Cameco Revenues, Net Earnings Rise in Second Quarter.Business Editors SASKATOON Saskatoon (săskət  n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. , Saskatchewan--(BUSINESS WIRE)--July 31, 2003Cameco 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 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 June June: see month. 30, 2003. HIGHLIGHTS OF THE QUARTER -- 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. contribution benefits from higher prices, output and increased ownership -- 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. earnings reduced by McArthur McArthur may refer to:Places:
rehabilitation rehabilitation: see physical therapy. costs -- Uranium spot prices continue to rise -- Conversion earnings increase on higher volumes -- Kumtor regains access to 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. zone; pit wall cleanup continues -- Change in income tax laws contributes earnings of $1.54 per share -- McArthur River resumes full production
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Financial 3 months 3 months 6 months 6 months Change
Highlights ended ended ended ended %
June 30 June 30 June 30 June 30
2003 2002 2003 2002
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Revenue ($ millions) 220 195 323 319 1
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Earnings from operations 13 26 22 37 (41)
($ millions)
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Cash provided by
operations ($ millions) 35 80 90 214 (58)
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Net earnings attributable
to common shares
($ millions) (1) 104 12 141 17 729
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Earnings per share ($) 1.87 0.22 2.53 0.31 716
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Average uranium spot
price for the period
($US/lb U3O8) 10.89 9.88 10.51 9.83 7
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Cameco's average realized
gold price for the period
($US/ounce) 315 307 317 295 7
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Average spot market gold
price for the period
($US/ounce) 347 312 350 301 16
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Note: All dollar amounts are expressed in Canadian dollars unless
otherwise indicated.
(1) Includes after-tax contributions from Bruce Power of $11 million
and $44 million for the second quarter and first half of 2003
respectively.
This report is organized under the following major headings:
1. Consolidated financial results,
2. Updates on markets, operations and strategy, and
3. Outlook.
1. 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 Second Quarter. For the three months ended June 30, 2003, net earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares increased to $104 million ($1.87 per share) from $12 million ($0.22 per share) in 2002. These results included a non-recurring, non-cash tax adjustment of $86 million ($1.54 per share) attributable to favourable changes in resource sector taxation by the 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. government. Excluding this tax adjustment, net earnings attributable to common shares for the three months ended June 30, 2003, increased to $18 million ($0.32 per share) from $12 million ($0.22 per share) in 2002. This improvement was attributable to increased earnings from Bruce Power due to higher realized electricity prices, increased output and higher percentage ownership. Earnings from the conversion business rose due to increased volumes. These were largely offset by lower earnings in the uranium segment due to costs incurred to bring McArthur River back into production following the increased water inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. at the mine in April. Cameco's share of the rehabilitation costs including care and maintenance costs at Key Lake, collectively "the rehabilitation costs", amounted to $23 million. After taxes, these costs were about $12 million or $0.22 per share for the second quarter. Excluding the impact of the tax adjustment, the effective tax rate decreased to 31% from 41% in 2002 due to lower earnings in the uranium segment. Earnings from operations were $13 million compared to $26 million in 2002 and 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. decreased to 13% from 21% in 2002. Year-to-Date. For the first six months of 2003, net earnings attributable to common shares were $141 million ($2.53 per share), including the tax adjustment noted above, compared to $17 million ($0.31 per share) in 2002. Excluding the tax adjustment, net earnings attributable to common shares for the first six months were $55 million ($0.99 per share) compared to $17 million ($0.31 per share) in 2002. This improvement was mainly attributable to increased earnings from Bruce Power and higher profits in the conversion segment. These improvements were offset somewhat by lower earnings in the uranium segment and higher charges for interest. Excluding the tax adjustment, the effective rate for income taxes decreased to 33% from 35%. Earnings from operations were $22 million compared to $37 million in 2002 and the aggregate gross profit margin declined to 17% from 20% in 2002. Cash flow from operating activities of $90 million was $124 million lower than in 2002 due to the significant cash inflow from accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying in the first quarter of 2002. Segmented Financial Results
Uranium Business
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Highlights 3 months 3 months 6 months 6 months
ended ended ended ended
June 30 June 30 June 30 June 30
2003 2002 2003 2002
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Revenue ($ millions) 159 134 215 206
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Gross profit ($ millions) 11 26 25 37
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Gross profit % 7% 19% 12% 18%
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EBT(1) ($ millions) 8 23 19 32
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Sales volume (lbs thousands) 9,886 8,198 12,938 12,842
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Production volume
(lbs thousands) 1,732 3,975 7,369 7,571
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(1) Earnings before taxes.
Second Quarter. Revenue from the uranium business increased by 19% to $159 million from $134 million in the second quarter of 2002 due to a 21% increase in sales volume. As the timing of deliveries of nuclear products within a calendar year is at the discretion of customers, Cameco's quarterly delivery patterns can vary significantly. The uranium spot price averaged $10.89 (US) in the second quarter compared to $9.88 (US) in 2002, an increase of 10%. 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 $148 million in the second quarter of 2003 compared to $108 million in the second quarter of 2002. This increase was attributable to the higher sales volumes and the rehabilitation costs at McArthur River and Key Lake. Earnings before taxes from the uranium business decreased by $15 million compared to the second quarter of 2002 and the profit margin declined to 7% from 19% in 2002 due to the rehabilitation costs. Excluding the rehabilitation costs, the gross profit margin was 21%. Year-to-Date. Revenue from the uranium business increased by 4% to $215 million from $206 million in 2002 due mainly to a 3% increase in the average realized price. The higher realized price was the result of an increase in the uranium spot price that averaged $10.51 (US) in the first six months compared to $9.83 (US) in 2002. During the first half of 2003, the total cost of products and services sold, including DDR was $190 million compared to $169 million in 2002, reflecting the rehabilitation costs. Excluding these costs for McArthur River in 2003 and Rabbit rabbit, name for herbivorous mammals of the family Leporidae, which also includes the hare and the pika. Rabbits and hares have large front teeth, short tails, and large hind legs and feet adapted for running or jumping. Lake's care and maintenance costs in 2002, the unit cost of sales rose by 3% due to higher costs of production at Rabbit Lake Rabbit Lake can refer to:
Earnings before taxes from the uranium business decreased by $13 million in the first six months of 2003 and the profit margin declined to 12% from 18% in 2002. Excluding the rehabilitation costs at McArthur River, the gross profit margin was 22%.
Conversion Business
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Highlights 3 months 3 months 6 months 6 months
ended ended ended ended
June 30 June 30 June 30 June 30
2003 2002 2003 2002
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Revenue ($ millions) 41 36 62 62
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Gross profit ($ millions) 13 11 20 16
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Gross profit % 32% 29% 33% 26%
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EBT ($ millions) 13 10 19 15
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Sales volume (tU) 4,716 3,805 6,844 6,996
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Production volume (tU) 3,482 3,096 7,338 6,607
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Second Quarter. Revenue from the conversion business increased by 14% to $41 million from $36 million in the second quarter of 2002 due to a 24% increase in sales volume. As with uranium deliveries, quarterly delivery patterns can vary significantly. The increase in volume was partially offset by an 8% decrease in the realized selling price, mainly the result of foreign exchange rate fluctuations. The total cost of products and services sold, including DDR, was $28 million in the second quarter of 2003 compared to $25 million in 2002. This increase was primarily attributable to the higher sales volume for the quarter. The unit cost of products and services sold declined by about 7% over the previous year due mainly to increased production. Earnings before taxes from the conversion business increased by $3 million in the second quarter of 2003 while the profit margin increased to 32% from 29% a year earlier. Year-to-Date. Revenue from the conversion business was unchanged at $62 million. Despite slightly lower sales volumes, revenue remained stable due to a 2% increase in the realized selling price. The total cost of products and services sold, including DDR, was $42 million in the first six months of 2003 compared to $46 million in 2002. This decrease was attributable to lower sales volumes and lower unit costs related to economies of scale on higher production volumes. Earnings before taxes from the conversion business increased by $4 million in the first half of 2003 and the profit margin increased to 33% from 26% in 2002. Electricity Business
Bruce Power Limited Partnership (100% basis)
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Highlights 3 months 3 months 6 months 6 months
ended ended ended ended
June 30 June 30 June 30 June 30
2003 2002 2003 2002
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Output (terawatt hours) 5.3 5.1 12.1 10.1
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Capacity factor (%) 77 74 88 74
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Realized price ($ per MWh) 45 38 52 39
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($ millions)
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Revenue 244 203 642 402
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Operating costs 210 192 403 387
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Earnings before interest
and taxes 34 11 239 15
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Interest 15 18 32 33
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Earnings (loss) before
taxes 19 (7) 207 (18)
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Cameco's earnings from
Bruce Power 17 (1) 66 (4)
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Note: Capacity factor for a given period represents the amount of
electricity actually produced for sale as a percentage of the amount
of electricity the plants are capable of producing for sale.
Second Quarter. During the second quarter, Bruce Power continued its solid operating performance, generating 5.3 terawatt hours (TWh), slightly higher than the same period in 2002. The four 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. B units achieved a combined capacity factor of 77% with one Bruce B reactor Reactor (electricity) A device for introducing an inductive reactance into a circuit. Inductive reactance x is a function of the product of frequency f and inductance L; thus, x = 2πfL. off-line See offline. (jargon) off-line - (Or "offline") 1. Not directly connected to the computer (e.g., an off-line tape drive), or with connection suspended ("take the printer off-line"). Contrast background, on-line. 2. Not now or not here. for scheduled maintenance during most of the quarter. The average 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. electricity spot price was $48 per megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt hour (MWh)
while Bruce Power's average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. was about $45 per MWh
from a mix of contract and spot sales.In addition to its proportionate 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. share of earnings from Bruce Power, Cameco records certain adjustments to account for any differences in accounting policy and to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. fair values assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to assets and liabilities at the time of acquisition (see note 2 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 dated June 30, 2003). As a result, Bruce Power contributed $17 million of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings to Cameco ($11 million after tax or $0.20 per share). Cameco holds a 31.6% interest in Bruce Power. To reduce its exposure to spot market prices, Bruce Power has a portfolio of fixed price sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . About 70% of Bruce Power's output was delivered into fixed price contracts in the second quarter compared to 55% in the first quarter when higher output was achieved as all four Bruce B reactors operated at 100%. Cameco's financial exposure for these and other Bruce Power commitments was about $208 million at June 30, 2003. Earnings from Bruce Power are directly affected by fluctuations in electricity spot market prices as well as overall plant availability which, in turn, is impacted by scheduled and unscheduled unscheduled Adjective not planned or intended Adj. 1. unscheduled - not scheduled or not on a regular schedule; "an unscheduled meeting"; "the plane made an unscheduled stop at Gander for refueling" maintenance. During the second quarter, one Bruce B unit returned to service after a planned maintenance 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 the Bruce A plant, the restart of the two reactors has been delayed and therefore they have made no contribution to revenue to June 30, 2003. At the end of the second quarter, the Bruce Power site had operated for more than a year without an unscheduled outage. In addition, two of the Bruce B units were recently ranked among the top three performing CANDU reactors The CANDU reactor is a pressurized heavy water reactor developed initially in the late 1950s and 1960s by a partnership between Atomic Energy of Canada Limited (AECL), the Hydro-Electric Power Commission of Ontario (now known as Ontario Power Generation), Canadian General Electric in the world. Year-to-Date. For the first six months of the year, the Bruce B units achieved a total capacity factor of 88%. These units produced 12.1 TWh during the first half of the year, a 20% increase over the same period last year. To date in 2003, the Ontario electricity spot price has averaged about $61 per MWh. During this period, Bruce Power's realized price has averaged $52 per MWh from a mix of contract and spot sales, a 33% increase over the same period last year. Year-to-date, generation revenues have totaled $642 million, up 60% compared to the first half of 2002. Bruce Power has contributed $66 million of pre-tax earnings to Cameco's results ($44 million after tax or $0.79 per share) compared to a small loss in 2002.
Gold Business
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Highlights 3 months 3 months 6 months 6 months
ended ended ended ended
June 30 June 30 June 30 June 30
2003 2002 2003 2002
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Revenue ($ millions) 19 25 47 51
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Gross profit ($ millions) 5 5 10 11
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Gross profit (%) 23% 20% 22% 21%
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EBT ($ millions) 3 2 6 6
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Selling price ($US/ounce) 315 307 317 295
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Unit cash cost (1) ($US/ounce) 273 217 240 190
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Sales volume (ounces) 40,968 48,238 95,095 103,796
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Production (ounces) 38,865 45,577 87,582 97,143
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(1) As defined by the Gold Institute. Note: the unit cash cost
reported above is Kumtor's cost. The net cost reported by Cameco is
lower due to the recovery of taxes and other costs such as management
fees.
Second Quarter. Revenue from the gold business decreased by 24% to $19 million from $25 million in the second quarter of last year due to a 15% decrease in the sales volume. Cameco's realized price for gold increased to $315 (US) in the quarter from $307 (US) per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. in the same quarter last year. Gold production at Kumtor was 15% lower than in the second quarter of 2002 mainly due to a lower 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 averaging 3.3 grams per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. (g/t) compared to 3.7 g/t in 2002. Kumtor's cash cost per ounce increased to $273 (US) compared to $217 (US) in 2002 due to the decline in production, costs related to the remediation of the pit wall, and higher production-based taxes. For the quarter, the gross profit margin was 23% compared to 20% in 2002. Year-to-Date. Revenue from the gold business declined by $4 million compared to the same period last year, reflecting an 8% decrease in sales volume that offset an increase in the average realized selling price. Cameco's realized price for gold has increased to $317 (US) in 2003 compared to $295 (US) per ounce in the first six months of 2002. Gold production at Kumtor was 10% lower than in the first half of 2002 due mainly to lower grade ore that averaged 3.6 g/t compared to 4.0 g/t last year. Kumtor's cash cost per ounce was $240 (US) in the first six months of 2003 compared to $190 (US) in 2002. The gross profit margin for gold was 22% in the first six months compared to 21% in 2002. Corporate Expenses In the first six months of 2003, total costs for administration, exploration and interest were about $32 million, $6 million higher than 2002. Administration costs increased by about $2 million due to a number of items including the addition of administration costs of AGR AGR advanced gas-cooled reactor Ltd. (AGR) and costs incurred for quality and business process improvements. AGR indirectly holds a 95% interest in the Boroo gold deposit, which is currently under development. Interest and other costs increased by about $4 million due to higher debt levels as a result of the increased investment in Bruce Power and foreign exchange losses. Income Taxes In June, the federal government introduced amendments to the Canadian Income Tax Act which provide for a 7% reduction in the corporate tax rate on income from resource activities. The tax rate will decline from its previous level of 28% to 21% over a five-year period commencing in 2003. Under Canadian accounting rules, the cumulative effect of a change in income tax legislation on future income tax assets and liabilities is included in a company's financial statements in the period of substantial enactment. Accordingly, Cameco reduced its balance sheet provision for future income taxes and recognized a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , non-cash income tax adjustment of $86 million ($1.54 per share) in the quarter. Excluding this one-time adjustment, year-to-date income tax expense was $17 million greater than in 2002 primarily as a result of the significantly higher earnings from Bruce Power which are taxed at a rate of 33%. The effective tax rate on consolidated earnings was slightly lower at 33% compared to 35% last year Cash Flow In the first six months of 2003, Cameco generated cash from operations of $90 million ($1.62 per share) compared to $214 million ($3.85 per share) in 2002. This decrease of $124 million reflects the significant cash inflow from accounts receivable in the first quarter of 2002. Cash used in investing activities increased to $360 million this year from $23 million last year due mainly to the additional investment in Bruce Power. Cameco paid $204 million for its incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. 16.6% interest and loaned an additional $75 million to Bruce Power. Expenditures for property, plant and equipment rose by $51 million compared to 2002 mainly due to the development of the Boroo gold mine Boroo Gold Mine is an open-pit gold mining site in Mongolia located about 110 km (70 mi) WNW of the capital Ulaanbaatar in Bayangol and Mandal sums (districts) of Selenge Province in northern Mongolia. Gatsuurt Gold Mine is 35 E from Boroo Gold Mine. in Mongolia Mongolia, country, Asia Mongolia (mŏn-gō`lēə, mŏng–), officially State of Mongolia, republic (2005 est. pop. 2,791,000), 604,247 sq mi (1,565,000 sq km), N central Asia; traditionally known as Outer Mongolia. . Balance Sheet During the first six months of 2003, 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 by $263 million to $487 million. At June 30, 2003, 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 19%, up from 7% at the end of 2002 as the majority of the Bruce Power investment was financed with debt. 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. receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and investments increased by $315 million. This was due to the additional investment in Bruce Power and accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. earnings from Bruce Power. This investment is accounted for using the equity method. Compared to the end of 2002, both accounts receivable and accounts payable have declined. Receivables, which reflect sales revenue, are typically higher in December December: see month. than at any other time of the year. 2. UPDATES ON MARKETS, OPERATIONS AND STRATEGY The most significant factors affecting the financial performance of Cameco are the market prices, sales volumes, and unit costs of production for U3O8, conversion, electricity and gold, and the foreign exchange rates between the Canadian and US dollars. Update on 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. Uranium Spot Market The industry average spot price on June 30, 2003 was $10.90 (US) per pound U3O8, compared to $10.10 (US) at March 31, 2003, an increase of 8%. This compares to a spot price of $9.90 (US) at the end of the second quarter of 2002. The spot market volume to June 30, 2003 was almost 10 million pounds U3O8, lower than the 12 million pounds of spot market volume at the end of the second quarter 2002. Spot demand was stronger in the second quarter compared to 2002. This resulted in price increases early in the quarter. Industry analysts are predicting that spot demand for the year will be similar to the 19 million pounds traded in 2002. Uranium Long-term Market The long-term market is expected to be as active in 2003 as it was in 2002; with long-term contracting forecast in the order of 70 million pounds U3O8. The long-term price indicator, 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. , was at $11.75 (US) per pound U3O8 at June 30, 2003, up 11% from $10.60 (US) at the beginning of the quarter. UF6 Conversion Spot Market The industry average spot market price for North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. uranium conversion services declined to $4.95 (US) per kgU during the quarter, down slightly from $5.03 (US) at March 31, 2003. This compares to $5.08 (US) per kgU at the end of the second quarter of 2002. In Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the spot conversion price increased to $6.50 (US) per
kgU from $6.38 (US) at the beginning of the quarter.The price decrease in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and price increase in Europe result from the excess UF6 supplies available in North America versus tighter supplies in Europe. Update on Uranium Market Trends and Developments Nuclear Power Generation Increases According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the International Atomic Energy Agency International Atomic Energy Agency: see Atomic Energy Agency, International. International Atomic Energy Agency (IAEA) International organization officially founded in 1957 to promote the peaceful use of nuclear energy. , world nuclear power generation increased by 30 TWh to 2,574 TWh in 2002. Total generating capacity also increased to 359,000 megawatts (MW) from about 355,000 MW. Six new reactors began operations during the year and there were four closures, resulting in 441 nuclear power reactors in operation at the end of 2002. Dutch Reactor to Operate Until 2013 The Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. government has confirmed that it will allow the single Dutch reactor to operate until 2013, the end of its design lifetime and 10 years longer than previously anticipated. The reactor had been operating under threat of shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down since November November: see month. 1994 when the parliament voted to close the reactor at the end of 2003, after 30 years of operation. Swiss Public Supports Nuclear Operations Swiss voters, in a May referendum referendum, referral of proposed laws or constitutional amendments to the electorate for final approval. This direct form of legislation, along with the initiative, was known in Greece and other early democracies. , rejected two antinuclear antinuclear /an·ti·nu·cle·ar/ (-noo´kle-ar) destructive to or reactive with components of the cell nucleus. proposals. Sixty-six Adj. 1. sixty-six - being six more than sixty 66, lxvi cardinal - being or denoting a numerical quantity but not order; "cardinal numbers" percent of voters rejected a proposal which called for shutting down all of the nation's reactors by 2014, and 58% of voters rejected a proposal which would have capped output at existing reactors and extended a moratorium A suspension of activity or an authorized period of delay or waiting. A moratorium is sometimes agreed upon by the interested parties, or it may be authorized or imposed by operation of law. on the construction of new reactors for another 10 years. Three Tepco Units Return to Service The Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and utility Tepco, as of July July: see month. 24, had restarted four of the 17 reactors closed for safety checks, and is considering more restarts to avoid shortages of electricity this summer. Gold Hedging Update The average spot market gold price during the second quarter of 2003 was $347 (US) per ounce. This compares to $352 (US) during the first quarter of 2003 and $312 (US) during the second quarter of 2002. Kumtor Gold Company (KGC KGC Knights of the Golden Circle KGC Kids get Care KGC Kingscote, South Australia, Australia (Airport Code) KGC Known Good Cable ) and AGR hedge the price risk for future gold sales. At the end of June, KGC had in place forward sales forward sales npl → ventas fpl a término and option agreements on 408,300 ounces and AGR had in place forward sales on 200,000 ounces. Combined, these hedge positions represented about 14% of proven and probable gold reserves. These hedges are expected to yield average prices of about $320 (US) per ounce. Cameco has agreed to provide credit support to a maximum of $90 (US) per ounce to the counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. of KGC and AGR which, based on the ounces hedged at June 30, 2003, could amount to $51 million (US) depending on the spot price of gold. At June 30, 2003, the actual exposure under these arrangements, reflecting the net mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. exposure, was $18 million (US). Timing differences between the usage and designations of hedge contracts may result in deferred revenue or deferred charges. At June 30, 2003, Cameco's share of deferred charges to be recognized totaled $5 million (US). Foreign Exchange Update During the quarter, the 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 strengthened against the US dollar from 1.4693 at March 31, 2003 to 1.3553 as of June 30, 2003. Most of the company's revenues are in US dollars. At June 30, 2003, Cameco had a foreign currency hedge Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). portfolio of $420 million (US). These hedges are expected to yield an average exchange rate of $1.5455. The net mark-to-market gain on these hedge positions was $69 million at June 30, 2003. Timing differences between the usage and designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. of hedge contracts may result in deferred revenue or deferred charges. At June 30, 2003, deferred revenue to be recognized totaled $8 million. Other Corporate Updates Uranium Mining Uranium mining is the process of extraction of uranium ore from the ground. As uranium ore is mostly present at relatively low concentrations, most uranium mining is very volume-intensive, and thus tends to be undertaken as open-pit mining. Early in the second quarter at the McArthur River mine The McArthur River Uranium Mine is the world's largest high-grade uranium deposit. Since it began operating in 1999, it has also become the world's most productive uranium mine, contributing approximately 20% of total global uranium mining production. The mine produced 18. , development work in a future production area encountered weak ground conditions. Subsequently, water began to enter the mine at a rate greater than underground pumping capacity could process. Through the quarter, remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. work to return the mine to safe operating conditions continued and was sufficiently advanced in early July for mine production to resume. The additional water inflow at McArthur River remains stable and is being drained through a series of pipes from the affected area to an inactive in·ac·tive adj. 1. Not active or tending to be active. 2. a. Not functioning or operating; out of use: inactive machinery. b. part of the mine before being pumped to the surface. The water continues to be treated and monitored to ensure good quality. The area where the water entered the mine has been filled with concrete and work is continuing to permanently seal it off by mid-August Noun 1. mid-August - the middle part of August period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" . While mining was suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. , the company met all sales commitments with existing inventory and other supply sources. At Cigar Lake, after 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. approval was received, the summer work program began. The main activities include the partial construction of the collar of number two shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. and pouring pour v. poured, pour·ing, pours v.tr. 1. To make (a liquid or granular solid) stream or flow, as from a container. 2. foundations for the hoist hoist: see winch. room and the head frame. The construction license is not expected to be approved until the second quarter of 2004. Gold Business In February February: see month. 2003, Cameco announced it had reached an agreement in principle with the Kyrgyz Kyr·gyz or Kir·ghiz or Kir·giz n. pl. Kyrgyz or Kyr·gyz·es or Kirghiz or Kir·ghiz·es or Kirgiz or Kir·giz·es 1. government to restructure the Kumtor mine ownership. The proposed 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). would result in Cameco holding all of the common shares of KGC, the owner of the Kumtor mine. Cameco currently has a one-third interest in KGC and operates the mine. The restructuring is contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent a number of factors, including further negotiations leading to final agreements acceptable to Cameco and the Kyrgyz government, approvals by third party institutions and a fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. requested by the Kyrgyz government. Recently, on the recommendation of the International Monetary Fund, the Kyrgyz government has asked for a second fairness opinion. This work is currently underway and is expected to be complete by the end of the third quarter. While Cameco remains committed to restructuring the mine ownership, there is no certainty that an agreement will be concluded, given the political sensitivity and complexity of the negotiations and approvals required. Cameco continues to examine all its options toward maximizing the value of its gold assets for shareholders. Corporate Award In the Corporate Knights Corporate Knights Inc. was established in 2002, and is an independent Canadian-based media company in Toronto. They also have the world’s largest circulation corporate responsibility magazine. Sustainable Development Sustainable development is a socio-ecological process characterized by the fulfilment of human needs while maintaining the quality of the natural environment indefinitely. The linkage between environment and development was globally recognized in 1980, when the International Union roundtable held in 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 during June 2003, Cameco ranked among Canada's 50 Best Corporate Citizens. Focused on the largest 100 publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. , the review examined a wide range of social and environmental indicators Environmental indicators are simple measures that tell us what is happening in the environment. Since the environment is very complex, indicators provide a more practical and economical way to track the state of the environment than if we attempted to record every possible variable . Cameco was complimented on its commitment to environmental protection, promoting health and safety and supporting communities. 3. OUTLOOK FOR YEAR Uranium Business With the loss of production in the second quarter at McArthur River/Key Lake, and difficult mining conditions persisting per·sist intr.v. per·sist·ed, per·sist·ing, per·sists 1. To be obstinately repetitious, insistent, or tenacious. 2. at Rabbit Lake, Cameco now anticipates total mill output of about 16.8 million pounds U3O8 in 2003. At McArthur River/Key Lake, full production resumed in early July and the operating plan assumes this rate will be sustained through the remainder of the year. Rehabilitation work will continue until the water is sealed off and the associated costs will be expensed. At Rabbit Lake, production at the Eagle Point mine continues to be constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by poor ground conditions. As a result, Rabbit Lake production for the second half of the year is expected to be less than the 3 million pounds milled in the first half. In-situ leach In-situ leaching (ISL), also called in-situ recovery (ISR) or solution mining, is a process of recovering minerals such as copper and uranium through boreholes drilled into the deposit. The process initially involves drilling of holes into the ore deposit. (ISL ISL - Interface Specification Language. Xerox PARC. Interface description language used by the ILU (Inter-Language Unification) system. Includes descriptions of multiple inheritance, exceptions and garbage collection. E-mail: Bill Janssen <janssen@parc.xerox.com>. ) operations in the US are expected to achieve the original plan. -------------------------------------------------------------------- 2003 Production Outlook -------------------------------------------------------------------- Cameco share 000 lbs U3O8 Revised Previous -------------------------------------------------------------------- McArthur River/Key Lake 9,400 13,000 -------------------------------------------------------------------- Rabbit Lake 5,500 6,000 -------------------------------------------------------------------- Smith Ranch/Highland 1,100 1,100 -------------------------------------------------------------------- Crow Butte 800 800 -------------------------------------------------------------------- Total 16,800 20,900 -------------------------------------------------------------------- Primarily as a result of reduced production at the McArthur River mine, western world production of about 70 million pounds is expected in 2003, similar to that of 2002. In 2003, Cameco's uranium revenue is expected to rise by about 5% over the 2002 level as a result of higher deliveries. Cameco expects its average realized price will be about the same as in 2002. Uranium margins are expected to be lower than in 2002 due to the substantial rehabilitation costs incurred and marginally higher costs at Rabbit Lake. At the Inkai project 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. , data collection and analysis has been completed and is being used to prepare the feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. . Test mining using ISL technology is projected to continue until the end of the year when the feasibility study results are expected. Conversion Business At Port Hope, conversion production is expected to be about 12,900 tonnes, up 4% compared to 2002. Revenue from the conversion business is likely to be slightly higher than in 2002 due to increased volumes. However, a change in the mix of contracts is expected to result in a slight decline in realized price and lower profit margins. Electricity Business A planned maintenance outage is scheduled at one Bruce B unit starting toward the end of the third quarter and continuing for almost two months. The site's capacity factor target remains at 88%, marginally below the long-term plan of over 90%. Bruce A Restart Bruce Power personnel are committed to carefully and safely bringing two Bruce A reactors into production. The restart schedule and operation of these units at full power are subject to regulatory approval and are affected by many factors inherent in a large and complex project. The Canadian Nuclear Safety Commission The Canadian Nuclear Safety Commission (CNSC), previously known as the "Atomic Energy Control Board" (AECB), is best described as the nuclear energy and materials watchdog in Canada. is currently reviewing documentation on one unit which will return to service following final stage commissioning and regulatory approval. The other unit is slated to return about one month later. To the end of June, total expenditures on the Bruce A restart were $610 million. In the second quarter, restart costs were approximately $20 million for each reactor per month and were related primarily to the ongoing cost of salaries for Bruce Power employees and contractors dedicated to the Bruce A units. Gold Business The remediation work of the Kumtor pit wall will continue for several weeks beyond June 30, 2003, however access to the high-grade zone has been regained. For the second half of the year, the average mill feed grade is expected to rise to about 5.6 g/t. Accordingly, for 2003, the production outlook at Kumtor remains at 670,000 ounces at an average feed grade of 4.6 g/t. At Boroo, construction was about 80% complete at the end of the second quarter and is expected to be completed by the end of 2003. With the re-design of the waste management facilities and certain foreign currency losses, the estimated cost of the project has risen to about $75 million (US) plus 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. costs during the pre-production phase. Corporate Excluding the one-time impact of the reduction in the federal tax rate, the effective income tax rate is expected to remain in the 30-35% range for the year. Sensitivity Analysis Uranium Price For the remaining deliveries in 2003, a $1 (US) per pound change in the U3O8 spot price from its current level would change revenue by about $14 million (Cdn), net earnings by about $7 million (Cdn) and cash flow by about $8 million (Cdn). About 60% of the remaining deliveries have market-related pricing. Gold Price For the remainder of 2003, about 73% of forecasted gold sales are unhedged. A $20 (US) per ounce change in the gold spot price from its current level would change each of revenue, net earnings and cash flow by about $3 million (Cdn). Electricity Price For the remaining deliveries in 2003, a $1.00 (Cdn) per MWh change in the spot price for electricity in Ontario would change Cameco's after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. earnings from Bruce Power by about $2 million (Cdn). For the remainder of 2003, about half of the planned generation, or about 8 TWh, is covered by fixed contracts. Conversion Price In the short term, Cameco's financial results are relatively insensitive in·sen·si·tive adj. 1. Not physically sensitive; numb. 2. a. Lacking in sensitivity to the feelings or circumstances of others; unfeeling. b. to changes in the spot price for conversion. The majority of conversion sales are at fixed prices. Foreign Exchange For the remainder of 2003, Cameco's exposure to changes in the US/Cdn foreign exchange rate is negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . . The majority of US dollar inflows are hedged through a combination of forward sales of US currency and natural hedges. Third Quarter of 2003 Revenue in the third quarter of 2003 is expected to be about 10% higher than in the second quarter reflecting higher sales volumes in the gold and uranium businesses. Gold production is expected to be about 50% greater than in the second quarter as Kumtor regains access to higher-grade ore. Results from the uranium business are expected to improve compared to the second quarter due to higher deliveries and the resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of operations at McArthur River. Results from Bruce Power are projected to improve due to higher output and an expected increase in the spot price for electricity during the summer months. Balance Sheet By the end of 2003, the quantity of uranium inventory is expected to decline about 10% from the level at the end of 2002. Subsequent to the McArthur River water problem, the company's debt was placed on credit watch by the credit agencies which rate Cameco. This situation is expected to be resolved once internal studies are completed and discussions are held with the agencies. DIVIDEND ANNOUNCEMENT Cameco 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 $0.15 per common share payable on October October: see month. 15, 2003 to shareholders of record at the close of business on September September: see month. 30, 2003. CONFERENCE CALL Cameco invites you to join an investor relations Investor relations The process by which the corporation communicates with its investors. and media conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 1, 2003 from 10:00 a.m. to 11:00 a.m. Eastern time (8:00 a.m. to 9:00 a.m. Saskatoon time). The call will be open to all members of the investment community and the media. Members of the media will be invited to ask questions at the end of the call. In order to join the conference call on Friday, August 1, please dial (416) 695-5259 or (877) 888-7019 (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 and US). An operator will put your call through. Alternatively an audio feed of the conference call will be available on the web site at www.cameco.com by using Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. or Real Player software. See the link on the home page on the day of the call. Please pass this invitation to colleagues in your organization who have an interest in Cameco. 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 producer of uranium and the largest supplier of combined uranium and conversion services. The company's competitive position is based upon its controlling ownership of the world's largest, high-grade reserves and low-cost operations. Cameco's uranium products are used to generate clean electricity in nuclear power plants around the world including Ontario where the company has an interest in a partnership which generates nuclear electricity. The company also mines gold and explores for uranium and gold in North America, Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and Asia. Cameco's shares trade on the Toronto 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. . CAUTION REGARDING FORWARD-LOOKING for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. INFORMATION Statements contained in this news release which are not historical facts are 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. that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied 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 and sensitivity to market prices for uranium, electricity in Ontario and gold; the impact of the sales volume of uranium, conversion services, electricity generated 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 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. . Although Cameco believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this report. Cameco disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Investor Information
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Common Shares Investor Inquiries Transfer Agent
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CCO Cameco Corporation CIBC Mellon Trust Company
The Toronto 2121 - 11th Street West 320 Bay Street, P.O. Box 1
Stock Exchange Saskatoon, Saskatchewan Toronto, Ontario
S7M 1J3 M5H 4A6
CCJ Phone: 306-956-6200 Phone: 800-387-0825
New York Fax: 306-956-6318 (North America)
Stock Exchange Web: www.cameco.com Phone: 416-643-5500
(outside North America)
PREFERRED
SECURITIES
CCJPR
New York
Stock Exchange
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Cameco Corporation
Highlights
(Unaudited)
Three months Ended Six Months Ended
June 30/03 June 30/02 June 30/03 June 30/02
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Financial (in millions)
Revenue $ 220 $ 195 $ 323 $ 319
Earnings from operations 13 26 22 37
Net Earnings attributable
to common shares 104 12 141 17
Cash provided by
operations 35 80 90 214
Working capital (end of
period) 423 429
Net debt to capitalization 19% 7%
Per common share
Net earnings $ 1.87 $0.22 $ 2.53 $0.31
Dividend 0.15 0.125 0.30 0.25
Weighted average number
of paid common shares
outstanding
(in thousands) 55,980 55,818 55,931 55,711
Average uranium spot
price for the period
(US$/lb) $10.89 $9.88 $10.51 $9.83
Sales volumes
Uranium (in thousands
lbs U308) 9,886 8,198 12,938 12,842
Uranium conversion (tU) 4,716 3,805 6,844 6,996
Gold (troy ounces) 40,969 48,238 95,095 103,796
Note: Currency amounts are expressed in Canadian dollars unless stated
otherwise.
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Cameco Cameco's Three Months Ended Six Months Ended
Production Share June 30/03 June 30/02 June 30/03 June 30/02
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Uranium
production
(in thousands
lbs U308)
McArthur
River 69.8% - 3,627 3,294 6,842
Rabbit Lake 100.0% 1,219 - 3,058 -
Key Lake 83.3% - 37 - 113
Crow Butte 100.0% 217 196 413 379
Smith Ranch
Highland 100.0% 296 115 604 237
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Total 1,732 3,975 7,369 7,571
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Uranium
conversion
(tU) 100.0% 3,482 3,096 7,338 6,607
Gold
(troy
ounces) 33.3% 38,865 45,577 87,582 97,143
Cameco Corporation
Consolidated Balance Sheets
(Unaudited)
(In Thousands)
As At
----------------------------------
June 30/03 Dec 31/02 June 30/02
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Assets
Current assets
Cash $ 38,261 $ 58,096 $ 156,102
Accounts receivable 129,881 186,369 139,057
Inventories 329,620 339,684 336,262
Supplies and prepaid expenses 46,465 45,731 37,964
Current portion of long-term
receivables, investments and other 28,176 20,163 17,436
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572,403 650,043 686,821
Property, plant and equipment 2,044,479 2,037,613 2,000,285
Long-term receivables, investments
and other 572,092 257,523 235,223
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2,616,571 2,295,136 2,235,508
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Total assets $3,188,974 $2,945,179 $2,922,329
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued
liabilities $ 123,788 $ 131,932 $ 113,540
Dividends payable 8,430 6,998 6,997
Current portion of long-term debt 6,777 6,318 112,863
Current portion of other liabilities 1,422 16,931 3,628
Future income taxes 8,519 9,198 21,025
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148,936 171,377 258,053
Long-term debt 480,444 218,290 179,835
Provision for reclamation 144,160 155,036 138,176
Other liabilities 10,195 9,523 8,741
Future income taxes 451,961 522,979 488,455
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1,235,696 1,077,205 1,073,260
Minority interest 17,580 18,078 23,210
Shareholders' equity
Preferred securities 165,805 193,763 186,071
Share capital 687,270 680,934 681,018
Contributed surplus 472,488 472,488 472,488
Retained earnings 608,173 483,658 468,642
Cumulative translation account 1,962 19,053 17,640
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1,935,698 1,849,896 1,825,859
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Total liabilities and shareholders'
equity $3,188,974 $2,945,179 $2,922,329
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See accompanying notes to consolidated financial statements
Cameco Corporation
Consolidated Statements of Earnings
(Unaudited)
(In Thousands)
Three Months Ended Six Months Ended
June 30/03 June 30/02 June 30/03 June 30/02
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Revenue from
Products and
services $219,989 $194,969 $322,934 $318,963
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Expenses
Products and
services sold 161,030 125,267 221,380 202,757
Depreciation, depletion
and reclamation 30,918 28,617 46,682 52,258
Administration 9,270 9,921 20,746 18,504
Exploration 4,516 5,386 9,555 9,683
Research and development 412 634 915 1,202
Interest and other
(note 5) 1,162 (646) 2,038 (2,176)
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207,308 169,179 301,316 282,228
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Earnings from
operations 12,681 25,790 21,618 36,735
Earnings (loss) from
Bruce Power 16,757 (1,371) 65,575 (3,615)
Other income (loss) (414) - 453 205
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Earnings before income
taxes and minority
interest 29,024 24,419 87,646 33,325
Income tax expense
(recovery) (note 6) (77,222) 9,995 (57,351) 11,561
Minority interest (195) - (498) -
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Net earnings 106,441 14,424 145,495 21,764
Preferred securities
charges, net of tax 2,024 2,256 4,218 4,652
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Net earnings attributable
to common shares $104,417 $ 12,168 $141,277 $ 17,112
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Basic earnings per
common share $ 1.87 $ 0.22 $ 2.53 $ 0.31
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Diluted earnings per
common share $ 1.87 $ 0.22 $ 2.53 $ 0.31
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Cameco Corporation
Consolidated Statements of Retained
Earnings
(Unaudited)
(In Thousands)
Three Months Ended Six Months Ended
June 30/03 June 30/02 June 30/03 June 30/02
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Retained earnings
at beginning of
period $512,180 $463,470 $483,658 $465,420
Net earnings 106,441 14,424 145,495 21,764
Dividends on common
shares (8,424) (6,996) (16,762) (13,890)
Preferred securities
charges, net of tax (2,024) (2,256) (4,218) (4,652)
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Retained earnings at
end of period $608,173 $468,642 $608,173 $468,642
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See accompanying notes to consolidated financial statements
Cameco Corporation
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Three Months Ended Six Months Ended
June 30/03 June 30/02 June 30/03 June 30/02
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Operating activities
Net earnings $106,441 $ 14,424 $145,495 $ 21,764
Items not requiring
(providing) cash:
Depreciation, depletion
and reclamation 30,918 28,617 46,682 52,258
Provision for future
taxes (77,779) 8,460 (59,696) 8,888
Deferred charges
(revenue) recognized 1,358 735 4,026 (594)
Earnings from Bruce
Power (16,757) 1,371 (65,575) 3,615
Equity in (earnings)
loss from associated
companies 414 - 770 -
Minority interest (195) - (498) -
Other operating items (9,653) 26,537 19,182 128,510
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Cash provided by
operations 34,747 80,144 90,386 214,441
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Investing activities
Additions to property,
plant and equipment (49,395) (10,968) (73,779) (22,744)
Increase in long-term
receivables,
investments and other (1,569) (4,229) (285,734) (11,515)
Decrease in long-term
receivables,
investments and other - 10,830 - 10,830
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Cash used in investing (50,964) (4,367) (359,513) (23,429)
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Financing activities
Decrease in debt - (12,476) - (58,469)
Increase in debt 1,342 1,379 266,152 1,379
Issue of shares, net of
issue costs 4,868 1,616 6,336 10,987
Preferred securities
charges (3,742) (4,198) (7,796) (8,595)
Dividends (8,402) (6,990) (15,400) (13,949)
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Cash provided by
(used in) financing (5,934) (20,669) 249,292 (68,647)
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Increase in cash during
the period (22,151) 55,108 (19,835) 122,365
Cash at beginning of
period 60,412 100,994 58,096 33,737
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Cash at end of period $ 38,261 $156,102 $ 38,261 $156,102
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Supplemental cash flow
disclosure
Interest paid $ 6,236 $ 5,130 $ 10,190 $ 9,323
Income taxes paid $ 5,943 $891 $ 8,917 $ 2,066
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See accompanying notes to consolidated financial statements
Cameco Corporation Notes to Consolidated Financial Statements (Unaudited) 1. Accounting Policies These consolidated financial statements have been prepared 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 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 and follow the same accounting principles and methods of application as the most recent annual consolidated financial statements, except as noted below. The financial statements should be read in conjunction with Cameco's annual consolidated financial statements included in the 2002 annual report. 2. Investment in Bruce Power L.P. (Bruce Power) On February 14, 2003, Cameco, TransCanada PipeLines The TransCanada pipeline is a system of natural gas pipelines, up to 48 inches (1219 millimetres) in diameter, that carries gas through Alberta, Saskatchewan, Manitoba, Ontario and Quebec. It is maintained by TransCanada PipeLines, LP. It is the longest pipeline in Canada. Limited (TransCanada The term TransCanada can refer to several things:
BPC Brewton-Parker College (Mt Vernon, GA) BPC Bible Presbyterian Church BPC Bangladesh Petroleum Corporation (Chittagong, Bangladesh) BPC British Pharmaceutical Codex ), amongst others, purchased a 79.8% interest in Bruce Power from 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. plc (British Energy). Upon closing, Cameco increased its ownership interest in Bruce Power from 15% to 31.6%. Each of Cameco, TransCanada and BPC now hold, directly or indirectly, a 31.6% interest in Bruce Power with the Power Workers' Union The Workers' Union was a trade union in the United Kingdom. It merged with the Transport and General Workers' Union in 1929. See also
The purchase price of Cameco's incremental 16.6% has been allocated as follows:
(Millions)
Net book value of assets acquired $ 149
Excess of fair value over book
value of assets acquired 124
Valuation of Bruce Power sales agreements (69)
--------
$ 204
--------
The amount allocated to the investment in Bruce Power includes an excess purchase price of approximately $124 million over Cameco's incremental share of the book value of the underlying net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. . This amount will be amortized to income based on the expected useful life of the Bruce Power assets which extends to 2018. The valuation of Bruce Power sales contracts will be amortized to income over the remaining term of the underlying sales contracts, which extend to 2007. In addition, Cameco, TransCanada and BPC loaned Bruce Power funds to repay $225 million, plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. , in deferred lease payments to OPG OPG Ontario Power Generation (Canada) OPG Osteoprotegerin OPG Online Policy Group OPG Oldroyd Publishing Group (UK) OPG Orthopantomography OPG Office of Projects and Grants . Cameco's share was $75 million plus accrued interest. Cameco, TransCanada and BPC have assumed the obligations to provide financial guarantees on behalf of the partnership. Cameco has provided the following financial assurances, with varying terms that range from 2003 to 2018: (i) Licensing assurances to Canadian Nuclear Safety Commission of $88 million. (ii) Guarantees to customers under power sale agreements of up to $127 million. At June 30, 2003, Cameco's actual exposure under these guarantees was $62 million. (iii) Termination payments to OPG pursuant to the lease agreement of $58 million. 3. Long-Term Debt Cameco's contingent obligation under guarantees of the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of Kumtor senior debt exceeds the amount included in Cameco's long-term debt at June 30, 2003 by $51.3 million (US). 4. Share Capital a) At June 30, 2003, there were 56,202,273 common shares outstanding. b) Options in respect of 2,607,850 shares are outstanding under the stock option plan and are exercisable up to 2011. Upon exercise of certain existing options, additional options in respect of 263,350 shares would be granted. 5. Interest and Other For the six months ended June 30, 2003, earnings include foreign exchange losses of $3.0 million (2002 - $1.1 million gain).
6. Income Tax Expense
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Three Months Ended Six Months Ended
(thousands) June 30/03 June 30/02 June 30/03 June 30/02
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Current income taxes $ 557 $ 1,535 $ 2,345 $ 2,673
Future income taxes (77,779) 8,460 (59,696) 8,888
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Income tax expense
(recovery) $ (77,222) $ 9,995 $ (57,351) $ 11,561
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In the second quarter of 2003, the federal government introduced amendments to the Canadian Income Tax Act which provide for a reduction in the corporate tax rate on income from resource activities. The cumulative effect of the change in income tax legislation on Cameco's future income tax liability was $86.2 million. 7. Stock-Based Compensation In accordance with the CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
This article is about reference works. For the subnotebook computer, see .
The phrase pro forma net earnings attributable to common shares and earnings per share information as if the company had accounted for employee stock options under the fair value method. Cameco has applied the pro forma disclosure provisions of the new standard to awards granted on or after January January: see month. 1, 2002. The pro forma effect of awards granted prior to January 1, 2002 has not been included. During the first six months, Cameco granted 624,850 options at an average strike price of $35.64 (2002 - 489,050 options at an average strike price of $43.84). The fair value of the options issued was determined using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following assumptions:
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2003 2002
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Dividend $0.60 $0.50
Expected volatility 20% 20%
Risk-free interest rate 4.1% 5.0%
Expected life of option 5 years 5 years
Expected forfeitures 17% 17%
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The weighted average grant date fair values of options granted was $7.45 per share (2002 - $10.83). For purposes of pro forma disclosures, the estimated fair value of the options is being amortized to earnings over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. For the three months ended June 30, 2003, Cameco's pro forma net earnings attributable to common shares was $103.6 million (2002 - $11.8 million) and pro forma basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of was $1.85 (2002 - $0.21). For the six months ended June 30, 2003, Cameco's pro forma net earnings attributable to common shares was $139.8 million (2002 - $16.6 million) and pro forma basic and diluted earnings per share was $2.50 (2002 - $0.30). 8. Guarantees Effective January 1, 2003, Cameco adopted the new CICA Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. AcG-14, which requires certain disclosures of obligations under guarantees. Except as disclosed in note 2, Investment in Bruce Power L.P., there have been no material changes to the guarantees reported in the annual consolidated financial statements. 9. Comparative Figures Certain comparative figures for the prior period have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current period's presentation.
10. Segmented Information
For the three months ended June 30, 2003
Uranium Conversion Gold Total
--------------------------------------------------------------------
Revenue $159,448 $41,086 $19,455 $219,989
Expenses
Products and services sold 124,193 25,852 10,985 161,030
Depreciation, depletion and
reclamation 24,705 2,302 3,911 30,918
Exploration 2,616 - 1,900 4,516
Research & development - 412 - 412
Earnings from Bruce Power (16,757)
Other 414 - - 414
Non-segmented expenses 10,432
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Earnings before income taxes 7,520 12,520 2,659 29,024
Income tax expense (recovery) (77,222)
Minority interest (195)
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Net earnings 106,441
Preferred securities charges,
net of tax 2,024
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Net earnings attributable to
common shares $104,417
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--------------------------------------------------------------------
For the three months ended June 30, 2002
Uranium Conversion Gold Total
--------------------------------------------------------------------
Revenue $134,193 $35,931 $24,845 $194,969
Expenses
Products and services sold 87,631 22,636 15,000 125,267
Depreciation, depletion and
reclamation 20,881 2,749 4,987 28,617
Exploration 2,760 - 2,626 5,386
Research & development - 634 - 634
Earnings from Bruce Power 1,371
Non-segmented expenses 9,275
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Earnings before income taxes 22,921 9,912 2,232 24,419
Income tax expense 9,995
--------------------------------------------------------------------
Net earnings 14,424
Preferred securities charges,
net of tax 2,256
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Net earnings attributable to
common shares $12,168
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For the six months ended June 30, 2003
Uranium Conversion Gold Total
--------------------------------------------------------------------
Revenue $214,572 $61,594 $46,768 $322,934
Expenses
Products and services sold 156,043 37,907 27,430 221,380
Depreciation, depletion and
reclamation 33,830 3,570 9,282 46,682
Exploration 5,748 - 3,807 9,555
Research & development - 915 - 915
Earnings from Bruce Power (65,575)
Other (453) - - (453)
Non-segmented expenses 22,784
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Earnings before income taxes 19,404 19,202 6,249 87,646
Income tax expense (recovery) (57,351)
Minority interest (498)
--------------------------------------------------------------------
Net earnings 145,495
Preferred securities charges,
net of tax 4,218
--------------------------------------------------------------------
Net earnings attributable to
common shares $141,277
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For the six months ended June 30, 2002
Uranium Conversion Gold Total
--------------------------------------------------------------------
Revenue $206,306 $62,004 $50,653 $318,963
Expenses
Products and services sold 134,498 40,021 28,238 202,757
Depreciation, depletion and
reclamation 34,517 5,829 11,912 52,258
Exploration 5,312 - 4,371 9,683
Research & development - 1,202 - 1,202
Earnings from Bruce Power 3,615
Other (205) - - (205)
Non-segmented expenses 16,328
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Earnings before income taxes 32,184 14,952 6,132 33,325
Income tax expense 11,561
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Net earnings 21,764
Preferred securities charges,
net of tax 4,652
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Net earnings attributable to
common shares $17,112
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