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USEC Reports Financial Results For The Fourth Quarter And Full Year 2012

Gross profit for 2012 was $138.0 million, an increase of $53.8 million or 64 percent over the previous year. The gross profit margin for the year was 7.2 percent compared to 5.0 percent in 2011. The higher gross profit margin primarily reflects higher SWU average prices and sales volumes, partially offset by lower uranium sales volumes. In addition, the gross profit of the contract services segment declined $3.9 million following the completion of Portsmouth site contract service work in the prior periods.

As noted earlier, in the fourth quarter of 2012, we expensed $1.1 billion of previously capitalized costs related to the American Centrifuge project based on our annual assessment of these assets. This included previously capitalized costs related to property, plant and equipment (including construction work in progress) of $1,075.6 million, prepayments made to suppliers of $9.9 million and deferred financing costs related to the DOE loan guarantee program of $6.7 million that were previously capitalized during the period 2007 through 2011. Additionally, an expense of $44.6 million was incurred in the second quarter of 2012 related to the title transfer of previously capitalized American Centrifuge machinery and equipment to DOE as provided in the cooperative agreement with DOE for the RD&D program.

Selling, general and administrative expenses in 2012 were $56.1 million, a decrease of $6.0 million or 10 percent compared to 2011. The lower expense reflects a decline of $3.1 million in consulting costs and a decline of $2.4 million in salary and other compensation costs.

We initiated an internal review of our organizational structure in 2012 and engaged a management consulting firm to support this review. The cost of these consultants and other advisors totaled $8.4 million in 2012. This review provided a plan to address necessary organizational changes as we transition the Paducah GDP. Our workforce was reduced by approximately 50 employees, including two senior corporate officers, at a cost of $3.9 million for termination benefits. Additional actions affecting employees to align the organization with our evolving business environment are expected.

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