Initial actions taken related to our organizational structure resulted in workforce reductions at our American Centrifuge design and engineering operations in Oak Ridge, Tenn., the central services operations located in Piketon, Ohio, and at our headquarters operations located in Bethesda, Md. The reductions to-date involved 45 employees, including two senior corporate officers. A charge of $1.9 million was incurred in the first quarter of 2012 and $1.7 million in the second quarter of 2012 for one-time termination benefits consisting of severance payments, short-term health care coverage and immediate vesting of restricted stock for certain employees. Additional actions affecting employees to align the organization with our evolving business environment are expected.
Interest expense increased $12.6 million in the three months and $25.3 million in the six months ended June 30, 2012, compared to the corresponding periods in 2011. As noted above, all American Centrifuge related project costs incurred have been expensed, including interest expense that previously would have been capitalized. For comparison, in the three and six months ended June 30, 2011, interest costs of $10.6 million and $21.6 million were capitalized, respectively. Interest expense in the first quarter of 2012 included $1.4 million of previously deferred financing costs related to the former credit facility that were expensed in connection with the amended and restated credit facility obtained in March 2012.
At June 30, 2012, USEC had a cash balance of $229.0 million compared to $72.3 million at March 31, 2012. Cash flow provided by operations in the six-month period of 2012 was $162.1 million compared to cash flow provided by operations of $285.6 million in the same period last year. Inventories declined $340.3 million in the six-month period due to monetization of inventory produced in the prior year. Payment of the Russian Contract payables balance of $65.2 million, due to the timing of deliveries, was a significant use of cash flow in the six months ended June 30, 2012. Capital expenditures were significantly reduced due to our decision to expense all costs related to the American Centrifuge project. In the same period of 2011, capital expenditures totaled $91.0 million. Cash collateral deposits of $43.8 million were returned to us in June 2012 in connection with the modification of surety bonds following the decrease in accrued depleted uranium disposition in the first quarter associated with the March 2012 uranium transfer agreement with DOE. Cash payments of $9.8 million were made for financing costs.