Cameco Announces 1999 Financial Results.Business Editors SASKATOON Saskatoon (săskət  n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. , SASKATCHEWAN--(BUSINESS WIRE)--Feb. 3, 2000CAMECO Cameco Corp. TSX: CCO NYSE: CCJ is the world's largest publicly traded uranium company, based in Saskatoon, Saskatchewan. It was formed in 1988 by the merger and privatization of two crown corporations: the federal owned Eldorado Mining and Refining Limited (known better CORPORATION (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CCO (Chief or Corporate Compliance Officer) The executive person in charge of compliance issues, regulatory requirements, internal controls and managing audits within an enterprise or organization. .) (NYSE NYSE See: New York Stock Exchange :CCJ See citizen journalism. ) today reports its 1999 financial results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . FINANCIAL RESULTS Cameco generated record cash from operations in 1999. After working capital changes, cash provided by operations was $249 million ($4.35 per share), up 5% compared to $237 million ($4.13 per share) in 1998. Before working capital changes, cash provided by operations was $228 million in 1999 compared to $222 million in 1998. In 1999, net earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares were $71 million ($1.24 per share) compared to $44 million ($0.76 per share) in 1998. &uot;We are pleased with our significant cash flow yet disappointed with the level of earnings which were achieved in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite very difficult uranium uranium (y rā`nēəm), radioactive metallic chemical element; symbol U; at. no. 92; at. wt. 238.0289; m.p. 1,132°C;; b.p. 3,818°C;; sp. gr. 19. and gold markets,&uot; said Bernard Ber·nard , Claude 1813-1878.French physiologist noted for his study of the digestive and nervous systems. Michel Michel named after Gaston Michel, a French surgeon (1875-1937). Michel clip metal skin sutures in various sizes from 8 to 16 mm long. Each clip is a 2 mm wide band of metal with a downturned sharp prong at each end. , Cameco's chair, president and chief executive officer. Earnings in 1999 were significantly impacted by two items; the gain on the sale of uranium property interests and the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of gold assets. The sale of uranium interests resulted in a net gain of $72 million, of which $59 million is recorded as deferred income tax recovery, and the remainder appears as a gain on the sale of property interests. The company reduced the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its gold assets in 1999 which resulted in a $43 million charge to earnings, net of a $6 million deferred tax recovery. About $40 million of this charge relates to the company's investment in Kumtor and $3 million has been taken against Cameco's investments in other gold companies. Excluding the gain on the sale of uranium property interests and the writedown of gold assets, 1999 net earnings would have been $42 million ($0.72 per share). This compares to $71 million ($1.24 per share) in 1998 after adjusting for that year's writedown of certain uranium properties and gold interests. Total revenue grew by 3% to a record $742 million in 1999 from $719 million in 1998. In 1999, nuclear products and services accounted for more than 85% of total revenue with the remainder coming from gold-related activities. In 1999, consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: earnings were negatively influenced by reduced operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from the gold business due to lower realized prices, decreased sales volumes and higher depreciation charges. In the nuclear business, weaker prices for uranium and conversion services were more than offset by increased sales volumes. Cameco also recorded higher charges for interest and preferred securities in the year but these increases were offset by lower costs for exploration and administration, which declined by 26% and 10% respectively compared to 1998. NUCLEAR BUSINESS In 1999, nuclear revenue increased to $634 million from $576 million last year due primarily to the sale of a record volume of U3O8 (uranium concentrates) up 14% from 1998. The influence of the greater volume was partially offset by an average realized price which was 3% lower as a result of the decline in the uranium spot price. In conversion services, sales volumes were up 11%, while average realized prices declined by 2%. Cost of products and services sold, including depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. , were marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. lower on a per unit basis but in total increased by 12% reflecting the higher uranium and conversion volumes. Unit costs for uranium sold were slightly lower in 1999 compared to 1998 due mainly to a decline in the cost of acquired material. The company continues to sell more uranium than it produces and, therefore, purchases additional quantities to meet its sales commitments. &uot;As we make the transition to our new uranium mine at McArthur McArthur may refer to: Places:
Cameco has more than 100 million pounds U3O8 and almost 50,000 tonnes of conversion services under contract for delivery over the next decade. GOLD BUSINESS Gold revenue declined by 25% to about $107 million compared to 1998 due to lower prices and reduced sales volume. The average realized gold price declined to $338 (US) per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. for 1999 compared to $380 (US) per ounce in 1998. Sales volume declined by 14% to about 205,000 ounces due to the planned decrease in Kumtor gold production and the closure of the Contact Lake operation after completion of mining in 1998. Depreciation expense rose as a result of a reduction in reserves in 1999. Kumtor's total cash cost per ounce was $179 (US), the same as in 1998, and is calculated in accordance with standards of The Gold Institute. Kumtor Gold Company's (KGC KGC Knights of the Golden Circle KGC Kids get Care KGC Kingscote, South Australia, Australia (Airport Code) KGC Known Good Cable ) hedge position at the end of 1999 was 1,133,900 ounces at an average expected price ranging from $305 (US) to $320 (US) per ounce. These positions were primarily held in the form of forward sales forward sales npl → ventas fpl a término contracts and covered the equivalent of almost two years' production. The unrealized mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gain on KGC's hedge position at the end of 1999 was $7 million (US) based on a market spot gold price of $290 (US) per ounce. The carrying value of Cameco's interest in KGC at December December: see month. 31, 1999 was $127 million (US). KGC should be able to meet its payment obligations to its senior lenders if gold prices average at least $220 (US) per ounce over the remaining life of the mine. Following scheduled debt repayments of $49 million (US) during 1999, KGC's outstanding senior indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. was $191 million (US), all of which is guaranteed by Cameco. INVESTING ACTIVITIES/FINANCIAL POSITION Cameco generated positive cash flow of $37 million from its investing activities in 1999 due to the sale of uranium property interests. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $239 million from the sale were largely offset by capital expenditures of $212 million related mainly to the development of McArthur River and Cigar Lake. This compares with $694 million invested in 1998, primarily for the acquisition of Uranerz, a 6.45% interest in Energy Resources of Australia Energy Resources of Australia Ltd (ASX: ERA) is a public company based in Australia. It is a subsidiary of the Rio Tinto Group which owns 68.4% of the company. The chairman is David Klingner and chief executive officer is Harry Kenyon-Slaney. and capital expenditures including $120 million for the development of McArthur River and Cigar Lake. Total debt has decreased by $242 million to $359 million at December 31, 1999. The company's ratio of total debt to capital was 16% at year end. Cameco used the proceeds from the sale of property interests to reduce long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. indebtedness. URANIUM MARKET The uranium market, like all commodity markets, has a history of volatility, moving not only with the standard forces of supply and demand, but also to whims of geopolitics. It has also evolved particularities of its own in response to the unique nature and use of this material. SUMMARY Long-term contract price indicators published in the industry fell by 10% to $10.00 (US) per pound U3O8 at the end of 1999 reflecting the low level of long-term contracting activity in 1999, particularly during the first three quarters of the year, and the aggressiveness of some suppliers. In 1999, the western world long-term market volume, contracted for delivery over multiple years, is estimated to total 50 million pounds U3O8 . This is the same amount contracted for in 1998, which was considered an extremely low level of activity reflecting inventory drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: by utilities and suggesting a return to higher, more normal levels in the near future. The 1999 spot market volume is estimated to total about 24 million pounds U3O8, more than double the 1998 level of 11 million pounds. &uot;While the volume picked up during 1999 compared to 1998, the aggressive marketing by inventory sellers in need of cash kept the uranium spot price under pressure for most of the year,&uot; said Michel. Even with the aggressive sellers, the uranium spot price ended 1999 at $9.60 (US) per pound U3O8 up 10% from $8.75 at the end of 1998. &uot;We expect to see continued volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in spot prices in 2000,&uot; said Michel. &uot;However, given that mine production continues to supply only one-half of consumption, we are convinced con·vince tr.v. con·vinced, con·vinc·ing, con·vinc·es 1. To bring by the use of argument or evidence to firm belief or a course of action. See Synonyms at persuade. 2. that the longer-term supply/demand fundamentals and outlook for price remain very positive.&uot; OUTLOOK FOR 2000 While selling uranium only on the long-term market, about 60% of Cameco's sales volume is affected by the spot price at the time of delivery. In 2000, a $1.00 (US) change in the uranium spot price would change revenue by about $17 million (Cdn), earnings by $7 million (Cdn) and cash flow by $13 million (Cdn). &uot;Uranium and gold prices continue to be depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. as we begin 2000. If prices remain at these levels, we anticipate a small drop in revenues for 2000. However, even with low commodity prices, we expect to generate strong cash flow - sufficient to fund our anticipated capital expenditures and dividends, pay down debt and continue to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares,&uot; said Michel. SHARE REPURCHASE Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. PROGRAM Cameco repurchased 535,000 shares in 1999 at an average price of $23.15. &uot;We believe that, considering the company's own longer-term outlook and its current share price, the purchase of our shares is simply a good way to invest a small portion of our funds on behalf of shareholders,&uot; said Michel. Cameco began its share repurchasing program in October October: see month. 1999. DIVIDEND ANNOUNCEMENT Cameco also announced today that the company's board of directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. its regular quarterly dividend of $0.125 per share payable April 14, 2000 to shareholders of record on March 31, 2000. PROFILE Cameco, with its head office in Saskatoon, Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. , is the world's largest uranium producer and is a significant producer of gold. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today. Cameco's shares trade on the Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing and New York stock exchanges New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements contained in this news release which are not historical facts are forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Such factors include among others: volatility and sensitivity to market prices for uranium and gold, competition, the impact of changes in foreign currency exchange rates, environmental risks, political risk arising from operating in certain developing countries, changes in government regulations, and policies including trade laws and policies, demand for nuclear power, replacement of production, receipt of permits and approvals from government authorities as well as other operating and development risks. If you would like to receive a 33-page fax containing the notes to the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge , please call Cameco's fax service at 1 (877) 556-1566 or contact the investor and corporate relations department at (306) 956-6400. It is also available at www.cameco.com, the company's website.
1999 HIGHLIGHTS
FINANCIAL 1999 1998 Change
($ millions except per share amounts)
Revenue $742 $719 3%
Earnings from operations $79 $104 -24%
Net earnings attributable to
common shares $71 $44 61%
Cash from operations $249 $237 5%
Earnings per share $1.24 $0.76 63%
Cash flow per share $4.35 $4.13 5%
Weighted average number of
paid common shares (millions) 57.4 57.3 0%
Total debt to capital ratio 0.16 0.24 -33%
PRODUCTION (Cameco Share)
Uranium concentrates
(million lbs U3O8) 16.8 27.5 -39%
Uranium conversion (tU) 11,231 11,169 1%
Gold (oz) 203,508 244,387 -17%
Cameco Corporation
CONSOLIDATED BALANCE SHEETS
As at December 31 1999 1998
(Thousands)
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Assets
Current assets
Cash $45,469 $36,466
Accounts receivable [note 3] 138,691 124,247
Inventories [note 4] 356,828 344,451
Supplies and prepaid expenses 47,695 51,467
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588,683 556,631
Property, plant and equipment [note 5] 2,135,843 1,989,011
Long-term receivables, investments
and other [note 6] 175,736 210,160
Inventories [note 4] 63,881 182,805
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Total assets $2,964,143 $2,938,607
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Liabilities and Shareholders' Equity
Current liabilities
Short-term debt [note 7] $ - $ 32,651
Accounts payable and accrued liabilities 105,873 116,335
Dividends payable 7,160 7,207
Current portion of long-term debt [note 8] 30,241 28,631
Current portion of other liabilities [note 10] 5,568 14,406
Current portion of deferred
income taxes [note 16] 32,549 34,123
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181,391 233,353
Long-term debt [note 8] 328,963 540,116
Provision for reclamation [note 9] 103,411 105,995
Other liabilities [note 10] 15,618 19,052
Deferred income taxes [note 16] 412,417 136,817
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1,041,800 1,035,333
Shareholders' equity
Preferred securities [note 11] 176,248 186,985
Share capital [note 12] 683,787 687,658
Contributed surplus [note 12] 490,771 496,745
Retained earnings 552,154 509,326
Cumulative translation account [note 13] 19,383 22,560
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1,922,343 1,903,274
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Total liabilities and shareholders' equity $2,964,143 $2,938,607
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Commitments and contingencies [notes 8, 9, 19, 25, 29]
See accompanying notes to consolidated financial statements.
Approved by the board of directors
Cameco Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
For the year ended December 31 1999 1998 1997
(Thousands)
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Revenue from
Products and services $741,592 $718,949 $642,945
Expenses
Products and services sold 428,904 400,632 316,108
Depreciation, depletion and
reclamation 136,863 126,669 122,676
Administration 35,720 39,516 27,213
Exploration 22,633 30,609 32,023
Research and development 2,331 2,671 1,893
Interest, net [note 14] 3,420 (1,609) (7,962)
Writedown of mineral
properties [note 5] 45,523 15,964 -
Gain on sale of property
interests [note 23] (13,129) - -
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662,265 614,452 491,951
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Earnings from operations [note 27] 79,327 104,497 150,994
Other expenses [note 15] 2,028 11,579 3,958
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Earnings before income taxes 77,299 92,918 147,036
Income tax expense
(recovery) [note 16] (2,738) 47,274 65,057
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Net earnings 80,037 45,644 81,979
Preferred securities charges,
net of tax [note 11] 8,835 1,980 -
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Net earnings attributable
to common shares [note 27] $71,202 $43,664 $81,979
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Net earnings per
common share [note 27] $1.24 $0.76 $1.51
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the year ended December 31 1999 1998 1997
(Thousands)
---------------------------------------------------------------------
Retained earnings at
beginning of year $509,326 $494,608 $440,206
Net earnings 80,037 45,644 81,979
Dividends on common shares (28,374) (28,946) (27,577)
Preferred securities charges,
net of tax [note 11] (8,835) (1,980) -
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Retained earnings at end of year $552,154 $509,326 $494,608
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See accompanying notes to consolidated financial statements.
Cameco Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31 1999 1998 1997
(Thousands)
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Operating activities
Net earnings $80,037 $45,644 $81,979
Items not requiring (providing) cash:
Depreciation, depletion
and reclamation 136,863 126,669 122,676
Provision for deferred taxes
(recovery) [note 16] (12,004) 38,148 58,847
Writedown of mineral
properties [note 5] 45,523 15,964 -
Gain on sale of property
interests [note 23] (13,129) - -
Deferred revenue recognized (12,793) (15,610) (8,384)
Other non-cash items 3,670 11,579 3,958
Other operating items [note 17] 21,245 14,430 (96,970)
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Cash provided by
operations [note 27] 249,412 236,824 162,106
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Investing activities
Additions to property,
plant and equipment (211,551) (158,623) (126,143)
Change in long-term receivables,
investments and other 5,058 10,524 (49,042)
Proceeds on sale of
property interests [note 23] 239,177 - -
Acquisition of net
business assets [note 24] - (548,128) (155,975)
Proceeds on sale of property,
plant and equipment 3,896 2,427 6,315
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Cash provided by (used in) investing 36,580 (693,800) (324,845)
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Financing activities
Increase in debt 98,289 407,906 150,412
Repayment of debt (324,184) (155,461) (63,699)
Restricted cash 3,825 (15,769) -
Issue of shares, net of issue costs 2,544 2,866 198,188
Shares repurchased (12,394) - -
Issue of preferred securities,
net of issue costs - 176,736 -
Preferred securities charges (16,361) (3,638) -
Dividends (28,708) (28,920) (27,043)
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Cash provided by (used in)
financing (276,989) 383,720 257,858
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Increase (decrease) in cash
during the year 9,003 (73,256) 95,119
Cash at beginning of year 36,466 109,722 14,603
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Cash at end of year $45,469 $36,466 $109,722
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Supplemental cash flow disclosure
Interest paid $32,968 $32,496 $29,945
Income taxes paid $14,599 $5,148 $6,425
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See accompanying notes to consolidated financial statements.
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