EX-99.3

EX-99.3 4 d620767dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

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Cameco Corporation

2013 condensed consolidated interim financial statements

(unaudited)

October 29, 2013

Cameco Corporation

Consolidated statements of earnings


						(Restated - note 3)						(Restated - note 3)
(Unaudited)			Three months ended						Nine months ended
($Cdn thousands, except per share amounts)	Note		Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Revenue from products and services			$	596,578		$	296,191		$	1,461,302		$	1,044,304
Cost of products and services sold				320,010			174,572			873,179			639,131
Depreciation and amortization				48,980			36,414			166,471			119,804

Cost of sales				368,990			210,986			1,039,650			758,935

Gross profit				227,588			85,205			421,652			285,369
Administration				35,515			38,735			134,327			123,814
Exploration				19,908			34,443			56,483			75,504
Research and development				1,014			2,181			4,967			6,159
Loss (gain) on sale of assets				(12	)		512			117			(1,637	)

Earnings from operations				171,163			9,334			225,758			81,529
Finance costs		11		(27,453	)		(26,804	)		(51,906	)		(55,078	)
Gains (losses) on derivatives		15		43,531			54,970			(19,763	)		56,125
Finance income				1,178			3,012			5,540			11,363
Earnings from BPLP		7		62,908			42,022			62,294			111,543
Share of loss from equity-accounted investees				(1,359	)		(2,073	)		(650	)		(4,620	)
Other expense				(14,838	)		—			(16,577	)		(25,745	)

Earnings before income taxes				235,130			80,461			204,696			175,117
Income tax expense (recovery)		12		24,042			2,160			(48,925	)		(35,733	)

Net earnings			$	211,088		$	78,301		$	253,621		$	210,850

Net earnings (loss) attributable to:
Equity holders			$	211,267		$	78,505		$	254,159		$	211,834
Non-controlling interest				(179	)		(204	)		(538	)		(984	)

Net earnings			$	211,088		$	78,301		$	253,621		$	210,850

Earnings per common share attributable to equity holders
Basic		16	$	0.53		$	0.20		$	0.64		$	0.54

Diluted		16	$	0.53		$	0.20		$	0.64		$	0.54

See accompanying notes to condensed consolidated interim financial statements.

Cameco Corporation

Consolidated statements of comprehensive income


						(Restated - note 3)						(Restated - note 3)
(Unaudited)			Three months ended						Nine months ended
($Cdn thousands)	Note		Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Net earnings			$	211,088		$	78,301		$	253,621		$	210,850
Other comprehensive income (loss), net of taxes		12
Items that will not be reclassified to profit or loss:
Defined benefit plan actuarial gains (losses)—equity-accounted investees				—			(105,133	)		100,725			(105,133	)
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations				(27,072	)		(33,089	)		(30,537	)		(36,194	)
Gains (losses) on derivatives designated as cash flow hedges—equity-accounted investees				166			(1,778	)		(71	)		3,911
Gains on derivatives designated as cash flow hedges transferred to net earnings—equity-accounted investees				(924	)		(4,108	)		(3,200	)		(15,941	)
Unrealized gains (losses) on available-for-sale assets				—			70			—			(20	)
Gains on available-for-sale assets transferred to net earnings				—			(92	)		—			(130	)

Other comprehensive income (loss), net of taxes				(27,830	)		(144,130	)		66,917			(153,507	)

Total comprehensive income (loss)			$	183,258		$	(65,829	)	$	320,538		$	57,343

Other comprehensive income (loss) attributable to:
Equity holders			$	(27,802	)	$	(144,089	)	$	66,887		$	(153,377	)
Non-controlling interest				(28	)		(41	)		30			(130	)

Other comprehensive income (loss) for the period			$	(27,830	)	$	(144,130	)	$	66,917		$	(153,507	)

Total comprehensive income (loss) attributable to:
Equity holders			$	183,465		$	(65,584	)	$	321,046		$	58,457
Non-controlling interest				(207	)		(245	)		(508	)		(1,114	)

Total comprehensive income (loss) for the period			$	183,258		$	(65,829	)	$	320,538		$	57,343

See accompanying notes to condensed consolidated interim financial statements.

Cameco Corporation

Consolidated statements of financial position


						(Restated - note 3)		(Restated - note 3)
(Unaudited)			As at					As at
($Cdn thousands)	Note		Sep 30/13			Dec 31/12		Jan 1/12
Assets
Current assets
Cash and cash equivalents			$	272,774		$	749,499	$	395,552
Short-term investments				—			49,535		804,141
Accounts receivable				260,151			404,040		516,663
Current tax assets				3,815			9,404		17,988
Inventories		5		975,908			563,578		493,875
Supplies and prepaid expenses				131,169			110,777		114,182
Current portion of long-term receivables, investments and other		6		13,492			22,807		14,088

Total current assets				1,657,309			1,909,640		2,356,489

Property, plant and equipment				5,132,507			4,815,924		3,906,429
Goodwill and intangible assets		4		189,014			94,327		98,954
Long-term receivables, investments and other		6		243,128			211,358		188,718
Investments in equity-accounted investees				299,800			205,889		224,148
Deferred tax assets				243,776			193,916		82,223

Total non-current assets				6,108,225			5,521,414		4,500,472

Total assets			$	7,765,534		$	7,431,054	$	6,856,961

Liabilities and Shareholders’ Equity
Current liabilities
Bank overdraft			$	56,563		$	—	$	—
Accounts payable and accrued liabilities				360,644			387,653		355,634
Current tax liabilities				36,097			36,600		39,330
Short-term debt				35,229			67,090		79,186
Dividends payable				39,546			39,535		39,475
Current portion of other liabilities		8		38,699			13,028		32,508
Current portion of provisions		9		16,285			18,830		14,857

Total current liabilities				583,063			562,736		560,990

Long-term debt				1,293,140			1,292,440		795,145
Other liabilities		8		54,865			77,517		52,308
Provisions		9		633,744			550,624		519,625
Deferred tax liabilities				39,983			5,773		8,165

Total non-current liabilities				2,021,732			1,926,354		1,375,243

Shareholders’ equity
Share capital				1,854,393			1,851,507		1,842,289
Contributed surplus				182,932			168,952		155,757
Retained earnings				3,148,201			2,913,134		2,872,565
Other components of equity				(26,047	)		7,791		46,574

Total shareholders’ equity attributable to equity holders				5,159,479			4,941,384		4,917,185
Non-controlling interest				1,260			580		3,543

Total shareholders’ equity				5,160,739			4,941,964		4,920,728

Total liabilities and shareholders’ equity			$	7,765,534		$	7,431,054	$	6,856,961

Commitments and contingencies [notes 4,7,12]

See accompanying notes to condensed consolidated interim financial statements

Cameco Corporation

Consolidated statements of changes in equity


																								(Restated -
	Attributable to equity holders																							note 3)
(Unaudited) ($Cdn thousands)	Share Capital		Contributed Surplus			Retained Earnings			Foreign Currency Translation			Cash Flow Hedges			Available -For-Sale Assets			Total			Non- Controlling Interest			Total Equity
Balance at January 1, 2013	$	1,851,507	$	168,952		$	2,913,134		$	3,699		$	4,092		$	—		$	4,941,384		$	580		$	4,941,964
Net earnings		—		—			254,159			—			—			—			254,159			(538	)		253,621
Other comprehensive income (loss)		—		—			100,725			(30,567	)		(3,271	)		—			66,887			30			66,917

Total comprehensive income for the period		—		—			354,884			(30,567	)		(3,271	)		—			321,046			(508	)		320,538

Share-based compensation		—		15,496			—			—			—			—			15,496			—			15,496
Share options exercised		2,886		(1,516	)		—			—			—			—			1,370			—			1,370
Dividends		—		—			(118,629	)		—			—			—			(118,629	)		—			(118,629	)
Change in ownership interest in subsidiary		—		—			(1,188	)		—			—			—			(1,188	)		1,188			—

Balance at September 30, 2013	$	1,854,393	$	182,932		$	3,148,201		$	(26,868	)	$	821		$	—		$	5,159,479		$	1,260		$	5,160,739

Balance at January 1, 2012	$	1,842,289	$	155,757		$	2,872,565		$	26,866		$	19,560		$	148		$	4,917,185		$	3,543		$	4,920,728
Net earnings		—		—			211,834			—			—			—			211,834			(984	)		210,850
Other comprehensive loss		—		—			(105,133	)		(36,064	)		(12,030	)		(150	)		(153,377	)		(130	)		(153,507	)

Total comprehensive income for the period		—		—			106,701			(36,064	)		(12,030	)		(150	)		58,457			(1,114	)		57,343

Share-based compensation		—		13,747			—			—			—			—			13,747			—			13,747
Share options exercised		9,185		(4,348	)		—			—			—			—			4,837			—			4,837
Dividends		—		—			(118,592	)		—			—			—			(118,592	)		—			(118,592	)
Change in ownership interests in subsidiary		—		—			—			—			—			—			—			(1,290	)		(1,290	)

Balance at September 30, 2012	$	1,851,474	$	165,156		$	2,860,674		$	(9,198	)	$	7,530		$	(2	)	$	4,875,634		$	1,139		$	4,876,773

See accompanying notes to condensed consolidated interim financial statements.

Cameco Corporation

Consolidated statements of cash flows


						(Restated - note 3)						(Restated - note 3)
(Unaudited)			Three months ended						Nine months ended
($Cdn thousands)	Note		Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Operating activities
Net earnings			$	211,088		$	78,301		$	253,621		$	210,850
Adjustments for:
Depreciation and amortization				48,980			36,414			166,471			119,804
Deferred charges				8,878			4,788			10,958			(10,852	)
Unrealized losses (gains) on derivatives				(52,768	)		(50,924	)		10,414			(53,781	)
Share-based compensation		14		3,518			3,821			15,496			13,747
Loss (gain) on sale of assets				(12	)		512			117			(1,637	)
Finance costs		11		27,453			26,804			51,906			55,078
Finance income				(1,178	)		(3,012	)		(5,540	)		(11,363	)
Earnings from BPLP		7		(62,908	)		(42,022	)		(62,294	)		(111,543	)
Share of loss from equity-accounted investees				1,359			2,073			650			4,620
Other expense (income)				14,838			—			16,577			(3,796	)
Income tax expense (recovery)		12		24,042			2,160			(48,925	)		(35,733	)
Interest received				1,024			4,277			4,576			13,069
Income taxes paid				—			(2,000	)		(62,462	)		(55,329	)
Income taxes refunded				2,833			4,383			10,993			17,546
BPLP net distributions				29,514			24,774			56,216			74,418
Other operating items		13		(121,079	)		(54,223	)		(50,737	)		67,908

Net cash provided by operations				135,582			36,126			368,037			293,006

Investing activities
Additions to property, plant and equipment				(159,899	)		(195,900	)		(499,076	)		(618,469	)
Acquisition of business, net of cash acquired		4		—			—			(126,197	)		—
Repayment of debt acquired on acquisition of business		4		—			—			(118,068	)		—
Decrease in short-term investments				—			382,764			49,535			605,534
Increase in long-term receivables, investments and other				(11,979	)		(467	)		(8,296	)		(30,270	)
Proceeds from sale of property, plant and equipment				—			25			—			3,124

Net cash provided by (used in) investing				(171,878	)		186,422			(702,102	)		(40,081	)

Financing activities
Decrease in debt				(17,814	)		(7,485	)		(33,107	)		(28,209	)
Interest paid				(21,359	)		(21,895	)		(55,235	)		(43,521	)
Proceeds from issuance of shares, stock option plan				564			693			2,260			6,997
Dividends paid				(39,543	)		(39,531	)		(118,618	)		(118,531	)

Net cash used in financing				(78,152	)		(68,218	)		(204,700	)		(183,264	)

Increase (decrease) in cash and cash equivalents net of bank overdraft, during the period				(114,448	)		154,330			(538,765	)		69,661
Exchange rate changes on foreign currency cash balances				(971	)		(817	)		5,477			(1,048	)
Cash and cash equivalents net of bank overdraft, beginning of period				331,630			310,652			749,499			395,552

Cash and cash equivalents net of bank overdraft at end of period			$	216,211		$	464,165		$	216,211		$	464,165

Cash and cash equivalents is comprised of:
Cash									$	87,848		$	59,179
Cash equivalents										184,926			404,986

Cash and cash equivalents									$	272,774		$	464,165
Bank overdraft										(56,563	)		—

Cash and cash equivalents and bank overdraft									$	216,211		$	464,165

See accompanying notes to condensed consolidated interim financial statements.

Cameco Corporation

Notes to condensed consolidated interim financial statements

(Unaudited)

($Cdn thousands, except per share amounts and as noted)

1. Cameco Corporation

Cameco Corporation is incorporated under the Canada Business Corporations Act. The address of its registered office is 2121 11th Street West, Saskatoon, Saskatchewan, S7M 1J3. The condensed consolidated interim financial statements as at and for the period ended September 30, 2013 comprise Cameco Corporation and its subsidiaries (collectively, the Company or Cameco) and the Company’s interest in associates and joint arrangements. The Company is primarily engaged in the exploration for and the development, mining, refining, conversion, fabrication and trading of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. Cameco has a 31.6% interest in Bruce Power L.P. (BPLP), which operates the four Bruce B nuclear reactors in Ontario.

2. Significant accounting policies

A. Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting. The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with Cameco’s annual consolidated financial statements as at and for the year ended December 31, 2012.

These condensed consolidated interim financial statements were authorized for issuance by the Company’s board of directors on October 29, 2013.

B. Basis of presentation

These condensed consolidated interim financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial information presented in Canadian dollars in tabular format has been rounded to the nearest thousand except where otherwise noted.

The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the statements of financial position: derivative financial instruments are measured at fair value, available-for-sale financial assets are measured at fair value, liabilities for cash-settled share-based payment arrangements are measured at fair value and the defined benefit asset is recognized as plan assets less the present value of the defined benefit obligation.

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may vary from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2012.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note five of the December 31, 2012 consolidated financial statements.

3. Accounting changes

A. Changes in accounting policy

On January 1, 2013, Cameco adopted the following new standards as issued by the International Accounting Standards Board: IFRS 7 Financial Instruments: Disclosures (IFRS 7), IFRS 10 Consolidated Financial Statements (IFRS 10), IFRS 11 Joint Arrangements (IFRS 11), IFRS 12 Disclosure of Interests in Other Entities (IFRS 12), IFRS 13 Fair Value Measurement (IFRS 13), IAS 1 Presentation of Financial Statements (IAS 1) and revised IAS 19 Employee Benefits (IAS 19R).

i. Subsidiaries

IFRS 10 introduces a new control model that is applicable to all investees. Among other things, it requires the consolidation of an investee if the Company controls the investee on the basis of de facto circumstances. In accordance with IFRS 10, Cameco re-assessed the control conclusion for its investees at January 1, 2013. There were no changes to the control conclusion for Cameco’s investees.

ii. Joint arrangements

Under IFRS 11, Cameco classifies its interests in joint arrangements as either joint operations or joint ventures depending on the Company’s rights to the assets and obligations for the liabilities of the arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances. Previously, the structure of the arrangement was the main determination of classification.

In accordance with IFRS 11, Cameco has re-evaluated its involvement in joint arrangements at January 1, 2013. As a result, the Company has changed its classification conclusion with respect to its investment in BPLP. BPLP has control over its own assets, liabilities, revenues, and expenses, and because Cameco is entitled to a share of the profits or losses from BPLP’s operations, Cameco has determined that its investment in BPLP should be classified as a joint venture. Accordingly, Cameco applied equity accounting to the investment commencing on January 1, 2013. Previously, the investee was accounted for as a jointly controlled entity using the proportionate consolidation method.

iii. Employee benefits

The revisions to IAS 19 have accelerated the recognition of past service costs and replaced interest cost and expected return on plan assets with a measure of net interest on the defined benefit asset or liability. In addition, IAS 19R has resulted in a change in the accounting for both plan administration costs and assets earning no return in refundable tax accounts. These revisions have resulted in adjustments to both Cameco and BPLP’s defined benefit obligation balances. There are also expanded disclosure requirements in IAS 19R. These will be included in the 2013 annual financial statements as the new disclosures are not required in interim periods.

The following tables summarize the adjustments made to Cameco’s consolidated statements of earnings for the three and nine month periods ended September 30, 2012 and to its consolidated statements of financial position at January 1, 2012 and December 31, 2012, as a result of the aforementioned accounting changes.


	Three months ended			Nine months ended
Consolidated statement of earnings	Sep 30/12			Sep 30/12
Net earnings as previously reported	$	81,571		$	220,406
Adjustments to:
Revenue from products and services		(112,206	)		(318,775	)
Cost of products and services sold		43,559			131,539
Depreciation and amortization		19,162			56,602
Administration		—			350
Exploration		104			(100	)
Finance costs		2,912			9,657
Gains on derivatives		1,932			1,513
Finance income		(1,734	)		(5,172	)
Earnings from BPLP		42,022			111,543
Share of loss from equity-accounted investees		(111	)		113
Income tax recovery		1,090			3,174

Net earnings as restated	$	78,301		$	210,850

Restated net earnings attributable to:
Equity holders	$	78,505		$	211,834
Non-controlling interest		(204	)		(984	)

	$	78,301		$	210,850


Consolidated statements of financial position	Dec 31/12			Jan 1/12
Equity as previously reported	$	4,944,267		$	4,923,136
Adjustments to:
Cash and cash equivalents		(325	)		(2,532	)
Accounts receivable		(142,460	)		(95,152	)
Supplies and prepaid expenses		(78,644	)		(67,855	)
Current portion of long-term receivables, investments and other		(23,452	)		(48,345	)
Property, plant and equipment		(433,175	)		(443,063	)
Long-term receivables, investments and other		(100,080	)		(107,195	)
Investments in equity-accounted investees		(6,633	)		3,922
Accounts payable and accrued liabilities		81,123			99,865
Short-term debt		39,500			18,644
Current portion of finance lease obligation		16,337			14,852
Current portion of other liabilities		8,116			17,987
Finance lease obligation		114,676			130,982
Other liabilities		521,911			474,651
Deferred tax liabilities		803			831

Equity as restated	$	4,941,964		$	4,920,728

Restated equity attributable to:
Equity holders	$	4,941,384		$	4,917,185
Non-controlling interest		580			3,543

	$	4,941,964		$	4,920,728

The adjustments to earnings relating to the new and amended standards resulted in a one cent decrease in both basic and diluted earnings per share for the three month period ended September 30, 2012 and a two cent decrease in both basic and diluted earnings per share for the nine months ended September 30, 2012.

B. New standards and interpretations not yet adopted

i. Financial instruments

In October 2010, the International Accounting Standards Board (IASB) issued IFRS 9, Financial Instruments (IFRS 9). This standard is part of a wider project to replace IAS 39, Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset or liability. The guidance in IAS 39 on impairment of financial assets and hedge accounting continues to apply. IFRS 9 is effective for annual periods beginning on or after January 1, 2015, with early adoption permitted. Cameco does not intend to early adopt IFRS 9. The extent of the impact of adoption of IFRS 9 has not yet been determined.

ii. Financial assets and financial liabilities

In December 2011, the IASB issued amendments to IAS 32, Financial Instruments: Presentation (IAS 32). The amendment is effective for periods beginning on or after January 1, 2014 and is to be applied retrospectively. The amendment clarifies matters regarding offsetting financial assets and financial liabilities as well as related disclosure requirements. Cameco intends to adopt the amendments to IAS 32 in its financial statements for the annual period beginning January 1, 2014 and does not expect the amendments to have a material impact on the financial statements.

iii. Levies

In May 2013, the IASB issued International Financial Reporting Interpretations Committee (IFRIC) 21, Levies. IFRIC 21 is effective for annual periods beginning on or after January 1, 2014 and is to be applied retrospectively. IFRIC 21 provides guidance on accounting for levies in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The interpretation defines a levy as an outflow from an entity imposed by a government in accordance with legislation and confirms that an entity recognizes a liability for a levy only when the triggering event specified in the legislation occurs. Cameco intends to adopt IFRIC 21 in its financial statements for the annual period beginning January 1, 2014. The extent of the impact of IFRIC 21 has not yet been determined.

iv. Impairment of assets

In May 2013, the IASB issued amendments to IAS 36 Impairment of Assets. The amendments in IAS 36 are effective for annual periods beginning on or after January 1, 2014 and are to be applied retrospectively. The amendments reverse the unintended requirement in IFRS 13, Fair Value Measurement to disclose the recoverable amount of every cash-generating unit to which significant goodwill or indefinite-lived intangible assets have been allocated. Under these amendments, the recoverable amount is required to be disclosed only when an impairment loss has been recognized or reversed. Cameco intends to adopt the amendments to IAS 36 in its financial statements for the annual period beginning January 1, 2014 and does not expect the amendments to have a material impact on the financial statements.

4. Acquisition of NUKEM Energy GmbH (NUKEM)

On January 9, 2013, Cameco completed the acquisition of NUKEM from Advent International (Advent) and other shareholders, through the purchase of all the outstanding shares for cash consideration of €107,149,000 ($140,494,000 (US)), plus additional consideration of €6,075,000 ($7,808,000 (US)). This additional consideration represents a share of NUKEM’s 2012 earnings under the terms of the agreement. Based on an amending agreement entered into during the quarter, no further earn-out payments will be made.

While Cameco received the economic benefit of owning NUKEM as of January 1, 2012, the results of NUKEM have been consolidated with the results of Cameco commencing on January 9, 2013. NUKEM is one of the world’s leading traders and brokers of nuclear fuel products and services. The acquisition complements Cameco’s business by strengthening our position in nuclear fuel markets and improving our access to unconventional and secondary sources of supply.

In accordance with the acquisition method of accounting, the purchase price was allocated to the underlying assets and liabilities assumed based on their fair values at the date of acquisition. Fair values were determined based on discounted cash flows and quoted market prices. The values assigned to the net assets acquired were as follows:


Net assets acquired
Cash and cash equivalents	$	12,974
Accounts receivable		43,529
Other working capital		5,172
Inventories		165,280
Intangible assets		87,535
Accounts payable and accrued liabilities		(68,464	)
Long-term debt		(116,922	)
Provisions		(15,514	)
Deferred tax liabilities		(53,665	)
Goodwill		88,377

Total	$	148,302

Cash	$	140,494
Additional consideration		7,808

Total	$	148,302

The fair value of the acquired accounts receivable approximates its carrying value due to the short-term nature of the balance. None of the accounts receivable were impaired and the amounts were fully collected.

Intangible assets include the fair value of the purchase and sales contracts that NUKEM was a party to as at January 9, 2013.

The goodwill arising on acquisition is attributable to the difference between the accounting fair value and the tax basis of the net assets acquired, and is not deductible for income tax purposes. Goodwill reflects the value assigned to the expected future earnings capabilities of the organization. This is the earnings potential that we anticipate will be realized through new business arrangements.

Since the effective date of the transaction was January 9, 2013, the consolidated revenue and net earnings for the current reporting period is not materially different than what would be reported if the business combination had occurred at the beginning of the year.

Acquisition costs of $3,800,000 have been expensed and included in administration expense in the 2012 consolidated statements of earnings. In addition, an advisory fee of $2,980,000 has been included in administration expense in the consolidated statement of earnings for the period ended September 30, 2013.

As at September 30, 2013, NUKEM had the following purchase commitments to buy uranium and fuel services products:


2013		2014		2015		2016		2017		Thereafter		Total
$	190,111	$	175,553	$	177,088	$	247,204	$	38,977	$	194,886	$	1,023,819

5. Inventories


	Sep 30/13		Dec 31/12
Uranium
Concentrate	$	514,169	$	407,067
Broken Ore		56,748		22,537

		570,917		429,604
NUKEM		239,208		—
Fuel Services		165,783		133,974

Total	$	975,908	$	563,578

For the quarter ended September 30, 2013, Cameco expensed $371,000,000 of inventory as cost of sales (2012—$186,300,000). For the nine months ended September 30, 2013, Cameco expensed $978,400,000 of inventory as cost of sales (2012—$650,400,000). Included in cost of sales is a $17,000,000 writedown of NUKEM inventory which Cameco recorded during the quarter to reflect net realizable value.

6. Long-term receivables, investments and other


	Sep 30/13			Dec 31/12
Available-for-sale securities
GoviEx Uranium (privately held)	$	21,295		$	20,599
Derivatives [note 15]		16,807			22,453
Advances receivable from JV Inkai LLP [note 18]		93,207			87,264
Investment tax credits		80,953			69,690
Other		44,358			34,159

		256,620			234,165
Less current portion		(13,492	)		(22,807	)

Net	$	243,128		$	211,358

7. Interest in BPLP

BPLP operates four nuclear reactors at the Bruce B electricity-generating station in southern Ontario. Cameco holds a 31.6% interest in the BPLP partnership, which is governed by an agreement that provides for joint control of the strategic operating, investing and financing activities among the three major partners. BPLP is a joint venture and Cameco accounts for it under the equity method of accounting.

The following table summarizes the financial information of BPLP (100%).


	Sep 30/13			Dec 31/12
Cash and cash equivalents	$	27,800		$	1,500
Other current assets		642,300			821,700
Non-current assets		1,555,900			1,557,700
Current liabilities		(384,600	)		(493,000	)
Non-current liabilities		(1,653,200	)		(2,141,000	)

Net assets	$	188,200		$	(253,100	)


	Three months ended						Nine months ended
	Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Revenue from products and services	$	391,900		$	384,300		$	987,000		$	1,094,800
Cost of products and services sold		(128,500	)		(181,400	)		(603,400	)		(545,300	)
Depreciation and amortization		(58,300	)		(55,600	)		(163,100	)		(164,000	)
Finance income		4,700			5,200			14,300			15,500
Finance costs		(7,100	)		(15,400	)		(26,800	)		(35,400	)

Earnings before income taxes	$	202,700		$	137,100		$	208,000		$	365,600

Cameco’s share		64,053			43,323			65,728			115,530
Adjustments ⁽ⁱ⁾		(1,145	)		(1,301	)		(3,434	)		(3,987	)

Cameco’s share of earnings before taxes	$	62,908		$	42,022		$	62,294		$	111,543

(i)	In addition to its proportionate share of earnings from BPLP, Cameco records certain consolidating adjustments to amortize fair values assigned to assets and liabilities at the time of acquisition

(a) During the year, Cameco, Cameco Bruce Holdings II Inc., BPC Generation Infrastructure Trust (BPC) and TransCanada Pipelines Limited (TransCanada) (collectively, the Consortium), signed an agreement with BE confirming the amount of the damages paid to the Consortium in connection with the claim against British Energy Limited and British Energy International Holdings Limited (collectively, BE) on the issues of repair costs and lost revenue for breach of a representation and warranty contained in the February 14, 2003 Amended and Restated Master Purchase Agreement under which the Consortium acquired BE’s interest in BPLP.

In connection with this arbitration, BE had issued on February 10, 2006 and then served on OPG and BPLP a Statement of Claim. This Statement of Claim seeks damages for any amounts that BE is found liable to pay to the Consortium in connection with the Unit 8 steam generator arbitration described above, additional damages in the amount of $500,000,000, costs pre and post judgement interest amongst other things. As part of the settlement noted above, BE is effectively discontinuing their action against BPLP.

(b) Annual supplemental rents of $31,000,000 (subject to CPI) per operating reactor are payable by BPLP to OPG. Should the hourly annual average price of electricity in Ontario fall below $30 per megawatt hour for any calendar year, the supplemental rent reduces to $12,000,000 per operating reactor. In accordance with the Sublease Agreement, BALP will participate in its share of any adjustments to the supplemental rent.

(c) Cameco, TransCanada and BPC have assumed the obligations to provide financial guarantees on behalf of BPLP. Cameco has provided the following financial assurances, with varying terms that range from 2013 to 2018:

i) Guarantees to customers under power sales agreements of up to $3,700,000. At September 30, 2013, Cameco had no exposure under these agreements.

ii) Termination payments to OPG pursuant to the lease agreement of $58,300,000. The fair value of these guarantees is nominal.

(d) Under a supply contract with the Ontario Power Authority (OPA), BPLP is entitled to receive payments from the OPA during periods when the market price for electricity in Ontario is lower than the floor price defined under the agreement during a calendar year. On July 6, 2009, BPLP and the OPA amended the supply contract such that beginning in 2009, the annual payments received will not be subject to repayment in future years. Previously, the payments received under the agreement were subject to repayment during the entire term of the contract, dependent on the spot price in future periods. On April 3, 2013, BPLP and the OPA reached an agreement to amend the supply contract to extend the floor price from the original end of life dates from between 2016 and 2019 to between 2019 and 2020. For the quarter ended September 30, 2013, BPLP recorded as revenue $203,600,000 (2012—$165,600,000) under this agreement, with Cameco’s share being $64,300,000 (2012 -$52,300,000). For the nine months ended September 30, 2013, BPLP recorded as revenue $486,400,000 (2012—$575,000,000) under this agreement, with Cameco’s share being $153,700,000 (2012—$181,700,000).

8. Other liabilities


	Sep 30/13			Dec 31/12
Deferred sales	$	23,887		$	9,820
Derivatives [note 15]		11,756			1,954
Accrued pension and post-retirement benefit liability		48,308			32,647
Investment in BPLP		—			40,533
Other		9,613			5,591

		93,564			90,545
Less current portion		(38,699	)		(13,028	)

Net	$	54,865		$	77,517

9. Provisions


	Reclamation			Waste disposal			Total
Beginning of year	$	552,637		$	16,817		$	569,454
Changes in estimates		69,355			275			69,630
Expenditures during the period		(7,102	)		(403	)		(7,505	)
Unwinding of discount		12,099			173			12,272
Impact of foreign exchange		6,178			—			6,178

End of period	$	633,167		$	16,862		$	650,029

Current		13,876			2,409			16,285
Non-current		619,291			14,453			633,744

	$	633,167		$	16,862		$	650,029

10. Share capital

At September 30, 2013, there were 395,466,300 common shares outstanding. Options in respect of 9,968,602 shares are outstanding under the stock option plan and are exercisable up to 2021. For the quarter ended September 30, 2013, 28,750 options were exercised resulting in the issuance of shares (2012 – 35,766). For the nine months ended September 30, 2013, 115,906 options were exercised resulting in the issuance of shares (2012 – 603,621).

11. Finance costs


	Three months ended				Nine months ended
	Sep 30/13		Sep 30/12		Sep 30/13			Sep 30/12
Interest on long-term debt	$	15,798	$	11,882	$	49,992		$	32,343
Unwinding of discount on provisions		4,116		3,396		12,272			10,172
Other charges		1,294		1,135		4,228			4,262
Foreign exchange losses (gains)		5,983		10,231		(15,037	)		7,409
Interest on short-term debt		262		160		451			892

Total	$	27,453	$	26,804	$	51,906		$	55,078

12. Income taxes


	Three months ended						Nine months ended
	Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Earnings (loss) before income taxes
Canada	$	22,996		$	(5,917	)	$	(302,934	)	$	(178,631	)
Foreign		212,134			86,378			507,630			353,748

	$	235,130		$	80,461		$	204,696		$	175,117

Current income taxes (recovery)
Canada	$	4,413		$	(1,447	)	$	2,567		$	(913	)
Foreign		22,026			5,318			49,841			19,542

	$	26,439		$	3,871		$	52,408		$	18,629
Deferred income taxes (recovery)
Canada	$	5,790		$	3,693		$	(72,906	)	$	(43,799	)
Foreign		(8,187	)		(5,404	)		(28,427	)		(10,563	)

	$	(2,397	)	$	(1,711	)	$	(101,333	)	$	(54,362	)

Income tax expense (recovery)	$	24,042		$	2,160		$	(48,925	)	$	(35,733	)

Cameco has recorded $243,776,000 of deferred tax assets (December 31, 2012—$193,916,000). Based on projections of future income, realization of these deferred tax assets is probable and consequently a deferred tax asset has been recorded.

In 2008, as part of the ongoing annual audits of Cameco’s Canadian tax returns, Canada Revenue Agency (CRA) disputed the transfer pricing structure and methodology used by Cameco and its wholly owned Swiss subsidiary, Cameco Europe Ltd. (CEL), in respect of sale and purchase agreements for uranium products. From December 2008 to date, CRA issued notices of reassessment for the taxation years 2003 through 2007, which have increased Cameco’s income for Canadian income tax purposes by approximately $43,000,000, $108,000,000, $197,000,000, $243,000,000 and $708,000,000 respectively. The 2007 reassessment resulted in Cameco being required to make a cash payment of approximately $27,000,000 in the first quarter of 2013. Cameco was successful in obtaining a refund of $20,000,000 related to this payment in the second quarter of 2013. Cameco believes it is likely that CRA will reassess Cameco’s tax returns for subsequent years on a similar basis and that these will result in future cash payments on receipt of the reassessments.

Using the methodology we believe that the CRA will continue to apply, and including the $1,300,000,000 already reassessed, we expect to receive notices of reassessment for a total of approximately $4,900,000,000 for the years 2003 through 2012, which would increase Cameco’s income for Canadian tax purposes and result in a related tax expense of approximately $1,400,000,000. Cash taxes payable would be between $800,000,000 and $850,000,000. In addition, we estimate there would be interest and instalment penalties applied that would be material to Cameco. We would be responsible for remitting 50% of the cash taxes, or between $400,000,000 and $425,000,000, plus related interest and instalment penalties assessed, which would be material to Cameco. The amount required to be remitted each year will depend on the amount of income reassessed in that year and the availability of elective deductions and tax loss carryovers. In light of our view of the likely outcome of the case as described above, we expect to recover all amounts paid to date and any other amounts remitted in this case.

The case on the 2003 reassessment is expected to go to trial in late 2014. If the timing is adhered to, we expect to have a Tax Court decision in 2015.

Having regard to advice from its external advisors, Cameco’s opinion is that CRA’s position is incorrect, and Cameco is contesting CRA’s position and expects to recover any cash paid as a result of the reassessments. However, to reflect the uncertainties of CRA’s appeals process and litigation, Cameco has recorded a cumulative tax provision related to this matter for the years 2003 through the current period in the amount of $68,000,000. While the resolution of this matter may result in liabilities that are higher or lower than the reserve, management believes that the ultimate resolution will not be material to Cameco’s financial position, results of operations or liquidity in the year(s) of resolution. Resolution of this matter as stipulated by CRA would be material to Cameco’s financial position, results of operations or liquidity in the year(s) of resolution, and other unfavourable outcomes for the years 2003 to date could be material to Cameco’s financial position, results of operations and cash flows in the year(s) of resolution.

To date, CRA’s Transfer Pricing Review Committee has not imposed a transfer pricing penalty for any year reassessed. Further to Cameco’s decision to contest CRA’s reassessments, Cameco is pursuing its appeal rights under the Income Tax Act.

Other comprehensive income (loss) included in the consolidated statements of comprehensive income and the consolidated statements of changes in equity is presented net of income taxes. The following income tax amounts are included in each component of other comprehensive income (loss):

For the three months ended September 30, 2013


	Before tax			Income tax recovery (expense)			Net of tax
Exchange differences on translation of foreign operations	$	(27,072	)	$	—		$	(27,072	)
Gains on derivatives designated as cash flow hedges—equity-accounted investees		221			(55	)		166
Gains on derivatives designated as cash flow hedges transferred to net earnings—equity-accounted investees		(1,232	)		308			(924	)

	$	(28,083	)	$	253		$	(27,830	)

For the three months ended September 30, 2012


	Before tax			Income tax recovery (expense)			Net of tax
Defined benefit plan actuarial losses—equity-accounted investees	$	(140,178	)	$	35,045		$	(105,133	)
Exchange differences on translation of foreign operations		(33,089	)		—			(33,089	)
Losses on derivatives designated as cash flow hedges—equity-accounted investees		(2,370	)		592			(1,778	)
Gains on derivatives designated as cash flow hedges transferred to net earnings—equity-accounted investees		(5,477	)		1,369			(4,108	)
Unrealized gains on available-for-sale assets		81			(11	)		70
Gains on available-for-sale assets transferred to net earnings		(106	)		14			(92	)

	$	(181,139	)	$	37,009		$	(144,130	)

For the nine months ended September 30, 2013


	Before tax			Income tax recovery (expense)			Net of tax
Defined benefit plan actuarial gains—equity-accounted investees	$	134,300		$	(33,575	)	$	100,725
Exchange differences on translation of foreign operations		(30,537	)		—			(30,537	)
Losses on derivatives designated as cash flow hedges—equity-accounted investees		(95	)		24			(71	)
Gains on derivatives designated as cash flow hedges transferred to net earnings—equity-accounted investees		(4,267	)		1,067			(3,200	)

	$	99,401		$	(32,484	)	$	66,917

For the nine months ended September 30, 2012


	Before tax			Income tax recovery (expense)			Net of tax
Defined benefit plan actuarial losses—equity-accounted investees	$	(140,178	)	$	35,045		$	(105,133	)
Exchange differences on translation of foreign operations		(36,194	)		—			(36,194	)
Gains on derivatives designated as cash flow hedges—equity-accounted investees		5,214			(1,303	)		3,911
Gains on derivatives designated as cash flow hedges transferred to net earnings—equity-accounted investees		(21,254	)		5,313			(15,941	)
Unrealized losses on available-for-sale assets		(25	)		5			(20	)
Gains on available-for-sale assets transferred to net earnings		(150	)		20			(130	)

	$	(192,587	)	$	39,080		$	(153,507	)

13. Statements of cash flows


	Three months ended						Nine months ended
	Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Changes in non-cash working capital:
Accounts receivable	$	(55,780	)	$	32,830		$	191,379		$	327,564
Inventories		(18,354	)		(130,183	)		(148,783	)		(193,221	)
Supplies and prepaid expenses		(1,500	)		(20,994	)		(15,310	)		(29,464	)
Accounts payable and accrued liabilities		(70,642	)		65,428			(87,367	)		(242	)
Reclamation payments		(3,055	)		(6,200	)		(7,505	)		(16,784	)
Other		28,252			4,896			16,849			(19,945	)

Other operating items	$	(121,079	)	$	(54,223	)	$	(50,737	)	$	67,908

14. Share-based compensation plans

Stock option plan

The Company has established a stock option plan under which options to purchase common shares may be granted to employees of Cameco. Options granted under the stock option plan have an exercise price of not less than the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted.

The aggregate number of common shares that may be issued pursuant to the Cameco stock option plan shall not exceed 43,017,198 of which 27,543,857 shares have been issued.

The inputs used in the measurement of the fair values at grant date of the stock option plan were as follows:


	Stock option plan
Number of options granted		1,840,932
Average strike price	$	22.00
Expected dividend	$	0.40
Expected volatility		41	%
Risk-free interest rate		1.2	%
Expected life of option		4.4 years
Expected forfeitures		8	%
Weighted average grant date fair values	$	6.51

Cameco records compensation expense with an offsetting credit to contributed surplus to reflect the estimated fair value of the equity-settled share-based compensation plans granted to employees.


	Three months ended				Nine months ended
	Sep 30/13		Sep 30/12		Sep 30/13		Sep 30/12
Stock option plan	$	2,059	$	2,605	$	11,268	$	11,661
Performance share unit		1,311		1,068		3,783		1,641
Restricted share unit		148		148		445		445

Total	$	3,518	$	3,821	$	15,496	$	13,747

15. Financial instruments

A. Fair value of financial instruments

The fair value of a financial instrument is estimated as the amount that would be received to sell a financial asset, or paid to transfer a financial liability in an orderly transaction between market participants at the reporting date. Fair values of financial instruments traded in an active market are determined by reference to last quoted prices, in the principal market for that instrument. In the absence of an active market for an instrument, fair values are determined based on quoted instruments with similar characteristics and risk profiles, or through other valuation techniques. Fair values determined using valuation techniques require the use of inputs, which are obtained from external, readily observable market data when available. In some circumstances, inputs that are not based on observable data must be used. In these cases, the estimated fair values may be adjusted in order to account for valuation uncertainty, or to reflect the assumptions that market participants would use in pricing the instrument.

The fair value of Cameco’s cash and cash equivalents, receivables, payables and accrued liabilities is assumed to approximate the carrying value as a result of the short-term nature of the instruments. The fair value of Cameco’s short-term debt and long-term debt is assumed to approximate the carrying value as a result of the variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.

Short-term investments represent available-for-sale money-market instruments which are carried at fair value, determined based on quoted closing bid prices at the reporting date. The fair value of Cameco’s privately held available-for-sale securities has not been disclosed, because of the unavailability of a quoted market price in an active market. Cameco does not currently have plans to dispose of this investment.

Cameco’s derivatives consist of foreign currency swaps, interest rate swaps, and interest rate caps. The fair value of foreign currency swaps is determined using quoted foreign exchange rates at the reporting date. The fair value of interest rate swaps is determined by discounting estimated future cash flows based on the terms and maturity of each contract, and using market interest rates for a similar instrument at the reporting date. The fair value of interest rate caps is determined based on broker quotes at the reporting date. Where applicable, the fair value of derivatives reflects the credit risk of the instrument, and includes adjustments to take into account the credit risk of the Company and counterparty.

All financial instruments measured at fair value are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

•

Level 1 – Values based on unadjusted quoted prices in active markets that are accessible at the reporting date for identical assets or liabilities.

•

Level 2 – Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

•

Level 3 – Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

When the inputs used to measure fair value fall within more than one level of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measure in its entirety.

The following tables present Cameco’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis.

As at September 30, 2013


	Level 1		Level 2			Level 3		Total
Derivative instrument assets	$	—	$	16,807		$	—	$	16,807
Derivative instrument liabilities		—		(11,756	)		—		(11,756	)

Net	$	—	$	5,051		$	—	$	5,051

As at December 31, 2012


	Level 1		Level 2			Level 3		Total
Derivative instrument assets	$	—	$	22,453		$	—	$	22,453
Available-for-sale securities		49,535		—			—		49,535
Derivative instrument liabilities		—		(1,954	)		—		(1,954	)

Net	$	49,535	$	20,499		$	—	$	70,034

Transfers between levels of the fair value hierarchy are recognized at the end of the reporting period. There were no transfers between level 1, level 2, or level 3 during the period. Cameco does not have any financial instruments that are categorized as level 3 as of the reporting date.

B. Derivatives

The following table summarizes the fair value of derivatives and classification on the statements of financial position:


	Sep 30/13			Dec 31/12
Non-hedge derivatives:
Foreign currency contracts	$	1,735		$	15,046
Interest rate contracts		3,316			5,453

Net	$	5,051		$	20,499

Classification:
Current portion of long-term receivables, investments and other [note 6]	$	13,492		$	17,000
Long-term receivables, investments and other [note 6]		3,315			5,453
Current portion of other liabilities [note 8]		(11,756	)		(1,954	)

Net	$	5,051		$	20,499

The following table summarizes different components of the gains (losses) on derivatives included in net earnings:


	Three months ended					Nine months ended
	Sep 30/13		Sep 30/12			Sep 30/13			Sep 30/12
Non-hedge derivatives:
Foreign currency contracts	$	43,019	$	55,248		$	(20,087	)	$	56,682
Embedded derivatives—sales contracts		—		(63	)		—			62
Interest rate contracts		512		(215	)		324			(619	)

	$	43,531	$	54,970		$	(19,763	)	$	56,125

16. Earnings per share

Per share amounts have been calculated based on the weighted average number of common shares outstanding during the period. The weighted average number of paid shares outstanding in 2013 was 395,413,451 (2012 – 395,195,455).


	Three months ended				Nine months ended
	Sep 30/13		Sep 30/12		Sep 30/13		Sep 30/12
Basic earnings per share computation
Net earnings attributable to equity holders	$	211,267	$	78,505	$	254,159	$	211,834
Weighted average common shares outstanding		395,459		395,341		395,413		395,195

Basic earnings per common share	$	0.53	$	0.20	$	0.64	$	0.54

Diluted earnings per share computation
Net earnings attributable to equity holders	$	211,267	$	78,505	$	254,159	$	211,834
Weighted average common shares outstanding		395,459		395,341		395,413		395,195
Dilutive effect of stock options		69		162		116		604

Weighted average common shares outstanding, assuming dilution		395,528		395,503		395,529		395,799

Diluted earnings per common share	$	0.53	$	0.20	$	0.64	$	0.54

17. Segmented information

Cameco has four reportable segments: uranium, fuel services, electricity and NUKEM. The uranium segment involves the exploration for, mining, milling, purchase and sale of uranium concentrate. The fuel services segment involves the refining, conversion and fabrication of uranium concentrate and the purchase and sale of conversion services. The electricity segment involves the generation and sale of electricity. The NUKEM segment acts as a market intermediary between uranium producers and nuclear-electric utilities.

Cameco’s reportable segments are strategic business units with different products, processes and marketing strategies.

Accounting policies used in each segment are consistent with the policies outlined in the summary of significant accounting policies. Segment revenues, expenses and results include transactions between segments incurred in the ordinary course of business. These transactions are priced on an arm’s length basis and are eliminated on consolidation.

Business segments

For the three months ended September 30, 2013


	Uranium			Fuel Services		NUKEM			(i) Electricity		(i) Adjustments			Other			Total
Revenue	$	449,355		$	76,777	$	92,992		$	123,840	$	(123,840	)	$	(22,546	)	$	596,578
Expenses
Cost of products and services sold		198,222			57,599		87,103			40,606		(40,606	)		(22,914	)		320,010
Depreciation and amortization		25,586			6,165		12,833			18,423		(18,423	)		4,396			48,980

Cost of sales		223,808			63,764		99,936			59,029		(59,029	)		(18,518	)		368,990

Gross profit (loss)		225,547			13,013		(6,944	)		64,811		(64,811	)		(4,028	)		227,588
Administration		—			—		3,758			—		—			31,757			35,515
Exploration		19,908			—		—			—		—			—			19,908
Research and development		—			—		—			—		—			1,014			1,014
Gain on sale of assets		(12	)		—		—			—		—			—			(12	)
Net finance costs		—			—		(2,376	)		758		(758	)		(14,880	)		(17,256	)
Earnings from BPLP		—			—		—			—		(62,908	)		—			(62,908	)
Share of loss (earnings) from equity-accounted investees		346			1,041		—			—		—			(28	)		1,359
Other expense (income)		14,838			—		—			1,145		(1,145	)		—			14,838

Earnings (loss) before income taxes		190,467			11,972		(8,326	)		62,908		—			(21,891	)		235,130
Income tax expense																		24,042

Net earnings																	$	211,088

For the three months ended September 30, 2012


	Uranium		Fuel Services		(i) Electricity		(i) Adjustments			Other			Total
Revenue	$	237,876	$	57,770	$	121,439	$	(121,439	)	$	545		$	296,191
Expenses
Cost of products and services sold		123,712		50,787		57,323		(57,323	)		73			174,572
Depreciation and amortization		26,212		4,971		17,570		(17,570	)		5,231			36,414

Cost of sales		149,924		55,758		74,893		(74,893	)		5,304			210,986

Gross profit (loss)		87,952		2,012		46,546		(46,546	)		(4,759	)		85,205
Administration		—		—		—		—			38,735			38,735
Exploration		34,443		—		—		—			—			34,443
Research and development		—		—		—		—			2,181			2,181
Loss on sale of assets		512		—		—		—			—			512
Net finance costs		—		—		3,223		(3,223	)		(31,178	)		(31,178	)
Earnings from BPLP		—		—		—		(42,022	)		—			(42,022	)
Share of loss (earnings) from equity-accounted investees		1,288		789		—		—			(4	)		2,073
Other expense (income)		—		—		1,301		(1,301	)		—			—

Earnings (loss) before income taxes		51,709		1,223		42,022		—			(14,493	)		80,461
Income tax expense														2,160

Net earnings													$	78,301

For the nine months ended September 30, 2013


	Uranium		Fuel Services		NUKEM			(i) Electricity		(i) Adjustments			Other			Total
Revenue	$	1,001,130	$	207,645	$	276,307		$	311,892	$	(311,892	)	$	(23,780	)	$	1,461,302
Expenses
Cost of products and services sold		509,374		156,695		231,314			190,674		(190,674	)		(24,204	)		873,179
Depreciation and amortization		91,716		17,006		44,388			51,540		(51,540	)		13,361			166,471

Cost of sales		601,090		173,701		275,702			242,214		(242,214	)		(10,843	)		1,039,650

Gross profit (loss)		400,040		33,944		605			69,678		(69,678	)		(12,937	)		421,652
Administration		—		—		10,542			—		—			123,785			134,327
Exploration		56,483		—		—			—		—			—			56,483
Research and development		—		—		—			—		—			4,967			4,967
Loss on sale of assets		117		—		—			—		—			—			117
Net finance costs		—		—		(1,261	)		3,950		(3,950	)		67,390			66,129
Earnings from BPLP		—		—		—			—		(62,294	)		—			(62,294	)
Share of loss (earnings) from equity-accounted investees		271		3,198		—			—		—			(2,819	)		650
Other expense (income)		14,838		—		—			3,434		(3,434	)		1,739			16,577

Earnings (loss) before income taxes		328,331		30,746		(8,676	)		62,294		—			(207,999	)		204,696
Income tax recovery																	(48,925	)

Net earnings																$	253,621

For the nine months ended September 30, 2012


	Uranium			Fuel Services		(i) Electricity		(i) Adjustments			Other			Total
Revenue	$	854,897		$	187,731	$	345,957	$	(345,957	)	$	1,676		$	1,044,304
Expenses
Cost of products and services sold		489,376			149,536		172,315		(172,315	)		219			639,131
Depreciation and amortization		90,841			15,775		51,824		(51,824	)		13,188			119,804

Cost of sales		580,217			165,311		224,139		(224,139	)		13,407			758,935

Gross profit (loss)		274,680			22,420		121,818		(121,818	)		(11,731	)		285,369
Administration		—			—		—		—			123,814			123,814
Exploration		75,504			—		—		—			—			75,504
Research and development		—			—		—		—			6,159			6,159
Gain on sale of assets		(1,637	)		—		—		—			—			(1,637	)
Net finance costs		—			—		6,288		(6,288	)		(12,410	)		(12,410	)
Earnings from BPLP		—			—		—		(111,543	)		—			(111,543	)
Share of loss (earnings) from equity-accounted investees		2,582			2,284		—		—			(246	)		4,620
Other expense (income)		35,745			—		3,987		(3,987	)		(10,000	)		25,745

Earnings (loss) before income taxes		162,486			20,136		111,543		—			(119,048	)		175,117
Income tax recovery															(35,733	)

Net earnings														$	210,850

(i)

Consistent with the presentation of financial information for internal management purposes, Cameco’s pro rata share of BPLP’s financial results have been presented as a separate segment. In accordance with IFRS, this investment is accounted for by the equity method of accounting in these condensed consolidated interim financial statements and the associated revenues and expenses are eliminated in the “Adjustments” column.

18. Related parties

The shares of Cameco are widely held and no shareholder, resident in Canada, is allowed to own more than 25% of the Company’s outstanding common shares, either individually or together with associates. A non-resident of Canada is not allowed to own more than 15%.

Related party transactions


	Transaction value						Transaction value						Balance outstanding
	Three months ended						Nine months ended						As at
	Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12			Sep 30/13			Sep 30/12
Sale of goods and services
Joint arrangements
BPLP	$	9,991		$	29,636		$	43,610		$	86,009		$	12,690		$	19,854
Other
Joint arrangements
Interest income (Inkai) ^(a)		521			600			1,533			1,671			93,207			96,332
Associates
Interest expense		(29	)		(135	)		(195	)		(806	)		(10,271	)		(49,187	)

(a)	Disclosures in respect of transactions with joint arrangements represent the amount of such transactions which do not eliminate on proportionate consolidation.

Cameco has entered into fuel supply agreements with BPLP for the procurement of fabricated fuel. Under these agreements, Cameco will supply uranium, conversion services and fabrication services. Contract terms are at market rates and on normal trade terms.

Through unsecured shareholder loans, Cameco has agreed to fund Inkai’s project development costs as well as further evaluation on Block 3. The limit of the loan facilities is $302,150,000 (US) and advances under these facilities bear interest at a rate of LIBOR plus 2%. At September 30, 2013, $226,560,000 (US) of principal and interest was outstanding (December 31, 2012—$219,277,000 (US)).

In 2008, a promissory note in the amount of $73,344,000 (US) was issued to finance the acquisition of GLE. The promissory note is payable on demand and bears interest at market rates. At September 30, 2013, $9,986,000 (US) of principal and interest was outstanding (December 31, 2012—$42,436,000 (US)).