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Accelerated Decommissioning Projects Delayed by Nation's Financial Crisis
| Source: EnergySolutions
SALT LAKE CITY, UT--(Marketwire - October 14, 2008) - The financial crisis that is impacting
the United States and world markets will delay EnergySolutions' (NYSE : ES )
ability to accelerate the decommissioning of identified nuclear power plant
assets, a key growth initiative of the company.
The company is now estimating net income in the range of $0.50 to $0.60 per
share, based on 88.3 million fully diluted shares outstanding. Net income
before the non-cash impact of the amortization of intangibles is estimated
to be in the range of $0.70 to $0.80 per share. Amortization expense of
intangible assets is expected to be $28 million, or $18 million net of
related income tax expense. The company estimates EBITDA for fiscal 2008
to be in the range of $165 million to $180 million. Estimates for net
income before the non-cash impact of the amortization of intangible assets
and for EBITDA exclude the costs of approximately $1.8 million from the
secondary offering in July 2008 and any special charges. The company
anticipates that the financial performance for fiscal 2009 to be similar to
2008. Further information will be provided in the company's third quarter
earnings call in November.
The Nuclear Regulatory Commission (NRC), which maintains oversight for the
use of decommissioning trust funds, informed EnergySolutions last week that
it denied the company's petition for a rulemaking change that would allow
the use of decommissioning trust funds for the processing and disposal of
major radioactive components ("large components") that have been removed
from operating nuclear reactors. The NRC indicated, however, that it would
consider, on a case-by-case basis, exemptions from its guidance against
using decommissioning trust funds for disposing of large components.
EnergySolutions will continue to work with the NRC and its nuclear utility
customers to seek appropriate exemptions and pursue NRC rulemaking changes.
The Commission has indicated that it believes that the early removal and
disposal of large components is important and it will continue to work on
alternative methods to accomplish this objective. EnergySolutions
continues to explore other innovative funding options with a number of
utilities to secure the decommissioning of these large components in the
near future.
EnergySolutions and Exelon have an agreement under which EnergySolutions
would accelerate the decommissioning of Exelon's Zion Nuclear Power Station
in Zion, Illinois, which stopped operating in February 1998. The NRC
approval for the transfer of the license from Exelon to the company's
decommissioning subsidiary, ZionSolutions, is expected by mid-December.
However, EnergySolutions does not believe that it is in the best interests
of its stakeholders to finalize the transfer of the Zion Nuclear Power
Station assets until after the financial markets stabilize and the company
reaffirms that there is sufficient value in the Zion decommissioning trust
funds to ensure adequate funds for the accelerated decommissioning of the
plant. Exelon officials have informed EnergySolutions that they are
supportive of this strategy. Pursuant to their agreement, EnergySolutions
and Exelon have until December 2009, to close the transaction.
EnergySolutions remains committed to its license stewardship program.
"Despite the financial challenges that are impacting the United States and
markets around the world, our base business is very solid and we continue
to generate significant cash flow," said Steve Creamer, CEO and Chairman of
EnergySolutions. "Our core customers, the governments of the United States
and United Kingdom and the domestic nuclear industry, continue to require
the unique services provided by EnergySolutions."
EnergySolutions offers customers a full range of integrated services and
solutions including nuclear operations; decommissioning; nuclear materials
management; processing, recycling and disposition of nuclear materials;
environmental restoration; site closure; decontamination and research and
engineering services across the nuclear fuel cycle.
Non-GAAP Measures
The company defines EBITDA as earnings before interest expense, income
taxes, depreciation and amortization. The company uses EBITDA to
facilitate a comparison of its operating performance on a consistent basis
from period to period that, when viewed with its GAAP results, management
believes provides a more complete understanding of factors and trends
affecting its business than GAAP measures alone. EBITDA assists management
in comparing its operating performance on a consistent basis because it
removes the impact of its capital structure (primarily interest charges),
asset base (primarily depreciation and amortization) and items outside the
control of its management team (taxes) from its results of operations.
EBITDA should not be considered as a substitute for net income or income
from operations, as determined in accordance with GAAP. EBITDA is not
defined by GAAP, and you should not consider it in isolation or as a
substitute for analyzing the company's results as reported under GAAP.
The company defines net income before the non-cash impact of
amortization of intangibles as net income plus amortization expense of
intangible assets, net of the related income tax expense of these items.
Net income before the non-cash impact of amortization of intangibles and
net income before the non-cash impact of amortization of intangibles per
share are not computed in accordance with GAAP. These non-GAAP measures may
be useful to investors seeking to compare the operating performance on a
consistent basis from period to period that, when viewed with its GAAP
results, management believes provides a more complete understanding of
factors and trends affecting the company's business than GAAP measures
alone. Net income before the non-cash impact of amortization of intangibles
and net income before the non-cash impact of amortization of intangibles
per share should not be considered as a substitute for net income or net
income per share, as determined in accordance with GAAP. Net income before
the non-cash impact of amortization of intangibles and net income before
the non-cash impact of amortization of intangibles per share are not
defined by GAAP, and you should not consider them in isolation or as a
substitute for analyzing the company's results as reported under GAAP.
Forward-Looking Statements
Statements in this news release regarding future financial and
operating results and any other statements about EnergySolutions, Inc.'s
future expectations, beliefs or prospects expressed by management
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. There are a number of important
factors that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including economic
conditions generally. Additional information on potential factors that
could affect the company's results and other risks and uncertainties are
set forth in EnergySolutions, Inc. filings with the Securities and Exchange
Commission including its annual report on Form 10-K for the fiscal year
ended December 31, 2007 and the prospectus for its secondary offering,
filed with the Securities and Exchange Commission on July 25, 2008. The
company does not undertake any obligation to release publicly any revision
to any of these forward-looking statements.