Cameco Revenue and Net Earnings Rise in Third Quarter.Business Editors SASKATOON Saskatoon (săskət  n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. , Saskatchewan--(BUSINESS WIRE)--Oct. 31, 2001
Cameco 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 (NYSE NYSE See: New York Stock Exchange :CCJ See citizen journalism. ) (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. .) today reported its financial results for the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. periods ended September September: see month. 30, 2001.
HIGHLIGHTS OF THE QUARTER
-- Revenue rises 23% on higher uranium sales
-- Earnings per share up significantly to $0.27
-- Bruce Power contributes $8 million in after-tax
earnings
-- Cameco joins the S&P/TSE 60 index
-- Half of the year's uranium deliveries expected in the
fourth quarter.
Financial Highlights
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3 months 3 months 9 months 9 months 9 months
to to to to %
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00 Change
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Revenue ($ millions) 170 138 379 444 -15
Earnings from
operations
($ millions) 13 -108 36 -62 -
Cash provided by
operations
($ millions) 14 24 54 140 -61
Net earnings
attributable to
common shares before
special items
($ millions) 15 10 28 30 -6
Net earnings
attributable to
common shares
($ millions) 15 -111 28 -91 -
Earnings per share
before special
items ($) 0.27 0.18 0.51 0.54 -6
Earnings per share
($) 0.27 -2.01 0.51 -1.62 -
Average uranium spot
price for the period
($US/lb U3O8) 9.11 7.81 8.54 8.56 -
Cameco's average
realized gold price
for the period
(US$/ounce) 280 328 285 320 -11
Average spot market
gold price for the
period (US$/ounce) 274 277 269 282 -5
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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: FINANCIAL RESULTS In comparing the results for 2001 to the previous year, the following discussion excludes 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 mineral properties taken in the third quarter of 2000. Third quarter. For the three months ended September 30, 2001, net earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares increased by $5 million to $15 million ($0.27 per share) compared to $10 million ($0.18 per share) during the same period last year. This increase was mainly due to the inclusion of Cameco's share of earnings from Bruce Power Bruce Power Limited Partnership is a Canadian corporation. It exists as a partnership between Cameco Corporation (31.6%), TransCanada Corporation (31.6%), BPC Generation Infrastructure Trust (31.6%), the Power Workers Union (4%) and The Society of Energy Professionals (1. which amounted to about $8 million after tax. The earnings from Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. were partially offset by lower earnings in the nuclear segment caused mainly by a reduction in the selling prices for mine concentrates and conversion services. Although spot prices are rising for both concentrates and conversion, there is a timing lag before they are reflected in realized prices. Earnings from the gold business were also lower than in the previous year due to a decline in the average realized selling price. Earnings from operations, which are calculated before earnings from Bruce Power, were $13 million in the third quarter of 2001 compared to $20 million in 2000. The aggregate gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. declined to 16% from 24% a year earlier. Year-to-date. For the first nine months of 2001, net earnings attributable to common shares were $28 million ($0.51 per share) compared to $30 million ($0.54 per share) during the same period last year. The decline was mainly attributable to lower sales volumes and realized prices in the nuclear segment compared to the first nine months of 2000. The reduction in earnings from the nuclear business was partially offset by the recognition of earnings from Bruce Power and improved results in the gold segment where a lower realized price was more than offset by reduced costs and higher sales. The effective tax rate for the nine-month period was 28% compared to 45% in the previous year due mainly to a greater proportion of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings being derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from gold operations outside of Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of where they are subject to a lower tax rate. Earnings from operations were $36 million in the first nine months of 2001 compared to $65 million in 2000. The aggregate gross profit margin declined to 20% from 23% in the previous year. Cash flow from operating activities of $54 million was 61% lower than in 2000 reflecting reduced nuclear sales volumes and an increase in working capital.
SEGMENTED FINANCIAL RESULTS
Nuclear Business
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3 months to 3 months to 9 months to 9 months to
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
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Revenue ($ millions) 141 104 293 368
Gross profit
($ millions) 20 24 49 86
Gross profit (%) 14 23 17 23
EBT(a) ($ millions) 29 22 53 78
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(a) Earnings before taxes
Third quarter. Revenue from the nuclear business increased by 36% to $141 million from $104 million in 2000 due mainly to a 72% increase in sales volume for 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. concentrates. As the timing of deliveries of U3O8 and
conversion services within a calendar year is at the discretion of
customers, Cameco's quarterly delivery patterns can vary
significantly. A 10% decrease in the average realized selling price for
uranium concentrates partially offset the effect of the higher volume.
Revenue from conversion services was about 7% lower than in the previous year due mainly to a decline in the realized price. The total 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. (DDR (Double Data Rate) Refers to an SDRAM memory chip that increases performance by doubling the effective data rate of the frontside bus. For more details, see SDRAM. DDR - Double Data Rate Random Access Memory ), was $122 million in the third quarter of 2001 compared to $80 million in 2000. This increase reflects the higher sales volume for uranium concentrates during the quarter. Earnings before taxes (EBT EBT See: Earnings Before Taxes ) from the nuclear business increased by $7 million or 32% to $29 million in the third quarter of 2001 while the profit margin for the quarter declined to 14% from 23% in 2000. Year-to-date. Revenue from the nuclear business declined by 20% to $293 million from $368 million in 2000 due primarily to uranium concentrates deliveries which were 16% lower than in the first nine months of 2000. Revenue was also impacted by a 7% decline in the average realized selling price for uranium concentrates which reflected a higher percentage of sales being delivered into market-related contracts and the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of lower prices on other deliveries. The decline in the realized price was mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. somewhat by more favourable exchange rates due to a weaker Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents . Nuclear revenue was also influenced by lower deliveries of conversion services which declined by 8% compared to the first nine months of 2000. During the first nine months of 2001, the total cost of products and services sold, including DDR, was $244 million compared to $282 million in 2000, reflecting the decreased sales volumes. The average unit costs for nuclear products were similar to the previous year. Expenditures for uranium exploration were $1 million lower than in 2000. EBT from the nuclear business was $53 million, a decrease of $25 million or 32% in the first nine months of 2001 and the profit margin declined to 17% from 23% in 2000.
Gold Business
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3 months to 3 months to 9 months to 9 months to
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
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Revenue ($ millions) 29 34 86 76
Gross profit
($ millions) 8 9 25 17
Gross profit (%) 26 28 30 23
EBT ($ millions) 6 7 21 11
Average selling price
($US/oz) 280 328 285 320
Unit cash cost ($US/oz) 148 155 139 165
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Third Quarter. Revenue from the gold business declined by $5 million or 15% compared to last year due primarily to a 15% decrease in selling price. Cameco's realized price for gold has declined from $328 (US) in the third quarter of 2000 to $280 (US) per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. this past quarter due to less favourable hedge positions and lower spot market prices. Gold production at Kumtor was 6% greater than in the third quarter of 2000 due to a reduction of in-circuit inventory. The ore grade Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly , recovery rate and throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. were all similar to the previous year. Kumtor's cash cost per ounce was $148 (US) compared to $155 (US) in 2000. 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 September was 1,271,000 ounces, one-third being Cameco's share. It is expected that these hedges will yield average prices in the range of $297 (US) to $302 (US) per ounce. There was no significant mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. difference on Cameco's share of the hedge position at September 30, 2001. Considering this hedge position, the sensitivity of Cameco's 2001 earnings and cash flow to changes in the gold price is not material. Year-to-Date. Revenue from the gold business rose by $10 million or 13% compared to the same period last year, reflecting a 22% increase in sales volume which more than offset a decline in the average realized selling price. Cameco's realized price for gold has declined from $320 (US) in the first nine months of 2000 to $285 (US) per ounce this year. Gold production at Kumtor was 23% greater than in the first nine months of 2000 due mainly to higher ore grade which averaged 5.17 grams per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. compared to 4.49 grams, an increase of 15%. An improved recovery rate, which rose to 84% from 81%, also contributed to the increased production. Kumtor's cash cost per ounce was $139 (US) in the first nine months of 2001 compared to $165 (US) in 2000. The gross profit margin for gold was 29% in the first nine months compared to 22% in 2000. The lower realized price has been more than offset by a reduced unit cost. Corporate Expenses During the first nine months of 2001, costs for administration increased by $3 million compared to the previous year. Interest expense rose by $1 million reflecting less interest being capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. . Bruce Power On May 12, 2001, the Bruce Power Limited Partnership (Bruce Power) finalized See finalization. its 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. lease with Ontario Power Generation Ontario Power Generation (OPG) is a public company whose shares are wholly owned by the Government of Ontario. It is responsible for approximately 70% of the electricity generation in the province of Ontario, Canada [1]. to operate the Bruce nuclear power plants. The lease arrangement is for a period of 18 years with an option to extend for an additional 25 years. Cameco also finalized agreements with British Energy British Energy plc (LSE: BGY) is the UK's largest electricity generator by volume and a constituent company of FTSE 100. It is primarily an operator of formerly state-owned nuclear power stations. related to our 15% interest in Bruce Power and has become the exclusive supplier of fuel to Bruce Power. The Bruce nuclear facility consists of four operating Bruce B reactors and four Bruce A reactors which are currently not in service. Two of the Bruce A reactors are slated for restart To resume computer operation after a planned or unplanned termination. See boot, warm boot and checkpoint/restart. by the summer of 2003, subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals. The net capacity of the operating reactors is currently 3,160 megawatts (MW). With the anticipated restart of the two Bruce A reactors, the total Bruce operating capacity is expected to increase to 4,660 MW, representing 20% of Ontario's electricity needs. Cameco has committed to invest up to $100 million in Bruce Power, of which an initial payment of $57 million was made in May 2001. The balance of the committed amount may be required depending on the net result of operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. less capital expenditures, largely related to the Bruce A restart program. In addition, Cameco provided $43 million for the purchase of fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: fuel inventory, of which $19 million was outstanding at September 30, 2001. The operating highlights for the Bruce Power partnership (100%) for the period from May 12 to September 30, 2001 are as follows:
to Sept 30/01
Output (terawatt hours) 10.2
Capacity factor (%) 94.5
($ million)
Revenue $395
Operating costs 279
----
Profit before interest & taxes 116
Interest 26
----
Profit before taxes $ 90
----
----
Cameco's share of earnings before taxes for this period is $13 million and has been fully reported in the third quarter. Note: Capacity factor represents the amount of electricity actually produced as a percentage of the amount of electricity the plants are capable of producing for sale for a given period. CASH FLOW During the first nine months of 2001, Cameco generated cash from operations of $54 million ($0.97 per share) compared to $140 million ($2.51 per share) in 2000. This decrease was largely attributable to lower revenues and an increase in working capital, mainly uranium inventory. During the first nine months of 2001, the quantity of uranium produced and purchased exceeded sales by a considerable margin. In the first nine months of 2000, operating cash flow was bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by a reduction of working capital. Excluding the changes in other operating items, cash from operations was $101 million compared to $131 million in 2000. This decline was primarily due to the lower deliveries and prices in the nuclear business to date in 2001. Cash used in investing activities increased to $105 million from $81 million due primarily to the investment in Bruce Power which totaled $76 million at September 30, 2001 including outstanding amounts for fabricated fuel. Expenditures for property, plant and equipment were $41 million lower than in 2000 due mainly to the completion of construction at McArthur McArthur may refer to: Places:
The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of principal on the subordinated loan In the field of finance, a subordinated loan is a type of loan which ranks after other debts should a company fall into receivership or be closed. It is also known as subordinated debt, or as junior debt. to KGC. BALANCE SHEET At September 30, 2001, total inventories had increased by 5% to $382 million compared to $365 million at December December: see month. 31, 2000. This increase reflects the production and purchases in excess of sales in the nuclear business during the first nine months. Total long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. increased to $380 million from $294 million at December 31, 2001. At September 30, 2001, Cameco's net debt to capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. ratio was 16%, up from 13% at the end of 2000. Cash flow to date in 2001 has been limited by the year's deliveries being heavily skewed skewed curve of a usually unimodal distribution with one tail drawn out more than the other and the median will lie above or below the mean. skewed Epidemiology adjective Referring to an asymmetrical distribution of a population or of data to the last quarter of the year. TRENDS AND UNCERTAINTIES The most significant factors impacting the financial performance of Cameco are:
-- the market price for U3O8,
-- sales volumes for nuclear products,
-- foreign exchange rates between the Canadian and US
dollars,
-- the market price for gold,
-- the unit costs of production, and
-- the quantity and profitability of electricity
generated by Bruce Power.
Uranium Spot Market The spot price (restricted) on September 30, 2001 was $9.50 (US) per pound U3O8, compared to $8.75 (US) at June June: see month. 30, 2001, an increase of about 8.5%. The spot price was $7.40 (US) at the end of the third quarter of 2000. Spot demand was steady over the quarter. Spot supply, while sufficient to meet demand, has not been aggressively priced, and consequently the spot price continued its rise through the quarter. The spot market volume in the nine months ended September 30, 2001 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 million pounds U3O8, compared to 9 million pounds for the same period in 2000. This compares to an average of 14 million pounds for the same period over the past five years. The spot market price for uranium conversion services increased by a further 7% during the quarter to $5.25 (US) per kgU from $4.90 (US) at June 30, 2001. This compares to $2.50 (US) per kgU at the end of the third quarter of 2000. Uranium Long-Term Market The long-term market has been active in 2001 with long-term contracting reported by one market analyst to have already exceeded 50 million pounds U3O8. For the year, long-term contracting is still expected to be about 75 million pounds U3O8, compared to 65 million pounds U3O8 in 2000. The long-term price indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. , published by TradeTech TradeTech is a portfolio of conferences, exhibitions and summits focussed on providing high quality content to the entire trading community. TradeTech’s conferences combine high quality content with unrivalled networking. , is at $10.50 (US) per pound U3O8 at September 30, 2001, up from the $10.00 (US) at the end of last quarter. The price at the end of the third quarter last year was $9.25 (US). International Expansion of Nuclear Generating Capacity The South Korean Korean, language of uncertain ancestry. It is thought by some scholars to be akin to Japanese, by others to be a member of the Altaic subfamily of the Ural-Altaic family of languages (see Uralic and Altaic languages), and by still others to be unrelated to any known government has reaffirmed the country's plan to construct an additional 10 nuclear power plants by 2011. Nuclear power currently generates about 40% of electricity in South Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. and construction of these plants will maintain this share. South Korea is expecting base load electricity demand to grow at a rate of 2% per year through 2015, requiring the installation, on average, of 1,500 MW to be added each year and one-third of that is expected to be nuclear. Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). has announced that electricity generated by nuclear power in Russia In 2005, a nuclear energy supply in Russia counted 137 billion kWh, which is 16% of total output. The total installed capacity of nuclear reactors is 21,244MW. The Russian energy strategy of 2003 sets policy priority to reduce the use of natural gas for electricity and to double will increase from the current 15% to 20% in the next five to seven years. Russia plans to build five new 1,000 MW reactors in that time frame. Previously, Russia had announced plans for the life extension of the first generation reactors and capacity increases at several existing plants. Ukraine Ukraine (y `krān, ykrān`), Ukr. Ukraina, republic (2005 est. pop. has also announced plans for the life
extension of its nuclear power plants by 10 to 15 years.
Fossil Fuels fossil fuel: see energy, sources of; fuel. fossil fuel Any of a class of materials of biologic origin occurring within the Earth's crust that can be used as a source of energy. Fossil fuels include coal, petroleum, and natural gas. Come With Heavy External Costs The European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community has reported, after a 10-year research project, that if environmental and public health costs were included in the price of power generation, nuclear power costs compare very favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. to those of other power generation methods. The cost of producing electricity from coal would increase by 100% and that of natural gas increase by 30%, if these costs were included. Gold Market Review During the third quarter of 2001, the average spot market gold price was $274 (US) per ounce compared to $268 (US) in the second quarter. The increase in prices was largely due to the events of September 11th and gold ended the quarter at $293 (US). Central Asian Gold and Uranium Operations The Kumtor mine is located in Kyrgyzstan Kyrgyzstan (kĭrgēstän`), officially Kyrgyz Republic, republic (2005 est. pop. 5,146,000), c.76,600 sq mi (198,400 sq km), central Asia. and the Inkai project is in Kazakhstan Kazakhstan or Kazakstan (kä'zäkstän`), officially Republic of Kazakhstan, republic (2005 est. pop. 15,186,000), c.1,050,000 sq mi (2,719,500 sq km), central Asia. . These countries share borders with Uzbekistan Uzbekistan (  zbĕkĭstän`), Uzbek Ozbekiston, officially Republic of Uzbekistan, republic (2005 est. pop. 26,851,000), 173,552 sq mi (449,500 sq km), central Asia. and
Tajikistan Tajikistan (təjĭkĭstän`), officially Republic of Tajikistan, republic (2005 est. pop. 7,164,000), 55,251 sq mi (143,100 sq km). which in turn share borders with northern Afghanistan Afghanistan (ăfgăn`ĭstăn', ăfgän'ĭstän`), officially Islamic Republic of Afghanistan, republic (2005 est. pop. 29,929,000), 249,999 sq mi (647,497 sq km), S central Asia. . The
military operations This is a list of missions, operations, and projects. Missions in support of other missions are not listed independently. World War I''See also List of military engagements of World War I
adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound shipments continue on schedule. The company has granted expatriate Expatriate An employee who is a U.S. citizen living and working in a foreign country. personnel who are concerned about their safety the option of leaving. No employees have elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to do so. The company continues to monitor the situation closely and is in contact 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. and American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of embassies in the region. Foreign Exchange Most of the company's revenues are in US dollars. At September 30, 2001 Cameco had sold forward $682 million (US) at an average spot exchange rate of $1.5035. During the quarter, the Canadian dollar weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. against the US
dollar from $1.5177 at the end of the second quarter to $1.5790 as of
September 30, 2001. As a result, Cameco's mark-to-market position
was a loss of $26 million.
Other Corporate Developments On October October: see month. 9, 2001, Standard & Poor's announced that Cameco was being added to the S&P/TSE 60, effective October 12th. This index is a market-weighted benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. of the 60 largest Canadian public companies and is co-managed by Standard & Poor's and the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSE). The effects of the announcement were immediate as index fund managers who track the "60" placed their orders for Cameco shares. OUTLOOK FOR 2001 Uranium Production Cameco expects its share of production for the year to total approximately 18.5 million pounds. At McArthur River, production is expected to be approximately at the 18 million pound design capacity (Cameco share 12.5 million pounds). Nuclear Revenue and Margins Nuclear revenue for the year is expected to be modestly lower than the level achieved in 2000 reflecting lower prices. Nuclear sales volumes and the percentage of contracts with market-related pricing are expected to be similar to last year. The effective tax rate for the year is expected to be lower than the 48% rate recorded in 2000 but above the 28% rate for the first nine months of 2001. For the fourth quarter, revenue in the nuclear business is expected to nearly double in comparison to the third quarter reflecting both higher volume and price for uranium concentrates. Approximately 50% of the year's uranium concentrate deliveries and revenue is expected in the fourth quarter compared to about 36% in the same period last year. Delivery risks previously noted regarding two Californian utility customers have been resolved to Cameco's satisfaction. For the last quarter of the year, a $1.00 (US) change in the U3O8 spot price from current levels would change revenue by about $4 million (Cdn), net earnings by about $2 million (Cdn) and cash flow by about $2 million (Cdn). Consolidated earnings for the fourth quarter are expected to be higher than the third quarter due primarily to increased deliveries in the nuclear business. Corporate expenses and interest costs are likely to be consistent with the first three quarters while the effective tax rate is projected to increase due to a proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. greater contribution to pre-tax earnings from the nuclear segment. Gold Business Fourth quarter revenue from the gold business is expected to be moderately higher than in the third quarter due to the realization of more favourable hedge prices. The unit cash cost is expected to be similar to the third quarter. The impact of higher ore grades mined to date and better recovery rates in 2001 are expected to continue and result in annual production of approximately 750,000 ounces (Cameco's share 250,000 ounces), up 12% from last year. Production in 2002 is expected to be approximately 650,000 ounces due to lower grade ore. Bruce Power Cameco's investment in Bruce Power is unlikely to contribute to fourth quarter earnings due to the planned outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. at Bruce B unit five which began on September 22, 2001 and will last into the first quarter of 2002. The scope and duration of this outage was identified during the due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. process and incorporated into our investment analysis. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , financial results in the near term are projected to be modest as a number of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs will be incurred as business improvements are implemented. The investment in Bruce Power is expected to contribute significantly to Cameco's earnings and cash flows beginning in 2003. Capital Expenditures In 2001, capital expenditures are projected to be about $120 million including the investment in Bruce Power. Within this total, expenditures to maintain existing capacity at all operations are expected to be about $20 million. 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. The company's competitive position is based on its large high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. reserves and low cost operations. Cameco is also one of the world's largest commercial providers of uranium conversion services. 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 has an interest in the Bruce nuclear generating plant in Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and also produces gold. The company'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. Factors that could cause such differences, without limiting the generality gen·er·al·i·ty n. pl. gen·er·al·i·ties 1. The state or quality of being general. 2. An observation or principle having general application; a generalization. 3. of the following, include: 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 and sensitivity to market prices for uranium, electricity in Ontario and gold; competition; the impact of change in foreign currency exchange rates and interest rates; imprecision im·pre·cise adj. Not precise. im  pre·cisely adv. in reserve estimates; environmental and safety risks
including increased regulatory burdens; unexpected geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. or hydrological hy·drol·o·gy n. The scientific study of the properties, distribution, and effects of water on the earth's surface, in the soil and underlying rocks, and in the atmosphere. conditions; political risks arising from operating in certain developing countries; a possible deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in political support for nuclear energy; changes in government regulations and policies, including trade laws and policies; demand for nuclear power; replacement of production and failure to obtain necessary permits and approvals from government authorities; legislative and regulatory initiatives regarding deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. , regulation or restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the electric utility industry in Ontario; Ontario electricity rate regulations; weather and other natural phenomena; ability to maintain and further improve positive labour relations labour relations (US), labor relations npl → relations fpl dans l'entreprise labour relations labour npl → Beziehungen pl ; operating performance of the facilities; success of planned development projects; and other development and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. . CONFERENCE CALL Cameco is hosting a conference call on Thursday Thursday: see week. , November November: see month. 1, 2001 from 11:00 a.m. to 12:00 noon Eastern time (10:00 a.m. to 11:00 a.m. Saskatoon time) to discuss the third quarter results. To join the call, please dial (416) 641-6680 or (800) 379-5831. A recorded version of the call will be available shortly after the call on the company's web site www.cameco.com or by telephone replay until midnight, Thursday, November 15 by calling (416) 626-4100 and entering the code 19816100.
INVESTOR INFORMATION
Common Shares Investor Inquiries Transfer Agent
CCO Cameco Corporation CIBC Mellon Trust Company
2121 - 11th Street West 320 Bay Street, P.O.Box 1
The Toronto Stock Saskatoon, Saskatchewan Toronto, Ontario
Exchange S7M 1J3 M5H 4A6
CCJ Phone: (306) 956-6400 Phone: (800) 387-0825
Fax: (306) 956-6318 (North America)
New York Stock Web: www.cameco.com Phone: (416) 643-5500
Exchange (outside North America)
Preferred Securities
CCJPR
New York Stock Exchange
Cameco Corporation
Highlights
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
---------------------------------------------------------------------
Financial (in millions)
Revenue $170 $138 $379 $444
Earnings from operations 13 (108) 36 (62)
Net earnings attributable
to common shares 15 (111) 28 (91)
Cash provided by operations 14 24 54 140
Working capital (end of period) 489 406
Net debt to capitalization 16% 16%
Per common share
Net earnings $0.27 ($2.01) $0.51 ($1.62)
Cash provided by
operations 0.25 0.44 0.97 2.51
Dividend 0.125 0.125 0.375 0.375
Weighted average number of
paid common shares
outstanding
(in thousands) 55,447 54,949 55,374 55,797
Average uranium spot price
for the period (US$/lb) $9.11 $7.81 $8.54 $8.56
Note: Currency amounts are expressed in Canadian dollars unless
stated otherwise.
---------------------------------------------------------------------
Cameco Production
Cameco's Three Months Ended Nine Months Ended
Share Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
---------------------------------------------------------------------
Uranium production (in thousands lbs U3O8)
McArthur River 69.8% 3,054 2,040 9,055 3,882
Rabbit Lake 100.0% - 1,348 4,563 5,268
Key Lake 83.3% 207 4 493 829
Crow Butte 100.0% 212 198 626 589
Highland 100.0% 171 218 527 653
-------------------------------------------------------------------
Total 3,644 3,808 15,264 11,221
-------------------------------------------------------------------
Uranium conversion
(tU) 100.0% 756 455 7,294 5,934
Gold (troy ounces)
Kumtor 33.3% 64,429 60,515 191,708 156,494
-------------------------------------------------------------------
Total 64,429 60,515 191,708 156,494
-------------------------------------------------------------------
Cameco Corporation
Consolidated Balance Sheets
(Unaudited)
(In Thousands)
As at
---------------------------------------
Sept 30/01 December 31/01 Sept 30/00
---------------------------------------------------------------------
Assets
Current assets
Cash $30,355 $33,131 $18,013
Accounts receivable (note 7) 147,739 144,853 70,397
Inventories 382,440 347,141 374,298
Supplies and prepaid expenses 47,680 45,992 53,801
Current portion of long-term
receivables 14,137 - 34,417
---------------------------------------------------------------------
622,351 571,117 550,926
Property, plant and
equipment 2,006,101 2,044,820 2,047,113
Long-term receivables,
investments and other
(note 7) 247,604 168,460 169,734
Inventories - 17,584 27,203
---------------------------------------------------------------------
2,253,705 2,230,864 2,244,050
---------------------------------------------------------------------
Total assets $2,876,056 $2,801,981 $2,794,976
---------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued
liabilities $67,935 $101,874 $77,364
Dividends payable 6,957 6,868 6,867
Current portion of long-term
debt 25,966 24,670 31,353
Current portion of other
liabilities 2,338 2,830 1,304
Deferred income taxes 30,108 22,632 28,461
---------------------------------------------------------------------
133,304 158,874 145,349
Long-term debt 354,118 269,677 323,964
Provision for reclamation 137,628 131,966 108,654
Other liabilities 11,456 15,611 9,908
Deferred income taxes 439,379 445,324 429,177
---------------------------------------------------------------------
1,075,885 1,021,452 1,017,052
Shareholders' equity
Preferred securities 193,489 183,520 184,330
Share capital 670,305 665,651 657,231
Contributed surplus 472,488 472,488 472,488
Retained earnings 444,571 437,328 440,764
Cumulative translation account 19,318 21,542 23,111
---------------------------------------------------------------------
1,800,171 1,780,529 1,777,924
---------------------------------------------------------------------
Total liabilities and
shareholders' equity $2,876,056 $2,801,981 $2,794,976
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Cameco Corporation
Consolidated Statements of Earnings
(Unaudited)
(In Thousands)
Three Months Ended Nine Months Ended
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
---------------------------------------------------------------------
Revenue from
Products and services $170,477 $138,081 $379,193 $444,003
---------------------------------------------------------------------
Expenses
Products and services
sold 107,425 79,743 229,512 263,562
Depreciation, depletion
and reclamation 35,854 24,673 75,348 76,800
Administration 9,567 8,508 26,714 24,176
Exploration 4,342 5,621 11,991 15,269
Research and development 453 506 1,565 1,873
Interest and other (310) (835) (1,740) (3,169)
Writedown of mineral
properties - 127,738 - 127,738
---------------------------------------------------------------------
157,331 245,954 343,390 506,249
---------------------------------------------------------------------
Earnings (loss) from
operations 13,146 (107,873) 35,803 (62,246)
Earnings from Bruce
Power 12,627 - 12,627 -
Other income 292 803 589 1,896
---------------------------------------------------------------------
Earnings (loss) before
income taxes 26,065 (107,070) 49,019 (60,350)
Income tax expense
- current 927 899 3,689 3,423
- deferred 7,461 382 10,270 20,144
---------------------------------------------------------------------
Net earnings (loss) 17,677 (108,351) 35,060 (83,917)
Preferred securities
charges, net of tax 2,437 2,246 6,965 6,610
---------------------------------------------------------------------
Net earnings (loss)
attributable to
common shares $15,240 ($110,597) $28,095 ($90,527)
---------------------------------------------------------------------
Earnings (loss) per
common share $0.27 ($2.01) $0.51 ($1.62)
---------------------------------------------------------------------
Cameco Corporation
Consolidated Statements of Retained Earnings
(Unaudited)
(In Thousands)
Three Months Ended Nine Months Ended
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
---------------------------------------------------------------------
Retained earnings at
beginning of period $436,288 $558,227 $437,328 $552,154
Net earnings (loss) 17,677 (108,351) 35,060 (83,917)
Dividends on common shares (6,957) (6,866) (20,852) (20,863)
Preferred securities
charges, net of tax (2,437) (2,246) (6,965) (6,610)
---------------------------------------------------------------------
Retained earnings at end
of Period $444,571 $440,764 $444,571 $440,764
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Cameco Corporation
Consolidated Statements of Cash Flow
(Unaudited)
(In Thousands)
Three Months Ended Nine Months Ended
Sept 30/01 Sept 30/00 Sept 30/01 Sept 30/00
---------------------------------------------------------------------
Operating activities
Net earnings (loss) $17,677 ($108,351) $35,060 ($83,917)
Items not requiring
(providing) cash:
Depreciation, depletion
and reclamation 35,854 24,673 75,348 76,800
Provision for deferred
taxes 7,461 382 10,270 20,144
Earnings from Bruce
Power (12,627) - (12,627) -
Writedown of mineral
properties - 127,738 - 127,738
Deferred revenue
recognized (2,475) (4,376) (7,234) (9,713)
Other operating items (32,033) (15,743) (47,150) 8,732
---------------------------------------------------------------------
Cash provided by
operations 13,857 24,323 53,667 139,784
---------------------------------------------------------------------
Investing activities
Additions to property,
plant and equipment (14,480) (10,492) (39,998) (81,319)
Investment in Bruce
Power (note 7) 19,853 - (75,979) -
Change in long-term
receivables, investments
and other - - 10,852 -
---------------------------------------------------------------------
Cash provided by (used in)
investing 5,373 (10,492) (105,125) (81,319)
---------------------------------------------------------------------
Financing activities
Increase in debt - 2,229 90,143 4,466
Repayment of debt (6,412) - (12,479) (12,150)
Shares repurchased - (9,292) - (46,484)
Issue of shares 644 169 4,653 1,645
Preferred securities
charges (4,357) (4,161) (12,898) (12,242)
Dividends (6,928) (6,924) (20,737) (21,156)
---------------------------------------------------------------------
Cash provided by (used in)
financing (17,053) (17,979) 48,682 (85,921)
---------------------------------------------------------------------
Increase (decrease) in
cash during the period 2,177 (4,148) (2,776) (27,456)
Cash at beginning of
period 28,178 22,161 33,131 45,469
---------------------------------------------------------------------
Cash at end of period $30,355 $18,013 $30,355 $18,013
---------------------------------------------------------------------
Supplemental cash flow disclosure
Interest paid $5,562 $7,012 $17,078 $21,017
Income taxes paid
(recovered) ($1,898) ($684) $609 $3,132
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Cameco Corporation
Segmented Information
(Unaudited)
(In Thousands)
For the three months ended September 30, 2001
Nuclear Gold Total
---------------------------------------------------------------------
Revenue $141,204 $29,273 $170,477
Expenses
Products and services sold 93,524 13,901 107,425
Depreciation, depletion and
reclamation 28,089 7,765 35,854
Exploration 2,672 1,670 4,342
Research & development 453 - 453
Earnings from Bruce Power (12,627) - (12,627)
Other (292) - (292)
Non-segmented expenses 9,257
---------------------------------------------------------------------
Earnings before income taxes 29,385 5,937 26,065
Income taxes 8,388
---------------------------------------------------------------------
Net earnings 17,677
Preferred securities charges, net of tax 2,437
---------------------------------------------------------------------
Net earnings attributable to common shares $15,240
---------------------------------------------------------------------
For the three months ended September 30, 2000
Nuclear Gold Total
---------------------------------------------------------------------
Revenue $104,195 $33,886 $138,081
Expenses
Products and services sold 65,967 13,776 79,743
Depreciation, depletion and
reclamation 13,903 10,770 24,673
Exploration 3,053 2,568 5,621
Research & development 506 - 506
Writedown of mineral properties 127,738 - 127,738
Other (803) - (803)
Non-segmented expenses 7,673
---------------------------------------------------------------------
Earnings (loss) before income taxes (106,169) 6,772 (107,070)
Income taxes 1,281
---------------------------------------------------------------------
Net earnings (loss) (108,351)
Preferred securities charges, net of tax 2,246
---------------------------------------------------------------------
Net earnings (loss) attributable to common shares ($110,597)
---------------------------------------------------------------------
Cameco Corporation
Segmented Information
(Unaudited)
(In Thousands)
For the nine months ended September 30, 2001
Nuclear Gold Total
---------------------------------------------------------------------
Revenue $293,036 $86,157 $379,193
Expenses
Products and services sold 190,621 38,891 229,512
Depreciation, depletion and
reclamation 53,568 21,780 75,348
Exploration 7,078 4,913 11,991
Research & development 1,565 - 1,565
Earnings from Bruce Power (12,627) - (12,627)
Other (589) - (589)
Non-segmented expenses 24,974
---------------------------------------------------------------------
Earnings before income taxes 53,420 20,573 49,019
Income taxes 13,959
---------------------------------------------------------------------
Net earnings 35,060
Preferred securities charges, net of tax 6,965
---------------------------------------------------------------------
Net earnings attributable to common shares $28,095
---------------------------------------------------------------------
For the nine months ended September 30, 2000
Nuclear Gold Total
---------------------------------------------------------------------
Revenue $368,227 $75,776 $444,003
Expenses
Products and services sold 229,516 34,046 263,562
Depreciation, depletion and
reclamation 52,366 24,434 76,800
Exploration 8,382 6,887 15,269
Research & development 1,873 - 1,873
Writedown of mineral properties 127,738 - 127,738
Other (1,896) - (1,896)
Non-segmented expenses 21,007
---------------------------------------------------------------------
Earnings (loss) before income taxes (49,752) 10,409 (60,350)
Income taxes 23,567
---------------------------------------------------------------------
Net earnings (loss) (83,917)
Preferred securities charges, net of tax 6,610
---------------------------------------------------------------------
Net earnings (loss) attributable to common shares ($90,527)
---------------------------------------------------------------------
Notes to Consolidated Financial Statements:
1. These interim financial statements have been prepared in
accordance with Canadian generally accepted accounting
principles.
2. The interim financial statements, which include the use of
estimates and judgments, contain all adjustments that management
believes are necessary for fair presentation of Cameco's
financial position, results of operations and cash flows.
3. The interim financial statements should be read in conjunction
with, and are based on the same accounting policies as contained
in Cameco's 2000 annual report.
4. Share Capital:
a) At September 30, 2001, there were 55,653,090 common shares
outstanding.
b) Options in respect of 2,226,283 shares are outstanding under
the stock option plan and are exercisable up to 2008. Upon
exercise of certain existing options, additional options in
respect of 320,500 shares would be granted.
5. Cameco's contingent obligation under guarantees of the repayment
of Kumtor senior debt exceeds the amount included in Cameco's
long-term debt at September 30, 2001 by $123 million.
6. Certain comparative figures for the prior period have been
reclassified to conform to the current period's presentation.
7. On May 12, 2001, Cameco acquired a 15% interest in the Bruce
Power Limited Partnership at an initial cost of $57 million. The
equity method is being used to account for this investment. In
addition, Cameco provided $43 million for the purchase of
fabricated fuel inventory, of which $19 million was outstanding
at September 30, 2001.
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