USEC REPORTS $40 MILLION LOSS FOR SECOND QUARTER

USEC late yesterday reported a $40 million loss for the second quarter of 2013, compared to a $90 million loss during the same quarter last year. USEC attributed its latest financial results, in part, to the end of uranium enrichment activities at the Paducah Gaseous Diffusion Plant. “The financial results for the second quarter and first half of 2013 reflect a reduction in separative work unit (SWU) revenue and lower gross profit compared to the same periods of 2012,” USEC said in a release. The company went on to say, “We are working on the transition of the Paducah GDP, including preparing facilities for return to the U.S. Department of Energy (DOE) following the termination of enrichment in the second quarter of 2013. These actions resulted in significant charges to cost of goods sold for immediate asset retirement charges for property formerly used in the enrichment process at the Paducah GDP, inventory valuation adjustments, site expenses including lease turnover activities, power contract losses, and accelerated depreciation. Additionally, we recorded special charges related to workforce reductions and advisory costs.”

USEC warned that it could experience “significant costs” related to the end of uranium enrichment work at the Paducah plant depending on the finalization of a plan to delease the plant and return it to DOE. “For example, delays in the de-lease schedule, delays in the packaging and transfer to other locations of the inventories held by us, additional lease turnover activities, additional costs for waste removal, and other costs could be greater than anticipated. These costs could place significant demands on our liquidity, and we are evaluating alternatives to manage these potential costs,” USEC said, adding, “We are also seeking to manage the impacts of the Paducah transition on our existing business. “

USEC said it officially notified DOE Aug. 1 that it has exercise its right to terminate the lease for the Paducah plant. “We anticipate being able to complete the return of the leased premises and to terminate the GDP lease as early as July 2014.  If we and DOE are unable to agree on a schedule for termination prior to two years, we plan to retain a small portion of the leased premises until August 1, 2015, at which time the Paducah GDP lease will terminate and any remaining portion of the leased premises will be returned to DOE,” USEC said, adding, “In such an event, during this period we plan to return portions of the leased premises no longer required to meet our business needs. However, limitations on available funding to DOE in light of federal budget restraints and spending cuts could limit DOE’s willingness to accept the return of areas that we wish to de-lease on a timely basis.”