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.
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