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Property, Plant and Equipment | 9 Months Ended
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Sep. 30, 2012
Property, Plant and Equipment |
Property, Plant and Equipment | 4. PROPERTY, PLANT AND EQUIPMENT A summary of changes in property, plant and equipment follows (in millions):
|  | December 31, 2011 |  |  | Capital Expenditures (Depreciation) |  |  | Transfers and Retirements |  |  | September 30, 2012 |
Construction work in progress |  | $ | 1,111.2 |  |  | $ | 13.9 |  |  | $ | (366.2 | ) |  | $ | 758.9 |
Leasehold improvements, machinery and equipment |  |  | 434.1 |  |  |  | 0.7 |  |  |  | 311.6 |  |  |  | 746.4 |
|  |  | 1,545.3 |  |  |  | 14.6 |  |  |  | (54.6 | ) |  |  | 1,505.3 |
Accumulated depreciation and amortization |  |  | (358.2 | ) |  |  | (19.4 | ) |  |  | 7.2 |  |  |  | (370.4 | )
|  | $ | 1,187.1 |  |  | $ | (4.8 | ) |  | $ | (47.4 | ) |  | $ | 1,134.9 |
Capital expenditures include items in accounts payable and accrued liabilities at September 30, 2012 for which cash is paid in subsequent periods. American Centrifuge USEC is working to deploy the American Centrifuge technology at the American Centrifuge Plant ("ACP") in Piketon, Ohio. Capital expenditures related to the ACP totaled $1.1 billion at September 30, 2012 and December 31, 2011. At December 31, 2011 ACP capital expenditures were primarily included in the construction work in progress balance. Capitalized asset retirement obligations included in construction work in progress totaled $19.3 million at September 30, 2012 and December 31, 2011. In the fall of 2011, instead of moving forward with a conditional commitment for a loan guarantee for the American Centrifuge project through the DOE Loan Guarantee Program, DOE proposed a two-year cost share research, development and demonstration ("RD&D") program for the American Centrifuge project. USEC, its subsidiary American Centrifuge Demonstration, LLC, ("ACD") and DOE entered into a cooperative agreement for the RD&D program on June 12, 2012. Additional details are provided in Note 12 under "American Centrifuge Plant – Project Funding." Beginning in the fourth quarter of 2011, as a result of the shift in focus of the American Centrifuge project, USEC began spending on the American Centrifuge technology at reduced levels with activities concentrating on development and demonstration. As a result, all project costs incurred since the fourth quarter of 2011 have been expensed, including interest expense that previously would have been capitalized. Capitalization of expenditures related to the ACP has ceased until commercial plant deployment resumes, anticipated to begin at the successful completion of the RD&D program. On June 12, 2012, USEC, through its subsidiary ACD, entered into a contract with DOE to transfer to DOE title to the centrifuge machines and equipment produced or acquired under the RD&D program. The transferred property include specified existing machines and equipment having a cost of $44.6 million that were transferred in the second quarter of 2012, and, at DOE's option, the machines and equipment produced or acquired under the cooperative agreement. During the third quarter of 2012 USEC conducted an extensive review of ACP related assets recorded in construction work in progress. As a result of this review, USEC believes that machine manufacturing infrastructure, on a limited production scale, is ready for its intended use. The physical assets are in their planned locations and in the condition necessary for them to be capable of operating in the manner intended, although in a much smaller scale than anticipated during the full commercial plant deployment. During the RD&D program no major additional facilitization is planned that would significantly increase machine manufacturing output through December 2013. During the third quarter of 2012, USEC transferred $303.1 million from construction work in progress and $12.3 million from prepaid assets into leasehold improvements, machinery and equipment based on its belief that machine manufacturing infrastructure, on a limited production scale, is ready for its intended use. The basis of the depreciation will be an allocation over the total cascades to be built as part of the ACP commercial plant deployment. USEC believes that future cash flows from the ACP will exceed its capital investment. Since USEC believes its capital investment is fully recoverable, no impairment of the balance of capitalized costs is anticipated at this time. USEC will continue to evaluate this assessment as conditions change, including as a result of activities conducted as part of the RD&D program. Paducah GDP USEC records leasehold improvements, machinery and equipment at acquisition cost and depreciates these assets on a straight line basis over the shorter of the useful life of the assets or the expected productive life of the plant, which has been June 2016 for the Paducah GDP commensurate with the term of the lease agreement. Maintenance and repair costs are charged to production costs as incurred. USEC believes it will be difficult to continue enrichment at the Paducah GDP beyond the one-year term of the depleted uranium enrichment arrangement and is working with DOE to plan for the transition of the Paducah GDP. Under the terms of the lease, USEC can terminate the lease prior to June 2016 upon two years' notice. Also, as USEC's needs change, USEC can de-lease portions of the property under lease upon 60 days' notice with DOE's consent, which cannot be unreasonably withheld. Once USEC ceases enrichment at the Paducah GDP, for a period of time it will still need to lease certain areas used for ongoing operations such as shipping and handling, inventory management and site services. Therefore several potential de-lease scenarios are being considered and discussed with DOE. USEC has been in discussions with DOE regarding the transition of the Paducah GDP. In September 2012, USEC provided DOE with a non-binding notice of potential return of certain leased premises and property at the Paducah GDP. USEC expects to continue its ongoing dialog with DOE and is developing a de-lease schedule for the return of certain leased areas back to DOE in the near-term. As a result of discussions with DOE and USEC's belief that it will be difficult to continue enrichment activities at the Paducah GDP through the expiration of the existing lease term, USEC has decided that leasehold improvements, machinery and equipment at the Paducah GDP will be depreciated on an accelerated straight line basis prospectively starting in the fourth quarter of 2012. Based on internal analysis that provided management's view of the most likely scenarios, USEC currently does not foresee that the lease term will continue beyond 2014 and will depreciate its existing assets over this timeframe unless facts and circumstances affecting the expected term of the lease change. In addition, some ongoing activities at the Paducah GDP that have been previously capitalized as part of construction work in progress are now assumed to have a relatively short expected life once placed in service. As such, USEC has expensed $2.8 million to cost of sales in the third quarter of 2012 related to construction work in progress costs that have not yet been placed into service. Going forward, many costs that would have been previously treated as construction work in progress will be treated similar to maintenance and repair costs because of the short expected productive life of the Paducah GDP.

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- Definition The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 5 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2921-110230 + Details
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