EXHIBIT 99.2




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REPORT OF MANAGEMENTS ACCOUNTABILITY
      Original signed by Gerald W. Grandey
    
    Original signed by O. Kim GoheenChief Executive Officer
    
    Senior Vice-President and Chief Financial OfficerFebruary 11, 2011
    
    February 11, 2011
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INDEPENDENT AUDITORS REPORT
   Managements Responsibility for the Consolidated Financial Statements
  Auditors Responsibility
    Opinion
  Original signed by KPMG LLP
 
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Consolidated Balance Sheets
 As at December 31($Cdn thousands)
    
    2010
    
    
    2009AssetsCurrent assetsCash and cash equivalents
    
    $
    376,621
    
    
    $
    1,101,229Short-term investments [note 5]
    
    
    883,032
    
    
    
    202,836Accounts receivable
    
    
    447,404
    
    
    
    446,722Income taxes receivable
    
    
    42,190
    
    
    
    Inventories [note 6]
    
    
    542,526
    
    
    
    453,224Supplies and prepaid expenses
    
    
    190,079
    
    
    
    169,005Current portion of long-term receivables, investments and other [note 9]
    
    
    91,447
    
    
    
    154,7252,573,299
    
    
    
    2,527,741Property, plant and equipment [note 7]
    
    
    4,337,809
    
    
    
    4,068,103Intangible assets [note 8]
    
    
    94,270
    
    
    
    97,713Long-term receivables, investments and other [note 9]
    
    
    628,824
    
    
    
    667,287Future income tax assets [note 18]
    
    
    37,166
    
    
    
    33,017Total assets
    
    $
    7,671,368
    
    
    $
    7,393,861Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable and accrued liabilities
    
    $
    399,035
    
    
    $
    503,521Income taxes payable
    
    
    35,042
    
    
    
    31,143Short-term debt [notes 10]
    
    
    72,948
    
    
    
    76,762Dividends payable
    
    
    27,605
    
    
    
    23,570Current portion of long-term debt [note 11]
    
    
    13,177
    
    
    
    11,629Current portion of other liabilities [note 13]
    
    
    28,228
    
    
    
    29,297Future income taxes [note 18]
    
    
    28,674
    
    
    
    87,135604,709
    
    
    
    763,057Long-term debt [note 11]
    
    
    940,317
    
    
    
    952,853Provision for reclamation [note 12]
    
    
    279,653
    
    
    
    258,277Other liabilities [note 13]
    
    
    244,179
    
    
    
    244,433Future income taxes [note 18]
    
    
    208,044
    
    
    
    167,3732,276,902
    
    
    
    2,385,993Minority interest
    
    
    178,139
    
    
    
    164,040Shareholders equityShare capital [note 14]
    
    
    1,535,857
    
    
    
    1,512,461Contributed surplus
    
    
    142,376
    
    
    
    131,577Retained earnings
    
    
    3,563,089
    
    
    
    3,158,506Accumulated other comprehensive income
    
    
    (24,995
    )
    
    
    41,2845,216,327
    
    
    
    4,843,828Total liabilities and shareholders equity
    
    $
    7,671,368
    
    
    $
    7,393,861
 Approved by the board of directors
Original signed by Gerald W. Grandey and John H. Clappison
 3




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Consolidated Statements of Earnings
 For the years ended December 31($Cdn thousands, except per share amounts)
    
    2010
    
    
    2009Revenue fromProducts and services
    
    $
    2,123,655
    
    
    $
    2,314,985ExpensesProducts and services sold
    
    
    1,127,879
    
    
    
    1,324,278Depreciation, depletion and reclamation
    
    
    251,547
    
    
    
    240,643Administration
    
    
    155,810
    
    
    
    135,558Exploration
    
    
    95,796
    
    
    
    49,061Research and development
    
    
    4,794
    
    
    
    630Interest and other [note 15]
    
    
    3,474
    
    
    
    (12,470
    )Gains on derivatives [note 26]
    
    
    (75,183
    )
    
    
    (243,804
    )Cigar Lake remediation
    
    
    16,633
    
    
    
    17,884Loss (gain) on sale of assets [note 16]
    
    
    107
    
    
    
    (566
    )1,580,857
    
    
    
    1,511,214Earnings from continuing operations
    
    
    542,798
    
    
    
    803,771Other expense [note 17]
    
    
    (11,150
    )
    
    
    (36,912
    )Earnings before income taxes and minority interest
    
    
    531,648
    
    
    
    766,859Income tax expense [note 18]
    
    
    27,251
    
    
    
    52,897Minority interest
    
    
    (10,352
    )
    
    
    (3,035
    )Earnings from continuing operations
    
    $
    514,749
    
    
    $
    716,997Earnings from discontinued operations [note 24]
    
    
    
    
    
    
    382,425Net earnings
    
    $
    514,749
    
    
    $
    1,099,422Net earnings per share [note 27]BasicContinuing operations
    
    $
    1.31
    
    
    $
    1.84Discontinued operations
    
    
    
    
    
    
    0.99Total basic earnings per share
    
    $
    1.31
    
    
    $
    2.83DilutedContinuing operations
    
    $
    1.30
    
    
    $
    1.84Discontinued operations
    
    
    
    
    
    
    0.98Total diluted earnings per share
    
    $
    1.30
    
    
    $
    2.82
  4




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Consolidated Statements of Shareholders Equity
 For the years ended December 31($Cdn thousands)
    
    2010
    
    
    2009Share capitalBalance at beginning of year
    
    $
    1,512,461
    
    
    $
    1,062,714Stock option plan
    
    
    23,396
    
    
    
    4,215Equity issuance [note 14]
    
    
    
    
    
    
    445,532Balance at end of year
    
    
    1,535,857
    
    
    
    1,512,461Contributed surplusBalance at beginning of year
    
    
    131,577
    
    
    
    131,858Stock-based compensation
    
    
    16,086
    
    
    
    641Options exercised
    
    
    (5,287
    )
    
    
    (922
    )Balance at end of year
    
    
    142,376
    
    
    
    131,577Retained earningsBalance at beginning of year
    
    
    3,158,506
    
    
    
    2,153,315Net earnings
    
    
    514,749
    
    
    
    1,099,422Dividends on common shares
    
    
    (110,166
    )
    
    
    (94,231
    )Balance at end of year
    
    
    3,563,089
    
    
    
    3,158,506Accumulated other comprehensive income (loss)Balance at beginning of year
    
    
    41,284
    
    
    
    165,736Other comprehensive loss
    
    
    (66,279
    )
    
    
    (124,452
    )Balance at end of year
    
    
    (24,995
    )
    
    
    41,284Total retained earnings and accumulated other comprehensive income (loss)
    
    
    3,538,094
    
    
    
    3,199,790Shareholders equity at end of year
    
    $
    5,216,327
    
    
    $
    4,843,828
  5




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Consolidated Statements of Comprehensive Income
 For the years ended December 31($Cdn thousands)
    
    2010
    
    
    2009Net earnings
    
    $
    514,749
    
    
    $
    1,099,422Other comprehensive income (loss), net of taxes [note 18]Unrealized foreign currency translation losses
    
    
    (6,696
    )
    
    
    (115,739
    )Gains on derivatives designated as cash flow hedges
    
    
    12,035
    
    
    
    101,162Gains on derivatives designated as cash flow hedges
transferred to net earnings
    
    
    (71,186
    )
    
    
    (113,360
    )Unrealized gains on available-for-sale securities
    
    
    2,125
    
    
    
    3,011(Gains) losses on available-for-sale securities transferred to net earnings
    
    
    (2,557
    )
    
    
    474Other comprehensive loss
    
    
    (66,279
    )
    
    
    (124,452
    )Total comprehensive income
    
    $
    448,470
    
    
    $
    974,970
 Consolidated Statement of Accumulated Other Comprehensive Income (Loss)
 CurrencyTranslation
    
    
    Cash Flow
    
    
    Available-For-($Cdn thousands)(net of related income taxes)[note 18]
    
    Adjustment
    
    
    Hedges
    
    
    Sale Assets
    
    
    TotalBalance at December 31, 2008
    
    $
    65,342
    
    
    $
    101,654
    
    
    $
    (1,260
    )
    
    $
    165,736Unrealized foreign currency translation losses
    
    
    (115,739
    )
    
    
    
    
    
    
    
    
    
    
    (115,739
    )Gains on derivatives designated as cash flow hedges
    
    
    
    
    
    
    101,162
    
    
    
    
    
    
    
    101,162Gains on derivatives designated as cash flow hedges
transferred to net earnings
    
    
    
    
    
    
    (113,360
    )
    
    
    
    
    
    
    (113,360
    )Unrealized gains on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    3,011
    
    
    
    3,011Losses on available-for-sale securities
transferred to net earnings
    
    
    
    
    
    
    
    
    
    
    474
    
    
    
    474Balance at December 31, 2009
    
    $
    (50,397
    )
    
    $
    89,456
    
    
    $
    2,225
    
    
    $
    41,284Unrealized foreign currency translation losses
    
    
    (6,696
    )
    
    
    
    
    
    
    
    
    
    
    (6,696
    )Gains on derivatives designated as cash flow hedges
    
    
    
    
    
    
    12,035
    
    
    
    
    
    
    
    12,035Gains on derivatives designated as cash flow hedges
transferred to net earnings
    
    
    
    
    
    
    (71,186
    )
    
    
    
    
    
    
    (71,186
    )Unrealized gains on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    2,125
    
    
    
    2,125Gains on available-for-sale securities
transferred to net earnings
    
    
    
    
    
    
    
    
    
    
    (2,557
    )
    
    
    (2,557
    )Balance at December 31, 2010
    
    $
    (57,093
    )
    
    $
    30,305
    
    
    $
    1,793
    
    
    $
    (24,995
    )
  6




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Consolidated Statements of Cash Flows
 For the years ended December 31($Cdn thousands)
    
    2010
    
    
    2009Operating activitiesNet earnings
    
    $
    514,749
    
    
    $
    1,099,422Items not requiring (providing) cash:Depreciation, depletion and reclamation
    
    
    251,547
    
    
    
    240,643Provision for future taxes [note 18]
    
    
    612
    
    
    
    2,237Deferred gains
    
    
    (33,369
    )
    
    
    (41,254
    )Unrealized (gains) losses on derivatives
    
    
    25,561
    
    
    
    (180,260
    )Stock-based compensation [note 22]
    
    
    16,086
    
    
    
    2,772Loss (gain) on sale of assets [note 16]
    
    
    107
    
    
    
    (566
    )Equity in loss from associated companies [note 17]
    
    
    16,413
    
    
    
    29,811Other expense (income) [note 17]
    
    
    (5,263
    )
    
    
    7,101Discontinued operations [note 24]
    
    
    
    
    
    
    (382,425
    )Minority interest
    
    
    (10,352
    )
    
    
    (3,035
    )Other operating items [note 19]
    
    
    (268,993
    )
    
    
    (84,333
    )Cash provided by operations
    
    
    507,098
    
    
    
    690,113Investing activitiesAdditions to property, plant and equipment
    
    
    (470,277
    )
    
    
    (392,719
    )Purchase of short-term investments [note 5]
    
    
    (680,346
    )
    
    
    (202,850
    )Decrease (increase) in long-term receivables, investments and other
    
    
    9,453
    
    
    
    (40,258
    )Proceeds on sale of property, plant and equipment
    
    
    1,437
    
    
    
    3,647Cash used in investing (continuing operations)
    
    
    (1,139,733
    )
    
    
    (632,180
    )Cash provided by investing (discontinued operations) [note 24]
    
    
    
    
    
    
    871,300Cash provided by (used in) investing
    
    
    (1,139,733
    )
    
    
    239,120Financing activitiesDecrease in debt
    
    
    (11,629
    )
    
    
    (726,460
    )Increase in debt
    
    
    1,896
    
    
    
    Issue of debentures, net of issue costs [note 11]
    
    
    
    
    
    
    495,272Issue of shares, net of issue costs [note 14]
    
    
    
    
    
    
    440,150Contributions from minority interests
    
    
    9,811
    
    
    
    Issue of shares, stock option plan
    
    
    18,109
    
    
    
    1,292Dividends
    
    
    (106,132
    )
    
    
    (92,603
    )Cash provided by (used in) financing
    
    
    (87,945
    )
    
    
    117,651Increase (decrease) in cash during the year
    
    
    (720,580
    )
    
    
    1,046,884Exchange rate changes on foreign currency cash balances
    
    
    (4,028
    )
    
    
    (9,877
    )Cash and cash equivalents at beginning of year
    
    
    1,101,229
    
    
    
    64,222Cash and cash equivalents at end of year
    
    $
    376,621
    
    
    $
    1,101,229Cash and cash equivalents comprised of:Cash
    
    $
    100,752
    
    
    $
    56,009Cash equivalents
    
    
    275,869
    
    
    
    1,045,220$
    376,621
    
    
    $
    1,101,229Supplemental cash flow disclosureInterest paid
    
    $
    53,859
    
    
    $
    35,267Income taxes paid
    
    $
    63,226
    
    
    $
    57,093
  7




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Notes to Consolidated Financial Statements
   1.
    
    Cameco CorporationCameco Corporation is incorporated under the Canada Business Corporations Act. Cameco
Corporation and its subsidiaries (collectively, Cameco or the company) are primarily engaged in
the exploration for and the development, mining, refining, conversion and fabrication of uranium
for sale as fuel for generating electricity in nuclear power reactors in Canada and other
countries. The company 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)
    
    Consolidation PrinciplesThe consolidated financial statements include the accounts of Cameco and its subsidiaries.
Interests in joint ventures are accounted for by the proportionate consolidation method.
Under this method, Cameco includes in its accounts its proportionate share of assets,
liabilities, revenues and expenses.The consolidated financial statements are prepared by management in accordance with Canadian
generally accepted accounting principles. Management makes various estimates and assumptions
in determining the reported amounts of assets and liabilities, revenues and expenses for each
year presented, and in the disclosure of commitments and contingencies. The most significant
estimates are related to the lives and recoverability of mineral properties, provisions for
decommissioning and reclamation of assets, future income taxes, financial instruments and
mineral reserves. Actual results could differ from these estimates. This summary of
significant accounting policies is a description of the accounting methods and practices that
have been used in the preparation of these consolidated financial statements and is presented
to assist the reader in interpreting the statements contained herein.(b)
    
    Cash and Cash EquivalentsCash and cash equivalents consist of balances with financial institutions and investments in
money market instruments, which have a term to maturity of three months or less at time of
purchase.(c)
    
    Short-Term InvestmentsShort-term investments consist of short-term money market instruments with terms to maturity
at the date of acquisition of between three and 12 months. The short-term investments are
classified as available-for-sale and are carried at fair value in the consolidated balance
sheets with unrealized gains and losses reported in other comprehensive income (OCI).
Realized gains and losses, as well as other-than-temporary declines in value, are recorded in
the consolidated statements of earnings.(d)
    
    InventoriesInventories of broken ore, uranium concentrates and refined and converted products are valued
at the lower of average cost and net realizable value. Average cost includes direct
materials, direct labour, operational overhead expenses and depreciation, depletion and
reclamation. Net realizable value for finished products is considered to be the estimated
selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses.(e)
    
    SuppliesConsumable supplies and spares are valued at the lower of cost or replacement value.(f)
    
    InvestmentsInvestments in associated companies over which Cameco has the ability to exercise significant
influence are accounted for by the equity method. Under this method, Cameco includes in
earnings its share of earnings or losses of the associated company. Portfolio investments
are classified as available-for-sale and are carried at fair value in the consolidated
balance sheets with unrealized gains and losses reported in OCI. Realized gains and losses,
as well as other-than-temporary declines in value, are recorded in the consolidated
statements of earnings.
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(g)
    
    Property, Plant and EquipmentAssets are carried at cost. Costs of additions and improvements are capitalized. When
assets are retired or sold, the resulting gains or losses are reflected in current earnings.
Maintenance and repair expenditures are charged to cost of production.The decision to develop a mine property within a project area is based on an assessment of
the commercial viability of the property, the availability of financing and the existence of
markets for the product. Once the decision to proceed to development is made, development
and other expenditures relating to the project area are deferred and carried at cost with the
intention that these costs will be depleted over the proven and probable reserves using the
units-of-production method. No depreciation or depletion is charged against the property
until commercial production commences. After a mine property has been brought into
commercial production, costs of any additional work on that property are expensed as
incurred, except for large development programs, which will be deferred and depleted over the
remaining lives of the related assets.The carrying values of non-producing properties are periodically assessed by management and
if management determines that the carrying values cannot be recovered, the unrecoverable
amounts are written off against current earnings.Cameco reviews the carrying values of its property, plant and equipment when changes in
circumstances indicate that those carrying values may not be recoverable. Estimated future
net cash flows are calculated using estimated recoverable reserves, estimated future
commodity prices and the expected future operating and capital costs. An impairment loss is
recognized when the carrying value of an asset held for use exceeds the sum of undiscounted
future net cash flows. An impairment loss is measured as the amount by which the assets
carrying amount exceeds its fair value.Interest is capitalized on expenditures related to development projects actively being
prepared for their intended use. Capitalization is discontinued when the asset enters
commercial operation or development ceases.Fuel services assets, mine buildings, equipment and mineral properties are depreciated or
depleted according to the units-of-production method. This method allocates the costs of
these assets to each accounting period. For fuel services, the amount of depreciation is
measured by the portion of the facilities total estimated lifetime production that is
produced in that period. For mining, the amount of depreciation or depletion is measured by
the portion of the mines proven and probable reserves which are recovered during the period.Nuclear generating plants are depreciated according to the straight-line method based on the
lower of useful life and remaining lease term.Other assets are depreciated according to the straight-line method based on estimated useful
lives, which generally range from three to 10 years.(h)
    
    Intangible AssetsIntangible assets acquired in a business combination are recorded at their fair values.
Finite-lived intangible assets are amortized over the estimated production profile of the
business unit to which they relate. The carrying values of intangible assets are periodically
assessed by management and if management determines that the carrying values cannot be
recovered, the unrecoverable amount is charged to earnings in the current period.(i)
    
    Future Income TaxesFuture income taxes are recognized for the future income tax consequences attributable to
differences between the carrying values of assets and liabilities and their respective income
tax bases. Future income tax assets and liabilities are measured using enacted or
substantively enacted income tax rates expected to apply to taxable income in the years in
which temporary differences are expected to be recovered or settled. The effect on future
income tax assets and liabilities of a change in rates is included in earnings in the period,
which includes the enactment date. Future income tax assets are recorded in the financial
statements and a valuation allowance is provided, if necessary, to reduce the future income
tax asset to an amount that is more likely than not to be realized. Accrued interest and
penalties for uncertain tax positions are recognized in the period in which uncertainties are
identified.
 9




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(j)
    
    Research and Development and Exploration CostsExpenditures for research and technology related to the products and processes are charged
against earnings as incurred. Exploration expenditures including drilling and related costs
are charged against earnings as incurred up until the point at which it is determined that
the costs are economically recoverable. Any further exploration expenditures are capitalized
once economic recoverability has been established.(k)
    
    Environmental Protection and Asset Retirement ObligationsThe fair value of the liability for an asset retirement obligation is recognized in the
period incurred. The fair value, discounted using the companys credit adjusted risk-free
rate, is added to the carrying amount of the associated asset and depreciated over the
assets useful life. The liability is accreted over time, using the companys credit
adjusted risk-free rate, through periodic charges to earnings, and it is reduced by actual
costs of decommissioning and reclamation. Camecos estimates of reclamation costs could
change as a result of changes in regulatory requirements, reclamation plans, cost estimates
and timing of estimated expenditures. Costs related to ongoing environmental programs are
charged against earnings as incurred.(l)
    
    Employee Future BenefitsCameco accrues its obligations under employee benefit plans. The cost of pensions and other
retirement benefits earned by employees is actuarially determined using the projected benefit
method pro-rated on service and managements best estimate of expected plan investment
performance, salary escalation, retirement ages of employees and expected health care costs.
For the purpose of calculating the expected return on plan assets, those assets are measured
at fair value. Cameco measures the plan assets and the accrued benefit obligations on
December 31 each year.On both the Cameco-specific and BPLP-specific defined benefit pension plans, past service
costs arising from plan amendments are amortized on a straight-line basis over the expected
average remaining service life of the plan participants. Net actuarial gains, which exceed
10% of the greater of the accrued benefit obligation and the fair value of plan assets, are
amortized on a straight-line basis over the expected average remaining service life of the
plan participants.On the Cameco-specific retirement benefit plans that do not vest or accumulate, past service
costs arising from plan amendments, and net actuarial gains and losses, are recognized in the
period they arise. Conversely, the BPLP-specific amounts are amortized on a straight-line
basis over the expected average remaining service life of the plan participants.(m)
    
    Stock-Based CompensationCameco has five stock-based compensation plans that are described in note 22. These
encompass a stock option plan, an employee share ownership plan, a performance share unit
plan, a deferred share unit plan and a phantom stock option plan. In calculating
compensation expense, Cameco includes an estimate for forfeitures that is based on historic
trends.Options granted under the stock option and performance share unit plans for which the holder
cannot elect cash settlement are accounted for using the fair value method. Under this
method, the compensation cost of options granted is measured at estimated fair value at the
grant date and recognized over the shorter of the period to eligible retirement or the
vesting period. Options that may be settled in cash are accounted for as liabilities and are
carried at their intrinsic value. The intrinsic value of the liability is marked-to-market
each period and is amortized to expense over the shorter of the period to eligible retirement
or the vesting period.Deferred share units and phantom stock options are amortized over the shorter of the period
to eligible retirement or the vesting period and re-measured at each reporting period, until
settlement, using the quoted market value. Camecos contributions under the employee share
ownership plan are expensed during the year of contribution. Shares purchased with company
contributions and with dividends paid on such shares become unrestricted on January 1 of the
second plan year following the date on which such shares were purchased.
 10




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(n)
    
    Revenue RecognitionCameco supplies uranium concentrates and uranium conversion services to utility customers.Cameco recognizes revenue on the sale of its nuclear products when evidenced by a contract
that indicates the product, pricing and delivery terms, when delivery occurs, the related
revenue is fixed or determinable and collection is reasonably assured.Cameco has three types of sales arrangements with its customers in its uranium and fuel
services businesses. These arrangements include uranium supply, toll conversion services and
conversion supply (converted uranium), which is a combination of uranium supply and toll
conversion services.Uranium SupplyIn a uranium supply arrangement, Cameco is contractually obligated to provide uranium
concentrates to its customers. Cameco-owned uranium is physically delivered to conversion
facilities (Converters) where the Converter will credit Camecos account for the volume of
accepted uranium. Based on delivery terms in a sales contract with its customer, Cameco
instructs the Converter to transfer title of a contractually specified quantity of uranium to
the customers account at the Converters facility. At this point, Cameco invoices the
customer and recognizes revenue for the uranium supply.Toll Conversion ServicesIn a toll conversion arrangement, Cameco is contractually obligated to convert customer-owned
uranium to a chemical state suitable for enrichment. The customer delivers uranium to
Camecos conversion facilities. Once conversion is complete, Cameco physically delivers
converted uranium to enrichment facilities (Enrichers) where the Enricher will credit
Camecos account for the volume of accepted processed uranium. Based on delivery terms in a
sales contract with its customer, Cameco instructs the Enricher to transfer title of a
contractually specified quantity of converted uranium to the customers account at the
Enrichers facility. At this point, Cameco invoices the customer and recognizes revenue for
the toll conversion services.Conversion SupplyIn a conversion supply arrangement, Cameco is contractually obligated to provide uranium
concentrates and conversion services to its customers. Cameco-owned uranium is converted and
physically delivered to an Enricher as described in the toll conversion services arrangement.
Based on delivery terms in a sales contract with its customer, Cameco instructs the Enricher
to transfer title of a contractually specified quantity of converted uranium to the
customers account at the Enrichers facility. At this point, Cameco invoices the customer
and recognizes revenue for both the uranium supplied and the conversion service provided. It
is rare for Cameco to enter into back-to-back arrangements for uranium supply and toll
conversion services. However, in the event that a customer requires such an arrangement,
revenue from uranium supply is deferred until the toll conversion service has been rendered.Revenue from deliveries to counterparties with whom Cameco has arranged a standby
product loan facility (up to the limit of the loan facilities) and the related cost of sales
are deferred until the loan arrangements have been terminated, or if drawn upon, when the
loans are repaid and that portion of the facility is terminated.Electricity sales are recognized at the time of generation, and delivery to the purchasing
utility is metered at the point of interconnection with the transmission system. Revenues are
recognized on an accrual basis, which includes an estimate of the value of electricity
produced during the period but not yet billed.(o)
    
    Amortization of Financing CostsFor financial instruments that are measured at amortized cost, the effective interest method
of amortization is used for any debt discounts and issue expenses. Unamortized costs are
classified with their related financial liability.(p)
    
    Foreign Currency TranslationMonetary assets and liabilities denominated in foreign currencies are translated into
Canadian dollars at year-end rates of exchange. Revenue and expense transactions denominated
in foreign currencies are translated into Canadian dollars at rates in effect at the time of
the transactions. The applicable exchange gains and losses arising on these transactions are
reflected in earnings.
 11




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##### 



The United States (US) dollar is considered the functional currency of most of Camecos
operations outside of Canada. The financial statements of these operations are translated
into Canadian dollars using the current rate method whereby all assets and liabilities are
translated at the year-end rate of exchange, and all revenue and expense items are translated
at the average rate of exchange prevailing during the year. Exchange gains and losses
arising from this translation, representing the net unrealized foreign currency translation
gain (loss) on Camecos net investment in these foreign operations, are recorded in the
foreign currency translation adjustments component of accumulated other comprehensive income
(AOCI). Exchange gains or losses arising from the translation of foreign debt designated as
hedges of a net investment in foreign operations are also recorded in the foreign currency
translation adjustments component of AOCI. These adjustments are not included in earnings
until realized through a reduction in Camecos net investment in such operations.(q)
    
    Derivative Financial Instruments and Hedging TransactionsFinancial Assets and Financial LiabilitiesAll financial assets and liabilities are carried at fair value in the consolidated balance
sheets, except for items classified in the following categories, which are carried at
amortized cost: loans and receivables, held-to-maturity securities and financial liabilities
not held-for-trading. Realized and unrealized gains and losses on financial assets and
liabilities that are held-for-trading are recorded in the consolidated statements of
earnings. Unrealized gains and losses on financial assets that are available-for-sale are
reported in OCI until realized, at which time they are recorded in the consolidated
statements of earnings.Hedge Accounting and DerivativesDerivative financial and commodity instruments are employed by Cameco to reduce exposure to
fluctuations in foreign currency exchange rates, interest rates and commodity prices. All
derivative instruments are recorded at fair value in the consolidated balance sheets, except
for those designated as hedging instruments.The purpose of hedging transactions is to modify Camecos exposure to one or more risks by
creating an offset between changes in the fair value of, or the cash inflows attributable to,
the hedged item and the hedging item. Hedge accounting ensures that the offsetting gains,
losses, revenues and expenses are recognized to net earnings in the same period or periods.
When hedge accounting is appropriate, the hedging relationship is designated as a fair value
hedge, a cash flow hedge, or a foreign currency risk hedge related to a net investment in a
self-sustaining foreign operation.At the inception of a hedging relationship, Cameco formally documents all relationships
between hedging instruments and hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The process includes linking all
derivatives to specific assets and liabilities on the balance sheet or to specific firm
commitments or forecasted transactions. Cameco also formally assesses, both at the inception
and on an ongoing basis, whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.For fair value hedges, changes in the fair value of the derivatives and corresponding changes
in fair value of the hedged items attributed to the risk being hedged are recognized in the
consolidated statements of earnings. For cash flow hedges, the effective portion of the
changes in the fair values of the derivative instruments are recorded in OCI until the hedged
items are recognized in the consolidated statements of earnings. Derivative instruments that
do not qualify for hedge accounting, or are not designated as hedging instruments, are
marked-to-market and the resulting net gains or losses are recognized on the consolidated
statements of earnings.Derivatives may be embedded in other financial instruments (the host instrument). Embedded
derivatives are treated as separate derivatives when their economic characteristics and risks
are not clearly and closely related to those of the host instrument, the terms of the
embedded derivative are the same as those of a stand-alone derivative, and the combined
contract is not held-for-trading or designated at fair value. These embedded derivatives are
measured at fair value with subsequent changes recognized in gains or losses on derivatives
on the consolidated statements of earnings.(r)
    
    Earnings Per ShareEarnings per share are calculated using the weighted average number of common shares
outstanding.The calculation of diluted earnings per share assumes that outstanding options and warrants
which are dilutive to earnings per share are exercised and the proceeds are used to
repurchase shares of the company at the average market price of the shares for the period.
The effect is to increase the number of shares used to calculate diluted earnings per share.
 12




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##### 



3.
    
    Accounting Standards
 (a)
    
    Future Changes in Accounting PoliciesInternational Financial Reporting Standards (IFRS)In February 2008, the Accounting Standards Board announced that Canadian publicly accountable
enterprises will be required to adopt IFRS effective January 1, 2011. As a result, Cameco
will publish its first consolidated financial statements, prepared in accordance with IFRS,
for the quarter ending March 31, 2011. We will also provide comparative data on an IFRS
basis, including an opening balance sheet as at January 1, 2010.
 4.
    
    Financial Risk ManagementThis note presents information about various risks that Cameco is exposed to from its
use of financial instruments, its objectives, policies and processes for measuring and managing
risk, and the companys management of capital. Further quantitative disclosures are included
throughout these consolidated financial statements.Risk Management OverviewCameco is exposed in varying degrees to a variety of financial instrument related risks.
Management and the board of directors, both separately and together, discuss the principal risks
of our businesses. The board sets policies for the implementation of systems to manage, monitor
and mitigate identifiable risks. Camecos risk management objective in relation to these
instruments is to protect and minimize volatility in cash flow.Market RiskCameco engages in various business activities which expose the company to market risk from
changes in commodity prices and foreign currency exchange rates. As part of its overall risk
management strategy, Cameco uses derivatives to manage some of its exposures to market risk that
result from these activities.Derivative instruments may include financial and physical forward contracts. Such contracts may
be used to establish a fixed price for a commodity, an interest-bearing obligation or a cash
flow denominated in a foreign currency. Market risks are monitored regularly against defined
risk limits and tolerances.Camecos actual exposure to these market risks is constantly changing as the companys
portfolios of foreign currency and commodity contracts change. Changes in fair value or cash
flows based on market variable fluctuations cannot be extrapolated as the relationship between
the change in the market variable and the change in fair value or cash flow may not be linear.The types of risk exposure and the way in which such exposure is managed are as follows:
 (a)
    
    Commodity Price RiskAs a significant producer and supplier of uranium, nuclear fuel processing and electricity,
Cameco bears significant exposure to changes in prices for these products. A substantial
change in prices will affect the companys net earnings and operating cash flows. Prices for
Camecos products are volatile and are influenced by numerous factors beyond the companys
control, such as supply and demand fundamentals, geopolitical events and, in the case of
electricity prices, weather.Camecos sales contracting strategy focuses on reducing the volatility in future earnings and
cash flow, while providing both protection against decreases in market price and retention of
exposure to future market price increases. To mitigate the risks associated with the
fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio
of uranium product sales contracts with a variety of delivery dates and pricing mechanisms
that provide a degree of protection from pricing volatility. To mitigate risks associated
with fluctuations in the market price for electricity, BPLP enters into various energy and
sales related contracts that qualify as cash flow hedges. At December 31, 2010, the effect
of a $1/MWh increase in the market price for electricity would be a decrease of $175,000 in
net earnings, and a decrease in other comprehensive income of $850,000 for 2010.
 13




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##### 



(b)
    
    Foreign Exchange RiskThe relationship between the Canadian and US dollars affects financial results of the uranium
business as well as the fuel services business.Sales of uranium and fuel services are routinely denominated in US dollars while production
costs are largely denominated in Canadian dollars. Cameco attempts to provide some
protection against exchange rate fluctuations by planned hedging activity designed to smooth
volatility. Cameco also has a natural hedge against US currency fluctuations because a
portion of its annual cash outlays, including purchases of uranium and fuel services, is
denominated in US dollars. At December 31, 2010, the effect of a $0.01 increase in the US to
Canadian dollar exchange rate on our portfolio of currency hedges and other US denominated
exposures would have been a decrease of $9,200,000 in net earnings for 2010.(c)
    
    Counterparty Credit RiskCamecos sales of uranium product, conversion and fuel manufacturing services expose the
company to the risk of non-payment. Counterparty credit risk is associated with the ability
of counterparties to satisfy their contractual obligations to Cameco, including both payment
and performance.Cameco manages this risk by monitoring the credit worthiness of our customers and seeking
pre-payment or other forms of payment security from customers with an unacceptable level of
credit risk.Camecos maximum counterparty credit exposure at the balance sheet date consists primarily of
the carrying amount of financial assets such as accounts receivable and short-term
investments. At December 31, 2010, there were no significant concentrations of credit risk
and no amounts were held as collateral.(d)
    
    Liquidity RiskFinancial liquidity represents Camecos ability to fund future operating activities and
investments. Cameco ensures that there is sufficient capital in order to meet short-term
business requirements, after taking into account cash flows from operations and the companys
holdings of cash and cash equivalents. The company believes that these sources will be
sufficient to cover the likely short-term and long-term cash requirements.The tables below outline the maturity dates for Camecos non-derivative financial liabilities
including, principal and interest, as at December 31, 2010:
 Due in less
    
    
    Due in
    
    
    Due in
    
    
    Due after(Millions)
    
    Total
    
    
    than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-term debt
    
    $
    794
    
    
    $
    
    
    
    $
    
    
    
    $
    298
    
    
    $
    496BPLP lease
    
    
    159
    
    
    
    13
    
    
    
    31
    
    
    
    39
    
    
    
    76Short-term debt
    
    
    73
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    Total contractual repayments
    
    $
    1,026
    
    
    $
    86
    
    
    $
    31
    
    
    $
    337
    
    
    $
    572
 Due in less
    
    
    Due in
    
    
    Due in
    
    
    Due after(Millions)
    
    Total
    
    
    than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsInterest on long-term debt
    
    $
    312
    
    
    $
    42
    
    
    $
    85
    
    
    $
    81
    
    
    $
    104Interest on BPLP lease
    
    
    55
    
    
    
    11
    
    
    
    20
    
    
    
    15
    
    
    
    9Interest on short-term debt
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Total interest payments
    
    $
    369
    
    
    $
    55
    
    
    $
    105
    
    
    $
    96
    
    
    $
    113
 14




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##### 



(e)
    
    Interest Rate RiskDuring the year, Cameco entered into interest rate swap arrangements whereby fixed rate
payments in relation to part of the $300,000,000 Series C debenture were swapped for variable
rate payments. The notional amount under the swap arrangements is $135,000,000. Concurrently,
Cameco has entered into interest rate cap arrangements at a notional amount of $135,000,000
million that are effective March 18, 2013 and terminate on March 16, 2015. These interest
rate cap arrangements, when effective, will limit Camecos interest rate exposure to 5% plus
an average margin of 1.81%.At December 31, 2010, the effect of a 1% increase in the three-month bankers acceptance rate
would be a decrease in net earnings of $3,570,000.
 Capital ManagementCamecos capital structure reflects our vision and the environment in which we operate. We seek
growth through development and expansion of existing assets and by acquisition. Our capital
resources are managed to support achievement of our goals. The overall objectives for managing
capital remained unchanged in 2010 from the prior comparative period.Camecos management considers its capital structure to consist of long-term debt, short-term
debt (net of cash and cash equivalents), minority interest and shareholders equity.The capital structure at December 31, 2010 was as follows:
 (Thousands)
    
    2010
    
    
    2009Long-term debt
    
    $
    953,494
    
    
    $
    964,482Short-term debt
    
    
    72,948
    
    
    
    76,762Cash and cash equivalents
    
    
    (376,621
    )
    
    
    (1,101,229
    )Short-term investments
    
    
    (883,032
    )
    
    
    (202,836
    )Net debt
    
    
    (233,211
    )
    
    
    (262,821
    )Minority interest
    
    
    178,139
    
    
    
    164,040Shareholders equity
    
    
    5,216,327
    
    
    
    4,843,828Total equity
    
    
    5,394,466
    
    
    
    5,007,868Total capital
    
    $
    5,161,255
    
    
    $
    4,745,047
 Cameco is bound by certain covenants in its general credit facilities. These covenants place
restrictions on total debt, including guarantees, and set minimum levels for net worth. As of
December 31, 2010, Cameco met these requirements.5.
    
    Short-Term InvestmentsIn 2010, Cameco purchased money market instruments with terms to maturity between three and 12
months. The fair values of marketable securities held at December 31, 2010 were $883,032,000
(2009  $202,836,000).6.
    
    Inventories
 2010
    
    
    2009UraniumConcentrate
    
    $
    392,613
    
    
    $
    310,893Broken ore
    
    
    12,264
    
    
    
    18,125404,877
    
    
    
    329,018Fuel Services
    
    
    137,649
    
    
    
    124,206Total
    
    $
    542,526
    
    
    $
    453,224
 15




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##### 



7.
    
    Property, Plant and Equipment
 AccumulatedDepreciationCost
    
    
    and Depletion
    
    
    2010 Net
    
    
    2009 NetUraniumMining
    
    $
    3,562,849
    
    
    $
    1,657,227
    
    
    $
    1,905,622
    
    
    $
    1,801,379Non-producing
    
    
    1,674,131
    
    
    
    
    
    
    
    1,674,131
    
    
    
    1,476,409Fuel Services
    
    
    507,221
    
    
    
    233,973
    
    
    
    273,248
    
    
    
    279,313ElectricityAssets under capital lease
    
    
    164,288
    
    
    
    89,744
    
    
    
    74,544
    
    
    
    83,866Other
    
    
    610,826
    
    
    
    257,945
    
    
    
    352,881
    
    
    
    361,377Other
    
    
    125,178
    
    
    
    67,795
    
    
    
    57,383
    
    
    
    65,759Total
    
    $
    6,644,493
    
    
    $
    2,306,684
    
    
    $
    4,337,809
    
    
    $
    4,068,103
 8.
    
    Intangible Assets
 AccumulatedCost
    
    
    Depreciation
    
    
    2010 Net
    
    
    2009 NetIntangible assets
    
    $
    118,819
    
    
    $
    24,549
    
    
    $
    94,270
    
    
    $
    97,713
  16




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##### 



9. Long-Term Receivables, Investments and Other
 2010
    
    
    2009Bruce B L.P. (BPLP) [note 21]Capital lease receivable from Bruce A L.P. (BALP) (i)
    
    $
    91,608
    
    
    $
    94,895Derivatives [note 26]
    
    
    77,831
    
    
    
    141,949Accrued pension benefit asset [note 23]
    
    
    88,268
    
    
    
    54,864Equity accounted investmentsGlobal Laser Enrichment LLC (Camecos interest 24%) (privately held)
    
    
    162,718
    
    
    
    185,716UNOR Inc.
    
    
    
    
    
    
    935UEX Corporation (market value $103,186)
    
    
    9,998
    
    
    
    6,052Huron Wind (privately held)
    
    
    3,913
    
    
    
    4,002Minergia S.A.C. (privately held)
    
    
    8,337
    
    
    
    4,551UFP Investments Inc. (privately held)
    
    
    6,784
    
    
    
    2,617Available-for-sale securitiesWestern Uranium Corporation (market value $6,033)
    
    
    6,033
    
    
    
    4,637GoviEx Uranium (privately held)
    
    
    23,017
    
    
    
    25,214Derivatives [note 26]
    
    
    50,011
    
    
    
    68,432Deferred chargesCost of sales [note 13]
    
    
    
    
    
    
    14,415Advances receivable from Inkai JV LLP(ii)
    
    
    125,072
    
    
    
    141,149Accrued pension benefit asset [note 23]
    
    
    6,142
    
    
    
    8,264Other
    
    
    60,539
    
    
    
    64,320720,271
    
    
    
    822,012Less current portion
    
    
    (91,447
    )
    
    
    (154,725
    )Net
    
    $
    628,824
    
    
    $
    667,287
 (i)
    
    BPLP leases the Bruce A nuclear generating plants and other property, plant and
equipment to BALP under a sublease agreement. Future minimum base rent sublease payments
under the capital lease receivable are imputed using a 7.5% discount rate.(ii)
    
    Through an unsecured shareholder loan, Cameco has agreed to fund the development
of the Inkai project. The limit of the loan facility is $370,000,000 (US) and advances
under the facility bear interest at a rate of LIBOR plus 2%. At December 31, 2010,
$314,000,000 (US) of principal and interest was outstanding (2009  $337,000,000 (US)), of
which 40% represents the joint venture partners share. 10.
    
    Short-Term DebtIn 2008, a promissory note in the amount of $73,344,000 (US) was issued to finance the
acquisition of GE-Hitachi Global Laser Enrichment LLC (GLE). The promissory note is payable on
demand and bears interest at a market rate of 2.72%.In February 2009, Cameco concluded an arrangement for a $100,000,000 unsecured revolving credit
facility. The original maturity date of the facility was February 5, 2010, however, in November
2010, upon mutual agreement with the lender, this facility was further extended to February 4,
2012. There are no longer any extensions available under this facility and there is no amount
outstanding.
 17




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##### 



11. Long-Term Debt
 2010
    
    
    2009Debentures
    
    $
    794,483
    
    
    $
    793,842Capital lease obligation  BPLP
    
    
    159,011
    
    
    
    170,640953,494
    
    
    
    964,482Less current portion
    
    
    (13,177
    )
    
    
    (11,629
    )Net
    
    $
    940,317
    
    
    $
    952,853
 Cameco has $300,000,000 outstanding in senior unsecured debentures (Series C). These debentures
bear interest at a rate of 4.7% per annum (effective interest rate of 4.79%) and mature
September 16, 2015.On September 2, 2009, Cameco issued debentures in the amount of $500,000,000. The debentures
bear interest at 5.67% per annum (effective interest rate of 5.80%) and mature on September 2,
2019. The proceeds of the issue after deducting expenses were $495,300,000.Cameco has a $500,000,000 unsecured revolving credit facility that is available until November
30, 2012. In addition to direct borrowings under the facility, up to $100,000,000 can be used
for the issuance of letters of credit and, to the extent necessary, up to $400,000,000 may be
allocated to provide liquidity support for the companys commercial paper program. The facility
ranks equally with all of Camecos other senior debt. At December 31, 2010, there were no
amounts outstanding under this credit facility (2009  nil). Cameco may also borrow directly
in the commercial paper market. There was no commercial paper outstanding at December 31, 2010
(2009  nil). These amounts, when drawn, are classified as long-term debt.Cameco is bound by certain covenants in its revolving credit facilities. The significant
financial covenants require a funded debt to tangible net worth ratio equal to or less than 1:1
and a tangible net worth greater than $1,250,000,000. Non-compliance with any of these
covenants could result in accelerated payment and termination of the revolving credit facility.
At December 31, 2010, Cameco was in compliance with covenants and does not expect its operating
and investing activities in 2011 to be constrained by them.Cameco has $554,934,000 ($400,882,000 and $154,889,000 (US)) in letter of credit facilities.
The majority of the outstanding letters of credit at December 31, 2010 relate to future
decommissioning and reclamation liabilities [note 12] and amounted to $549,533,000 ($395,818,000
and $153,987,000 (US)) (2009  $592,215,000 ($396,427,000 and $187,071,000 (US)).BPLP holds a long-term lease with OPG to operate the Bruce nuclear power facility. The term of
the lease, which expires in 2018, is 18 years with an option to extend the lease for up to an
additional 25 years. The interest rate associated with the lease is 7.5%.BPLP has a $200,000,000 (Camecos share $63,200,000) revolving credit facility that is available
until July 30, 2013, as well as $270,000,000 (Camecos share $83,320,000) in letter of credit
facilities. As at December 31, 2010, BPLP had $45,000,000 (Camecos share $14,220,000)
outstanding under the revolving credit facility (2009  $35,000,000 (Camecos share
$11,060,000)) and $270,000,000 (Camecos share $85,320,000) outstanding under the letter of
credit facilities (2009  $184,000,000 (Camecos share $58,144,000)).
 18




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##### 



The table below represents currently scheduled maturities of long-term debt and capital lease
obligations over the next five years.
 2011
    
    $
    13,1772012
    
    
    14,8522013
    
    
    16,3372014
    
    
    18,2332015
    
    
    319,040Thereafter
    
    
    571,855Total
    
    $
    953,494
 Standby Product Loan FacilitiesCameco had arranged for a standby product loan facility with one of its customers. The
arrangement, which was finalized in 2008, allowed Cameco to borrow up to 2,400,000 pounds
U3O8 equivalent over the period 2008 to 2011 with repayment during 2012 to
2014. Under the loan facility, standby fees of 2% were payable based on the market value of the
facility, and interest was payable on the market value of any amounts drawn at a rate of 5%. Any
borrowings were repayable in kind.On September 13, 2010, Cameco gave notice of termination to the counterparty of the product loan
agreement. The loan facility was terminated on October 15, 2010.12.
    
    Provision for ReclamationCamecos estimates of future asset retirement obligations are based on reclamation standards
that satisfy regulatory requirements. Elements of uncertainty in estimating these amounts
include potential changes in regulatory requirements, decommissioning and reclamation
alternatives and amounts to be recovered from other parties.Cameco estimates total future decommissioning and reclamation costs for its operating assets to
be $465,709,000. These estimates are reviewed by Cameco technical personnel as required by
regulatory agencies or more frequently as circumstances warrant. In connection with future
decommissioning and reclamation costs, Cameco has provided financial assurances of $548,933,000
in the form of letters of credit to satisfy current regulatory requirements.Under the BPLP lease agreement, OPG, as the owner of the Bruce nuclear plants, is responsible to
decommission the Bruce facility and to provide funding and meet other requirements that the
Canadian Nuclear Safety Commission (CNSC) may require of BPLP as licensed operator of the Bruce
facility. OPG is also responsible to manage radioactive waste associated with decommissioning
of the Bruce nuclear plants.Following is a reconciliation of the total liability for asset retirement obligations:
 2010
    
    
    2009Balance, beginning of year
    
    $
    258,277
    
    
    $
    276,431Changes in estimates
    
    
    20,201
    
    
    
    (17,125
    )Liabilities settled
    
    
    (12,542
    )
    
    
    (4,599
    )Accretion expense
    
    
    17,208
    
    
    
    17,828Impact of foreign exchange
    
    
    (3,491
    )
    
    
    (14,258
    )Balance, end of year
    
    $
    279,653
    
    
    $
    258,277
 19




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##### 



Following is a summary of the key assumptions on which the carrying amount of the asset
retirement obligations is based:
 (i)
    
    Total undiscounted amount of the estimated cash flows  $465,709,000.(ii)
    
    Expected timing of payment of the cash flows  timing is based on life of mine plans.
The majority of expenditures are expected to occur after 2016.(iii)
    
    Discount rates  5.00% to 7.50%.
 The asset retirement obligations liability relates to the following segments:
 2010
    
    
    2009Uranium
    
    $
    211,927
    
    
    $
    192,544Fuel Services
    
    
    67,726
    
    
    
    65,733Total
    
    $
    279,653
    
    
    $
    258,277
 13. Other Liabilities
 2010
    
    
    2009Deferred sales [note 9]
    
    $
    17,004
    
    
    $
    24,982Derivatives [note 26]
    
    
    5,273
    
    
    
    4,137Accrued post-retirement benefit liability [note 23]
    
    
    13,355
    
    
    
    12,019Pensions [note 23]
    
    
    659
    
    
    
    491BPLPAccrued post-retirement benefit liability [note 23]
    
    
    138,533
    
    
    
    125,402Pensions [note 23]
    
    
    20,699
    
    
    
    18,251Derivatives [note 26]
    
    
    29,954
    
    
    
    36,820Provision for waste disposal
    
    
    37,660
    
    
    
    38,619Other
    
    
    9,270
    
    
    
    13,009272,407
    
    
    
    273,730Less current portion
    
    
    (28,228
    )
    
    
    (29,297
    )Net
    
    $
    244,179
    
    
    $
    244,433
 14.
    
    Share CapitalAuthorized share capital:
 Unlimited number of first preferred sharesUnlimited number of second preferred sharesUnlimited number of voting common shares, andOne Class B share
 (a)
    
    Common Shares
 Number Issued(Number of Shares)
    
    2010
    
    
    2009Beginning of year
    
    
    392,838,733
    
    
    
    365,718,923Issued:Equity issuance
    
    
    
    
    
    
    26,666,400Stock option plan [note 22]
    
    
    1,512,310
    
    
    
    453,410Issued share capital
    
    
    394,351,043
    
    
    
    392,838,733
 (b)
    
    Class B ShareOne Class B share issued during 1988 and assigned $1 of share capital entitles the
shareholder to vote separately as a class in respect of any proposal to locate the head
office of Cameco to a place not in the province of Saskatchewan.
 20




---



##### 



(c)
    
    Share IssuanceOn March 5, 2009, Cameco issued 26,666,400 common shares pursuant to a public offering for a
total consideration of $459,995,000. The proceeds of the issue after deducting expenses were
$445,532,000. Excluding the deferred tax recoveries, our net cash proceeds amounted to
$440,150,000 in 2009.
 15.
    
    Interest and Other
 2010
    
    
    2009Interest on long-term debt
    
    $
    47,877
    
    
    $
    38,377Interest on short-term debt
    
    
    2,005
    
    
    
    2,366Foreign exchange (gains) losses
    
    
    6,626
    
    
    
    (21,086
    )Other charges
    
    
    8,597
    
    
    
    11,302Interest income
    
    
    (13,910
    )
    
    
    (6,614
    )Capitalized interest
    
    
    (47,721
    )
    
    
    (36,815
    )Net
    
    $
    3,474
    
    
    $
    (12,470
    )
 16.
    
    Loss (Gain) on Sale of Assets
 2010
    
    
    2009Sale of geological data
    
    $
    (1,107
    )
    
    $
    (3,674
    )Other
    
    
    1,214
    
    
    
    3,108Net
    
    $
    107
    
    
    $
    (566
    )
 17.
    
    Other Expense
 2010
    
    
    2009Equity in loss of associated companies
    
    $
    (16,413
    )
    
    $
    (29,811
    )Other
    
    
    5,263
    
    
    
    (7,101
    )Net
    
    $
    (11,150
    )
    
    $
    (36,912
    )
 In 2010, the equity in loss of associated companies includes a charge of $11,363,000 for the
amortization of in-process research and development associated with the investment in GLE (2009
  $18,295,000).
 21




---



##### 



18.
    
    Income Taxes
 The significant components of future income tax assets and liabilities at December 31 are as
follows:
 2010
    
    
    2009AssetsProvision for reclamation
    
    $
    92,198
    
    
    $
    89,996Foreign exploration and development
    
    
    47,230
    
    
    
    40,221Income tax losses carried forward
    
    
    41,625
    
    
    
    100,783Other
    
    
    46,617
    
    
    
    31,185Future income tax assets before valuation allowance
    
    
    227,670
    
    
    
    262,185Valuation allowance
    
    
    (63,843
    )
    
    
    (57,398
    )Future income tax assets, net of valuation allowance
    
    $
    163,827
    
    
    $
    204,787LiabilitiesProperty, plant and equipment
    
    $
    292,631
    
    
    $
    338,645Inventories
    
    
    24,264
    
    
    
    5,618Long-term investments and other
    
    
    46,484
    
    
    
    82,015Future income tax liabilities
    
    $
    363,379
    
    
    $
    426,278Net future income tax liabilities
    
    $
    199,552
    
    
    $
    221,491
 The provision for income taxes differs from the amount computed by applying the combined
expected federal and provincial income tax rate to earnings before income taxes. The reasons
for these differences are as follows:
 2010
    
    
    2009Earnings before income taxes and minority interest
    
    $
    531,648
    
    
    $
    766,859Combined federal and provincial tax rate
    
    
    30.2
    %
    
    
    31.4
    %Computed income tax expense
    
    
    160,558
    
    
    
    240,794Increase (decrease) in taxes resulting from:Reduction in income tax rates
    
    
    (29,508
    )
    
    
    (10,983
    )Manufacturing and processing deduction
    
    
    (3,846
    )
    
    
    (3,211
    )Difference between Canadian rate and rates
applicable to subsidiaries in other countries
    
    
    (126,222
    )
    
    
    (175,969
    )Change in valuation allowance
    
    
    13,499
    
    
    
    18,125Capital and other taxes
    
    
    1,409
    
    
    
    1,824Stock-based compensation plans
    
    
    2,696
    
    
    
    1,371Other permanent differences
    
    
    8,665
    
    
    
    (19,054
    )Income tax expense
    
    $
    27,251
    
    
    $
    52,897
 22




---



##### 



In 2008, as part of the ongoing annual audits of Camecos Canadian tax returns, Canada
Revenue Agency (CRA) disputed the transfer pricing methodology used by Cameco and its wholly
owned Swiss subsidiary, Cameco Europe Ltd. (CEL), in respect of sale and purchase agreements
for uranium products. In December 2008, CRA issued a notice of reassessment, which
increased Camecos 2003 income for Canadian income tax purposes by approximately
$43,000,000. Additional reassessments for 2003 were issued by CRA in 2009 and 2010, both to
similar effect. In December 2009, CRA issued a notice of reassessment for the 2004 taxation
year, which increased Camecos 2004 income by approximately $108,000,000. Another
reassessment for 2004 was issued by CRA on May 13, 2010 to similar effect. In December
2010, CRA issued a notice of reassessment for the 2005 taxation year, which increased
Camecos 2005 taxable income by approximately $197,000,000. No reassessment received to
date has resulted in more than a nominal amount of cash taxes becoming payable due to the
availability of elective deductions and tax loss carrybacks. Cameco believes it is likely
that CRA will reassess Camecos tax returns for the years 2006 through 2010 on a similar
basis.CRAs Transfer Pricing Review Committee is scheduled to meet in late February, 2011, to
decide whether to impose a penalty for 2005. Given that the Transfer Pricing Review
Committee did not impose a transfer pricing penalty for 2003 or 2004, we do not expect that
a penalty will be imposed for 2005.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. 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 2010 in the amount of $27,000,000. No
provisions for penalties or interest have been recorded. We do not expect more than a
nominal amount of cash taxes to be payable due to availability of elective deductions and
tax loss carryovers. 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 over the
period. However, an unfavourable outcome for the years 2003 to 2010 could be material to
Camecos financial position, results of operations or cash flows in the year(s) of
resolution.Further to Camecos decision to contest CRAs reassessments, a Notice of Appeal for the 2003
taxation year was filed with the Tax Court of Canada on July 22, 2009, and amended on
January 26, 2011, and the litigation process is proceeding. In connection with CRAs 2004
reassessment, Cameco is contesting the reassessment and pursuing its appeal rights under the
Income Tax Act. A Notice of Appeal for the 2004 taxation year was filed with the Tax Court
of Canada on November 10, 2010. Cameco intends to object to the 2005 reassessment and
pursue its appeal rights under the Income Tax Act.
 2010
    
    
    2009Earnings (loss) before income taxes and minority interestCanada
    
    $
    (27,641
    )
    
    $
    109,534Foreign
    
    
    559,289
    
    
    
    657,325$
    531,648
    
    
    $
    766,859Current income taxes (recovery)Canada
    
    $
    (12,280
    )
    
    $
    17,109Foreign
    
    
    38,919
    
    
    
    33,551$
    26,639
    
    
    $
    50,660Future income taxes (recovery)Canada
    
    $
    7,105
    
    
    $
    3,885Foreign
    
    
    (6,493
    )
    
    
    (1,648
    )$
    612
    
    
    $
    2,237Income tax expense
    
    $
    27,251
    
    
    $
    52,897
 For 2010, earnings from discontinued operations [note 24] included a net income tax expense of
nil, (2009  recovery of $94,600,000).
 23




---



##### 



At December 31, 2010, loss carry forwards of $136,000,000 (2009  $380,000,000) are available to
reduce taxable income. These losses expire as follows:
 Date of expiry
    
    Canada
    
    
    US
    
    
    Other
    
    
    Total2011
    
    
    
    
    
    $
    158
    
    
    
    
    
    
    $
    1582013
    
    
    
    
    
    
    1,722
    
    
    
    
    
    
    
    1,7222019
    
    
    
    
    
    
    
    
    
    
    7,255
    
    
    
    7,2552029
    
    
    
    
    
    
    17,463
    
    
    
    
    
    
    
    17,4632030
    
    
    441
    
    
    
    10,546
    
    
    
    
    
    
    
    10,987no expiry
    
    
    
    
    
    
    
    
    
    
    98,657
    
    
    
    98,657$
    441
    
    
    $
    29,889
    
    
    $
    105,912
    
    
    $
    136,242
 Included in the table above is $101,000,000 (2009  $94,000,000) of temporary differences
related to loss carry forwards where no future benefit is realized.
 Other comprehensive income included on the consolidated statements of shareholders equity and
the consolidated statements of comprehensive income is presented net of income taxes. The
following income tax amounts are included in each component of other comprehensive income:
 2010
    
    
    2009Gains on derivatives designated as cash flow hedges
    
    $
    2,977
    
    
    $
    48,368Gains on derivatives designated as cash flow hedges transferred to net
earnings
    
    
    (29,400
    )
    
    
    (48,121
    )Unrealized gains on assets available-for-sale
    
    
    330
    
    
    
    466(Gains) losses on assets available-for-sale transferred to net earnings
    
    
    (399
    )
    
    
    80Total income tax expense (recovery) included in OCI
    
    $
    (26,492
    )
    
    $
    793
 Accumulated other comprehensive income included on the consolidated statements of shareholders
equity and the consolidated statement of accumulated other comprehensive income is presented net
of income taxes. The following income tax amounts are included in each component of accumulated
other comprehensive income:
 2010
    
    
    2009Gains on derivatives designated as cash flow hedges
    
    $
    10,564
    
    
    $
    36,987Gains on assets available-for-sale
    
    
    277
    
    
    
    346Total income tax expense included in AOCI
    
    $
    10,841
    
    
    $
    37,333
 24




---



##### 



19.
    
    Statements of Cash FlowsOther Operating Items
 2010
    
    
    2009Changes in non-cash working capital:Accounts receivable
    
    $
    (1,566
    )
    
    $
    34,556Inventories
    
    
    (74,899
    )
    
    
    (74,938
    )Supplies and prepaid expenses
    
    
    (21,229
    )
    
    
    (27,838
    )Accounts payable and accrued liabilities
    
    
    (141,748
    )
    
    
    30,784Other
    
    
    (29,551
    )
    
    
    (46,897
    )Total
    
    $
    (268,993
    )
    
    $
    (84,333
    )
 20.
    
    Uranium Joint VenturesCameco conducts a portion of its exploration, development, mining and milling activities through
joint ventures. Cameco proportionately consolidates its ownership interest in these assets.
The McArthur River, Key Lake and Cigar Lake joint ventures allocate uranium production to each
joint venture participant and the joint venture participant derives revenue directly from the
sale of such product. Mining and milling expenses incurred by the joint venture are included in
the cost of inventory.The participants in the Inkai joint venture purchase uranium from Inkai and, in turn, derive
revenue directly from the sale of such product to third party customers. On proportionate
consolidation of Inkai, Cameco eliminates revenues and cost of sales recorded by Inkai related
to sales by Inkai directly to Cameco. After elimination of these related party sales for the
period, there are no revenues and expenses resulting from proportionate consolidation of Inkai
and accordingly, a statement showing revenues and expenses from Inkai has not been provided.The following table outlines Camecos proportionate interest of the assets and liabilities of
each joint venture:
 Ownership
    
    
    2010
    
    
    2009Total AssetsMcArthur River
    
    
    69.81
    %
    
    $
    963,510
    
    
    $
    923,786Key Lake
    
    
    83.33
    %
    
    
    469,156
    
    
    
    401,604Cigar Lake
    
    
    50.03
    %
    
    
    1,022,770
    
    
    
    874,661Inkai
    
    
    60.00
    %
    
    
    233,884
    
    
    
    255,932$
    2,689,320
    
    
    $
    2,455,983Total LiabilitiesMcArthur River
    
    
    69.81
    %
    
    $
    31,960
    
    
    $
    25,183Key Lake
    
    
    83.33
    %
    
    
    73,345
    
    
    
    65,706Cigar Lake
    
    
    50.03
    %
    
    
    22,208
    
    
    
    14,076Inkai
    
    
    60.00
    %
    
    
    11,341
    
    
    
    8,627$
    138,854
    
    
    $
    113,592
 25




---



##### 



21.
    
    Investment in BPLPCameco holds a 31.6% interest in BPLP, which is governed by an agreement that provides for joint
control of the strategic operating, investing and financing activities among the three major
partners. Cameco proportionately consolidates its 31.6% interest in BPLP.Fuel Supply AgreementsCameco 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. During 2010, sales of
uranium and conversion services to BPLP amounted to $80,211,000 (2009  $84,909,000),
approximately 3.8% (2009  3.7%) of Camecos total revenue. At December 31, 2010, amounts
receivable under these agreements totaled $19,667,000 (2009  $11,505,000).The following schedules reflect Camecos 31.6% proportionate interest in the balance sheets,
statements of earnings and statements of cash flows of BPLP.Balance Sheets
 (Millions)
    
    2010
    
    
    2009Current assets
    
    $
    207
    
    
    $
    252Property, plant and equipment
    
    
    373
    
    
    
    390Long-term receivables and investments
    
    
    213
    
    
    
    207$
    793
    
    
    $
    849Current liabilities
    
    $
    125
    
    
    $
    129Long-term liabilities
    
    
    314
    
    
    
    320439
    
    
    
    449Equity
    
    
    354
    
    
    
    400$
    793
    
    
    $
    849
 Statements of Earnings
 (Millions)
    
    2010
    
    
    2009Revenue
    
    $
    477
    
    
    $
    518Operating costs
    
    
    294
    
    
    
    286Earnings before interest and taxes
    
    
    183
    
    
    
    232Interest
    
    
    11
    
    
    
    1Earnings before taxes
    
    $
    172
    
    
    $
    231
 Statements of Cash Flows
 (Millions)
    
    2010
    
    
    2009Cash provided by operations
    
    $
    203
    
    
    $
    238Cash used in investing
    
    
    (32
    )
    
    
    (36
    )Cash used in financing
    
    
    (172
    )
    
    
    (200
    )
 26




---



##### 



22.
    
    Stock-Based Compensation PlansStock Option PlanCameco has established a stock option plan under which
options to purchase common shares may be
granted to officers and other 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. Options have not
been awarded to directors since 2003 and the plan has been amended to preclude the issue of
options to directors.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 26,092,439 shares have been issued.Stock option transactions for the respective years were as follows:
 (Number of Options)
    
    2010
    
    
    2009Beginning of year
    
    
    7,939,833
    
    
    
    7,120,555Options granted
    
    
    1,515,945
    
    
    
    1,381,039Options exercised [note 14]
    
    
    (1,512,310
    )
    
    
    (453,410
    )Options forfeited
    
    
    (391,089
    )
    
    
    (108,351
    )End of year
    
    
    7,552,379
    
    
    
    7,939,833Exercisable
    
    
    4,814,761
    
    
    
    5,550,148
 Weighted average exercise prices were as follows:
 2010
    
    
    2009Beginning of year
    
    $
    27.42
    
    
    $
    27.98Options granted
    
    
    28.90
    
    
    
    19.41Options exercised
    
    
    12.75
    
    
    
    9.79Options forfeited
    
    
    35.05
    
    
    
    35.68End of year
    
    $
    30.26
    
    
    $
    27.42Exercisable
    
    $
    32.02
    
    
    $
    26.84
 Total options outstanding and exercisable at December 31, 2010 were as follows:
 2010
    
    
    
    
    
    Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    AverageRemaining
    
    
    Exercisable
    
    
    
    
    
    
    ExercisableOption Price Per Share
    
    Number
    
    
    Life
    
    
    Price
    
    
    Number
    
    
    Price$5.75 - 13.49
    
    
    788,200
    
    
    
    2
    
    
    $
    9.72
    
    
    
    788,200
    
    
    $
    9.7213.50 - 32.99
    
    
    3,755,092
    
    
    
    6
    
    
    
    25.33
    
    
    
    1,381,999
    
    
    
    25.2533.00 - 55.00
    
    
    3,009,087
    
    
    
    5
    
    
    
    41.78
    
    
    
    2,644,562
    
    
    
    42.197,552,379
    
    
    
    
    
    
    
    
    
    
    
    4,814,761
 27




---



##### 



The foregoing options have expiry dates ranging from March 9, 2011 to March 2, 2018.Non-vested stock option transactions for the respective years were as follows:
 (Number of Options)
    
    2010
    
    
    2009Beginning of year
    
    
    2,389,685
    
    
    
    2,163,426Options granted
    
    
    1,515,945
    
    
    
    1,381,039Options forfeited
    
    
    (91,439
    )
    
    
    (75,039
    )Options vested
    
    
    (1,076,573
    )
    
    
    (1,079,741
    )End of year
    
    
    2,737,618
    
    
    
    2,389,685
 For the year ended December 31, 2010, Cameco has recorded a net expense of $8,931,000 (2009 -
$4,372,000), related to options that vested during the year.
 The fair value of the options granted each year was determined using the Black-Scholes
option-pricing model with the following weighted average assumptions:
 2010
    
    
    2009Number of options granted
    
    
    1,515,945
    
    
    
    1,381,039Average strike price
    
    $
    28.90
    
    
    $
    19.41Expected dividend
    
    $
    0.28
    
    
    $
    0.24Expected volatility
    
    
    36
    %
    
    
    36
    %Risk-free interest rate
    
    
    2.1
    %
    
    
    1.6
    %Expected life of option
    
    4.0 years
    
    
    4.0 yearsExpected forfeitures
    
    
    15
    %
    
    
    15
    %Weighted average grant date fair values
    
    $
    8.46
    
    
    $
    5.23
 Executive Performance Share Unit (PSU), Deferred Share Unit (DSU), and Other PlansCommencing in 2005, Cameco provides each plan participant an annual grant of PSUs in an amount
determined by the board. Each PSU represents one phantom common share that entitles the
participant to a payment of one Cameco common share purchased on the open market, or cash at the
boards discretion, at the end of each three-year period if certain performance and vesting
criteria have been met. The final value of the PSUs will be based on the value of Cameco common
shares at the end of the three-year period and the number of PSUs that ultimately vest. Vesting
of PSUs at the end of the three-year period will be based on total shareholder return over the
three years, Camecos ability to meet its annual cash flow from operations targets and whether
the participating executive remains employed by Cameco at the end of the three-year vesting
period. As of December 31, 2010, the total PSUs held by the participants was 395,360 (2009 
233,710). In 2010, Cameco recognized an expense of $3,679,000 in relation to PSUs (2009 -
$3,347,000).Cameco offers a deferred share unit plan to non-employee directors. A DSU is a notional unit
that reflects the market value of a single common share of Cameco. 60% of each directors
annual retainer is paid in DSUs. In addition, on an annual basis, directors can elect to
receive 25%, 50%, 75% or 100% of the remaining 40% of their annual retainer and any additional
fees in the form of DSUs. If a director meets their ownership requirements, the director may
elect to take 25%, 50%, 75% or 100% of their annual retainer and any fees in cash, with the
balance, if any, to be paid in DSUs. Each DSU fully vests upon award. The DSUs will be
redeemed for cash upon a director leaving the board. The redemption amount will be based upon
the weighted average of the closing prices of the common shares of Cameco on the TSX for the
last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the
director. As of December 31, 2010, the total DSUs held by participating directors was 354,276
(2009  373,921).
 28




---



##### 



Cameco makes annual grants of bonuses to eligible non-North American employees in the form of
phantom stock options. Employees receive the equivalent value of shares in cash when exercised.
Options granted under the phantom stock option plan have an award value equal to 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. As of December 31, 2010, the number of options held by participating employees
was 242,051 (2009 267,148) with exercise prices ranging from $5.88 to $46.88 per share (2009 -
$5.88 to $46.88) and a weighted average exercise price of $30.00 (2009  $30.61).Commencing in 2007, Cameco created an employee share ownership plan whereby both employee and
company contributions are used to purchase shares on the open market for employees. The
companys contributions are expensed during the year of contribution. Under the plan, all
employees have the opportunity to participate in the program to a maximum of 6% of eligible
earnings each year with Cameco matching the first 3% of employee-paid shares by 50%. Cameco
contributes $1,000 of shares annually to each employee that is enrolled in the plan. At
December 31, 2010, there were 3,496 participants in the plan (2009  3,306). The total number
of shares purchased in 2010 on behalf of participants, including the company contribution, was
214,795 shares (2009  281,207). In 2010, the companys contributions totaled $6,608,000 (2009
  $5,166,000).Cameco has recognized the following expenses under these plans:
 2010
    
    
    2009Deferred share units
    
    
    1,971
    
    
    
    4,930Phantom stock options
    
    
    979
    
    
    
    1,531Employee share ownership plan
    
    
    6,608
    
    
    
    5,166
 At December 31, 2010, a liability of $16,798,000 (2009  $14,962,000) was included in the
balance sheet to recognize accrued but unpaid expenses for these plans.
 29




---



##### 



23.
    
    Pension and Other Post-Retirement BenefitsCameco maintains both defined benefit and defined contribution plans providing pension and
post-retirement benefits to substantially all of its employees.Under the defined pension benefit plans, Cameco provides benefits to retirees based on their
length of service and final average earnings. The non-pension post-retirement plan covers such
benefits as group life and supplemental health insurance to eligible employees and their
dependants. The costs related to the non-pension post-retirement plans are charged to earnings
in the period during which the employment services are rendered. However, these future
obligations are not funded.The effective date for the most recent valuations for funding purposes on the pension benefit
plans is January 1, 2009. The next planned effective date for valuation for funding purposes of
the pension benefit plans is set to be January 1, 2012. The status of the defined plans is as
follows:
 (a)
    
    Accrued Benefit Obligation
 Pension Benefit Plans
    
    
    Other Benefit Plans2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of year
    
    $
    30,840
    
    
    $
    23,580
    
    
    $
    12,019
    
    
    $
    11,842Current service cost
    
    
    1,330
    
    
    
    915
    
    
    
    553
    
    
    
    435Interest cost
    
    
    1,905
    
    
    
    1,683
    
    
    
    664
    
    
    
    730Actuarial loss (gain)
    
    
    3,535
    
    
    
    5,647
    
    
    
    720
    
    
    
    (442
    )Foreign exchange
    
    
    (81
    )
    
    
    (238
    )
    
    
    
    
    
    
    Benefits paid
    
    
    (2,011
    )
    
    
    (747
    )
    
    
    (601
    )
    
    
    (546
    )$
    35,518
    
    
    $
    30,840
    
    
    $
    13,355
    
    
    $
    12,019
 (b)
    
    Plan Assets
 Pension Benefit Plans2010
    
    
    2009Fair value at beginning of year
    
    $
    24,209
    
    
    $
    20,289Actual return on plan assets
    
    
    3,739
    
    
    
    (708
    )Employer contributions
    
    
    1,158
    
    
    
    5,335Benefits paid
    
    
    (1,971
    )
    
    
    (707
    )Fair value at end of year
    
    $
    27,135
    
    
    $
    24,209
 30




---



##### 



Plan assets consist of:
 Pension Benefit Plans2010
    
    
    2009Asset Category (i)Equity securities
    
    
    26
    %
    
    
    28
    %Fixed income
    
    
    22
    %
    
    
    23
    %Other (ii)
    
    
    52
    %
    
    
    49
    %Total
    
    
    100
    %
    
    
    100
    %
 (i)
    
    The defined benefit plan assets contain no material amounts of related party
assets at December 31, 2010 and 2009 respectively.(ii)
    
    Relates to the value of the refundable tax account held by the Canada Revenue
Agency. The refundable total is approximately equal to half of the sum of the realized
investment income plus employer contributions less half of the benefits paid by the
plan.
 (c)
    
    Funded Status Reconciliation
 Pension Benefit Plans
    
    
    Other Benefit Plans2010
    
    
    2009
    
    
    2010
    
    
    2009Fair value of plan assets
    
    $
    27,135
    
    
    $
    24,209
    
    
    $
    
    
    
    $
    Accrued benefit obligation
    
    
    35,518
    
    
    
    30,840
    
    
    
    13,355
    
    
    
    12,019Funded status of plans  deficit
    
    
    (8,383
    )
    
    
    (6,631
    )
    
    
    (13,355
    )
    
    
    (12,019
    )Unamortized net actuarial loss
    
    
    13,866
    
    
    
    14,404
    
    
    
    
    
    
    
    Accrued benefit asset (liability)
    
    $
    5,483
    
    
    $
    7,773
    
    
    $
    (13,355
    )
    
    $
    (12,019
    )Amounts included in:Long-term receivables, investments and
other [note 9]
    
    
    6,142
    
    
    
    8,264
    
    
    
    
    
    
    
    Other liabilities [note 13]
    
    
    (659
    )
    
    
    (491
    )
    
    
    (13,355
    )
    
    
    (12,019
    )Accrued benefit asset (liability)
    
    $
    5,483
    
    
    $
    7,773
    
    
    $
    (13,355
    )
    
    $
    (12,019
    )
 (d)
    
    Net Pension Expense
 2010
    
    
    2009Current service cost
    
    $
    1,330
    
    
    $
    915Interest cost
    
    
    1,905
    
    
    
    1,683Actual return on plan assets
    
    
    (3,739
    )
    
    
    708Actuarial loss
    
    
    3,535
    
    
    
    5,647Balance prior to adjustments to recognize the long-term
nature of employee future benefit costs
    
    
    3,031
    
    
    
    8,953Difference between actual and expected return on plan assets
    
    
    2,961
    
    
    
    (1,494
    )Difference between actuarial loss recognized for year and actual
actuarial loss on accrued benefit obligation for year
    
    
    (2,472
    )
    
    
    (4,974
    )Defined benefit pension expense
    
    
    3,520
    
    
    
    2,485Defined contribution pension expense
    
    
    14,649
    
    
    
    13,506Net pension expense
    
    $
    18,169
    
    
    $
    15,991
 31




---



##### 



2010
    
    
    2009Significant assumptions at December 31Discount rate
    
    
    5.5
    %
    
    
    6.0
    %Rate of compensation increase
    
    
    4.5
    %
    
    
    4.5
    %Long-term rate of return on assets
    
    
    5.9
    %
    
    
    5.9
    %
 (e)
    
    Other Post-Retirement Benefit Expense
 2010
    
    
    2009Current service cost
    
    $
    553
    
    
    $
    435Interest cost
    
    
    664
    
    
    
    730Actuarial loss (gain)
    
    
    720
    
    
    
    (442
    )Other post-retirement benefit expense
    
    $
    1,937
    
    
    $
    723
 2010
    
    
    2009Significant assumptions at December 31Discount rate
    
    
    5.5
    %
    
    
    6.0
    %Health care cost trend rate
    
    
    9.0
    %
    
    
    9.0
    %
 (f)
    
    Pension and Other Post-Retirement Benefits Cash Payments
 2010
    
    
    2009Employer contributions to funded pension plans
    
    $
    1,158
    
    
    $
    5,335Benefits paid for unfunded benefit plans
    
    
    640
    
    
    
    585Cash contributions to defined contribution plans
    
    
    14,649
    
    
    
    13,506Total cash payments for employee future benefits
    
    $
    16,447
    
    
    $
    19,426
 Benefits paid by the funded pension plan were $1,971,000 for 2010 (2009  $707,000).
Camecos expected contributions for the year ended December 31, 2011 are approximately
$252,044 for the pension benefit plans.The following are estimated future benefit payments, which reflect expected future service:
 Pension Benefit Plans
    
    Other Benefit Plans2011
    
    $
    8,376
    
    
    $
    6992012
    
    
    1,421
    
    
    
    7362013
    
    
    1,471
    
    
    
    8152014
    
    
    1,546
    
    
    
    8222015
    
    
    1,854
    
    
    
    8062016 to 2020
    
    
    10,683
    
    
    
    4,294
 32




---



##### 



BPLP
    (a)
    
    Accrued Benefit Obligation
 Pension Benefit Plans
    
    
    Other Benefit Plans2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of year
    
    $
    711,636
    
    
    $
    617,259
    
    
    $
    151,826
    
    
    $
    112,355Current service cost
    
    
    18,329
    
    
    
    14,944
    
    
    
    7,422
    
    
    
    4,910Interest cost
    
    
    42,478
    
    
    
    41,061
    
    
    
    8,960
    
    
    
    7,284Actuarial loss
    
    
    139,143
    
    
    
    65,018
    
    
    
    17,291
    
    
    
    31,127Plan participants contributions
    
    
    6,630
    
    
    
    6,244
    
    
    
    
    
    
    
    Benefits paid
    
    
    (30,797
    )
    
    
    (32,890
    )
    
    
    (4,488
    )
    
    
    (3,850
    )$
    887,419
    
    
    $
    711,636
    
    
    $
    181,011
    
    
    $
    151,826
 (b)
    
    Plan Assets
 Pension Benefit Plans2010
    
    
    2009Fair value at beginning of year
    
    $
    635,293
    
    
    $
    546,755Actual return on plan assets
    
    
    55,288
    
    
    
    65,486Employer contributions
    
    
    50,906
    
    
    
    49,698Plan participants contributions
    
    
    6,630
    
    
    
    6,244Benefits paid
    
    
    (30,797
    )
    
    
    (32,890
    )Fair value at end of year
    
    $
    717,320
    
    
    $
    635,293
  Asset Allocation
    
    
    Target Allocation2010
    
    
    2009
    
    
    2010
    
    
    2009Asset Category (i)Equity securities
    
    
    59
    %
    
    
    60
    %
    
    
    60
    %
    
    
    60
    %Fixed income
    
    
    39
    %
    
    
    38
    %
    
    
    40
    %
    
    
    40
    %Cash
    
    
    2
    %
    
    
    2
    %
    
    
    
    
    
    
    Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 33




---



##### 



The assets of the pension plan are managed on a going concern basis subject to legislative
restrictions. The plans investment policy is to maximize returns within an acceptable risk
tolerance. Pension assets are invested in a diversified
manner with consideration given to the demographics of the plan participants. Rebalancing
will take place on a monthly basis if outside of 3% of the target asset allocation.(i) The defined benefit plan assets contain no material amounts of related party
assets at December 31, 2010.(c)
    
    Funded Status Reconciliation
 Pension Benefit Plans
    
    
    Other Benefit Plans2010
    
    
    2009
    
    
    2010
    
    
    2009Fair value of plan assets
    
    $
    717,320
    
    
    $
    635,293
    
    
    $
    
    
    
    $
    Accrued benefit obligation
    
    
    887,419
    
    
    
    711,636
    
    
    
    181,011
    
    
    
    151,826Funded status of plans  deficit
    
    
    (170,099
    )
    
    
    (76,343
    )
    
    
    (181,011
    )
    
    
    (151,826
    )Unrecognized prior service cost
    
    
    
    
    
    
    
    
    
    
    1,981
    
    
    
    2,431Unamortized net actuarial loss
    
    
    237,668
    
    
    
    112,956
    
    
    
    40,497
    
    
    
    23,993Accrued benefit asset (liability)
    
    $
    67,569
    
    
    $
    36,613
    
    
    $
    (138,533
    )
    
    $
    (125,402
    )Amounts included in:Long-term
receivables, investments and other [note 9]
    
    
    88,268
    
    
    
    54,864
    
    
    
    
    
    
    
    Other liabilities [note 13]
    
    
    (20,699
    )
    
    
    (18,251
    )
    
    
    (138,533
    )
    
    
    (125,402
    )Accrued benefit asset (liability)
    
    $
    67,569
    
    
    $
    36,613
    
    
    $
    (138,533
    )
    
    $
    (125,402
    )
 (d)
    
    Net Pension Expense
 2010
    
    
    2009Current service cost
    
    $
    18,329
    
    
    $
    14,944Interest cost
    
    
    42,478
    
    
    
    41,061Actual return on plan assets
    
    
    (55,288
    )
    
    
    (65,486
    )Actuarial loss
    
    
    139,143
    
    
    
    65,018Balance prior to adjustments to recognize the long-term
nature of employee future benefit costs
    
    
    144,662
    
    
    
    55,537Difference between actual and expected return on plan assets
    
    
    10,798
    
    
    
    27,286Difference between actuarial loss recognized and actual actuarial
loss on accrued benefit obligation for year
    
    
    (135,509
    )
    
    
    (63,678
    )Net pension expense
    
    $
    19,951
    
    
    $
    19,145
 2010
    
    
    2009Significant assumptions at December 31Discount rate
    
    
    5.3
    %
    
    
    6.0
    %Rate of compensation increase
    
    
    3.5
    %
    
    
    5.5
    %Long-term rate of return on assets
    
    
    7.0
    %
    
    
    7.0
    %
 34




---



##### 



(e)
    
    Other Benefit Plans Expense
 2010
    
    
    2009Current service cost
    
    $
    7,422
    
    
    $
    4,910Interest cost
    
    
    8,960
    
    
    
    7,284Actuarial loss
    
    
    17,291
    
    
    
    31,127Balance prior to adjustments to recognize the long-term nature of
employee
future benefit costs
    
    
    33,673
    
    
    
    43,321Difference between amortization of past service costs and actual plan
amendments for year
    
    
    450
    
    
    
    450Difference between actuarial loss (gain) recognized and actual actuarial
loss on accrued benefit obligation for year
    
    
    (16,504
    )
    
    
    (31,556
    )Other benefit plans expense
    
    $
    17,619
    
    
    $
    12,215
 2010
    
    
    2009Significant assumptions at December 31Discount rate
    
    
    5.1
    %
    
    
    5.8
    %Rate of compensation increase
    
    
    3.5
    %
    
    
    3.5
    %Initial health care cost trend rate
    
    
    9.5
    %
    
    
    10.0
    %Cost trend rate declines to
    
    
    5.0
    %
    
    
    5.0
    %Year the rate reaches its final level
    
    
    2019
    
    
    
    2019
 (f)
    
    Pension and Other Post-Retirement Benefits Cash Payments
 2010
    
    
    2009Employer contributions to funded pension plans
    
    $
    49,938
    
    
    $
    45,890Benefits paid for unfunded benefit plans
    
    
    4,814
    
    
    
    4,209Total cash payments for employee future benefits
    
    $
    54,752
    
    
    $
    50,099
 Benefits paid by the funded pension plan were $30,472,000 for 2010 (2009  $32,531,000).
BPLPs expected contributions for the year ended December 31, 2011 are approximately
$86,148,000 for the pension benefit plans.The following are estimated future benefit payments, which reflect expected future service:
 Pension Benefit Plans
    
    
    Other Benefit Plans2011
    
    $
    39,637
    
    
    $
    5,4732012
    
    
    43,334
    
    
    
    6,0132013
    
    
    47,201
    
    
    
    6,5752014
    
    
    51,134
    
    
    
    7,1172015
    
    
    54,858
    
    
    
    7,6132016 to 2020
    
    
    330,163
    
    
    
    46,407
 35




---



##### 



24.
    
    Restructuring of the Gold BusinessThe assets and liabilities related to discontinued operations have been reclassified as assets
or liabilities of discontinued operations on the consolidated balance sheets. Operating results
related to the discontinued operations have been included in earnings from discontinued
operations on the consolidated statements of earnings. Comparative period balances have been
restated.
 (a)
    
    Sale of Centerra Gold Inc. (Centerra)On December 30, 2009, Cameco completed a public offering of 88,618,472 common shares of
Centerra for net proceeds of approximately $871,000,000 and recorded a net gain of
$374,000,000. Concurrent with this offering, Cameco transferred an additional 25,300,000
common shares of Centerra to Kyrgyzaltyn pursuant to the agreement that Cameco entered into
with the Government of the Kyrgyz Republic on April 24, 2009. As a result of the closing of
the public offering, and the transfer of the Centerra common shares to Kyrgyzaltyn, Cameco
has disposed of its entire interest in Centerra.(b)
    
    Kyrgyz Share TransferIn 2007, the Parliament of the Kyrgyz Republic challenged the legal validity of Kumtor Gold
Company (Kumtor) agreements with the Kyrgyz Republic. As a result, Cameco and Centerra
entered into discussions with Kyrgyzaltyn, culminating in the signing of two agreements in
August 2007 providing for the transfer of a certain number of Centerra shares to Kyrgyzaltyn,
subject to certain conditions. These agreements, however, were never ratified by the Kyrgyz
parliament.On April 24, 2009, Cameco, Centerra, the Kyrgyz government and other parties signed a new
agreement to resolve all the issues related to the Kumtor mine. On April 30, 2009, the
Kyrgyz parliament ratified the agreement and enacted legislation authorizing implementation
of the agreement. On June 11, 2009, closing occurred and Centerra issued 18,232,615 treasury
            shares to Kyrgyzaltyn and Cameco transferred 25,300,000 shares of its 113,918,000 Centerra
common shares to a custodian, to be held in escrow, for ultimate release to Kyrgyzaltyn,
subject to certain conditions. Cameco retained its voting rights over these shares while they
were held in escrow. As a result of the public offering concluded on December 30, 2009,
Cameco released the shares held in escrow to Kyrgyzaltyn.The total amount of the after-tax loss related to this agreement is $179,000,000, of which an
expense of $46,000,000 was recorded in 2009, a recovery of $20,000,000 in 2008 and an expense
of $153,000,000 in 2007.(c)
    
    Financial Results of Discontinued OperationsThe results of the operations of Centerra are presented under discontinued operations on
the consolidated statements of earnings. The following table presents the components of the
discontinued operations amounts, net of future income tax expenses [note 18]:
 (Millions)
    
    2010
    
    
    2009Sale of Centerra
    
    
    
    
    
    $
    374.2Kyrgyz share transfer
    
    
    
    
    
    
    (45.9
    )Operating earnings
    
    
    
    
    
    
    54.1Earnings from discontinued operations
    
    
    
    
    
    $
    382.4
 36




---



##### 



The following table presents the components of the operating results of Centerra:
 (Millions)
    
    2010
    
    
    2009Revenue
    
    
    
    
    
    $
    770.2ExpensesProducts and services sold
    
    
    
    
    
    
    440.4Depreciation, depletion and reclamation
    
    
    
    
    
    
    122.4Exploration
    
    
    
    
    
    
    28.5Other
    
    
    
    
    
    
    37.3Earnings before income taxes and minority interest
    
    
    
    
    
    
    141.6Income tax expense
    
    
    
    
    
    
    33.4Minority interest
    
    
    
    
    
    
    54.1Operating earnings
    
    
    
    
    
    $
    54.1
 25.
    
    Commitments and Contingencies
 (a)
    
    On February 12, 2004, Cameco, Cameco Bruce Holdings II Inc., BPC Generation
Infrastructure Trust and TransCanada Pipelines Limited (collectively, the Consortium)
sent a notice of claim to British Energy Limited and British Energy International Holdings
Limited (collectively, BE) requesting, amongst other things, indemnification for breach of
a representation and warranty contained in the February 14, 2003, Amended and Restated
Master Purchase Agreement. The alleged breach is that the Unit 8 steam generators were not
in good condition, repair and proper working order, having regard to their use and age.
This defect was discovered during a planned outage conducted just after closing. As a
result of this defect, the planned outage had to be significantly extended. The Consortium
has claimed damages in the amount of $64,558,200 being 79.8% of the $80,900,000 of damages
actually incurred, plus an unspecified amount to take into account the reduced operating
life of the steam generators. By agreement of the parties, an arbitrator has been
appointed to arbitrate the claims and a schedule has been set for the next steps in the
proceeding.The Consortium served its claim on October 21, 2008, and has amended it as required, most
recently on August 7, 2009. BE served its answer and counter-statement on December 22, 2008,
most recently amended on March 25, 2010, and the Consortium served its reply and answer to
counter-statement on January 22, 2009, most recently amended on August 7, 2009.The Unit 8 steam generators require on-going monitoring and maintenance as a result of the
defect. In addition to the $64,558,200 in damages sought in the notice of claim, the claim
seeks an additional $4,900,000 spent on inspection, monitoring and maintenance of Unit 8, and
$31,900,000 in costs for future monitoring and maintenance, as well as repair costs and lost
revenue due to anticipated unplanned outages as a consequence of the defect in Unit 8. The
initial claim had also sought damages for the early replacement of the Unit 8 steam
generators due to the defect shortening their useful operating lives. However, recent
inspection data and analysis of the condition of the Unit 8 steam generators now indicates
that they will continue to function until the end of the Consortiums lease of the Bruce
Power facility in 2018, as was expected at the time the MPA was entered into. The claim for
early replacement was thus abandoned via an amendment to the claim on August 7, 2009. The
arbitration hearing was completed on November 23, 2010 and final oral arguments are scheduled
for June 1, 2011.In anticipation of this claim, BE issued on February 10, 2006, and then served on Ontario
Power Generation Inc. (OPG) and Bruce Power LP 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, damages in the amount of
$500,000,000, costs and pre and post judgment interest amongst other things. Further
proceedings in this action are on hold pending completion of the arbitration hearing.(b)
    
    Annual supplemental rents of $30,000,000 (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, the supplemental rent reduces to $12,000,000 per
operating reactor. In accordance with the Sublease Agreement, Bruce A L.P. will
participate in its share of any adjustments to the supplemental rent.
 37




---



##### 



(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 2011 to 2018:
 i)
    
    Guarantees to customers under power sales agreements of up to $35,300,000. At
December 31, 2010, Camecos actual exposure under these guarantees was $24,000,000.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. BPLPs entitlement to
receive these payments remains in effect until December 31, 2019 but the generation that is
subject to these payments starts to decrease in 2016, reflecting the original estimated
lives for the Bruce B units. During 2010, BPLP recorded $339,000,000 under this agreement
which was recognized as revenue with Camecos share being $107,000,000. Of the amount
recorded, BPLP currently expects to repay $4,000,000.
 (e)
    
    Camecos North American workforce includes about 3,300 employees, of which
approximately 900 (27%) belong to three separate labour unions.
 (f)
    
    At December 31, 2010, Camecos purchase commitments, the majority of which are fixed
price uranium and conversion purchase arrangements, were as follows:
 (Millions (US))2011
    
    $
    2672012
    
    
    2262013
    
    
    3972014
    
    
    1142015
    
    
    60Thereafter
    
    
    6Total
    
    $
    1,070
 26.
    
    Financial InstrumentsThe majority of revenues at Cameco are derived from the sale of uranium products, and
electricity through its investment in BPLP. Camecos uranium product financial results are
closely related to the long and short-term market price of uranium sales and conversion
services. Prices fluctuate and can be affected by demand for nuclear power, worldwide
production and uranium levels, and political and economic conditions in uranium producing and
consuming countries. BPLPs revenue from electricity is affected by changes in electricity
prices associated with an open spot market for electricity in Ontario. Financial results for
Cameco are also impacted by changes in foreign currency exchange rates and other operating
risks. Finally, certain financial assets are subject to credit risks, including cash and
securities, accounts receivable, and commodity and currency instruments.To mitigate risks associated with certain financial assets, Cameco will hold positions with a
variety of large creditworthy institutions. Sales of uranium products, with short payment
terms, are made to customers that management believes are creditworthy.To mitigate risks associated with foreign currency on its sale of uranium products, Cameco
enters into forward sales contracts to establish a price for future delivery of the foreign
currency.
 38




---



##### 



Cameco is exposed to interest rate risk through its interest rate swap contracts whereby fixed
rate payments on a notional amount of $135,000,000 of the Series C senior unsecured debentures
were swapped for variable rate payments. The swaps terminate on March 16, 2015. Under the
terms of the swaps, Cameco makes interest payments based on three-month bankers acceptance rate
plus an average margin of 1.81% and receives fixed interest payments of 4.7%. To mitigate this
risk, Cameco entered into interest rate cap arrangements, effective March 18, 2013, whereby the
three-month bankers acceptance rate was capped at 5.0% such that total variable payments will
not exceed, on average 6.81%. At December 31, 2010, the mark-to-market gain on Camecos
interest rate swaps and caps less premiums paid was $1,458,000.
 To mitigate risks associated with the fluctuations in the market price for uranium products,
Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of
delivery dates and pricing mechanisms that provide a degree of protection from price volatility.
To mitigate risks associated with the fluctuations in the market price for electricity, BPLP
enters into various energy and sales related contracts that qualify as cash flow hedges. These
instruments have terms ranging from 2011 to 2016. At December 31, 2010, the mark-to-market gain
on BPLPs sales contracts was $29,000,000.
 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:
    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.
 Except as otherwise disclosed, the fair market value of Camecos financial assets and
liabilities approximates the carrying amount as a result of the short-term nature of the
instruments, or the variable interest rate associated with the instruments, or the fixed
interest rate of the instruments being similar to market rates.
 The fair values of Camecos privately held available-for-sale securities, as described in note
9, have 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 any of these investments.
 39




---



##### 



The following tables present Camecos fair value hierarchy for those assets and liabilities
measured at fair value on a recurring basis.As at December 31, 2010
 Description
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Derivative instrument assets
    
    $
    127,842
    
    
    $
    
    
    
    $
    122,786
    
    
    $
    5,056Available-for-sale securities [notes 5, 9]
    
    
    889,065
    
    
    
    889,065
    
    
    
    
    
    
    
    Derivative instrument liabilities
    
    
    (35,227
    )
    
    
    
    
    
    
    (35,227
    )
    
    
    Net
    
    $
    981,680
    
    
    $
    889,065
    
    
    $
    87,559
    
    
    $
    5,056
 As at December 31, 2009
 Description
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Derivative instrument assets
    
    $
    210,381
    
    
    $
    
    
    
    $
    197,381
    
    
    $
    13,000Available-for-sale securities [notes 5, 9]
    
    
    207,473
    
    
    
    207,473
    
    
    
    
    
    
    
    Derivative instrument liabilities
    
    
    (40,957
    )
    
    
    
    
    
    
    (39,957
    )
    
    
    (1,000
    )Net
    
    $
    376,897
    
    
    $
    207,473
    
    
    $
    157,424
    
    
    $
    12,000
 The fair value of a financial instrument is the amount at which the financial instrument could
be exchanged in an arms-length transaction between knowledgeable and willing parties under no
compulsion to act. Fair values of identical instruments traded in active markets are determined
by reference to last quoted prices, in the most advantageous active market for that instrument.
In the absence of an active market, we determine fair values based on quoted prices for
instruments with similar characteristics and risk profiles. Fair values of financial
instruments determined using valuation models require the use of inputs. In determining those
inputs, we look primarily to external, readily observable market inputs, when available,
including factors such as interest rate yield curves, currency rates, and price and rate
volatilities, as applicable. In some circumstances, we use input parameters that are not based
on observable market data. In these cases, we may adjust model values to reflect the valuation
uncertainty in order to determine what the fair value would be based on the assumptions that
market participants would use in pricing the financial instrument. These adjustments are made in
order to determine the fair value of the instruments.
 We make valuation adjustments for the credit risk of our derivative portfolios in order to
arrive at their fair values. These adjustments take into account the creditworthiness of our
counterparties.
 Equity-accounted investments and financial instruments classified as available-for-sale comprise
actively traded debt and equity securities and are carried at fair value based on available
quoted prices.
 There were no significant transfers between level 1 and level 2 of the fair value hierarchy.
Transfers into level 3 are comprised of BPLP derivative financial instruments with contract
terms extending beyond 36 months. Due to the decline in electricity prices as a result of the
recession, the liquidity in the market has been significantly reduced, resulting in a lack of an
active market and observable market inputs beyond 36 months.
 40




---



##### 



Derivatives
 The following tables summarize the fair value of derivatives and classification on the balance
sheet:
 As at December 31, 2010
 Cameco
    
    
    BPLP
    
    
    TotalNon-hedge derivatives:Embedded derivatives  sales contracts
    
    $
    (3,864
    )
    
    $
    18,877
    
    
    $
    15,013Foreign currency contracts
    
    
    47,144
    
    
    
    
    
    
    
    47,144Interest rate contracts
    
    
    1,458
    
    
    
    
    
    
    
    1,458Cash flow hedges:Energy and sales contracts
    
    
    
    
    
    
    29,000
    
    
    
    29,000Net
    
    $
    44,738
    
    
    $
    47,877
    
    
    $
    92,615Classification:Current
portion of long-term receivables, investments and other [note 9]
    
    $
    46,629
    
    
    $
    44,505
    
    
    $
    91,134Long-term receivables, investments and other [note 9]
    
    
    3,382
    
    
    
    33,326
    
    
    
    36,708Current portion of other liabilities [note 13]
    
    
    (377
    )
    
    
    (20,662
    )
    
    
    (21,039
    )Other liabilities [note 13]
    
    
    (4,896
    )
    
    
    (9,292
    )
    
    
    (14,188
    )Net
    
    $
    44,738
    
    
    $
    47,877
    
    
    $
    92,615
 As at December 31, 2009
 Cameco
    
    
    BPLP
    
    
    TotalNon-hedge derivatives:Embedded derivatives  sales contracts
    
    $
    (2,736
    )
    
    $
    9,082
    
    
    $
    6,346Foreign currency contracts
    
    
    67,031
    
    
    
    
    
    
    
    67,031Cash flow hedges:Energy and sales contracts
    
    
    
    
    
    
    96,047
    
    
    
    96,047Net
    
    $
    64,295
    
    
    $
    105,129
    
    
    $
    169,424Classification:Current
portion of long-term receivables, investments and other [note 9]
    
    $
    66,972
    
    
    $
    87,439
    
    
    $
    154,411Long-term receivables, investments and other [note 9]
    
    
    1,460
    
    
    
    54,510
    
    
    
    55,970Current portion of other liabilities [note 13]
    
    
    (445
    )
    
    
    (19,595
    )
    
    
    (20,040
    )Other liabilities [note 13]
    
    
    (3,692
    )
    
    
    (17,225
    )
    
    
    (20,917
    )Net
    
    $
    64,295
    
    
    $
    105,129
    
    
    $
    169,424
 41




---



##### 



The following tables summarize different components of the (gains) and losses on derivatives:
 For the year ended December 31, 2010
 Cameco
    
    
    BPLP
    
    
    TotalNon-hedge derivatives:Embedded derivatives  sales contracts
    
    $
    1,623
    
    
    $
    2,785
    
    
    $
    4,408Foreign currency contracts
    
    
    (80,107
    )
    
    
    
    
    
    
    (80,107
    )Interest rate contracts
    
    
    (2,482
    )
    
    
    
    
    
    
    (2,482
    )Cash flow hedges:Energy and sales contracts
    
    
    
    
    
    
    2,998
    
    
    
    2,998Net
    
    $
    (80,966
    )
    
    $
    5,783
    
    
    $
    (75,183
    )
 For the year ended December 31, 2009
 Cameco
    
    
    BPLP
    
    
    TotalNon-hedge derivatives:Embedded derivatives  sales contracts
    
    $
    (4,764
    )
    
    $
    (4,737
    )
    
    $
    (9,501
    )Foreign currency contracts
    
    
    (234,066
    )
    
    
    
    
    
    
    (234,066
    )Interest rate contracts
    
    
    401
    
    
    
    
    
    
    
    401Cash flow hedges:Energy and sales contracts
    
    
    
    
    
    
    (638
    )
    
    
    (638
    )Net
    
    $
    (238,429
    )
    
    $
    (5,375
    )
    
    $
    (243,804
    )
 Over the next 12 months, based on current exchange rates, Cameco expects an estimated $5,573,000
of pre-tax gains from the foreign currency cash flow hedges to be reclassified through other
comprehensive income to net earnings. The maximum length of time Cameco hedges its exposure
to the variability in future cash flows related to foreign currency on anticipated
transactions is five years.
 Over the next 12 months, based on current prices, Cameco expects an estimated $18,012,000 of
pre-tax gains from BPLPs various energy and sales related cash flow hedges to be reclassified
through other comprehensive income to net earnings. The maximum length of time BPLP is hedging
its exposure to the variability in future cash flows related to electricity prices on
anticipated transactions is six years.
 Currency
 At December 31, 2010, Cameco had $1,317,500,000 (US) in forward contracts at an average exchange
rate of $1.03 and 93,000,000 at an average exchange rate of $1.35. The foreign
currency contracts are scheduled for use as follows:
 (Millions)
    
    US
    
    
    Rate
    
    
    Cdn
    
    
    Euro
    
    
    Rate
    
    
    US2011
    
    $
    890
    
    
    
    1.03
    
    
    $
    917
    
    
    
    45
    
    
    
    1.35
    
    
    $
    612012
    
    
    363
    
    
    
    1.04
    
    
    
    378
    
    
    
    46
    
    
    
    1.35
    
    
    
    622013
    
    
    65
    
    
    
    1.03
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    1.34
    
    
    
    3Total
    
    $
    1,318
    
    
    
    1.03
    
    
    $
    1,362
    
    
    
    93
    
    
    
    1.35
    
    
    $
    126
 These positions consist entirely of forward sales contracts. The average exchange rate reflects
the current forward contract price. Of these amounts, $1,252,500,000 of the US-denominated
contracts and $93,000,000 of the Euro-denominated contracts mature in 2011. The remaining
$65,000,000 in US-denominated contracts matures in 2012.
 42




---



##### 



27.
    
    Per Share Amounts
 Per share amounts have been calculated based on the weighted average number of common shares
outstanding during the year. The weighted average number of paid shares outstanding in 2010 was
393,168,523 (2009   387,955,503).
 2010
    
    
    2009Basic earnings per share computationNet earnings
    
    $
    514,749
    
    
    $
    1,099,422Weighted average common shares outstanding
    
    
    393,169
    
    
    
    387,956Basic earnings per common share
    
    $
    1.31
    
    
    $
    2.83Diluted earnings per share computationNet earnings
    
    $
    514,749
    
    
    $
    1,099,422Weighted average common shares outstanding
    
    
    393,169
    
    
    
    387,956Dilutive effect of stock options
    
    
    1,850
    
    
    
    1,977Weighted average common shares outstanding, assuming dilution
    
    
    395,019
    
    
    
    389,933Diluted earnings per common share
    
    $
    1.30
    
    
    $
    2.82
 28.
    
    Segmented Information
 Cameco has three reportable segments: uranium, fuel services and electricity. 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.
 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.
 43




---



##### 



(a)
    
    Business Segments2010
 Fuel
    
    
    
    
    
    
    Inter-(Millions)
    
    Uranium
    
    
    Services
    
    
    Electricity
    
    
    Segment
    
    
    TotalRevenue
    
    $
    1,373.7
    
    
    $
    300.6
    
    
    $
    476.7
    
    
    $
    (27.3
    )
    
    $
    2,123.7ExpensesProducts and services sold
    
    
    698.5
    
    
    
    213.6
    
    
    
    246.4
    
    
    
    (30.6
    )
    
    
    1,127.9Depreciation, depletion and
reclamation
    
    
    171.8
    
    
    
    26.9
    
    
    
    52.5
    
    
    
    0.3
    
    
    
    251.5Exploration
    
    
    95.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95.8Other
    
    
    (2.8
    )
    
    
    14.3
    
    
    
    
    
    
    
    
    
    
    
    11.5Cigar Lake remediation
    
    
    16.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.6Loss on sale of assets
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Non-segmented expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88.7.Earnings before income taxes
and minority interest
    
    
    393.7
    
    
    
    45.8
    
    
    
    177.8
    
    
    
    3.0
    
    
    
    531.6Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27.3Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.4
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    514.7Assets
    
    $
    6,317.4
    
    
    $
    395.9
    
    
    $
    863.8
    
    
    $
    
    
    
    $
    7,577.1Intangibles
    
    $
    
    
    
    $
    94.3
    
    
    $
    
    
    
    $
    
    
    
    $
    94.3Capital expenditures for the year
    
    $
    415.2
    
    
    $
    20.2
    
    
    $
    34.9
    
    
    $
    
    
    
    $
    470.3
 2009
 Fuel
    
    
    
    
    
    
    Inter-(Millions)
    
    Uranium
    
    
    Services
    
    
    Electricity
    
    
    Segment
    
    
    TotalRevenue
    
    $
    1,551.3
    
    
    $
    276.3
    
    
    $
    518.3
    
    
    $
    (30.9
    )
    
    $
    2,315.0ExpensesProducts and services sold
    
    
    901.4
    
    
    
    203.9
    
    
    
    243.5
    
    
    
    (24.5
    )
    
    
    1,324.3Depreciation, depletion and
reclamation
    
    
    161.9
    
    
    
    22.8
    
    
    
    55.6
    
    
    
    0.3
    
    
    
    240.6Exploration
    
    
    49.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49.1Other
    
    
    15.9
    
    
    
    21.3
    
    
    
    
    
    
    
    
    
    
    
    37.2Cigar Lake remediation
    
    
    17.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.9Gain on sale of assets
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Non-segmented expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (120.4
    )Earnings (loss) before income taxes
and minority interest
    
    
    405.7
    
    
    
    28.3
    
    
    
    219.2
    
    
    
    (6.7
    )
    
    
    766.9Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52.9Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.0
    )Net earnings from continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    717.0Assets
    
    $
    5,989.7
    
    
    $
    383.9
    
    
    $
    922.6
    
    
    $
    
    
    
    $
    7,296.2Intangibles
    
    $
    
    
    
    $
    97.7
    
    
    $
    
    
    
    $
    
    
    
    $
    97.7Capital expenditures for the year
    
    $
    333.3
    
    
    $
    20.7
    
    
    $
    38.7
    
    
    $
    
    
    
    $
    392.7
 44




---



##### 



(b)
    
    Geographic Segments
 (Millions)
    
    2010
    
    
    2009Revenue from products and servicesCanada   domestic
    
    $
    689.0
    
    
    $
    739.2 export
    
    
    102.9
    
    
    
    194.9United States
    
    
    1,331.8
    
    
    
    1,380.9$
    2,123.7
    
    
    $
    2,315.0AssetsCanada
    
    $
    5,819.8
    
    
    $
    5,774.5United States
    
    
    670.77
    
    
    
    695.9Australia
    
    
    607.9
    
    
    
    553.1Europe
    
    
    342.8
    
    
    
    139.0Kazakhstan
    
    
    230.1
    
    
    
    231.4$
    7,671.4
    
    
    $
    7,393.9
 (c)
    
    Major CustomersCameco relies on a small number of customers to purchase a significant portion of its uranium
concentrates and uranium conversion services. During 2010, revenues from one customer of
Camecos uranium and fuel services segments
represented approximately $125,657,000 (2009  $252,699,000), about 8% (2009  14%) of
Camecos total revenues from these segments. As customers are relatively few in number,
accounts receivable from any individual customer may periodically exceed 10% of accounts
receivable depending on delivery schedules.During 2010, electricity revenues from one customer of BPLP represented approximately 7%
(2009  5%) of BPLPs total revenues.
 29.
    
    Talvivaara Agreement
 On February 7, 2011, Cameco signed two agreements with Talvivaara Mining Company Plc. to buy
uranium produced at the Sotkamo nickel-zinc mine in Finland. Under the first agreement with
Talvivaara, Cameco will provide an up-front payment, to a maximum of $60,000,000 (US) to cover
certain construction costs. This amount will be repaid through deliveries of uranium
concentrate. Once the full amount has been repaid, Cameco will continue to purchase the uranium
concentrates produced at the Sotkamo mine through a second agreement which provides for the
purchase of uranium using a pricing formula that references market prices at the time of
delivery. The second agreement expires on December 31, 2027.
 30.
    
    Related Party Transactions
 Cameco purchases a significant amount of goods and services for its Saskatchewan mining
operations from northern Saskatchewan suppliers to support economic development in the region.
One such supplier is Points Athabasca Contracting Ltd. and the president of the company became a
member of the board of directors of Cameco during 2009. In 2010, Cameco paid Points Athabasca
Contracting Ltd. $38,000,000 (2009  $30,800,000) for construction and contracting services.
The transactions were conducted in the normal course of business and were accounted for at the
exchange amount. Accounts payable include a balance of $2,290,000 (2009  $230,000) resulting
from these transactions.
 31.
    
    Comparative Figures
 Certain prior year balances have been reclassified to conform to the current financial statement
presentation.
 45