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USEC Updates Outlook
for 2012 Financial Metrics

by Press Release
Market Watch, June 27, 2012

Revenue of approximately $1.9 billion expected
Gross profit margin expected to improve over 2011
June 30th cash balance expected to exceed $200 million

The B reactor complex, operating in the 1940s, was the earliest facility to turn out large amounts of waste at Hanford. (U.S. Department of Energy/Wikimedia Commons) BETHESDA, Md., -- USEC Inc. USU -2.52% is providing an updated view of financial projections for 2012 following a recently signed agreement to extend Paducah Gaseous Diffusion Plant operations through May 31, 2013.

In May, USEC entered into a multi-party arrangement with Energy Northwest, the Bonneville Power Administration, the Tennessee Valley Authority and the U.S. Department of Energy (DOE) to extend uranium enrichment operations at the Paducah, Ky. plant.

The Company has also entered into an agreement with DOE regarding a two-year, $350 million cooperative research, development and demonstration (RD&D) program for the American Centrifuge technology. USEC is evaluating the accounting treatment for the transfer of certain assets to DOE in connection with the RD&D program and the government's cost-sharing contributions for the RD&D program. Therefore, this update does not include the effects of the RD&D program and does not include earnings guidance.

Under the Paducah agreement, Energy Northwest is required to provide USEC with approximately 9,000 metric tons of high-assay depleted uranium and 600 metric tons of natural uranium. USEC will enrich the depleted uranium tails to make about 480 metric tons of low enriched uranium. The program, combined with other USEC commercial obligations, will require approximately 5 million separative work units (SWU), a standard measure of uranium enrichment that represents the effort that is required to increase the concentration of the U-235 isotope in the uranium. The work, which began in early June, will take about 12 months. The overall tails disposal liability of the U.S. government will be reduced as a result of the agreement and subsequent processing.

USEC's prior guidance for 2012 did not assume Paducah operations beyond May 31, 2012, and included an expectation that 2012 SWU deliveries would be roughly equivalent to 2011 deliveries. Under the new contract, USEC expects to increase SWU deliveries in 2012 by approximately 30 percent compared to last year and roughly equal to the volume of SWU sold in 2009. Revenue from the sale of SWU is expected to be approximately $1.8 billion, an increase of $300 million to $400 million over prior guidance. We anticipate the average price per SWU billed to customers will increase 5 percent over 2011. The average price billed to customers for sales of SWU increased 3 percent in each of 2011 and 2010, reflecting the particular contracts under which SWU were sold during the periods, as well as the general trend of higher prices under contracts signed in recent years. Uranium revenue in 2012 is expected to be as much as $50 million, subject to timing of sales, which is $80 million less than in 2011.

Under the Megatons to Megawatts program, USEC anticipates buying 5.5 million SWU from Russia during 2012. Under the contract's pricing formula, the price we pay Russia will increase 2 percent compared to deliveries in 2011.

Guidance for the contract services segment is unchanged. Contract services work for DOE at the former Portsmouth Gaseous Diffusion Plant was completed in September 2011, and revenue for the segment is expected to decline significantly in 2012. In prior years, contract work at Portsmouth represented approximately three-quarters of revenue for the contract services segment. USEC subsidiary NAC International will represent a majority of revenue for the segment going forward and we expect annual revenue for contract services in 2012 of approximately $85 million.

Therefore, total revenue is expected to be approximately $1.9 billion. Based on our view of revenue and expense, we expect to earn a gross profit margin in the range of 6 to 7 percent.

USEC has undertaken a review to align our organization with our evolving business environment and the expected reduction in the size of our workforce over time. The recent agreements regarding Paducah operations and the RD&D program will extend the time period for additional workforce reductions. As a result of initial workforce reductions already taken, USEC expects to take a charge of $1.1 million for one-time employee termination benefits and related cash expenditures when we report second quarter 2012 results. We expect to take additional actions during 2012 that could result in additional charges. We currently expect our selling, general and administrative (SG&A) expense to be approximately $58 million in 2012, a $4 million reduction from 2011, as our financial results begin to reflect the benefit of reductions in corporate expenses.

The Company expects to provide an update on advanced technology spending, all of which is currently being expensed, when it reports second quarter results.

In previous years, USEC has provided guidance for cash flow from operations. Because the accounting treatment for the RD&D program is still being evaluated, the Company is not providing cash flow guidance at this time. We do, however, expect to end the second quarter with a cash balance of more than $200 million compared to $72.3 million at March 31, 2012. In June, $44 million of cash was returned to USEC that had been cash collateral supporting financial assurance for the disposition of a quantity of depleted uranium that was transferred to DOE in exchange for DOE acquiring U.S.-origin low enriched uranium from USEC. This was pursuant to a uranium sales agreement signed in March 2012.

USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel and nuclear industry related services for commercial nuclear power plants.

Press Release
USEC Updates Outlook for 2012 Financial Metrics
Market Watch, June 27, 2012

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