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
|
o
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Smaller reporting company
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ý
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Accelerated filer
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o
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Emerging growth company
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o
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Non-accelerated filer
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o
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Page
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PART I – FINANCIAL INFORMATION
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PART II – OTHER INFORMATION
|
|
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June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
140.1
|
|
|
$
|
208.8
|
|
Accounts receivable
|
27.9
|
|
|
60.2
|
|
||
Inventories
|
100.0
|
|
|
153.1
|
|
||
Deferred costs associated with deferred revenue
|
130.2
|
|
|
122.3
|
|
||
Other current assets
|
22.7
|
|
|
22.5
|
|
||
Total current assets
|
420.9
|
|
|
566.9
|
|
||
Property, plant and equipment, net of accumulated depreciation of $2.2 as of June 30, 2018 and $1.9 as of December 31, 2017
|
4.5
|
|
|
4.9
|
|
||
Deposits for financial assurance
|
19.8
|
|
|
19.7
|
|
||
Intangible assets, net
|
79.9
|
|
|
82.7
|
|
||
Other long-term assets
|
0.7
|
|
|
1.1
|
|
||
Total assets
|
$
|
525.8
|
|
|
$
|
675.3
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
47.0
|
|
|
$
|
54.3
|
|
Payables under SWU purchase agreements
|
19.5
|
|
|
79.4
|
|
||
Inventories owed to customers and suppliers
|
45.1
|
|
|
77.9
|
|
||
Deferred revenue and advances from customers
|
195.0
|
|
|
191.8
|
|
||
Total current liabilities
|
306.6
|
|
|
403.4
|
|
||
Long-term debt
|
155.3
|
|
|
157.5
|
|
||
Postretirement health and life benefit obligations
|
151.7
|
|
|
154.2
|
|
||
Pension benefit liabilities
|
155.2
|
|
|
161.6
|
|
||
Advances from customers
|
14.5
|
|
|
—
|
|
||
Other long-term liabilities
|
12.3
|
|
|
17.5
|
|
||
Total liabilities
|
795.6
|
|
|
894.2
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
||||
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized
|
|
|
|
||||
Series A Participating Cumulative Preferred Stock, none issued
|
—
|
|
|
—
|
|
||
Series B Senior Preferred Stock, 7.5% cumulative, 104,574 shares issued and outstanding and an aggregate liquidation preference of $115.4 as of June 30, 2018 and $111.5 as of December 31, 2017
|
4.6
|
|
|
4.6
|
|
||
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 7,632,669 shares issued and outstanding as of June 30, 2018 and December 31, 2017
|
0.8
|
|
|
0.8
|
|
||
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 1,406,082 shares issued and outstanding as of June 30, 2018 and December 31, 2017
|
0.1
|
|
|
0.1
|
|
||
Excess of capital over par value
|
60.2
|
|
|
60.0
|
|
||
Accumulated deficit
|
(335.5
|
)
|
|
(284.5
|
)
|
||
Accumulated other comprehensive income, net of tax
|
—
|
|
|
0.1
|
|
||
Total stockholders’ deficit
|
(269.8
|
)
|
|
(218.9
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
525.8
|
|
|
$
|
675.3
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Separative work units
|
$
|
32.9
|
|
|
$
|
37.9
|
|
|
$
|
50.6
|
|
|
$
|
38.7
|
|
Uranium
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
||||
Contract services
|
6.5
|
|
|
6.1
|
|
|
20.9
|
|
|
12.5
|
|
||||
Total revenue
|
39.4
|
|
|
44.0
|
|
|
75.1
|
|
|
51.2
|
|
||||
Cost of Sales:
|
|
|
|
|
|
|
|
||||||||
Separative work units and uranium
|
42.9
|
|
|
42.5
|
|
|
77.7
|
|
|
45.2
|
|
||||
Contract services
|
7.2
|
|
|
6.2
|
|
|
13.4
|
|
|
13.6
|
|
||||
Total cost of sales
|
50.1
|
|
|
48.7
|
|
|
91.1
|
|
|
58.8
|
|
||||
Gross loss
|
(10.7
|
)
|
|
(4.7
|
)
|
|
(16.0
|
)
|
|
(7.6
|
)
|
||||
Advanced technology license and decommissioning costs
|
5.4
|
|
|
4.4
|
|
|
13.4
|
|
|
10.5
|
|
||||
Selling, general and administrative
|
9.7
|
|
|
9.7
|
|
|
20.9
|
|
|
22.1
|
|
||||
Amortization of intangible assets
|
1.5
|
|
|
2.0
|
|
|
2.8
|
|
|
3.2
|
|
||||
Special charges for workforce reductions and advisory costs
|
0.3
|
|
|
2.3
|
|
|
0.9
|
|
|
4.7
|
|
||||
Gains on sales of assets
|
(0.2
|
)
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|
(1.7
|
)
|
||||
Operating loss
|
(27.4
|
)
|
|
(22.4
|
)
|
|
(53.7
|
)
|
|
(46.4
|
)
|
||||
Gain on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.6
|
)
|
||||
Nonoperating components of net periodic benefit expense (income)
|
(1.7
|
)
|
|
(0.4
|
)
|
|
(3.3
|
)
|
|
(0.8
|
)
|
||||
Interest expense
|
1.0
|
|
|
0.7
|
|
|
2.0
|
|
|
3.6
|
|
||||
Investment income
|
(0.6
|
)
|
|
(0.3
|
)
|
|
(1.2
|
)
|
|
(0.6
|
)
|
||||
Loss before income taxes
|
(26.1
|
)
|
|
(22.4
|
)
|
|
(51.2
|
)
|
|
(15.0
|
)
|
||||
Income tax benefit
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
||||
Net loss
|
(26.1
|
)
|
|
(22.4
|
)
|
|
(51.1
|
)
|
|
(14.8
|
)
|
||||
Preferred stock dividends - undeclared and cumulative
|
2.0
|
|
|
2.0
|
|
|
4.0
|
|
|
3.0
|
|
||||
Net loss allocable to common stockholders
|
$
|
(28.1
|
)
|
|
$
|
(24.4
|
)
|
|
$
|
(55.1
|
)
|
|
$
|
(17.8
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per common share - basic and diluted
|
$
|
(3.08
|
)
|
|
$
|
(2.69
|
)
|
|
$
|
(6.05
|
)
|
|
$
|
(1.96
|
)
|
Average number of common shares outstanding - basic and diluted (in thousands):
|
9,118
|
|
|
9,077
|
|
|
9,111
|
|
|
9,070
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(26.1
|
)
|
|
$
|
(22.4
|
)
|
|
$
|
(51.1
|
)
|
|
$
|
(14.8
|
)
|
Other comprehensive loss, before tax (Note 12):
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service credits, net
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Other comprehensive loss, before tax
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Income tax benefit related to items of other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive loss, net of tax benefit
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Comprehensive loss
|
$
|
(26.2
|
)
|
|
$
|
(22.4
|
)
|
|
$
|
(51.2
|
)
|
|
$
|
(14.9
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Operating Activities
|
|
|
|
||||
Net loss
|
$
|
(51.1
|
)
|
|
$
|
(14.8
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3.3
|
|
|
3.6
|
|
||
PIK interest on paid-in-kind toggle notes
|
0.9
|
|
|
0.8
|
|
||
Gain on early extinguishment of debt
|
—
|
|
|
(33.6
|
)
|
||
Gain on sales of assets
|
(0.3
|
)
|
|
(1.7
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
32.1
|
|
|
(32.1
|
)
|
||
Inventories, net
|
20.4
|
|
|
42.7
|
|
||
Payables under SWU purchase agreements
|
(59.9
|
)
|
|
(39.7
|
)
|
||
Deferred revenue, net of deferred costs
|
(4.7
|
)
|
|
13.9
|
|
||
Accounts payable and other liabilities
|
(7.0
|
)
|
|
(15.7
|
)
|
||
Other, net
|
0.6
|
|
|
(1.4
|
)
|
||
Cash used in operating activities
|
(65.7
|
)
|
|
(78.0
|
)
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Proceeds from sales of assets
|
0.3
|
|
|
1.7
|
|
||
Cash provided by investing activities
|
0.2
|
|
|
1.6
|
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
||||
Payment of interest classified as debt
|
(3.0
|
)
|
|
—
|
|
||
Repurchase of debt
|
—
|
|
|
(27.6
|
)
|
||
Payment of securities transaction costs
|
—
|
|
|
(9.0
|
)
|
||
Cash used in financing activities
|
(3.0
|
)
|
|
(36.6
|
)
|
||
|
|
|
|
||||
Decrease in cash, cash equivalents and restricted cash
|
(68.5
|
)
|
|
(113.0
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
(1)
|
244.8
|
|
|
296.7
|
|
||
Cash, cash equivalents and restricted cash at end of period
(1)
|
$
|
176.3
|
|
|
$
|
183.7
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Interest paid in cash
|
$
|
0.4
|
|
|
$
|
2.1
|
|
Non-cash activities:
|
|
|
|
||||
Conversion of interest payable-in-kind to long-term debt
|
$
|
0.9
|
|
|
$
|
0.8
|
|
Exchange of debt for Series B preferred stock
|
$
|
—
|
|
|
$
|
4.6
|
|
|
Preferred Stock,
Series B
|
|
Common Stock,
Class A,
Par Value
$.10 per Share
|
|
Common Stock,
Class B,
Par Value
$.10 per Share
|
|
Excess of
Capital Over
Par Value
|
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive Income
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
59.5
|
|
|
$
|
(296.7
|
)
|
|
$
|
0.2
|
|
|
$
|
(236.1
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.8
|
)
|
|
—
|
|
|
(14.8
|
)
|
|||||||
Issuance of preferred stock
|
4.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
|||||||
Other comprehensive loss, net of tax benefit (Note 12)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||||||
Restricted stock units and stock options issued, net of amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||||
Balance at June 30, 2017
|
$
|
4.6
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
59.7
|
|
|
$
|
(311.5
|
)
|
|
$
|
0.1
|
|
|
$
|
(246.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2017
|
$
|
4.6
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
60.0
|
|
|
$
|
(284.5
|
)
|
|
$
|
0.1
|
|
|
$
|
(218.9
|
)
|
Adoption of ASC 606 as of January 1, 2018 (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.1
|
)
|
|
—
|
|
|
(51.1
|
)
|
|||||||
Other comprehensive loss, net of tax benefit (Note 12)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||||||
Restricted stock units and stock options issued, net of amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||||
Balance at June 30, 2018
|
$
|
4.6
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
60.2
|
|
|
$
|
(335.5
|
)
|
|
$
|
—
|
|
|
$
|
(269.8
|
)
|
|
Balance at December 31, 2017
|
|
Adjustment for ASC 606
|
|
Balance at
January 1, 2018
|
||||||
Assets:
|
|
|
|
|
|
||||||
Unbilled contract revenue
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
||||||
Accumulated Deficit
|
(284.5
|
)
|
|
0.1
|
|
|
(284.4
|
)
|
|
Three Months Ended
June 30, 2018
|
|
Six Months Ended
June 30, 2018
|
||||||||||||||||||||
|
As Reported
|
|
Under Previous Accounting
|
|
Effect of Adoption
|
|
As Reported
|
|
Under Previous Accounting
|
|
Effect of Adoption
|
||||||||||||
Revenue - Contract services
|
$
|
6.5
|
|
|
$
|
8.1
|
|
|
$
|
(1.6
|
)
|
|
$
|
20.9
|
|
|
$
|
22.9
|
|
|
$
|
(2.0
|
)
|
Net loss
|
(26.1
|
)
|
|
(24.5
|
)
|
|
(1.6
|
)
|
|
(51.1
|
)
|
|
(49.1
|
)
|
|
(2.0
|
)
|
|
Three Months Ended
June 30, 2017
|
|
Six Months Ended
June 30, 2017
|
||||||||||||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
Current Presentation
|
|
As Previously Reported
|
|
Adjustments
|
|
Current Presentation
|
||||||||||||
Cost of sales - separative work units and uranium
|
$
|
42.1
|
|
|
$
|
0.4
|
|
|
$
|
42.5
|
|
|
$
|
44.4
|
|
|
$
|
0.8
|
|
|
$
|
45.2
|
|
Nonoperating components of net periodic benefit expense (income)
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|
Six Months Ended
June 30, 2017
|
||||||||||
|
As Previously Reported
|
|
Adjustments
|
|
Current Presentation
|
||||||
Cash used in operating activities
|
$
|
(87.0
|
)
|
|
$
|
9.0
|
|
|
$
|
(78.0
|
)
|
Cash used in financing activities
|
(27.6
|
)
|
|
(9.0
|
)
|
|
(36.6
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
United States
|
$
|
32.9
|
|
|
$
|
10.9
|
|
|
$
|
54.0
|
|
|
$
|
11.1
|
|
Asia
|
—
|
|
|
27.0
|
|
|
0.1
|
|
|
27.6
|
|
||||
Other
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Revenue - SWU and uranium
|
$
|
32.9
|
|
|
$
|
37.9
|
|
|
$
|
54.2
|
|
|
$
|
38.7
|
|
|
|
June 30,
2018
|
|
January 1, 2018
|
|
Year-To-Date Change
|
||||||
Contract assets
|
|
|
|
|
|
|
||||||
Accounts receivable:
|
|
|
|
|
|
|
||||||
Billed
|
|
$
|
27.9
|
|
|
$
|
60.2
|
|
|
$
|
(32.3
|
)
|
Unbilled contract revenue
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|||
Accounts receivable
|
|
$
|
27.9
|
|
|
$
|
60.3
|
|
|
$
|
(32.4
|
)
|
|
|
|
|
|
|
|
||||||
Deferred costs associated with deferred revenue
|
|
$
|
130.2
|
|
|
$
|
122.3
|
|
|
$
|
7.9
|
|
|
|
|
|
|
|
|
||||||
Contract liabilities
|
|
|
|
|
|
|
||||||
Deferred revenue and advances from customers - current:
|
|
|
|
|
|
|
||||||
Deferred revenue
|
|
$
|
193.1
|
|
|
$
|
172.5
|
|
|
$
|
20.6
|
|
Advances from customers
|
|
1.9
|
|
|
19.3
|
|
|
(17.4
|
)
|
|||
Deferred revenue and advances from customers - current
|
|
$
|
195.0
|
|
|
$
|
191.8
|
|
|
$
|
3.2
|
|
|
|
|
|
|
|
|
||||||
Advances from customers - noncurrent
|
|
$
|
14.5
|
|
|
$
|
—
|
|
|
$
|
14.5
|
|
|
Deferred Sales in the Period
|
|
Previously Deferred Sales Recognized in the Period
|
|
Year-To-Date Change
|
||||||
Deferred costs associated with deferred revenue
|
$
|
10.6
|
|
|
$
|
(2.7
|
)
|
|
$
|
7.9
|
|
Deferred revenue
|
23.3
|
|
|
(2.7
|
)
|
|
20.6
|
|
(in millions)
|
|
Liability
December 31,
2017
|
|
Six Months Ended
June 30, 2018 |
|
Liability
June 30,
2018
|
||||||||||
|
|
|
Charges for Termination Benefits
|
|
Paid/Settled
|
|
||||||||||
Workforce reductions:
|
|
|
|
|
|
|
|
|
||||||||
Evolving business needs
|
|
$
|
0.8
|
|
|
$
|
0.7
|
|
|
$
|
(1.1
|
)
|
|
$
|
0.4
|
|
Piketon demonstration facility
|
|
5.7
|
|
|
0.1
|
|
|
(2.5
|
)
|
|
3.3
|
|
||||
|
|
$
|
6.5
|
|
|
$
|
0.8
|
|
|
$
|
(3.6
|
)
|
|
$
|
3.7
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
140.1
|
|
|
$
|
208.8
|
|
Restricted cash included in other current assets
|
16.4
|
|
|
16.3
|
|
||
Restricted cash included in other long-term assets
|
19.8
|
|
|
19.7
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
176.3
|
|
|
$
|
244.8
|
|
|
June 30,
2018
|
|
December 31, 2017
|
||||
Current assets
|
|
|
|
||||
Deposits for surety bonds - NRC
|
$
|
16.2
|
|
|
$
|
16.1
|
|
Deposits for financial assurance - other
|
0.2
|
|
|
0.2
|
|
||
Included in other current assets
|
$
|
16.4
|
|
|
$
|
16.3
|
|
|
|
|
|
||||
Long-term assets
|
|
|
|
||||
Deposits for surety bonds - DOE
|
$
|
13.6
|
|
|
$
|
13.5
|
|
Deposits for financial assurance - workers compensation
|
5.9
|
|
|
5.9
|
|
||
Deposits for financial assurance - other
|
0.3
|
|
|
0.3
|
|
||
Deposits for financial assurance
|
$
|
19.8
|
|
|
$
|
19.7
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Current
Assets
|
|
Current
Liabilities
(a)
|
|
Inventories, Net
|
|
Current
Assets
|
|
Current
Liabilities
(a)
|
|
Inventories, Net
|
||||||||||||
Separative work units
|
$
|
7.3
|
|
|
$
|
3.8
|
|
|
$
|
3.5
|
|
|
$
|
47.2
|
|
|
$
|
15.0
|
|
|
$
|
32.2
|
|
Uranium
|
92.7
|
|
|
41.3
|
|
|
51.4
|
|
|
105.9
|
|
|
62.9
|
|
|
43.0
|
|
||||||
|
$
|
100.0
|
|
|
$
|
45.1
|
|
|
$
|
54.9
|
|
|
$
|
153.1
|
|
|
$
|
77.9
|
|
|
$
|
75.2
|
|
(a)
|
Inventories owed to customers and suppliers, included in current liabilities, include SWU and uranium inventories owed to fabricators.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
||||||||||||
Sales order book
|
$
|
54.6
|
|
|
$
|
26.4
|
|
|
$
|
28.2
|
|
|
$
|
54.6
|
|
|
$
|
25.9
|
|
|
$
|
28.7
|
|
Customer relationships
|
68.9
|
|
|
17.2
|
|
|
51.7
|
|
|
68.9
|
|
|
14.9
|
|
|
54.0
|
|
||||||
Total
|
$
|
123.5
|
|
|
$
|
43.6
|
|
|
$
|
79.9
|
|
|
$
|
123.5
|
|
|
$
|
40.8
|
|
|
$
|
82.7
|
|
|
Maturity
|
|
June 30,
2018
|
|
December 31, 2017
|
||||
8.25% Notes:
|
Feb. 2027
|
|
|
|
|
||||
Principal
|
|
|
$
|
74.3
|
|
|
$
|
74.3
|
|
Interest
|
|
|
55.1
|
|
|
58.1
|
|
||
8.25% Notes
|
|
|
129.4
|
|
|
132.4
|
|
||
8% PIK Toggle Notes
|
Sep. 2019
(a)
|
|
32.1
|
|
|
31.3
|
|
||
Subtotal
|
|
|
161.5
|
|
|
163.7
|
|
||
Less deferred issuance costs
|
|
|
0.1
|
|
|
0.1
|
|
||
Total debt
|
|
|
161.4
|
|
|
163.6
|
|
||
Less current portion
|
|
|
6.1
|
|
|
6.1
|
|
||
Long-term debt
|
|
|
$
|
155.3
|
|
|
$
|
157.5
|
|
•
|
Level 1 – quoted prices for identical instruments in active markets.
|
•
|
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
•
|
Level 3 – valuations derived using one or more significant inputs that are not observable.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
$
|
140.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140.1
|
|
|
$
|
208.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
208.8
|
|
Deferred compensation asset (a)
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred compensation obligation (a)
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
(a)
|
The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is funded through a rabbi trust. Trust funds are invested in mutual funds for which unit prices are quoted in active markets and are classified within Level 1 of the valuation hierarchy.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
(a)
|
|
Carrying Value
|
|
Estimated Fair Value
(a)
|
||||||||
8.25% Notes
|
$
|
129.4
|
|
(b)
|
$
|
60.5
|
|
|
$
|
132.4
|
|
(b)
|
$
|
61.7
|
|
8% PIK Toggle Notes
|
32.1
|
|
|
27.0
|
|
|
31.3
|
|
|
25.1
|
|
(b)
|
The carrying value of the 8.25% Notes consists of the principal balance of
$74.3 million
and the sum of current and noncurrent interest payment obligations until maturity. Refer to
Note 7, Debt
.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service costs
|
$
|
0.9
|
|
|
$
|
1.0
|
|
|
$
|
1.7
|
|
|
$
|
1.9
|
|
Interest costs
|
7.2
|
|
|
8.0
|
|
|
14.4
|
|
|
16.1
|
|
||||
Expected gains on plan assets
|
(10.3
|
)
|
|
(10.2
|
)
|
|
(20.5
|
)
|
|
(20.4
|
)
|
||||
Net periodic benefit income
|
$
|
(2.2
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(4.4
|
)
|
|
$
|
(2.4
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest costs
|
$
|
1.5
|
|
|
$
|
1.8
|
|
|
$
|
2.9
|
|
|
$
|
3.6
|
|
Amortization of prior service credits
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Net periodic benefit expense
|
$
|
1.4
|
|
|
$
|
1.8
|
|
|
$
|
2.8
|
|
|
$
|
3.5
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss allocable to common stockholders (in millions)
|
$
|
(28.1
|
)
|
|
$
|
(24.4
|
)
|
|
$
|
(55.1
|
)
|
|
$
|
(17.8
|
)
|
|
|
|
|
|
|
|
|
||||||||
Shares in thousands:
|
|
|
|
|
|
|
|
||||||||
Average common shares outstanding - basic
|
9,118
|
|
|
9,077
|
|
|
9,111
|
|
|
9,070
|
|
||||
Potentially dilutive shares related to stock options
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Average common shares outstanding - diluted
|
9,118
|
|
|
9,077
|
|
|
9,111
|
|
|
9,070
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per common share (in dollars):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(3.08
|
)
|
|
$
|
(2.69
|
)
|
|
$
|
(6.05
|
)
|
|
$
|
(1.96
|
)
|
Diluted
|
$
|
(3.08
|
)
|
|
$
|
(2.69
|
)
|
|
$
|
(6.05
|
)
|
|
$
|
(1.96
|
)
|
(a)
|
For the three and six months ended June 30, 2018, common stock equivalents of less than
0.1 million
shares are excluded from the diluted calculation as a result of the net loss. For the three and six months ended June 30, 2017, common stock equivalents of less than
0.1 million
shares are excluded from the diluted calculation as a result of the net loss.
|
(a)
|
its pension plans and Enrichment Corp.’s pension plans are at least
90%
funded on a variable rate premium calculation in the current plan year;
|
(b)
|
its net income calculated in accordance with GAAP (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds
$7.5 million
;
|
(c)
|
its free cash flow (defined as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds
$35 million
;
|
(d)
|
the balance of cash and cash equivalents calculated in accordance with GAAP on the last day of the immediately preceding quarter would exceed
$150 million
after pro forma application of the dividend payment; and
|
(e)
|
dividends may be legally paid under Delaware law.
|
|
Preferred Stock,
Series B
|
|
Common Stock,
Class A
|
|
Common Stock,
Class B
|
|||
|
|
|
|
|
|
|||
Balance at December 31, 2016
|
—
|
|
|
7,563,600
|
|
|
1,436,400
|
|
Issuance of Preferred Stock
|
104,574
|
|
|
—
|
|
|
—
|
|
Issuance of Class A Common Stock
|
—
|
|
|
38,751
|
|
|
—
|
|
Conversion of Common Stock from Class B to Class A
|
—
|
|
|
28,018
|
|
|
(28,018
|
)
|
Balance at June 30, 2017
|
104,574
|
|
|
7,630,369
|
|
|
1,408,382
|
|
|
|
|
|
|
|
|||
Balance at December 31, 2017 and June 30, 2018
|
104,574
|
|
|
7,632,669
|
|
|
1,406,082
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
LEU Segment:
|
|
|
|
|
|
|
|
||||||||
Separative work units
|
$
|
32.9
|
|
|
$
|
37.9
|
|
|
$
|
50.6
|
|
|
$
|
38.7
|
|
Uranium
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
||||
|
32.9
|
|
|
37.9
|
|
|
54.2
|
|
|
38.7
|
|
||||
Contract Services Segment
|
6.5
|
|
|
6.1
|
|
|
20.9
|
|
|
12.5
|
|
||||
Revenue
|
$
|
39.4
|
|
|
$
|
44.0
|
|
|
$
|
75.1
|
|
|
$
|
51.2
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Gross Profit (Loss)
|
|
|
|
|
|
|
|
||||||||
LEU Segment
|
$
|
(10.0
|
)
|
|
$
|
(4.6
|
)
|
|
$
|
(23.5
|
)
|
|
$
|
(6.5
|
)
|
Contract Services Segment
|
(0.7
|
)
|
|
(0.1
|
)
|
|
7.5
|
|
|
(1.1
|
)
|
||||
Gross loss
|
$
|
(10.7
|
)
|
|
$
|
(4.7
|
)
|
|
$
|
(16.0
|
)
|
|
$
|
(7.6
|
)
|
•
|
sales of the SWU component of LEU,
|
•
|
sales of both the SWU and uranium components of LEU, and
|
•
|
sales of natural uranium.
|
•
|
Additional short-term purchases or sales of SWU and uranium;
|
•
|
Timing of customer orders, related deliveries, and purchases of LEU or components;
|
•
|
The outcome of legal proceedings and other contingencies;
|
•
|
Potential use of cash for strategic initiatives;
|
•
|
Actions taken by our customers, including actions that might affect our existing contracts, as a result of market and other conditions impacting our customers and the industry; and
|
•
|
Additional costs for decontamination and decommissioning of our facility in Ohio.
|
|
Three Months Ended
June 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
LEU Segment
|
|
|
|
|
|
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
SWU revenue
|
$
|
32.9
|
|
|
$
|
37.9
|
|
|
$
|
(5.0
|
)
|
|
(13
|
)%
|
Uranium revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
–
|
|
|||
Total
|
32.9
|
|
|
37.9
|
|
|
(5.0
|
)
|
|
(13
|
)%
|
|||
Cost of sales
|
42.9
|
|
|
42.5
|
|
|
(0.4
|
)
|
|
(1
|
)%
|
|||
Gross loss
|
$
|
(10.0
|
)
|
|
$
|
(4.6
|
)
|
|
$
|
(5.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Contract Services Segment
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
$
|
6.5
|
|
|
$
|
6.1
|
|
|
$
|
0.4
|
|
|
7
|
%
|
Cost of sales
|
7.2
|
|
|
6.2
|
|
|
(1.0
|
)
|
|
(16
|
)%
|
|||
Gross loss
|
$
|
(0.7
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
$
|
39.4
|
|
|
$
|
44.0
|
|
|
$
|
(4.6
|
)
|
|
(10
|
)%
|
Cost of sales
|
50.1
|
|
|
48.7
|
|
|
(1.4
|
)
|
|
(3
|
)%
|
|||
Gross loss
|
$
|
(10.7
|
)
|
|
$
|
(4.7
|
)
|
|
$
|
(6.0
|
)
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
LEU Segment
|
|
|
|
|
|
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
SWU revenue
|
$
|
50.6
|
|
|
$
|
38.7
|
|
|
$
|
11.9
|
|
|
31
|
%
|
Uranium revenue
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|
–
|
|
|||
Total
|
54.2
|
|
|
38.7
|
|
|
15.5
|
|
|
40
|
%
|
|||
Cost of sales
|
77.7
|
|
|
45.2
|
|
|
(32.5
|
)
|
|
(72
|
)%
|
|||
Gross loss
|
$
|
(23.5
|
)
|
|
$
|
(6.5
|
)
|
|
$
|
(17.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Contract Services Segment
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
$
|
20.9
|
|
|
$
|
12.5
|
|
|
$
|
8.4
|
|
|
67
|
%
|
Cost of sales
|
13.4
|
|
|
13.6
|
|
|
0.2
|
|
|
1
|
%
|
|||
Gross profit (loss)
|
$
|
7.5
|
|
|
$
|
(1.1
|
)
|
|
$
|
8.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
$
|
75.1
|
|
|
$
|
51.2
|
|
|
$
|
23.9
|
|
|
47
|
%
|
Cost of sales
|
91.1
|
|
|
58.8
|
|
|
(32.3
|
)
|
|
(55
|
)%
|
|||
Gross loss
|
$
|
(16.0
|
)
|
|
$
|
(7.6
|
)
|
|
$
|
(8.4
|
)
|
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
LEU Segment (GAAP)
|
|
|
|
||||
Gross loss
|
$
|
(23.5
|
)
|
|
$
|
(6.5
|
)
|
Gross margin
|
(43.4
|
)%
|
|
(16.8
|
)%
|
||
|
|
|
|
||||
Legacy costs included in cost of sales:
|
|
|
|
||||
Pension and postretirement health and life benefits
|
$
|
1.5
|
|
|
$
|
1.7
|
|
Disability obligations and other
|
0.3
|
|
|
(0.1
|
)
|
||
Legacy costs
|
$
|
1.8
|
|
|
$
|
1.6
|
|
|
|
|
|
||||
LEU Segment excluding legacy costs (non-GAAP)
|
|
|
|
||||
Gross loss excluding legacy costs
|
$
|
(21.7
|
)
|
|
$
|
(4.9
|
)
|
Gross margin excluding legacy costs
|
(40.0
|
)%
|
|
(12.7
|
)%
|
|
Three Months Ended
June 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Gross loss
|
$
|
(10.7
|
)
|
|
$
|
(4.7
|
)
|
|
$
|
(6.0
|
)
|
|
(128
|
)%
|
Advanced technology license and decommissioning costs
|
5.4
|
|
|
4.4
|
|
|
(1.0
|
)
|
|
(23
|
)%
|
|||
Selling, general and administrative
|
9.7
|
|
|
9.7
|
|
|
—
|
|
|
—
|
%
|
|||
Amortization of intangible assets
|
1.5
|
|
|
2.0
|
|
|
0.5
|
|
|
25
|
%
|
|||
Special charges for workforce reductions and advisory costs
|
0.3
|
|
|
2.3
|
|
|
2.0
|
|
|
87
|
%
|
|||
Gains on sales of assets
|
(0.2
|
)
|
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(71
|
)%
|
|||
Operating loss
|
(27.4
|
)
|
|
(22.4
|
)
|
|
(5.0
|
)
|
|
(22
|
)%
|
|||
Nonoperating components of net periodic benefit expense (income)
|
(1.7
|
)
|
|
(0.4
|
)
|
|
1.3
|
|
|
325
|
%
|
|||
Interest expense
|
1.0
|
|
|
0.7
|
|
|
(0.3
|
)
|
|
(43
|
)%
|
|||
Investment income
|
(0.6
|
)
|
|
(0.3
|
)
|
|
0.3
|
|
|
100
|
%
|
|||
Loss before income taxes
|
(26.1
|
)
|
|
(22.4
|
)
|
|
(3.7
|
)
|
|
(17
|
)%
|
|||
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
(26.1
|
)
|
|
(22.4
|
)
|
|
(3.7
|
)
|
|
(17
|
)%
|
|||
Preferred stock dividends - undeclared and cumulative
|
2.0
|
|
|
2.0
|
|
|
—
|
|
|
—
|
%
|
|||
Net loss allocable to common stockholders
|
$
|
(28.1
|
)
|
|
$
|
(24.4
|
)
|
|
$
|
(3.7
|
)
|
|
(15
|
)%
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Gross loss
|
$
|
(16.0
|
)
|
|
(7.6
|
)
|
|
$
|
(8.4
|
)
|
|
(111
|
)%
|
|
Advanced technology license and decommissioning costs
|
13.4
|
|
|
10.5
|
|
|
(2.9
|
)
|
|
(28
|
)%
|
|||
Selling, general and administrative
|
20.9
|
|
|
22.1
|
|
|
1.2
|
|
|
5
|
%
|
|||
Amortization of intangible assets
|
2.8
|
|
|
3.2
|
|
|
0.4
|
|
|
13
|
%
|
|||
Special charges for workforce reductions and advisory costs
|
0.9
|
|
|
4.7
|
|
|
3.8
|
|
|
81
|
%
|
|||
Gains on sales of assets
|
(0.3
|
)
|
|
(1.7
|
)
|
|
(1.4
|
)
|
|
(82
|
)%
|
|||
Operating loss
|
(53.7
|
)
|
|
(46.4
|
)
|
|
(7.3
|
)
|
|
(16
|
)%
|
|||
Gain on early extinguishment of debt
|
—
|
|
|
(33.6
|
)
|
|
(33.6
|
)
|
|
(100
|
)%
|
|||
Nonoperating components of net periodic benefit expense (income)
|
(3.3
|
)
|
|
(0.8
|
)
|
|
2.5
|
|
|
313
|
%
|
|||
Interest expense
|
2.0
|
|
|
3.6
|
|
|
1.6
|
|
|
44
|
%
|
|||
Investment income
|
(1.2
|
)
|
|
(0.6
|
)
|
|
0.6
|
|
|
100
|
%
|
|||
Loss before income taxes
|
(51.2
|
)
|
|
(15.0
|
)
|
|
(36.2
|
)
|
|
(241
|
)%
|
|||
Income tax benefit
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
(50
|
)%
|
|||
Net loss
|
(51.1
|
)
|
|
(14.8
|
)
|
|
(36.3
|
)
|
|
(245
|
)%
|
|||
Preferred stock dividends - undeclared and cumulative
|
4.0
|
|
|
3.0
|
|
|
(1.0
|
)
|
|
33
|
%
|
|||
Net loss allocable to common stockholders
|
$
|
(55.1
|
)
|
|
$
|
(17.8
|
)
|
|
$
|
(37.3
|
)
|
|
(210
|
)%
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash used in operating activities
|
$
|
(65.7
|
)
|
|
$
|
(78.0
|
)
|
Cash provided by investing activities
|
0.2
|
|
|
1.6
|
|
||
Cash used in financing activities
|
(3.0
|
)
|
|
(36.6
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(68.5
|
)
|
|
$
|
(113.0
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
140.1
|
|
|
$
|
208.8
|
|
Accounts receivable
|
27.9
|
|
|
60.2
|
|
||
Inventories, net
|
54.9
|
|
|
75.2
|
|
||
Other current assets and liabilities, net
|
(108.6
|
)
|
|
(180.7
|
)
|
||
Working capital
|
$
|
114.3
|
|
|
$
|
163.5
|
|
10.47
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
101
|
Unaudited condensed consolidated financial statements from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed in interactive data file (XBRL) format.
|
|
|
|
Centrus Energy Corp.
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 9, 2018
|
By:
|
/s/ Marian K. Davis
|
|
|
|
|
Marian K. Davis
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
||
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
E – ENRICHED PRODUCT CERTIFICATION
|
E-1
|
DETERMINATION OF RESPECTIVE AMOUNTS OF FEED MATERIAL AND SWU
|
F-1
|
1.1
|
“
AD Duties
” means the antidumping duties deriving from the implementation of the AD Order.
|
1.2
|
“
AD Order
” means the antidumping order on low enriched uranium (“
LEU
”) from France.
|
1.3
|
“
Affiliate
” of a Party means an entity that, through one or more intermediaries, controls, is controlled by, or is under common control with, such Party.
|
1.4
|
“
Assay
” means the total weight of
235
U per kilogram of Material divided by the total weight of all uranium isotopes per kilogram of Material, the quotient of which is multiplied by 100 and expressed as a weight percent.
|
1.5
|
“
Book Transfer
” or “
Book Transferred
” means the transfer of credits for a given quantity of Feed Material, Enriched Product or SWU (all as defined below) between accounts maintained by a Party or by another nuclear fuel processor (such as an Orano Cycle Facility).
|
1.6
|
“
Book Transfer Delivery
” means a delivery of Enriched Product by means of a Book Transfer pursuant to Section 4.1.
|
1.7
|
“
Business Day
” means a day that is not a Saturday, Sunday or Holiday (which is a day for which employees of Supplier or Customer are excused from work with pay pursuant to a holiday recognized by the national government of France or the United States, respectively.) Unless qualified by the term “
Business
,” references in this Agreement to “
day
” or “
days
” refer to a calendar day or days, respectively.
|
1.8
|
“
Calendar Year
”, “
CY
” or “
Year
” means a period of twelve (12) months from January 1 through December 31.
|
1.9
|
“
Client
” means (a) third party with whom Customer has an agreement to Deliver Enriched Product or (b) another third party who is designated by the third party in (a) to take Delivery;
|
1.10
|
“
Client Product Account
” means an account established by Supplier for the Client within the Orano Cycle Enrichment Facility accounting system to which the Enriched Product, or its Feed Material and SWU Components, can be Delivered by means of a Book Transfer Delivery.
|
1.11
|
“
Conforming Material
” means, as the context requires, (a) Enriched Product that meets *****; or (b) Feed Material that meets *****.
|
1.12
|
“
Converter
” means the natural uranium conversion facility selected by Customer in its Order where Feed Material will be Delivered. *****.
|
1.13
|
“
Customer Product Account”
means the account established by Supplier for Customer under this Agreement N° C18 012 CEN SW 00, to which the Enriched Product Delivered to Customer, or its Feed and SWU Components, can be Delivered by means of a Book Transfer Delivery.
|
1.14
|
“
Cylinder
” means a container (such as a “30B” cylinder) certified by the appropriate government agencies and used for transporting Uranium Hexafluoride. As the context requires, Cylinder also includes any overpack required for the transportation of such container or of any Material which it contains.
|
1.15
|
“
Deliver
” or “
Delivery
” shall mean, as the context requires, (a) in reference to Enriched Product, a Book Transfer Delivery or a Physical Delivery under Article 4; and (b) in reference to Feed Material, the Book Transfer of Feed Material into or out of an account under Article 5.
|
1.16
|
“
Delivery Year
” at a given point in time, shall mean a Year in which Customer has a binding purchase obligation under Section 3.1 of this Agreement, taking into account all options under Section 3.2 that, up to that time, Customer has exercised.
|
1.17
|
“
Effective Date
” has the meaning ascribed to that term on the first page of this Agreement.
|
1.18
|
“
Enriched Product
” means Uranium Hexafluoride with an Assay greater than 0.711.
|
1.19
|
“
Enrichment
” means the process, measured in Separative Work Units, by which the Assay of Feed Material is increased.
|
1.20
|
“
EP Delivery Date
” or “
Enriched Product Delivery Date
” means a date selected by Customer for Book Transfer Delivery or Physical Delivery of the Enriched Product ordered pursuant to Article 4. In the case of a Physical Delivery, if the Physical Delivery cannot be made on one date, the EP Delivery Date shall be *****.
|
1.21
|
“
Fabricator
” means, as the context requires, (a) one of the following nuclear fuel fabricator facilities - *****.
|
1.22
|
“
Feed Component
” means the amount of Feed Material (in KgU as UF
6
) required to produce Enriched Product with a given Assay, and Tails Material with a given Tails Assay, calculated as shown in Appendix F.
|
1.23
|
“
Feed Delivery Date
” has the meaning ascribed to that term in Article 5.
|
1.24
|
“
Feed Material
” means natural uranium in the form of UF
6
which has not been irradiated, enriched or depleted, with an approximate Assay of 0.711.
|
1.25
|
“
Material
” means, as the context requires, Feed Material, Tails Material and/or Enriched Product.
|
1.26
|
“
Notice
” shall have the meaning ascribed to that term in Article 18 of this Agreement.
|
1.27
|
“
Obligation Code
” means a code assigned by EURATOM or the United States, as the case may be, to indicate under which bilateral agreement the peaceful use obligations are applicable to Material.
|
1.28
|
“
Orano Cycle
” means the company formerly named AREVA NC, with registered number 305 207 169 RCS Nanterre.
|
1.29
|
“
Orano Cycle Conversion Facility
” means both of the natural uranium conversion plants operated by Supplier in Malvési and Tricastin, France.
|
1.30
|
“
Orano Cycle Enrichment Facility
” means the enrichment facility operated by Supplier or its Affiliate in Tricastin, France and commonly known as George Besse II.
|
1.31
|
“
Orano Cycle Facility
” means either of the Orano Cycle Enrichment Facility or a Orano Cycle Conversion Facility.
|
1.32
|
“
Orano Cycle Feed Account
” means an account established by Supplier in Customer’s name under that certain Agreement between United States Enrichment Corporation and Orano Cycle (formerly named AREVA NC), governing a United States Enrichment Corporation UF6 Holding Account at Orano Cycle, *****, or any successor agreement, including all amendments thereto and the change of name from AREVA NC to Orano Cycle.
|
1.33
|
“
Order
” shall have the meaning ascribed to that term in Section 3.3.
|
1.34
|
“
Origin
” means, in the case of Feed Material, or the Feed Component of Enriched Product, the country where the ore contained in a particular quantity of Feed Material was mined, or deemed to have been mined or, in the case of the SWU Component of Enriched Product, the country where the Feed Material in the Feed Component of such Enriched Product was enriched, or deemed to have been enriched. The Origin can be reflected in the U.S. Obligation Code applicable to the Material.
|
1.35
|
“
Payment Due Date
” shall have the meaning ascribed to that term in Section 6.4.
|
1.36
|
“
Physical Delivery
” means the Delivery of Enriched Product in Customer-supplied Cylinders, *****.
|
1.37
|
“
Physical Material Release
” means the availability of Enriched Product in Customer-supplied Cylinders for Physical Delivery to Customer or Client at the Orano Cycle Facility.
|
1.38
|
“
Replacement Value
” shall mean *****;
|
1.39
|
“
Separative Work Unit
” (“
SWU
”) means the measure of work required to produce Enriched Product through Enrichment, as calculated using the formula in Appendix F.
|
1.40
|
“
Spot Market Feed Value
” means the applicable quantity of Feed Material (in KgU) multiplied by *****.
|
1.41
|
“
Spot Market SWU Value
” means the applicable quantity of SWU multiplied by *****.
|
1.42
|
“
SWU Component
” means the amount of SWU required to enrich Feed Material to produce Enriched Product with a given Assay, and Tails Material with a given Tails Assay, calculated as shown in Appendix F.
|
1.43
|
“
Tails
” or “
Tails Material
” means the UF
6
residue, the Assay of which has been depleted in the process of Enrichment.
|
1.44
|
“
Uranium Hexafluoride
” or “
UF
6
” means a chemical compound of uranium and fluorine.
|
1.45
|
“
235
U
” or “
U
235
” means the fissionable uranium isotope with mass number 235.
|
1.46
|
“
Withdrawal Delivery Date
” means the date specified in a Withdrawal Notice for withdrawal of Enriched Product from the Customer Product Account by Book Transfer or Physical Delivery to Customer or its Client pursuant to Article 4.
|
1.47
|
“
Withdrawal Notice
” means a binding Notice of the Withdrawal Delivery Date, the amount and the means of withdrawal from the Customer Product Account pursuant to Article 4.
|
3.1
|
Commitments of the Parties
. Under this Agreement, Customer shall purchase from Supplier, and Supplier shall sell to Customer, the nominal quantities of SWU in Row 2 of the table below for Delivery beginning in Delivery Year 2023 through 2028, subject to (i) the flexibility in Row 4, which shall allow Customer to modify its purchase obligation for the Years listed in the table to fall between the minimum in Row 1 and the maximum in Row 3, (ii) the possible addition of the Years 2029 and 2030 to the Parties’ obligations under this
|
3.2
|
Options
.
|
3.2.1
|
Optional Years: 2029 and 2030
.
|
3.2.2
|
Advancement of Purchases and Deliveries
.
|
3.2.3
|
Postponement of Purchases and Deliveries
.
|
|
*****.
|
3.2.4
|
Section 3.2 Notices; Effect of Advancement or Postponement on Optional Years
.
|
3.3
|
Standard Notices
.
|
3.3.1
|
First Annual Non-Binding Notice
|
3.3.2
|
Second Annual Non-Binding Notice
.
|
3.3.3
|
Binding Delivery Notice
.
|
3.3.3.1
|
For each Delivery Year, binding Delivery Notices (“
Orders
”) for Deliveries of SWU in Enriched Product by Supplier and associated Feed Material by Customer, shall be issued by Customer at least: *****.
|
3.3.3.2
|
Each Order shall specify the information required by Appendix A:
|
i)
|
The EP Delivery Date and if applicable, the period that Customer will take Physical Delivery of the Enriched Product;
|
ii)
|
The quantity (in KgU) of Enriched Product to be Delivered by Supplier pursuant to the Order;
|
iii)
|
The Assay(s) of the Enriched Product to be Delivered by Supplier;
|
iv)
|
The quantity of SWU to be supplied in the Enriched Product pursuant to the Order;
|
v)
|
The quantity (in KgU of natural UF6) of Feed Material to be supplied by Customer pursuant to the Order;
|
vi)
|
The Tails Assay;
|
vii)
|
The Enriched Product Delivery location(s) applicable to the Order;
|
viii)
|
The method of Enriched Product Delivery (
i.e
., Physical Delivery or Book Transfer) pursuant to the Order;
|
ix)
|
The Feed Delivery location(s) for the Feed Material to be supplied by Customer pursuant to the Order, if then known; otherwise this information shall be provided in accordance with Section 3.3.3.6;
|
x)
|
Origin(s) of Feed Material to be supplied by Customer, if available; and
|
xi)
|
Confirmation from Customer that the Feed Material to be supplied by Customer pursuant to the Order will be of legal use in licensed commercial nuclear reactors in the United States.
|
3.3.3.3
|
The total quantity of SWU indicated in all Orders submitted for a Delivery Year shall not ***** and shall be within the applicable minimum and maximum quantities for that Delivery Year in the Table under Section 3.1.
|
3.3.3.4
|
In case, for an Order in which Customer requires Supplier to Deliver by Book Transfer Enriched Product with a Feed Component matching the same Origins as the Feed Material to be Delivered to Supplier by Customer for such Order, Customer shall notify Supplier of the Origin(s), not later than *****.
|
3.3.3.5
|
In case, for an Order, Customer requires Supplier to Deliver by Physical Delivery the Enriched Product with a Feed Component matching the same Origins as the delivered Feed Material, Customer shall notify Supplier of the Origin(s), not later than *****.
|
3.3.3.6
|
For all Orders (
i.e
., whether Delivery is by Book Transfer or by Physical Delivery), Customer shall notify Supplier of the Delivery location(s) for Feed Material for the Order not later than *****.
|
3.4
|
Assays
.
|
3.4.1
|
In its Order, Customer may select one or more Assays for Enriched Product in the range of *****.
|
3.4.2
|
In its Order, Customer shall select *****.
|
3.5
|
Planning Data
.
|
4.1
|
Book Transfer Delivery
.
|
4.1.1
|
In its Order, Customer may direct Supplier to make a Book Transfer Delivery of the Enriched Product to (a) the account of Customer or the account of a Client or other third party at a Fabricator, including *****; or (b) the Customer Product Account or; (c) subject to the terms of the agreement with Supplier that governs such account, the account of a Client or other third party on the books of Supplier.
|
4.1.1.1
|
*****, Supplier shall open the Customer Product Account within the accounting system of the Orano Cycle Enrichment Facility to be used for the Delivery of Enriched Product under this Agreement.
|
4.1.1.2
|
*****.
|
4.1.1.3
|
*****.
|
4.1.1.4
|
*****.
|
4.1.2
|
Where Customer has specified a Book Transfer Delivery in its Order, Supplier shall, subject to Delivery to, or purchase of Feed Material from, Supplier pursuant to Article 5, Deliver Enriched Product to Customer by means of a Book Transfer Delivery to the account, and at the location, specified by Customer in the applicable Order. Supplier shall give Customer a Notice of the completion of such Book Transfer Delivery immediately upon the completion of the Book Transfer.
|
4.1.3
|
*****.
|
4.2
|
Physical Delivery
.
|
4.2.1
|
A Physical Delivery of Enriched Product may occur under this Agreement pursuant to either (a) an Order in which Customer directs Supplier to make a Physical Delivery to Customer or a Client, or (b) a withdrawal from the Customer Product Account, in cases where Customer selected a Book Transfer Delivery to the Customer Product Account in its Order, and subsequently wants to withdraw the Enriched Product by Physical Delivery from the Customer Product Account. The applicable Delivery term for a Physical Delivery shall be *****.
|
4.2.2
|
In the case of an Order for Physical Delivery, Customer shall give Supplier the Order according to the lead time pursuant to Section 3.3.3.
|
4.2.3
|
In the case of a withdrawal by Physical Delivery from the Customer Product Account, Customer shall give Supplier its Withdrawal Notice not later than *****.
|
4.2.4
|
Any requests for sampling and witnessing in accordance with Appendix D shall be included in the Order or Withdrawal Notice, as applicable.
|
4.2.5
|
For each Assay, *****.
|
4.4.1
|
All Enriched Product Delivered under this Agreement shall be Conforming Material lawful and suitable for use in the fabrication of nuclear fuel for commercial nuclear reactors in Japan, the European Union, the United Kingdom or the United States.
|
4.4.2
|
For Enriched Product Delivered by Physical Delivery, the SWU Component of the Enriched Product shall be French Origin and, subject to Section 5.4, the Feed Component shall have the same Origin as the Feed Material supplied by Customer under Article 5.
|
4.4.3
|
The Customer acknowledges that the Enriched Product Physically Delivered under this Agreement is of French Origin, and will be considered as “
LEU from France
”, which could be subject to the AD Order on such Enriched Product if imported into the United States.
|
4.4.4.
|
*****.
|
4.4.5
|
*****.
|
4.4.6
|
For Deliveries by Book Transfer at U.S. Fabricators as per Section 4.1, Supplier shall Deliver ***** SWU in Enriched Product that will be suitable for use in the United States as fuel in a U.S. commercial nuclear power reactor without payment of any tariff stemming from the AD Order or an obligation to reexport the Enriched Product or fuel within a certain period of time due to the AD Order. In no event shall Supplier Deliver by Book Transfer in the United States LEU that is subject to the AD Order or any successor restriction on LEU from France.
|
4.5
|
Adjustment
.
|
4.6
|
Title and Risk of Loss
.
|
4.6.1
|
Title – Customer Product Account
|
4.6.2
|
Risk of Loss – Customer Product Account
|
4.6.3
|
Title and Risk of Loss - Book Transfer
|
4.6.4
|
Title and Risk of Loss – Physical Delivery
|
4.7.1
|
If for any reason other than (i) a delay excused under Article 9; or (ii) an act or omission of Customer, or a person acting on Customer’s behalf, Supplier fails to Deliver the Enriched Product required by this Agreement to Customer by the Enriched Product Delivery Date or Withdrawal Delivery Date, Supplier shall reimburse Customer for any reasonable penalty or fee assessed against Customer by its Client or by a fabricator, as a result of such delay. In addition, Customer may cancel the Delivery with respect to the Enriched Product that Supplier failed to Deliver and procure an equivalent amount of substitute Enriched Product from another source if the failure to Deliver continues for more than ***** (the “
Cure Period
”) after the Enriched Product Delivery Date or Withdrawal Delivery Date, as applicable. For these purposes, procuring substitute Enriched Product from another source may include obtaining it from a third party or using Customer’s own inventories as the source of substitute Enriched Product.
|
4.7.2
|
If, pursuant to Section 4.7.1, Customer cancels a Delivery and elects to replace the Enriched Product that Supplier failed to Deliver with substitute Enriched Product, the following remedies shall apply:
|
4.7.2.1
|
In the case of a Delivery pursuant to an Order, Supplier shall *****.
|
4.7.2.2
|
In the case of a Physical Delivery pursuant to a Withdrawal Notice, Supplier shall reimburse Customer for *****.
|
4.7.2.3
|
In all remedies under this Section 4.7.2, Customer shall use its commercially reasonable efforts to procure substitute Enriched Product on reasonable terms, conditions, and prices reasonably available to Customer, taking into account the market conditions prevailing at the time. Following cancellation of a Delivery pursuant to any of these remedies, Customer shall submit an invoice for *****.
|
4.7.3
|
Customer shall not have the right to cancel a Delivery if during the Cure Period, Supplier is able to procure, and Delivers to Customer, substitute Enriched Product that complies with the specification defined under this Agreement.
|
4.7.4
|
In addition to its reimbursement obligation under Sections 4.7.1 and 4.7.2, Supplier also shall reimburse Customer for *****.
|
4.7.5
|
If, pursuant to Section 4.7.1, Customer cancels part of or all of a Delivery for an Order and procures substitute Enriched Product from another source pursuant to Section 4.7.2, Customer’s purchase obligation shall be reduced by the SWU Component of the Enriched Product that Supplier failed to Deliver.
|
4.7.6
|
Reimbursement under this Section 4.7 shall be Customer’s exclusive remedy for Supplier’s failure to Deliver Enriched Product under this Agreement; provided however that such right shall not preclude Customer from exercising any other remedy under this Agreement.
|
5.1.1
|
Customer shall have the right to provide the Feed Material to meet its obligation under Section 5.1.4 by *****.
|
5.1.2
|
Customer shall also have the right to provide the Feed Material to meet its obligation under Section 5.1.4 *****.
|
5.1.3
|
*****.
|
5.1.4
|
Customer shall ensure that, no later than ***** the Feed Material required to produce the quantity of Enriched Product to be Delivered by Supplier to Customer (as determined using Appendix F using the Assay(s) ordered and the Tails Assay stipulated in the Order) is *****.
|
5.1.5
|
*****.
|
5.1.6
|
*****. Supplier shall comply with the instructions provided by Customer on or prior to the applicable Feed Delivery Date concerning the quantity of each Origin to allocate to the Enriched Product Delivery. If there is an insufficient quantity of Feed Material of the Origin(s) specified by Customer, Supplier shall notify Customer and Customer shall promptly designate other Origins to allocate.
|
5.3.1
|
If all the required Feed Material for the Delivery of Enriched Product has not been supplied to Supplier under Section 5.1 by the close of business on the Enriched Product Delivery Date, Supplier shall, effective on the Enriched Product Delivery Date, *****.
|
5.3.2
|
*****.
|
5.3.3
|
With respect to any portion of the Remaining Feed Shortfall that is satisfied by ***** (the “
Late Delivered Feed
”), Customer may withdraw from the Customer Product
|
5.3.4
|
*****.
|
5.3.5
|
The ***** penalties in Section 5.2 and this Section 5.3 shall not apply if Customer’s failure to Deliver Feed Material occurs due to reasons excused under Article 9, but in no event shall Supplier be obligated to Deliver Enriched Product until the Feed Material for such Enriched Product has been Delivered.
|
5.3.6
|
If only a portion of the required Feed Material for the Delivery of Enriched Product pursuant to the Order has been Delivered by the Feed Delivery Date, Sections 5.2 and 5.3 shall apply only to an amount of Enriched Product, the Feed Component of which equals the Feed Shortfall. All other Enriched Product (in other words, the Enriched Product for which adequate Feed Material has been Delivered) shall be Delivered, notwithstanding the Feed Shortfall.
|
5.4
|
Country of Origin
.
|
5.4.1
|
Customer shall supply Feed Material of any Origin, except *****, which is not subject to any restrictions,
i.e
. which is acceptable for use in commercial nuclear power reactors in the United States of America and the European Union without restriction or duty on the Feed Delivery Date.
|
5.4.2
|
Supplier shall supply Enriched Product with a Feed Component of any Origin, except *****, which is not subject to any restrictions,
i.e
. which is acceptable for use in commercial nuclear power reactors in the United States of America and the European Union without restriction or duty on the delivery date.
|
5.4.3
|
If Customer notifies Supplier of the Origin of the Feed Material later than the applicable deadline for such Notice in Section 3.3.3.4 or Section 3.3.3.5, as applicable, but prior to the Enriched Product Delivery Date, Supplier shall use its reasonable efforts to Deliver the Enriched Product with the same Origin(s) of Feed Material provided in Customer’s Notice. However, if Supplier is not in a position to do so, it shall use Feed Material of another Origin or Origins that meets the requirements of this Section 5.4 in order to avoid any delay in the Delivery of the Enriched Product. In such a case, Supplier shall not be liable to Customer regarding the Origin(s) of the Feed Component of the Enriched Product and shall notify Customer of the Origin(s) of the Feed Component of the Enriched Product it shall Deliver.
|
5.5.1
|
Customer shall hold title to all Feed Material Delivered ***** under Section 5.1.1. or ***** under Section 5.1.2, either in its own name or on behalf of its Client, and Supplier shall at least quarterly provide to Customer a Notice of the balance of Feed Material to which Customer holds title *****. Once Feed Material is allocated under
|
5.5.2
|
Supplier shall bear risk of loss of, and shall enjoy the exclusive and unrestricted right to use, Feed Material ***** under Section 5.1.1 or ***** under Section 5.1.2, and such Feed Material may be commingled and treated as fungible with other uranium inventories of Supplier. Supplier shall remain responsible for all Feed Material *****.
|
6.1.1.
|
The Customer shall pay Supplier *****.
|
6.1.1.1
|
*****.
|
6.1.1.2
|
*****.
|
6.1.1.3
|
*****.
|
6.1.1.4
|
*****.
|
6.1.1.5
|
*****.
|
6.3.1
|
*****.
|
6.3.2
|
*****.
|
6.3.3
|
*****.
|
6.3.4
|
*****.
|
6.3.5
|
Nothing herein shall require a Party to manage its inventories or modify its operations except as it deems appropriate in its sole discretion.
|
6.3.6
|
*****.
|
6.3.7
|
In the event of a change in tax law or regulation after the Effective Date of the Agreement which was not foreseen by a Party at such date, and which may have an economic impact that would materially increase the cost to a Party under this Agreement of the purchase or sale of SWU or the costs of Delivery of Feed Material, SWU or Enriched Product, such Party may give a Notice to the other Party, and ***** after receipt of such Notice, the Parties shall endeavor in good faith to reach an agreement on measures to mitigate such economic impact to the mutual satisfaction of the Parties.
|
6.4.1
|
*****, Supplier shall issue to Customer an invoice (a “
Delivery Invoice
”) for the SWU Component of the Enriched Product Delivered. For other prices, fees, charges or costs which Supplier is entitled to charge or collect from Customer under this Agreement (*****), Supplier shall issue an invoice (an “
Other Invoice
”) according to Supplier’s invoicing procedures.
A Delivery Invoice and an Other Invoice are referred to herein individually as an “
Invoice
” and all such Delivery Invoices and Other Invoices are referred to herein collectively as “
Invoices
”.
|
6.4.2
|
All invoiced amounts shall be paid in United States dollars (“USD” or “US$”) and Euros (“
EUR
”).
|
6.4.3
|
Customer shall pay each Invoice ***** in EUR and ***** in USD ***** by wire transfer of immediately available funds in accordance with Supplier’s invoice instructions not later than ***** the “
Payment Due Date
”).
|
6.4.4
|
*****.
|
6.4.5
|
*****.
|
6.4.6
|
*****.
|
6.4.7
|
If Customer fails to pay an invoice in full on, or prior to, the Payment Due Date, Customer shall pay Supplier interest *****.
|
6.4.8
|
*****.
|
6.4.9
|
Notwithstanding any other provision of this Agreement, Supplier’s failure to issue an invoice in accordance with this Section for a payment due to Supplier shall not be deemed to be a waiver by Supplier of its right to receive such payment, but the ***** payment period shall run from the date the invoice is received.
|
6.5.1
|
In the case of charges that can be billed by Customer under this Agreement (for example, under Section 4.7), an invoice shall be issued according to Customer’s invoicing procedures.
|
6.5.3
|
Supplier shall pay each Customer invoice by wire transfer to a U.S. bank of immediately available funds in accordance with Customer’s invoice instructions
(and without deduction for any amounts owed by Customer with respect to goods and services not covered by the invoice or
for any bank fees or any other charges
)
no later than the Payment Due Date (as defined in Section 6.4);
|
6.5.4
|
If Supplier fails to pay the invoice in full on, or prior to, the Payment Due Date, Supplier shall pay Customer interest *****.
|
6.5.5
|
*****.
|
6.5.6
|
Notwithstanding any other provision of this Agreement, Customer’s failure to issue an invoice in accordance with this Section shall not be deemed to be a waiver by Customer of its right to receive payment pursuant to this Agreement, but the ***** payment period shall run from the date the invoice is received.
|
8.1.1
|
This Agreement is a valid and binding obligation of Supplier, enforceable against Supplier in accordance with its terms.
|
8.1.2
|
Supplier has, or will have at the time required, all necessary licenses and governmental approvals required to engage in the transactions contemplated by this Agreement.
|
8.1.3
|
All Enriched Product Delivered by Supplier to Customer or a Client under this Agreement shall be Delivered free and clear of all liens, pledges, encumbrances, security interests or title claims created by Supplier, its agents or others acting on its behalf and Supplier shall indemnify, hold harmless and, at Customer’s option, defend Customer from any claim contrary to the representations in this Section 8.1.3.
|
8.1.4
|
Material credited to the Orano Cycle Feed Account, the Customer Product Account or any other account at a facility of Supplier or its Affiliate pursuant to a Book Transfer Delivery shall at all times be free and clear of any lien, pledge, encumbrance, security interest or other claim arising from or on account of Supplier or its Affiliates;
|
8.1.5
|
*****.
|
8.2.1
|
This Agreement is a valid and binding obligation of Customer, enforceable against it in accordance with its terms.
|
8.2.2
|
Customer has, or will have at the time required, all necessary licenses and governmental approvals required to engage in the transactions contemplated by this Agreement.
|
8.2.3
|
Material credited to the Orano Cycle Feed Account shall at all times be free and clear of any lien, pledge, encumbrance, security interest or other claim that could impair Supplier’s right to the exclusive use of such Material and shall be free and clear of any lien, pledge, encumbrance, security interest or other claim that could impair Supplier’s right to produce Enriched Product with such Material for Delivery to Customer; and Customer shall indemnify, hold harmless and, at Supplier’s option, defend Supplier from any claim contrary to the representations in this Section 8.2.3.
|
8.3.1
|
Supplier warrants to Customer that Enriched Product Delivered by Supplier to Customer pursuant to Article 4 shall be Conforming Material and shall also conform to the quantity and Assay ordered and to the Origin requirements in Article 4. Replacement by Supplier in accordance with the terms of this Agreement of Enriched Product that fails to meet this warranty and payment by Supplier of any costs provided for in Section 4.7 shall be Customer’s exclusive remedies for (i) any breach of this warranty by Supplier or (ii) Supplier’s failure to Deliver Enriched Product in accordance with the terms of this Agreement;
provided
, that, *****, replacement shall not be required in the event Customer procures substitute Enriched Product from another source pursuant to Section 4.7.
|
8.3.2
|
Supplier warrants to Customer that Supplier is authorized to use ***** by Supplier to Customer under Article 5.
|
8.3.3
|
Supplier warrants to Customer that Supplier shall not impair or diminish Customer’s right to title to, and ownership of, all of Customer’s Material whether or not processed and/or held for processing while in Supplier’s possession, care, custody or control, and shall not issue a document of title purporting to convey ownership of Customer’s Material to a third party. Supplier shall indemnify, hold harmless and, at Customer’s option, defend Customer from any claim, liability, cost or expense, including reasonable attorney’s fees incurred in defending itself against such claim, liability,
|
8.6
|
Transferability
. All Supplier warranties in this Agreement regarding Enriched Product shall be transferable to the third parties to whom Customer shall convey or transfer such Enriched Product (each a “
Transferee
”), provided that (i) Customer notifies Supplier of the identity of such Transferee in the Order given pursuant Section 3.3 or the Withdrawal Notice given pursuant to Article 4, or (ii) if Customer does not provide such identity in the Order or Withdrawal Notice, Customer provides the name of such third party or parties to Customer prior to Acceptance, provided that the Acceptance (as defined in Appendix D) occurs no later than ***** and identifies the specific Cylinders containing such Enriched Product. For the avoidance of doubt, the transferred warranties shall only apply to the Enriched Product Delivered by Supplier.
|
10.1
|
Responsibility and Indemnification
|
10.1.1
|
Regarding Physical Delivery of Material ***** and also regarding Physical Delivery by Supplier further to a Book Transfer Delivery, Supplier shall be responsible for, and shall hold harmless and fully indemnify Customer under the conditions and within the limit of the Paris Convention and of the provisions of Chapter VII of Title IX – Book V of the French Environmental Code applicable to third party nuclear liability in respect of, any and all risk of injury to third parties or damage to third party property arising
|
(a)
|
enters the boundary of the Fabricator facility when located in a country that is a contracting party to the Paris Convention, or
|
(b)
|
enters the territorial limits (including territorial waters) of the country of the Fabricator facility when such country is not a contracting party to the Paris Convention.
|
10.1.3
|
“Paris Convention” shall mean the Convention on Third Party Liability in the Field of Nuclear Energy signed in Paris on July 29, 1960.
|
10.1.5
|
The allocation of liability in this Section 10.1 is without prejudice to the liability of a Fabricator under the laws or treaties applicable to it, or to the liability of an insurer under any indemnifications or policy of insurance applicable at the Fabricator facility or during transportation to or from such facility, which laws, treaties, indemnifications and insurance in all cases shall be deemed primary over any indemnification provided by a Party under this Section 10.1.
|
11.1.1
|
Neither Party shall be liable to the other Party for any incidental, consequential, special, exemplary, penal, indirect or punitive damages of any nature arising out of or relating to the performance or breach of this Agreement including, but not limited to, replacement power costs, loss of revenue, loss of business opportunities, loss of anticipated profits or loss of use of, or damage to, plant or other property;
provided
,
however
, that expenses, penalties or other charges incurred by a Party that are expressly reimbursable under this Agreement by the other Party shall not be considered “damages” for purposes of this Section 11.1.1.
|
11.1.2
|
Either Party’s maximum liability for any claims arising out of or relating to the performance or breach of this Agreement (including, without limitation, claims under Section 4.7), whether based upon contract, tort (regardless of degree of fault or negligence), strict liability, warranty, or otherwise, shall in no event exceed an amount *****. However, this Section 11.1.2 shall not limit the liability of Supplier to Customer under Section 11.1.4 to pay the Replacement Value of Material for which Supplier bears the risk of loss or the liability for failure to return under this Agreement or for any failure of a Party to comply with its obligations under Article 10.
|
11.1.3
|
Subject to Section 11.1.6, either Party’s maximum aggregate liability for all claims arising out of or relating to the performance or breach of this Agreement, other than a failure to perform the obligation to purchase or sell SWU, or to Deliver Enriched Product, shall be limited to *****. This liability limitation also shall not limit the liability of Supplier for the cost of replacement (based on Replacement Value) of Feed Material, or Enriched Product pursuant to Section 11.1.4.
|
11.1.4
|
In the event of loss or damage to Customer’s Material for which Supplier bears the risk of loss, or in the event Supplier fails to return Material to Customer ***** under Section 4.7, Section 9.3 or Section 14.3 or Supplier breaches its warranty in Section 8.3.3, Customer shall have the right to procure replacement Material or seek compensation for the impaired value of Customer’s Material and Supplier shall pay up to the Replacement Value of Customer’s Material, as determined on the date of such loss, damage, failure to return or breach, to cover the reasonable costs of such replacement or compensation.
|
11.1.5
|
All claims that a Party (the “
Claiming Party
”) may have against the other Party, whether based upon contract, tort (regardless of degree of fault or negligence), strict liability, warranty, or otherwise, for any losses or damages arising out of, connected with, or resulting from the performance or breach of this Agreement shall be limited to specifically identified written claims submitted by the Claiming Party to the other
|
11.1.6
|
Nothing in this Section 11.1 (other than Section 11.1.1 in the case of item (ii) and (iii) hereof) shall be construed as limiting the liability of a Party (i) for any failure to comply with Article 10; (ii) to purchase or sell the quantities of SWU required to be purchased hereunder; (iii) to pay the Price per SWU for the SWU Component of Enriched Product Delivered hereunder or any cost or charge that is specifically payable by such Party under this Agreement, including the Replacement Value of Feed Material, or any indemnity provision hereof; or (iv) for willful misconduct or gross negligence.
|
12.1
|
Each Party shall (i) obtain (or cause its agents to obtain) all permits, licenses or approvals required for performance of its obligations under this Agreement, including any special nuclear material licenses and those required for the possession, storage and transportation of Material; and (ii) comply with all applicable treaties, conventions and similar international agreements to which the United States or France is a party.
|
12.2
|
The Delivery of Enriched Product is subject to the granting of an export license by the relevant French Authorities. This Agreement shall be subject to such reasonable actions as each Party may make in order to comply with any applicable law, regulation, ruling, or request of their respective authorities. In the event of occurrence of prohibition of export or
|
14.1.1
|
In addition to any other rights it may have and subject to applicable law, a Party shall have the right, at no cost to the either Party, to terminate or suspend this Agreement in whole or in part, by Notice to the other Party, in the event the other Party enters into any voluntary or involuntary receivership, bankruptcy or insolvency proceeding, other than a proceeding under Chapter 11 of the United States Bankruptcy Code;
provided
,
however
, that in the case of an involuntary proceeding, the right to terminate or suspend shall arise only if the proceeding has not been dismissed within *****. In addition, Customer’s obligations under this Agreement to take Delivery of Enriched Product shall be deemed suspended if Supplier’s right to Deliver Enriched Product expires or is suspended or terminated by any governmental authority having the power to take such action. The Parties shall promptly discuss the situation to clarify the extent and impact of the suspension of Customer’s obligations and to agree upon a date for resumption of Delivery, if applicable.
|
14.1.2
|
In addition to (and without limiting) any other rights it may have under this Agreement (including under Section 4.7, 5.3 or 9.3) and subject to applicable law, a Party (a “
Suspending/Terminating Party
”) shall have the right, at no cost to such Suspending/Terminating Party, to terminate or suspend this Agreement in whole or in part, by Notice to the other Party (a “
Breaching Party
”), in the event:
|
14.1.2.1
|
the Breaching Party fails to perform its material obligations under this Agreement other than a failure to perform attributable to a cause meeting the definition of Force Majeure in Section 9.1 (each, a “
Material Breach
”); and
|
14.1.2.2
|
the Terminating Party delivers Notice of such breach to the Breaching Party (the "
Material Breach Notice
"); and
|
14.1.2.3
|
the Breaching Party (A) fails to timely and fully complete any remedy for such Material Breach provided in this Agreement (
e.g
., Section 4.7), or (B) if no remedy is provided in this Agreement, does not cure the Material Breach ***** after it receives the Material Breach Notice;
provided
, such failure to complete the remedy or to cure the Material Breach is not attributable to a cause meeting the definition of Force Majeure in Section 9.1.
|
14.1.3
|
A Party that has delivered a Material Breach Notice shall have the right to suspend its obligations under this Agreement, but may not exercise such right until (i) it has notified the Breaching Party of its intention so to do (the "
Suspension Warning Notice
"); and (ii) the Breaching Party has failed to cure the Material Breach ***** after receiving such Suspension Warning Notice with respect to a Material Breach of this Agreement or such shorter Cure Period as may be provided in this Agreement (for example, in Section 4.7.1).
|
14.3.1
|
No later than ***** after the effective date of any termination or expiration of this Agreement, Supplier and Customer shall agree upon terms for the return of any Material remaining in the Orano Cycle Feed Account or the Customer Product Account. In case of termination of this Agreement for a reason attributable to a Party, that Party shall *****.
|
14.3.2
|
If, for any reason, Supplier is not willing to agree to terms for such a return, Customer shall have the replacement rights set forth in Section 11.1.4.
|
14.3.3
|
If, for any reason, Customer is not willing to agree to terms for such a return, Supplier shall send Customer a request to agree, with its best and final offer of terms. If
|
15.2.1
|
A Party’s consent shall not be required for an assignment by the other Party of this Agreement as collateral for financing of the other Party’s business, or for an assignment of the other Party’s right to receive any payment owed to the assigning Party hereunder, or any further assignment thereof,
provided
that the assignee receives no greater rights under this Agreement than the assignor and the other Party remains the primary obligor under the Agreement following the assignment subject to the assignee’s right to perform in the event of enforcement of its lien.
|
15.2.2
|
A Party’s consent shall not be required for an assignment (in whole or in part) by the other Party to its Affiliate, to an entity that succeeds to substantially all of the assets or business of the assigning Party or, in the case of an assignment by Customer, a trust, corporation, or other entity utilized by Customer for purposes of financing the acquisition, use and/or maintenance of Enriched Product or nuclear fuel;
provided
that (i) the assignor notifies the non-assigning Party in writing that this Agreement has been assigned; (ii) the assignee notifies the non-assigning Party in writing that it agrees to be bound by this Agreement; (iii) the assignee’s rights and obligations hereunder shall be subject to any defenses or claims of the non-assigning Party under this Agreement; (iv) the assignment does not reduce the amount of SWU sold, or Enriched Product Delivered, under this Agreement; and (v) the assigning Party shall not be released from its obligations under this Agreement.
|
15.2.3
|
Neither the disposition of a Party’s stock nor a transfer of ownership of such a Party (whether in whole or in part) by merger or otherwise shall be construed as an assignment or otherwise require consent of the other Party.
|
16.1.1
|
Except as provided in Section 16.1.3, Supplier and Customer shall treat this Agreement, its terms and conditions, and appendices, including all modifications, and all related communications as “
Restricted Proprietary Information
.”
|
16.1.2
|
Except as provided in Section 16.1.3 a Party shall not disclose any part of such Restricted Proprietary Information to any other person or entity other than officers, directors,
or employees of a Party, and accountants, bankers, and legal counsel acting on behalf of such Party (provided such accountants, bankers, and legal counsel have agreed in writing to maintain such Restricted Proprietary Information in confidence or are otherwise subject to an obligation of confidentiality that will provide at least the level of protection afforded by this Article 16), without the prior written consent of an authorized representative of the other Party (which consent shall not be unreasonably withheld), except as such disclosure may be required (i) by court order, subpoena, or other appropriate governmental authority or to meet legal reporting obligations to a government agency or a Party’s shareholders under, for example, the rules of the U.S. Securities and Exchange Commission; (ii) to fulfill obligations under this Agreement (including communications by either Party with Fabricators, transporters or others concerning matters necessary to effect a Delivery of Material or a payment required under this Agreement) or obligations under a Party’s agreements with financial institutions; or (iii) to enforce either Party’s rights hereunder. In all cases under this Section 16.1.2, the disclosing Party shall take reasonable precautions to protect the confidentiality of the disclosed Restricted Proprietary Information. Further, if disclosure of Restricted Proprietary Information is required under item (i) above, the disclosing Party shall promptly notify the other Party of the requirement and shall take such further measures as necessary to minimize or oppose the disclosure, if requested by the other Party.
|
16.1.3
|
Following execution of this Agreement, the Parties shall agree upon the terms that Customer may share on a confidential basis with a Client or its agents on a confidential basis to the extent Customer deems necessary to ensure performance of this Agreement or deliver and/or sell the Material provided by Supplier under this Agreement. Subject to further review of details of these provisions by each Party, it is the Parties’ intention that these terms shall include the Restricted Proprietary Information in Articles 1 and 4 and Appendices C and D, which is relevant to the Delivery of Enriched Product to such Client or the handling of such Delivery by its agents and not commercially sensitive.
|
17.1.1
|
This Article 17 shall provide the exclusive means of resolving any other dispute, claim, controversy or failure to agree arising out of, relating to, or connected with this Agreement or the breach, termination, or validity thereof (a “
Dispute
”).
|
17.1.2
|
Either Party may invoke the provisions of this Article by giving Notice thereof to the other Party with a detailed description of the matters involved in the Dispute. The Parties shall attempt to resolve such Dispute through good faith negotiations, including one or more meetings between senior executive representatives of the Parties, during the ***** following such Notice. The ***** for negotiation may be shortened or lengthened by mutual agreement. The failure to conduct such negotiations for any reason shall not bar the referral of the Dispute to arbitration pursuant to the remaining provisions of this Article.
|
17.2
|
Arbitration Rules
.
|
19.5.1
|
A Party may fulfill its obligations under this Agreement through one or more contractors. No such contractor and/or subcontractor is authorized to modify the terms of this Agreement, waive any requirement hereof, or settle any claim or dispute arising hereunder.
|
19.5.2
|
References in this Agreement to the liability of a Party for its negligence or intentional acts shall be deemed to include the negligence or intentional acts or omissions of the Party’s contractors, subcontractors, employees, or agents if, under applicable law, the Party would be vicariously liable for such acts or omissions.
|
4.
|
The quantity of SWU to be supplied in the Enriched Product
|
5.
|
The quantity (in KgU of natural UF6) of Feed Material to be supplied by Customer, as well as, if known, the Feed Delivery location(s) for such quantity and the Feed Material Origin(s)
|
Quantity
|
Delivery location(s) and Origin(s) (if known; otherwise provide under Section 3.3)
|
[fill in]
|
[fill in]
|
[fill in]
|
[fill in]
|
9.
|
Method of Enriched Product Delivery (
i.e
., Physical Delivery or Book Transfer) and, if a Book Transfer *****
|
10.
|
Confirmation from Customer that the Feed Material to be Delivered has an Origin or Origins that can lawfully be used in licensed commercial nuclear reactors in the United States
|
Delivery Year
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
The amount of SWU expected to be purchased in the Delivery Year
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
The anticipated Enriched Product Delivery location(s)
|
*****
|
*****
|
*****
|
*****
|
*****
|
*****
|
•
|
Intermediate calculation (i.e. V(Np), V(Nf) and V(Nw)) will be rounded to the eighth decimal place.
|
•
|
The amount of Enriched Product is expressed in kilograms of uranium, rounded to the nearest third decimal place (i.e. to the gram).
|
•
|
The amount of Feed Material to be supplied is expressed in kilograms of uranium, rounded to the nearest third decimal place (i.e. to the gram).
|
•
|
The amount of Feed material used in the formula to calculate the amount of SWU to be invoiced will be rounded to the eighth decimal place.
|
•
|
Amounts of uranium, either Feed Material or Enriched Product, are obtained by multiplying the measured quantities of corresponding UF6 material (expressed in Kilograms rounded up to the nearest first decimal place for the UF6 weighed in 30B containers and, in the case of UF6 weighed in 48Y containers, rounded up to the nearest integral number) by the measured ratio of uranium content. This ratio is expressed to the nearest fourth decimal place.
|
•
|
The Enriched Product Assay is expressed in weight fraction and rounded up to the nearest fifth decimal place.
|
•
|
The amounts of separative work, expressed in SWU, are rounded up to the nearest third decimal (i.e. to the 1/1,000 SWU).
|
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 that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
August 9, 2018
|
/s/ Daniel B. Poneman
|
|
Daniel B. Poneman
|
|
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 that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
August 9, 2018
|
/s/ Marian K. Davis
|
|
Marian K. Davis
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
August 9, 2018
|
/s/ Daniel B. Poneman
|
|
Daniel B. Poneman
|
|
President and Chief Executive Officer
|
August 9, 2018
|
/s/ Marian K. Davis
|
|
Marian K. Davis
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|