The expected productive life of the Paducah GDP was further reduced following the ceasing of enrichment at the end of May 2013, and the depreciation of property, plant and equipment at the Paducah site was completed as of June 30, 2014. Additionally, an immediate asset retirement charge of
$19.3 million
was incurred in the second quarter of 2013 for property, plant and equipment formerly used in the enrichment process at the Paducah GDP; and
|
-
|
Power contract losses of
$11.8 million
in the nine months ended September 30, 2013. As a result of falling prices in power markets, the Company incurred expenses as it ceased enrichment at the Paducah GDP and canceled remaining power purchases.
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||||||||||
|
Liability Balance to Be Paid,
Dec. 31, 2012
|
|
2013 Special Charges
|
|
2013
Paid
|
|
Liability Balance to Be Paid,
Dec. 31, 2013
|
|
Year-to-Date 2014 Special Charges
|
|
Year-to-Date 2014
Paid
|
|
|
Liability Balance to Be Paid,
Sep. 30, 2014
|
||||||||||||||
Workforce reductions, primarily severance payments
|
$
|
—
|
|
|
$
|
25.2
|
|
|
$
|
(4.0
|
)
|
|
$
|
21.2
|
|
|
$
|
4.5
|
|
|
$
|
(13.6
|
)
|
|
|
$
|
12.1
|
|
Less: Amounts billed to DOE
|
—
|
|
|
(1.2
|
)
|
|
na
|
|
|
na
|
|
|
(2.4
|
)
|
|
na
|
|
|
|
na
|
|
|||||||
Pension and postretirement benefit charges, non-cash
|
—
|
|
|
22.2
|
|
|
na
|
|
|
na
|
|
|
—
|
|
|
na
|
|
|
|
na
|
|
|||||||
Advisory costs
|
0.1
|
|
|
11.0
|
|
|
(9.9
|
)
|
|
1.2
|
|
|
—
|
|
|
(1.2
|
)
|
|
|
—
|
|
|||||||
|
$
|
0.1
|
|
|
$
|
57.2
|
|
|
$
|
(13.9
|
)
|
|
$
|
22.4
|
|
|
$
|
2.1
|
|
|
$
|
(14.8
|
)
|
|
|
$
|
12.1
|
|
|
Successor
|
|
|
Predecessor
|
||||
($ millions)
|
September 30,
2014 |
|
|
December 31, 2013
|
||||
|
|
|
|
|
||||
Utility customers and other
|
$
|
67.9
|
|
|
|
$
|
129.3
|
|
DOE cost share of Cooperative Agreement funding
|
—
|
|
|
|
20.1
|
|
||
Contract services, primarily DOE
|
22.1
|
|
|
|
13.6
|
|
||
Accounts receivable
|
$
|
90.0
|
|
|
|
$
|
163.0
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
|
September 30, 2014
|
|
|
December 31, 2013
|
||||||||||||||||||||
|
Current
Assets
|
|
Current
Liabilities
(a)
|
|
Inventories, Net
|
|
|
Current
Assets
|
|
Current
Liabilities
(a)
|
|
Inventories, Net
|
||||||||||||
Separative work units
|
$
|
412.6
|
|
|
$
|
91.5
|
|
|
$
|
321.1
|
|
|
|
$
|
628.4
|
|
|
$
|
200.0
|
|
|
$
|
428.4
|
|
Uranium
|
86.3
|
|
|
81.6
|
|
|
4.7
|
|
|
|
335.4
|
|
|
299.7
|
|
|
35.7
|
|
||||||
Materials and supplies
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|
|
3.8
|
|
|
—
|
|
|
3.8
|
|
||||||
|
$
|
499.4
|
|
|
$
|
173.1
|
|
|
$
|
326.3
|
|
|
|
$
|
967.6
|
|
|
$
|
499.7
|
|
|
$
|
467.9
|
|
(a)
|
Inventories owed to customers and suppliers, included in current liabilities, consist primarily of SWU and uranium inventories owed to fabricators.
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||
|
December 31,
2013 |
|
Capital Expenditures (Depreciation)
|
|
Retirements
|
|
Fresh Start Adjustments
|
|
|
September 30,
2014 |
||||||||||
Leasehold improvements
|
$
|
141.1
|
|
|
$
|
—
|
|
|
$
|
(138.4
|
)
|
|
$
|
(2.7
|
)
|
|
|
$
|
—
|
|
Machinery and equipment
|
164.0
|
|
|
—
|
|
|
(118.6
|
)
|
|
(41.7
|
)
|
|
|
3.7
|
|
|||||
|
305.1
|
|
|
—
|
|
|
(257.0
|
)
|
|
(44.4
|
)
|
|
|
3.7
|
|
|||||
Accumulated depreciation and amortization
|
(297.2
|
)
|
|
(4.0
|
)
|
|
256.8
|
|
|
44.4
|
|
|
|
—
|
|
|||||
|
$
|
7.9
|
|
|
$
|
(4.0
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
|
$
|
3.7
|
|
|
|
|
Successor
|
||
($ millions)
|
Weighted Average Useful Life
|
|
September 30,
2014 |
||
|
|
|
|
||
Amortizable intangible assets:
|
|
|
|
||
Backlog
|
(a)
|
|
$
|
54.6
|
|
Customer relationships
|
15 years
|
|
68.9
|
|
|
Total
|
|
|
$
|
123.5
|
|
|
|
|
|
||
Nonamortizable intangible assets:
|
|
|
|
||
Excess reorganizational value
|
|
|
$
|
137.2
|
|
2014
|
$
|
3.9
|
|
2015
|
12.9
|
|
|
2016
|
12.9
|
|
|
2017
|
10.8
|
|
|
2018
|
10.8
|
|
|
Thereafter
|
72.2
|
|
|
|
$
|
123.5
|
|
|
Successor
|
|
|
Predecessor
|
||||
($ millions)
|
September 30,
2014 |
|
|
December 31,
2013 |
||||
|
|
|
|
|
||||
Trade payables (a)
|
$
|
19.3
|
|
|
|
$
|
8.7
|
|
Compensation and benefits (b)
|
27.6
|
|
|
|
27.3
|
|
||
Severance
|
12.1
|
|
|
|
21.2
|
|
||
Lease turnover costs
|
—
|
|
|
|
30.4
|
|
||
Other accrued liabilities
|
20.5
|
|
|
|
26.9
|
|
||
|
$
|
79.5
|
|
|
|
$
|
114.5
|
|
•
|
under a future credit facility;
|
•
|
held by or for the benefit of the Pension Benefit Guaranty Corporation ("PBGC") pursuant to any settlement of any actual or alleged ERISA Section 4062(e) event;
|
•
|
held by any party with respect to any equity investment (or any commitment to make an equity investment) with respect to the financing of the American Centrifuge project;
|
•
|
held by DOE, export credit agencies or any other lenders or insurers with respect to the financing or government support of the American Centrifuge project; and
|
•
|
held by the U.S. government.
|
•
|
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)
|
|||||||||||||||||||||||||||
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||||||
|
September 30, 2014
|
|
|
December 31, 2013
|
||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash equivalents (a)
|
—
|
|
|
$
|
90.6
|
|
|
—
|
|
|
$
|
90.6
|
|
|
|
—
|
|
|
$
|
312.7
|
|
|
—
|
|
|
$
|
312.7
|
|
Deferred compensation asset (b)
|
—
|
|
|
3.1
|
|
|
—
|
|
|
3.1
|
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
3.1
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation obligation (b)
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
3.0
|
|
(a)
|
Cash equivalents consist of funds invested in institutional money market funds. These investments are classified within Level 2 of the valuation hierarchy because the publicly reported Net Asset Value (“NAV”) of one dollar does not necessarily reflect the fair value of the underlying securities.
|
(b)
|
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.
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
September 30, 2014
|
|
|
December 31, 2013
|
||||||||||||
|
Carrying Value
|
|
Fair
Value
|
|
|
Carrying Value
|
|
Fair
Value
|
||||||||
8% PIK toggle notes
|
$
|
240.4
|
|
|
$
|
240.4
|
|
|
|
-
|
|
|
-
|
|
||
Convertible senior notes, excluding accrued interest
|
-
|
|
|
-
|
|
|
|
$
|
530.0
|
|
|
$
|
184.1
|
|
|
Predecessor
|
||||||||||||||||||||||||||||||
|
Defined Benefit Pension Plans
|
|
Postretirement Health and Life Benefit Plans
|
||||||||||||||||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Service costs
|
$
|
0.6
|
|
|
$
|
1.4
|
|
|
$
|
1.8
|
|
|
$
|
8.8
|
|
|
$
|
0.4
|
|
|
$
|
0.9
|
|
|
$
|
1.3
|
|
|
$
|
2.7
|
|
Interest costs
|
10.6
|
|
|
11.5
|
|
|
31.7
|
|
|
33.5
|
|
|
2.5
|
|
|
2.2
|
|
|
7.5
|
|
|
6.7
|
|
||||||||
Expected returns on plan assets (gains)
|
(12.9
|
)
|
|
(12.8
|
)
|
|
(38.5
|
)
|
|
(38.3
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(1.5
|
)
|
|
(1.7
|
)
|
||||||||
Amortization of actuarial (gains) losses, net
|
0.4
|
|
|
2.0
|
|
|
1.0
|
|
|
14.2
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
2.0
|
|
||||||||
Amortization of prior service costs (credits)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||||||
Curtailment (gains)
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net benefit costs (credits)
|
$
|
(3.5
|
)
|
|
$
|
2.1
|
|
|
$
|
(6.2
|
)
|
|
$
|
18.2
|
|
|
$
|
2.3
|
|
|
$
|
3.2
|
|
|
$
|
7.0
|
|
|
$
|
9.7
|
|
|
Predecessor
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(millions)
|
||||||||||||||
Total stock-based compensation costs:
|
|
|
|
|
|
|
|
||||||||
Restricted stock and restricted stock units
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
$
|
1.6
|
|
Stock options, performance awards and other
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Expense included in selling, general and administrative and advanced technology costs
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
$
|
1.7
|
|
Total recognized tax benefit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Predecessor
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(millions)
|
||||||||||||||
Numerators:
|
|
|
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
418.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
340.1
|
|
|
$
|
(108.9
|
)
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
21.7
|
|
||||
Net income (loss)
|
$
|
418.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
340.1
|
|
|
$
|
(87.2
|
)
|
Interest expense on convertible notes (a)
|
3.0
|
|
|
—
|
|
|
9.0
|
|
|
—
|
|
||||
Net income if-converted - diluted
|
$
|
421.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
349.1
|
|
|
$
|
(87.2
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares
|
5.0
|
|
|
5.0
|
|
|
5.0
|
|
|
5.0
|
|
||||
Less: Weighted average unvested restricted stock
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
||||
Denominator for basic calculation
|
4.9
|
|
|
4.9
|
|
|
4.9
|
|
|
4.9
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Weighted average effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible notes
|
1.8
|
|
|
1.8
|
|
|
1.8
|
|
|
1.8
|
|
||||
Convertible preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equivalent common shares (b)
|
35.8
|
|
|
13.7
|
|
|
27.2
|
|
|
10.5
|
|
||||
Less: share issuance limitation (c)
|
34.9
|
|
|
12.8
|
|
|
26.3
|
|
|
9.6
|
|
||||
Net allowable common shares
|
0.9
|
|
|
0.9
|
|
|
0.9
|
|
|
0.9
|
|
||||
Subtotal
|
2.7
|
|
|
2.7
|
|
|
2.7
|
|
|
2.7
|
|
||||
Less: shares excluded in a period of a net loss or antidilution
|
—
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
||||
Weighted average effect of dilutive securities
|
2.7
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
||||
Denominator for diluted calculation
|
7.6
|
|
|
4.9
|
|
|
7.6
|
|
|
4.9
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Income (loss) per share from continuing operations – basic
|
$
|
85.49
|
|
|
$
|
(9.04
|
)
|
|
$
|
69.41
|
|
|
$
|
(22.22
|
)
|
Income (loss) per share from continuing operations – diluted
|
$
|
55.51
|
|
|
$
|
(9.04
|
)
|
|
$
|
45.93
|
|
|
$
|
(22.22
|
)
|
Income per share from discontinued operations – basic and diluted
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.43
|
|
Net income (loss) per share – basic
|
$
|
85.49
|
|
|
$
|
(9.04
|
)
|
|
$
|
69.41
|
|
|
$
|
(17.79
|
)
|
Net income (loss) per share – diluted
|
$
|
55.51
|
|
|
$
|
(9.04
|
)
|
|
$
|
45.93
|
|
|
$
|
(17.79
|
)
|
(a)
|
Interest expense on Old Notes and Old Preferred Stock dividends was
$5.1 million
in the three months ended September 30, 2013 and
$15.2 million
in the nine months ended September 30, 2013. The tax rate is the statutory rate.
|
(b)
|
The number of equivalent shares of Old Common Stock for the Old Preferred Stock was based on the arithmetic average of the daily volume weighted average prices per share of Old Common Stock for each of the last 20 trading days, and was determined as of the beginning of the period for purposes of calculating diluted net income per share.
|
(c)
|
Prior to obtaining shareholder approval, the Company's Old Preferred Stock could not have been converted into an aggregate number of shares of Old Common Stock in excess of
19.99%
of the shares of Old Common Stock outstanding on May 25, 2010 (approximately
0.9 million
shares adjusted to take into account the 1-for-25 reverse stock split), in compliance with the rules of the NYSE. If a share issuance limitation were to exist at the time of share conversion or sale, any shares of Old Preferred Stock subject to the share issuance limitation would have been subject to optional or mandatory redemption for, at the Company's option, cash or SWU consideration. However, the Company’s ability to redeem may have been limited by Delaware law and the Bankruptcy Code.
|
|
Predecessor
|
|
|||||||||||||||||
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
||||||||||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||||||
Options excluded from diluted net income per share
|
200
|
|
|
|
1,000
|
|
|
|
200
|
|
|
|
1,000
|
|
|
||||
Warrants excluded from diluted net income per share
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
||||
Exercise price of excluded options
|
$
|
283.25
|
|
to
|
|
$
|
177.50
|
|
to
|
|
$
|
283.25
|
|
to
|
|
$
|
177.50
|
|
to
|
|
$
|
357.00
|
|
|
|
$
|
357.00
|
|
|
|
$
|
357.00
|
|
|
|
$
|
357.00
|
|
|
Exercise price of excluded warrants
|
$
|
187.50
|
|
|
|
$
|
187.50
|
|
|
|
$
|
187.50
|
|
|
|
$
|
187.50
|
|
|
|
Predecessor
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(millions)
|
||||||||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
LEU segment:
|
|
|
|
|
|
|
|
||||||||
Separative work units
|
$
|
97.4
|
|
|
$
|
295.8
|
|
|
$
|
347.5
|
|
|
$
|
853.4
|
|
Uranium
|
—
|
|
|
3.8
|
|
|
—
|
|
|
45.3
|
|
||||
|
97.4
|
|
|
299.6
|
|
|
347.5
|
|
|
898.7
|
|
||||
Contract services segment
|
23.3
|
|
|
4.2
|
|
|
43.0
|
|
|
10.3
|
|
||||
|
$
|
120.7
|
|
|
$
|
303.8
|
|
|
$
|
390.5
|
|
|
$
|
909.0
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Gross Profit (Loss)
|
|
|
|
|
|
|
|
|
|
||||||
LEU segment
|
$
|
(5.9
|
)
|
|
$
|
(30.8
|
)
|
|
$
|
(21.9
|
)
|
|
$
|
(63.7
|
)
|
Contract services segment
|
0.5
|
|
|
0.8
|
|
|
(0.9
|
)
|
|
0.1
|
|
||||
Gross profit (loss)
|
$
|
(5.4
|
)
|
|
$
|
(30.0
|
)
|
|
$
|
(22.8
|
)
|
|
$
|
(63.6
|
)
|
(i)
|
two times the participant’s Final Eligible Compensation;
|
(ii)
|
the participant’s Prorated Performance Bonus (for the second half of 2014);
|
(iii)
|
the sum of (A) severance or similar payments made pursuant to any Federal, state or local law, including but not limited to payments under the WARN Act, and (B) any termination or severance payments under any other termination or severance plans, policies or programs of the Company that the Participant receives.
|
•
|
significantly reduce the gross profit impact of deferred revenues going forward;
|
•
|
result in the amortization of sales backlog and customer relationship intangible assets that were created at emergence; and
|
•
|
result in higher cost of sales as a result of increasing inventory values at emergence.
|
•
|
sales of the SWU component of LEU,
|
•
|
sales of both the SWU and uranium components of LEU, and
|
•
|
sales of uranium.
|
|
September 30,
2014 |
|
June 30,
2014 |
|
December 31, 2013
|
|
September 30,
2013 |
||||||||
SWU:
|
|
|
|
|
|
|
|
||||||||
Long-term price indicator ($/SWU)
|
$
|
90.00
|
|
|
$
|
95.00
|
|
|
$
|
114.00
|
|
|
$
|
114.00
|
|
Spot price indicator ($/SWU)
|
89.00
|
|
|
93.00
|
|
|
99.00
|
|
|
101.00
|
|
||||
UF
6
:
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term price composite ($/KgU)
|
133.58
|
|
|
130.97
|
|
|
146.64
|
|
|
149.26
|
|
||||
Spot price indicator ($/KgU)
|
99.00
|
|
|
80.75
|
|
|
98.65
|
|
|
100.00
|
|
-
|
Site expenses, including lease turnover activities and Paducah and Portsmouth retiree benefit costs. Following the cessation of enrichment at the Paducah GDP, costs for plant activities that formerly were capitalized as production costs have been charged directly to cost of sales including inventory management and disposition, ongoing regulatory compliance, utility requirements for operations, security, and other site management activities related to transition of facilities and infrastructure.
|
-
|
Accelerated asset charges. Beginning in the fourth quarter of 2012, the expected productive life of property, plant and equipment at the Paducah GDP was reduced from the lease term ending June 2016 to an accelerated basis ending December 2014. The expected productive life of the Paducah GDP was further reduced following the ceasing of enrichment at the end of May 2013, and the depreciation of property, plant and equipment at the Paducah site was completed as of June 30, 2014;
|
-
|
Residual inventories. Charges were incurred for residual uranium in cylinders transferred to DOE and inventories that had been deployed for cascade drawdown, assay blending and repackaging. The Company determined that it was uneconomic to recover resulting residual quantities for resale. In addition, certain materials and supplies used in the enrichment process were expensed following the termination of enrichment; and
|
-
|
Asset retirement charges for property, plant and equipment formerly used in the enrichment process at the Paducah GDP.
|
|
|
No. of Employees
|
|||||||
Location
|
|
Sep. 30, 2014
|
|
Dec. 31, 2013
|
|
Dec. 31, 2012
|
|||
Paducah, KY
|
|
328
|
|
|
852
|
|
|
1,133
|
|
Piketon, OH
|
|
289
|
|
|
329
|
|
|
311
|
|
Oak Ridge, TN
|
|
145
|
|
|
167
|
|
|
171
|
|
Norcross, GA
|
|
—
|
|
|
—
|
|
|
67
|
|
Bethesda, MD
|
|
72
|
|
|
84
|
|
|
88
|
|
Total Employees
|
|
834
|
|
|
1,432
|
|
|
1,770
|
|
|
Predecessor
|
|||||||||||||
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
LEU segment
|
|
|
|
|
|
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
SWU revenue
|
$
|
97.4
|
|
|
$
|
295.8
|
|
|
$
|
(198.4
|
)
|
|
(67
|
)%
|
Uranium revenue
|
—
|
|
|
3.8
|
|
|
(3.8
|
)
|
|
(100
|
)%
|
|||
Total
|
97.4
|
|
|
299.6
|
|
|
(202.2
|
)
|
|
(67
|
)%
|
|||
Cost of sales
|
103.3
|
|
|
330.4
|
|
|
227.1
|
|
|
69
|
%
|
|||
Gross profit (loss)
|
$
|
(5.9
|
)
|
|
$
|
(30.8
|
)
|
|
$
|
24.9
|
|
|
81
|
%
|
|
|
|
|
|
|
|
|
|||||||
Contract services segment
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue
|
$
|
23.3
|
|
|
$
|
4.2
|
|
|
$
|
19.1
|
|
|
455
|
%
|
Cost of sales
|
22.8
|
|
|
3.4
|
|
|
(19.4
|
)
|
|
(571
|
)%
|
|||
Gross profit (loss)
|
$
|
0.5
|
|
|
$
|
0.8
|
|
|
$
|
(0.3
|
)
|
|
(38
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue
|
$
|
120.7
|
|
|
$
|
303.8
|
|
|
$
|
(183.1
|
)
|
|
(60
|
)%
|
Cost of sales
|
126.1
|
|
|
333.8
|
|
|
207.7
|
|
|
62
|
%
|
|||
Gross profit (loss)
|
$
|
(5.4
|
)
|
|
$
|
(30.0
|
)
|
|
$
|
24.6
|
|
|
82
|
%
|
|
Predecessor
|
|||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
LEU segment
|
|
|
|
|
|
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
SWU revenue
|
$
|
347.5
|
|
|
$
|
853.4
|
|
|
$
|
(505.9
|
)
|
|
(59
|
)%
|
Uranium revenue
|
—
|
|
|
45.3
|
|
|
(45.3
|
)
|
|
(100
|
)%
|
|||
Total
|
347.5
|
|
|
898.7
|
|
|
(551.2
|
)
|
|
(61
|
)%
|
|||
Cost of sales
|
369.4
|
|
|
962.4
|
|
|
593.0
|
|
|
62
|
%
|
|||
Gross profit (loss)
|
$
|
(21.9
|
)
|
|
$
|
(63.7
|
)
|
|
$
|
41.8
|
|
|
66
|
%
|
|
|
|
|
|
|
|
|
|||||||
Contract services segment
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue
|
$
|
43.0
|
|
|
$
|
10.3
|
|
|
$
|
32.7
|
|
|
317
|
%
|
Cost of sales
|
43.9
|
|
|
10.2
|
|
|
(33.7
|
)
|
|
(330
|
)%
|
|||
Gross profit (loss)
|
$
|
(0.9
|
)
|
|
$
|
0.1
|
|
|
$
|
(1.0
|
)
|
|
(1,000
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
|||
Revenue
|
$
|
390.5
|
|
|
$
|
909.0
|
|
|
$
|
(518.5
|
)
|
|
(57
|
)%
|
Cost of sales
|
413.3
|
|
|
972.6
|
|
|
559.3
|
|
|
58
|
%
|
|||
Gross profit (loss)
|
$
|
(22.8
|
)
|
|
$
|
(63.6
|
)
|
|
$
|
40.8
|
|
|
64
|
%
|
|
Predecessor
|
|||||||||||||
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
Cost of sales for the LEU segment:
|
|
|
|
|
|
|
|
|||||||
SWU and uranium
|
$
|
85.8
|
|
|
$
|
282.7
|
|
|
$
|
196.9
|
|
|
70
|
%
|
Non-production expenses
|
17.5
|
|
|
47.7
|
|
|
30.2
|
|
|
63
|
%
|
|||
Total
|
$
|
103.3
|
|
|
$
|
330.4
|
|
|
$
|
227.1
|
|
|
69
|
%
|
|
Predecessor
|
|||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
Cost of sales for the LEU segment:
|
|
|
|
|
|
|
|
|||||||
SWU and uranium
|
$
|
302.7
|
|
|
$
|
839.0
|
|
|
$
|
536.3
|
|
|
64
|
%
|
Non-production expenses
|
66.7
|
|
|
123.4
|
|
|
56.7
|
|
|
46
|
%
|
|||
Total
|
$
|
369.4
|
|
|
$
|
962.4
|
|
|
$
|
593.0
|
|
|
62
|
%
|
-
|
Site expenses, including lease turnover activities and Paducah and Portsmouth retiree benefit costs, of $15.6 million and $51.3 million in the three and nine months ended September 30, 2014, compared to $37.4 million and $63.8 million in the corresponding periods of 2013. Following the cessation of enrichment at the Paducah GDP, costs for plant activities that formerly were capitalized as production costs are now charged directly to cost of sales including inventory management and disposition, ongoing regulatory
|
-
|
Inventory charges of $1.8 million and $13.5 million in the three and nine months ended September 30, 2014, compared to $5.0 million and $15.0 million in the three and nine months ended September 30, 2013. These inventories are intended to be transferred to DOE upon final de-lease, including residual uranium in cylinders and inventories deployed for cascade drawdown, assay blending and repackaging. The Company determined that it was currently uneconomic to recover resulting residual quantities for resale.
|
-
|
Accelerated asset charges of $0.1 million in the three months and $1.9 million in the nine months ended September 30, 2014, compared to $5.3 million and $13.5 million in the corresponding periods of 2013. Beginning in the fourth quarter of 2012, the expected productive life of property, plant and equipment at the Paducah GDP was reduced from the lease term ending June 2016 to an accelerated basis ending December 2014. Beginning in the third quarter of 2012, costs that would have been previously treated as construction work in progress were treated similar to maintenance and repair costs because of the shorter expected productive life of the Paducah GDP. The expected productive life of the Paducah GDP was further reduced following the ceasing of enrichment at the end of May 2013, and the depreciation of property, plant and equipment at the Paducah site was completed as of June 30, 2014. Additionally, an immediate asset retirement charge of $19.3 million was incurred in the second quarter of 2013 for property, plant and equipment formerly used in the enrichment process at the Paducah GDP; and
|
-
|
Power contract losses of $11.8 million in the nine months ended September 30, 2013. As a result of falling prices in power markets, the Company incurred expenses as it ceased enrichment at the Paducah GDP and canceled remaining power purchases.
|
|
Predecessor
|
|||||||||||||
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
Gross profit (loss)
|
$
|
(5.4
|
)
|
|
$
|
(30.0
|
)
|
|
$
|
24.6
|
|
|
82
|
%
|
Advanced technology costs
|
5.3
|
|
|
44.5
|
|
|
39.2
|
|
|
88
|
%
|
|||
Selling, general and administrative
|
10.4
|
|
|
11.2
|
|
|
0.8
|
|
|
7
|
%
|
|||
Special charges for workforce reductions and advisory costs
|
0.1
|
|
|
3.5
|
|
|
3.4
|
|
|
97
|
%
|
|||
Other (income)
|
(4.8
|
)
|
|
(35.9
|
)
|
|
(31.1
|
)
|
|
(87
|
)%
|
|||
Operating (loss)
|
(16.4
|
)
|
|
(53.3
|
)
|
|
36.9
|
|
|
69
|
%
|
|||
Interest expense
|
4.7
|
|
|
9.5
|
|
|
4.8
|
|
|
51
|
%
|
|||
Interest (income)
|
(0.1
|
)
|
|
—
|
|
|
0.1
|
|
|
-
|
|
|||
Reorganization items, net
|
(440.0
|
)
|
|
—
|
|
|
440.0
|
|
|
-
|
|
|||
Income (loss) from continuing operations before income taxes
|
419.0
|
|
|
(62.8
|
)
|
|
481.8
|
|
|
767
|
%
|
|||
Provision (benefit) for income taxes
|
0.1
|
|
|
(18.5
|
)
|
|
(18.6
|
)
|
|
(101
|
)%
|
|||
Income (loss) from continuing operations
|
418.9
|
|
|
(44.3
|
)
|
|
463.2
|
|
|
1,046
|
%
|
|||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
-
|
|
|||
Net income (loss)
|
$
|
418.9
|
|
|
$
|
(44.3
|
)
|
|
$
|
463.2
|
|
|
1,046
|
%
|
|
Predecessor
|
|||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
%
|
|||||||
Gross profit (loss)
|
$
|
(22.8
|
)
|
|
$
|
(63.6
|
)
|
|
$
|
40.8
|
|
|
64
|
%
|
Advanced technology costs
|
56.6
|
|
|
150.0
|
|
|
93.4
|
|
|
62
|
%
|
|||
Selling, general and administrative
|
32.2
|
|
|
36.0
|
|
|
3.8
|
|
|
11
|
%
|
|||
Special charges for workforce reductions and advisory costs
|
2.1
|
|
|
9.6
|
|
|
7.5
|
|
|
78
|
%
|
|||
Other (income)
|
(39.4
|
)
|
|
(124.2
|
)
|
|
(84.8
|
)
|
|
(68
|
)%
|
|||
Operating (loss)
|
(74.3
|
)
|
|
(135.0
|
)
|
|
60.7
|
|
|
45
|
%
|
|||
Interest expense
|
14.0
|
|
|
32.1
|
|
|
18.1
|
|
|
56
|
%
|
|||
Interest (income)
|
(0.5
|
)
|
|
(0.4
|
)
|
|
0.1
|
|
|
25
|
%
|
|||
Reorganization items, net
|
(426.9
|
)
|
|
—
|
|
|
426.9
|
|
|
-
|
|
|||
Income (loss) from continuing operations before income taxes
|
339.1
|
|
|
(166.7
|
)
|
|
505.8
|
|
|
303
|
%
|
|||
Provision (benefit) for income taxes
|
(1.0
|
)
|
|
(57.8
|
)
|
|
(56.8
|
)
|
|
(98
|
)%
|
|||
Income (loss) from continuing operations
|
340.1
|
|
|
(108.9
|
)
|
|
449.0
|
|
|
412
|
%
|
|||
Income from discontinued operations
|
—
|
|
|
21.7
|
|
|
(21.7
|
)
|
|
(100
|
)%
|
|||
Net income (loss)
|
$
|
340.1
|
|
|
$
|
(87.2
|
)
|
|
$
|
427.3
|
|
|
490
|
%
|
|
Predecessor
|
||||||
|
Three Months Ended
September 30, 2014 |
|
Nine Months Ended
September 30, 2014 |
||||
Professional fees
|
$
|
10.4
|
|
|
$
|
22.3
|
|
Expense of deferred financing costs on convertible senior notes
|
—
|
|
|
1.2
|
|
||
Effects of Plan:
|
|
|
|
||||
Gain on cancellation of convertible senior notes, net
|
(284.7
|
)
|
|
(284.7
|
)
|
||
Gain on cancellation of convertible preferred stock, net
|
(64.1
|
)
|
|
(64.1
|
)
|
||
Expense of unamortized restricted stock
|
0.4
|
|
|
0.4
|
|
||
Gain related to the freeze of SERP benefits
|
(2.2
|
)
|
|
(2.2
|
)
|
||
Fresh Start Adjustments:
|
|
|
|
||||
Revaluation of deferred revenue, net of deferred costs
|
(20.1
|
)
|
|
(20.1
|
)
|
||
Revaluation of inventory
|
(35.4
|
)
|
|
(35.4
|
)
|
||
Valuation of intangible assets
|
(260.7
|
)
|
|
(260.7
|
)
|
||
Remeasurement of pension and postretirement benefit obligations
|
94.7
|
|
|
94.7
|
|
||
Elimination of Predecessor Company accumulated other comprehensive loss related to pension and postretirement benefit obligations
|
121.7
|
|
|
121.7
|
|
||
Reorganization items, net
|
$
|
(440.0
|
)
|
|
$
|
(426.9
|
)
|
|
Predecessor
|
||||||
|
Nine Months Ended
September 30, |
||||||
|
2014
|
|
2013
|
||||
Net Cash (Used in) Operating Activities
|
$
|
(220.3
|
)
|
|
$
|
(104.6
|
)
|
Net Cash Provided by Investing Activities
|
12.3
|
|
|
25.7
|
|
||
Net Cash (Used in) Financing Activities
|
(0.8
|
)
|
|
(85.6
|
)
|
||
Net (Decrease) in Cash and Cash Equivalents
|
$
|
(208.8
|
)
|
|
$
|
(164.5
|
)
|
|
Successor
|
|
|
Predecessor
|
||||
(in millions)
|
September 30, 2014
|
|
|
December 31, 2013
|
||||
Cash and cash equivalents
|
$
|
105.4
|
|
|
|
$
|
314.2
|
|
Accounts receivable, net
|
90.0
|
|
|
|
163.0
|
|
||
Inventories, net
|
326.3
|
|
|
|
467.9
|
|
||
Convertible preferred stock
|
—
|
|
|
|
(113.9
|
)
|
||
Convertible senior notes, current
|
—
|
|
|
|
(530.0
|
)
|
||
Other current assets and liabilities, net
|
(132.3
|
)
|
|
|
(463.9
|
)
|
||
Working capital (deficit)
|
$
|
389.4
|
|
|
|
$
|
(162.7
|
)
|
•
|
key suppliers could terminate their relationship or require financial assurances or enhanced performance;
|
•
|
trade creditors could require payment in advance or cash on delivery;
|
•
|
the ability to renew existing contracts and compete for new business may be adversely affected;
|
•
|
the ability to attract, motivate and/or retain key executives and employees may be adversely affected;
|
•
|
employees may be distracted from performance of their duties or more easily attracted to other employment opportunities;
|
•
|
competitors may take business away from us, as our ability to attract and retain customers may be negatively impacted;
|
•
|
the operations and relationships of our wholly owned subsidiary Enrichment Corp., even though not included as a debtor in the Chapter 11 bankruptcy proceedings, may suffer; and
|
•
|
other factors as discussed elsewhere in these risk factors.
|
•
|
will significantly reduce the gross profit impact of deferred revenues going forward;
|
•
|
will result in the amortization of sales backlog and customer relationship intangible assets that were created at emergence; and
|
•
|
will result in higher cost of sales as a result of increasing inventory values at emergence.
|
•
|
the terms and conditions imposed by the documents governing its indebtedness could make it more difficult for Centrus to satisfy its obligations to its lenders and other creditors, resulting in possible defaults on and acceleration of such indebtedness or breaches of such other commitments;
|
•
|
Centrus may be more vulnerable to adverse economic conditions and have less flexibility to plan for, or react to, changes in the nuclear enrichment industry which could place Centrus at a competitive disadvantage compared to any industry competitors that have less debt or comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic downturns;
|
•
|
Centrus may find it more difficult to obtain additional financing for future working capital, further development of the American Centrifuge Project and other general corporate requirements; and
|
•
|
Centrus will be required to dedicate a substantial portion of its cash resources to payments on the New Notes thereby reducing the availability of its cash for further development of the American Centrifuge Project and to fund its operations, capital expenditures and future business opportunities;
|
•
|
There will be a transition period of at least several years until Centrus will have further clarity regarding its commercialization plans for the American Centrifuge Plant ("ACP"). During this period, the Company will no longer be enriching uranium and will only be making sales from its existing inventory, from its future purchases under the 10-year commercial supply agreement with Russia (the "Russian Supply Agreement") and from other potential supplies. The Company has an objective of minimizing the period of transition until it has a new source of domestic U.S. enrichment production. However, there is currently no definitive timeline for the American Centrifuge Plant deployment to provide this source of production and the economics of the American Centrifuge project and the Russian Supply Agreement are severely challenged as a result of current enrichment market conditions. Absent a
|
•
|
The cessation of enrichment at the Paducah GDP could adversely affect the Company’s relationships with a variety of stakeholders, including customers. Customers could ask the Company to provide adequate assurances of performance under existing contracts that could adversely affect its business. Customers may also not be willing to modify existing contracts, some of which may need to be revised to permit acceptance of low enriched uranium ("LEU") from anticipated supply sources during the transition period. The cessation of enrichment at the Paducah GDP could also adversely affect the Company’s ability to enter into new contracts with customers, including its ability to contract for the output of the American Centrifuge Plant and for the material purchased under the Russian Supply Agreement.
|
•
|
cause Centrus to implement worker layoffs and potentially lose additional key skilled personnel, all of whom have security clearances, which could be difficult to re-hire or replace, and incur severance and other termination costs;
|
•
|
cause Centrus to need to suspend or to terminate contracts with suppliers and contractors involved in the American Centrifuge project and make it more difficult to obtain key suppliers for the American Centrifuge Plant and preserve the manufacturing infrastructure developed over the last several years; and
|
•
|
delay deployment of the American Centrifuge project and increase its overall cost, which could adversely affect the overall economics of the project and Centrus’ ability to successfully commercialize the American Centrifuge technology.
|
•
|
June 2014 - Commitment to proceed with commercial operation;
|
•
|
November 2014 - 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;
|
•
|
July 2017 - Begin commercial American Centrifuge Plant operations;
|
•
|
September 2018 - Commercial American Centrifuge Plant annual capacity at 1 million SWU per year; and
|
•
|
September 2020 - Commercial American Centrifuge Plant annual capacity of approximately 3.5 million SWU per year.
|
•
|
the ability to address DOE’s financial concerns to DOE’s satisfaction;
|
•
|
the ability to address any additional concerns that may be raised by DOE as part of its review of our loan guarantee application in the future;
|
•
|
the ability to demonstrate to DOE that we can obtain the capital needed to complete the ACP;
|
•
|
reliance on the continued support of our strategic investor, Toshiba and obtaining access to financing from the Japanese export credit agencies;
|
•
|
the ability to reach agreement with DOE regarding the terms of a loan guarantee conditional commitment;
|
•
|
the outcome of any reviews of our loan guarantee application by the DOE credit group, the Office of Management and Budget, the Department of the Treasury and the National Economic Council, including uncertainty regarding our ability to achieve a manageable credit subsidy cost estimate and to fund any potential capital shortfall that would be created by a high credit subsidy cost; and
|
•
|
uncertainty regarding the continuation of the DOE Loan Guarantee Program, including the impact of defaults and related investigations under the DOE Loan Guarantee Program.
|
•
|
the performance and reliability of individual centrifuge components;
|
•
|
the availability and performance of plant support systems;
|
•
|
the operable lives of individual components and the level of maintenance required to sustain overall plant availability;
|
•
|
the ability to acquire or manufacture replacement parts for centrifuges or plant support systems when needed; and
|
•
|
differences in actual commercial plant conditions from the conditions used to establish and test design criteria.
|
•
|
LEU and uranium production levels and costs in the industry;
|
•
|
actions taken by governments to regulate, protect or promote trade in nuclear material, including the continuation of existing restrictions on unfairly priced imports;
|
•
|
actions taken by governments to narrow, reduce or eliminate limits on trade in nuclear material, including the decrease or elimination of existing restrictions on unfairly priced imports;
|
•
|
the release by governments of stockpiles of enriched and natural uranium without consideration of the adverse impact of the availability of those stockpiles on producers;
|
•
|
actions of competitors;
|
•
|
exchange rates;
|
•
|
availability and cost of alternate fuels; and
|
•
|
inflation.
|
•
|
accidents, terrorism or other incidents at nuclear facilities or involving shipments of nuclear materials;
|
•
|
regulatory actions or changes in regulations by nuclear regulatory bodies;
|
•
|
decisions by agencies, courts or other bodies that limit our ability to seek relief under applicable trade laws to offset unfair competition or pricing by foreign competitors;
|
•
|
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 American Centrifuge facilities;
|
•
|
the 2002 DOE-USEC Agreement and other agreements that address issues relating to the domestic uranium enrichment industry and centrifuge technology; and
|
•
|
the ACTDO Agreement with UT-Battelle as operator of ORNL for DOE.
|
•
|
Redemption price or exchange value:
Generally the redemption price or exchange value for any shares of our New Common Stock redeemed or exchanged would be their fair market value. However, if we redeem or exchange shares held by foreign persons or Contravening Persons and our Board in good faith determines that such person knew or should have known that its ownership would constitute a foreign ownership review event (other than shares for which our Board determined at the time of the person’s purchase that the ownership of, or exercise of rights with respect to, such shares did not at such time constitute an Adverse Regulatory Occurrence), the redemption price or exchange value is required to be the lesser of fair market value and the person’s purchase price for the shares redeemed or exchanged
|
•
|
Form of payment:
Cash, securities or a combination, valued by our Board in good faith
|
•
|
Notice:
At least 30 days written notice of redemption is required; however, if we have deposited the cash or securities for the redemption or exchange in trust for the benefit of the relevant holders, we may redeem shares held by such holders on the same day that we provide notice.
|
Period
|
|
(a) Total
Number of
Shares (or
Units)
Purchased(1)
|
|
(b)
Average
Price Paid
Per Share
(or Unit)
|
|
(c) Total Number
of Shares (or Units)
Purchased as Part
of Publicly
Announced Plans
or Programs
|
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs
|
|
|
|
|
|
|
|
|
|
July 1 - July 31
|
|
—
|
|
—
|
|
—
|
|
—
|
August 1 - August 31
|
|
65
|
|
$4.55
|
|
—
|
|
—
|
September 1 - September 30
|
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
|
65
|
|
$4.55
|
|
—
|
|
—
|
(1)
|
These purchases were not made pursuant to a publicly announced repurchase plan or program. Represents 65 shares of Old Common Stock surrendered to Centrus to pay withholding taxes on shares of restricted stock under the Company’s prior equity incentive plan.
|
|
|
|
Centrus Energy Corp.
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
November 14, 2014
|
By:
|
/s/ John C. Barpoulis
|
|
|
|
|
John C. Barpoulis
|
|
|
|
Senior Vice President and Chief Financial Officer
|
||
|
|
(Principal Financial Officer)
|
32.1
|
Certification of Interim CEO and CFO pursuant to 18 U.S.C. Section 1350. (a)
|
101
|
Condensed consolidated financial statements from the quarterly report on Form 10-Q for the quarter ended September 30, 2014, furnished in interactive data file (XBRL) format.
|
(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.
|
“5.07
|
The following special terms shall apply to the nominal ***** ordered by USEC on ***** for Delivery in the first half of *****:
|
(a)
|
*****
|
(b)
|
The quality analysis of samples representing the EUP in the ***** shall be conducted by the *****. USEC shall inform TENEX of the acceptability of the quality of the EUP in the samples within one (1) calendar week of receiving information on the results of the analysis. If the quality is not acceptable, the EUP shall not be transported until the Parties can confirm that the EUP in the type 30B Cylinders is Conforming Material.
|
(c)
|
Notwithstanding Paragraph 2.0 of the Addendum to Appendix E1, or any other provision of the CONTRACT regarding samples, TENEX shall arrange for sufficient samples to be taken so that, in addition to any samples taken by *****
|
(d)
|
TENEX shall render to USEC services of organizing the transportation of ***** Sample Containers representing the EUP in the ***** and the transportation of ***** from the place of EUP production, *****, to the *****. The cost of the Services shall be USD *****, including *****. The Services shall be considered rendered by TENEX on the date when the dispatch note has been sealed by *****. TENEX shall provide written confirmation from ***** that the ***** Sample Containers and the *****.
|
(e)
|
Notwithstanding the provisions of the CONTRACT, the Delivery Date for filled ***** Sample Containers and ***** transported therewith shall be the *****. In the relations between USEC and TENEX, title to, and risk of loss of or damage to, EUP contained in ***** Sample Containers, as well as risk of loss of or damage to the ***** Sample Containers and ***** transported therewith, shall transfer to USEC at the moment when the ***** Sample Containers and ***** are consigned to the *****.
|
(f)
|
TENEX shall prepare for signing by the Parties an Acceptance Report for the Services rendered by TENEX as per Section 5.07(d) above, as well as a Delivery Receipt indicating the Delivery Date for the ***** Sample Containers and ***** transported therewith. Both documents shall be executed in duplicate, one copy for each of the Parties. It is understood that these documents are only applicable to the Delivery of the ***** Sample Containers and *****transported therewith, and not the EUP in the *****, which shall be Delivered under the other provisions of the CONTRACT, including Article 5 and Appendix E-1.
|
(g)
|
TENEX shall provide USEC with copies of the CQQs for the EUP in the ***** Sample Containers (see Appendix F1-2 of this CONRACT) from the ***** not later than the date of the dispatch of the filled ***** Sample Containers from the ***** to the *****. Copies of the CQQs shall be sent to the email address of USEC in Section 16.01(a), with a copy to *****. USEC shall confirm by email to the email address of TENEX in Section 16.01(b)(ii) the receipt of the CQQs.
|
(h)
|
Regarding the EUP in the
***** Sample Containers only, notwithstanding anything to the contrary in the provisions of Paragraph E1-7, the notification period stipulated in Paragraph E1-7 with respect to such EUP shall be ***** after the date USEC receives the results of the ***** and ***** analyses. As to the EUP in 30B type Cylinders in the *****, the notification periods stipulated in Paragraph E1-7 shall continue to apply.
|
(i)
|
Transportation of the EUP in 30B type Cylinders in *****, shall start only after
|
(j)
|
In view of Russian tax legislation and the fact that the Services and the Delivery of the EUP in ***** Sample Containers to USEC shall be carried out on the territory of the Russian Federation, all amounts in TENEX invoices for the Services and such EUP will include the amount of the *****. USEC shall pay amounts invoiced for the Services ***** within ***** after receipt of a duly executed original invoice from TENEX, and amounts invoiced for such EUP (including applicable *****) shall be paid in ***** after the Delivery Date. The invoices for Services and EUP in ***** Sample Containers, which shall be issued not earlier than the *****, shall be deemed to be received by USEC upon their receipt by email. Payment shall be made by wire transfer of immediately available U.S. dollar funds.
|
(k)
|
In addition to the CQQs, TENEX shall provide USEC with the UF6 Shipments Worksheet and a Nuclear Transaction Report, the forms of which are provided in Appendix 1 to Amendment No. 003 to the CONTRACT. These documents shall indicate the TENEX contract number, the USEC contract number and the number of the contract between USEC and its Customer - *****. If requested by USEC, TENEX shall request ***** to provide the laboratory report supporting the data contained in the CQQs provided to USEC.
|
1.
|
The following new subsections (d), (e), (f), and (g) shall be inserted at the end of Section 3.02:
|
“(d)
|
In addition to the EUP ordered for Delivery in calendar year ***** pursuant to Sections 3.02(a), (b) and (c) above, TENEX shall supply to USEC, and USEC shall order from TENEX and import to the United States by the end of calendar year *****, EUP containing *****
|
(e)
|
USEC shall have the option to purchase the *****. USEC may exercise this option by giving TENEX Notice of its election to make *****. If USEC elects to make *****, USEC’s obligation for *****
|
(f)
|
In addition to the option in Section 3.02(e), USEC also shall have the option, which it may exercise by Notice given to TENEX not later than *****.
|
(g)
|
Except to the extent that delaying title transfer until ***** would prevent USEC from importing the Related EUP containing the SWU purchased pursuant to Section 3.02(d) in the United States in calendar year *****, with such Related EUP being counted against *****.”
|
2.
|
The following new subsection (g) shall be inserted at the end of Section 4.03:
|
“(g)
|
USEC shall place its Order for Delivery of EUP pursuant to its obligations under Section 3.02(d) (the *****) not later than *****. TENEX shall fulfill such Order for the ***** notwithstanding that the Order does not otherwise comply with the other
|
3.
|
The following new subsection (f) shall be inserted after subsection (e) of Section 4.06:
|
“(f)
|
For Delivery Year *****, if (i) by *****, the total amount of SWU contained in EUP ordered by USEC (the “
***** Ordered SWU Amount
”) is not at least equal to the minimum Firm Commitment SWU for ***** under Section 3.02 *****, Section 4.06(b) shall not apply and TENEX may invoke the remedy in Section 4.06(c) at any time after ***** with respect to the amount by which the ***** exceeds the ***** Ordered SWU Amount (the “
***** SWU Shortfall
”), without the need for TENEX either to seek to sell such ***** SWU Shortfall to one or more third parties prior to invoking such remedy or to wait until ***** to invoke such remedy. Further, in the case of the ***** SWU Shortfall, the liquidated damages under Section 4.06(a) applicable to the ***** SWU Shortfall shall be payable within ***** after receipt by USEC of the invoice from TENEX for the full period from *****, without regard to whether TENEX has sold the ***** SWU Shortfall. For the avoidance of doubt, if the ***** is equal to or less than the ***** Ordered SWU Amount, Section 4.06 shall not be invoked with respect to the *****.”
|
4.
|
The following new Section 5.08 shall be inserted at the end of Article 5:
|
“5.08
|
Notwithstanding anything to the contrary in Section 5.04 or other terms of this CONTRACT, title to, but not the risk of loss of, EUP Delivered pursuant to Section 3.02(d) shall transfer automatically to USEC (and all claims of any kind of TENEX to the EUP shall be deemed to have expired) on the date of delivery of the EUP by USEC to its Customer under the terms of the Customer’s contract with USEC (“
Title Transfer Date
”, on which date, at the latest, USEC shall notify TENEX of the occurrence of the transfer of title), *****.
|
5.
|
The following new subsection (c) shall be inserted at the end of Section 6.01:
|
“(c)
|
Notwithstanding anything to the contrary in this Article 6 or the other terms of this CONTRACT, including Appendix H, the SWU Price for the SWU Delivered pursuant to the ***** (as defined in Section 4.03(g)) shall be the SWU Price for *****, as calculated under Appendix H.
|
6.
|
The following shall be added to the end of the last paragraph of Section 6.06(b):
|
7.
|
The following new subsection (vi) shall be inserted at the end of Section 7.02(a):
|
“(vi)
|
*****, USEC may Deliver Related Natural Uranium to TENEX ***** under Section 7.02(a) *****.”
|
8.
|
The following new subsection (i) shall be inserted at the end of Section 7.02:
|
“(i)
|
In the case of the Related Natural Uranium to be Delivered to TENEX in respect of the *****, USEC shall Deliver such Related Natural Uranium under Section 7.02(a) by *****. Upon request, TENEX shall use its reasonable efforts to ensure the *****.
|
9.
|
Section 7.09 shall be replaced with the following:
|
“7.09
|
USEC shall use its reasonable efforts to ensure that all the Natural Uranium in one cylinder of Natural Uranium supplied to TENEX in the United States under Section 7.02(c) or Section 7.02(h) is either assigned the same Obligation Code or is unobligated. The Parties recognize that USEC cannot direct the origin or Obligation Code of Related Natural Uranium supplied to USEC by its Customers and therefore, its ability to fulfill the prior sentence will be dictated by the origins and Obligation Codes of the Related Natural Uranium provided to USEC by its Customer for any Related EUP. Where it is not possible for USEC to supply a Cylinder containing Related Natural Uranium bearing a single Obligation Code or containing only unobligated Related Natural Uranium, USEC may, with at least ten (10) Business Days prior Notice to TENEX and the consent of TENEX in response to such Notice (such response to be given not later than five (5) Business Days after TENEX receives such Notice), hold the Related Natural Uranium that USEC could not supply in a TENEX account on the books of USEC until USEC can supply such Related Natural Uranium in a Cylinder containing
|
10.
|
Notwithstanding any provision to the contrary in the CONTRACT, including but not limited to Paragraph D1-1, USEC may Physically Deliver the 30B Cylinders, Overpacks and Sample Containers for the EUP ordered under Section 4.03(g) by *****.
|
11.
|
The following new Paragraph H-7A shall be inserted into Appendix H after Paragraph H-7:
|
(a)
|
If, pursuant to Section 3.02(e), USEC elects *****
|
(b)
|
If, pursuant to Section 3.02(f), USEC elects *****
|
12.
|
Recognizing that USEC will order the EUP pursuant to the *****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
1.
|
*****.
|
2.
|
In no event shall USEC be obligated to make more than *****.
|
3.
|
In addition to the provisions of Section 16.01 (a) and Section 16.01 (b), all information marked as Confidential Information shall be sent only through secure channels, or with password protection, including, but not limited to, the Notice of Delivery required in accordance with Section 5.02.
|
4.
|
Appendix J to the CONTRACT shall be replaced with the new Appendix J provided in Exhibit 1 to this Amendment No. 004.
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Centrus Energy Corp.;
|
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(s) 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(s) 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.
|
November 14, 2014
|
/s/ John R. Castellano
|
|
John R. Castellano
|
|
Interim President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Centrus Energy Corp.;
|
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(s) 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(s) 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.
|
November 14, 2014
|
/s/ John C. Barpoulis
|
|
John C. Barpoulis
|
|
Senior Vice President and Chief Financial Officer
|
November 14, 2014
|
/s/ John R. Castellano
|
|
John R. Castellano
|
|
Interim President and Chief Executive Officer
|
November 14, 2014
|
/s/ John C. Barpoulis
|
|
John C. Barpoulis
|
|
Senior Vice President and Chief Financial Officer
|