Advanced technology expenses, primarily related to the demonstration of the American Centrifuge technology, were $273.2 million for the full year of 2011, an increase of $163.0 million compared to 2010. As previously disclosed, USEC expensed $136.7 million of capitalized work-in-progress cost related to damaged centrifuge machines as well as earlier machines that were determined to no longer be compatible with the commercial plant design. In addition, $9.9 million was expensed in the fourth quarter of 2011 for previously capitalized amounts related to prepayments made to a supplier for the American Centrifuge Plant (ACP). The Company’s contract with this supplier could not be extended and this amount represents the remaining balance for prepayments for materials that USEC will not purchase under the contract.
Beginning with the start of the fourth quarter of 2011, all ACP-related project costs incurred have been expensed, including interest expense that previously would have been capitalized. Spending at the reduced levels relates primarily to development and maintenance activities rather than capital asset creation. USEC also expects to expense costs under the research, development and demonstration (RD&D) program as incurred. Capitalization of expenditures related to ACP has ceased until commercial plant deployment resumes.
Advanced technology costs include expenses in 2011 of $1.6 million compared to $2.4 million in 2010 by NAC to develop and expand its MAGNASTOR ® technology and its transportation counterpart, MAGNATRAN.
Selling, general and administrative expenses in 2011 were $62.1 million, an increase of $3.2 million compared to 2010. The higher expense reflects an increase of $1.8 million in consulting costs and an increase of $0.3 million in director compensation related to two additional directors in 2011.In January 2011, USEC executed an exchange with a noteholder whereby the Company received convertible notes with a principal amount of $45 million in exchange for 6,952,500 shares of common stock, and cash for accrued but unpaid interest on the convertible notes. In connection with this exchange, a gain on debt extinguishment of $3.1 million was recognized in the first quarter of 2011.
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