Transition Charges

3 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

TRANSITION CHARGES

Non-Production Expenses

The Company ceased uranium enrichment at the Paducah gaseous diffusion plant (the “Paducah GDP”) at the end of May 2013 and subsequently completed transferring its inventory to off-site licensed locations to meet future customer orders. On October 21, 2014, all of the leased portions of the Paducah GDP were de-leased and returned to the U.S. Department of Energy (“DOE”). Pursuant to a June 2014 agreement with DOE, the lease will terminate with respect to the Paducah GDP on August 1, 2015. The termination of the lease with respect to the Paducah GDP does not affect the Company’s right to lease portions of the DOE-owned site in Piketon, Ohio needed for the American Centrifuge program. The USEC Privatization Act and the lease for the plant provide that DOE remains responsible for decontamination and decommissioning of the Paducah GDP site.

As the Company accelerated the expected productive life of plant assets and ceased uranium enrichment at the Paducah GDP, the Company has incurred a number of expenses unrelated to production that have been charged directly to cost of sales. Non-production expenses totaled $4.7 million in the three months ended March 31, 2015 and $34.9 million in the corresponding period in 2014 as follows:

Operating expenses of $4.4 million in the three months ended March 31, 2015 and $27.0 million in the three months ended March 31, 2014. Charges in the first quarter of 2015 include off-site inventory management and logistics costs. Charges in the first quarter of 2014 include inventory management and disposition, ongoing regulatory compliance, utility requirements for operations, security, and other Paducah site management activities related to the transitioning of facilities and infrastructure to DOE;


-	Inventory charges of $0.3 million in the three months ended March 31, 2015 and $6.6 million in the three months ended March 31, 2014, including the cost of inventories deployed for cascade drawdown, assay blending and repackaging, and residual uranium in cylinders transferred to DOE. The Company determined that it was uneconomic to recover resulting residual quantities for resale; and


-	Paducah GDP asset depreciation charges of $1.3 million in the three months ended March 31, 2014. Paducah GDP asset depreciation was completed as of June 30, 2014.

Special Charges for Workforce Reductions

The cessation of enrichment at the Paducah GDP and evolving business needs have resulted in workforce reductions since July 2013 at the Paducah GDP, American Centrifuge and headquarters. DOE’s liability for its share of Paducah employee severance paid by the Company is pursuant to the USEC Privatization Act. A summary of special charges and changes in the related balance sheet accounts in the first quarter of 2015 follows (in millions):



	Liability Balance to Be Paid, Dec. 31, 2014		Three Months Ended Mar. 31, 2015						Liability Balance to Be Paid, Mar. 31, 2015
	Liability Balance to Be Paid, Dec. 31, 2014		Special Charges			Paid			Liability Balance to Be Paid, Mar. 31, 2015
Workforce reductions, primarily severance payments	$	2.4	$	0.9		$	(2.7	)	$	0.6
Less: Amounts billed to DOE	*		(0.3		)	*			*
	$	2.4	$	0.6		$	(2.7	)	$	0.6

* - not applicable

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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