3. PROPERTY, PLANT AND EQUIPMENT

A summary of changes in property, plant and equipment follows (in millions):


	December 31, 2010			Capital Expenditures (Depreciation)			Transfers and Retirements			September 30, 2011
Construction work in progress	$	1,126.3		$	134.8		$	(21.5	)	$	1,239.6
Leasehold improvements		187.3			-			4.0			191.3
Machinery and equipment		269.1			-			(2.5	)		266.6
		1,582.7			134.8			(20.0	)		1,697.5
Accumulated depreciation and amortization		(351.3	)		(35.0	)		10.2			(376.1	)
	$	1,231.4		$	99.8		$	(9.8	)	$	1,321.4

Capital expenditures include items in accounts payable and accrued liabilities at September 30, 2011 for which cash is paid in subsequent periods.

USEC is working to deploy the American Centrifuge technology at the American Centrifuge Plant ("ACP") in Piketon, Ohio. Capital expenditures related to the ACP, which are primarily included in the construction work in progress balance, totaled $1,252.5 million at September 30, 2011 and $1,143.8 million at December 31, 2010. Capitalized asset retirement obligations included in construction work in progress totaled $19.3 million at September 30, 2011 and was unchanged from December 31, 2010.

During the second quarter of 2011, USEC expensed $9.6 million of previously capitalized construction work in progress costs. This expense was charged to advanced technology costs on the consolidated statement of operations and relates to a number of centrifuge machines and the related capitalized interest allocated to the centrifuge machines. The centrifuge machines expensed are no longer considered to have future economic benefit because they were irreparably damaged during lead cascade operations. There is no machine technology, machine design or machine manufacturing issue associated with this expense.

On September 30, 2011, USEC announced that in order to prudently manage its resources it would be reducing its spending on the American Centrifuge project during October 2011 by approximately 30% (as compared to the average monthly rate of spending in the prior months of 2011) as the Company continued working with the U.S. Department of Energy ("DOE") to achieve a conditional commitment for a DOE loan guarantee for the American Centrifuge project by November 1, 2011.

Subsequent to that action, USEC and DOE engaged in intense discussions throughout October and discussions are ongoing regarding a research, development and demonstration ("RD&D") program to reduce the technology and financial risk of commercializing the American Centrifuge technology. The RD&D program being discussed is currently anticipated to include up to $300 million of total U.S. government funding provided through a cost sharing arrangement. The RD&D program is expected to involve the manufacturing of additional production design centrifuge machines and construction and operation of at least one complete commercial cascade of machines so that key systems associated with cascade operations of the American Centrifuge technology can be tested as they would actually operate at the scale necessary for full commercialization. As a first step in the RD&D program, USEC and DOE are in discussions regarding a cooperative agreement to provide immediate funding to continue American Centrifuge RD&D activities over the next couple of months and to develop the scope for execution of the enhanced RD&D program. However, no agreement has been reached with DOE regarding any phase of the RD&D program. USEC is evaluating its spending on a day-to-day basis and could make a decision at any time to further reduce spending and demobilize the project based on the timing and likelihood of an agreement with DOE and any government funding.

As previously disclosed in the second quarter of 2011, USEC is currently evaluating the ongoing utility of a number of earlier AC100 centrifuge machines that may not be compatible with the current commercial plant design that were previously capitalized as part of construction work in progress. If it is determined that these centrifuge machines have no future economic benefit, then USEC would expense up to $100 million in a subsequent quarter. USEC is evaluating several potential uses of these machines and the related economics for each scenario, such as use in the commercial plant as a production line, use of certain parts or subassemblies as operating spares, and use for operator training. The evaluation of these centrifuge machines is expected to be completed by the end of the fourth quarter of 2011.

USEC continues to believe that future cash flows generated by the ACP will exceed its capital investment and its capital investment is more likely than not fully recoverable. If conditions change and deployment was no longer probable or was delayed significantly from USEC's current projections, USEC could expense up to the full amount of previously capitalized costs related to the ACP of up to $1.3 billion as early as the fourth quarter of 2011. Events that could impact USEC's views as to the probability of deployment or USEC's projections include a failure to successfully enter into an agreement with DOE for the RD&D program, including the failure to timely enter into a cooperative agreement with DOE to provide immediate funding for the project, or an unfavorable determination in any initial scoping phase of the RD&D program regarding the restructuring of the project.