Kenneth Fletcher
RW Monitor
5/16/2014
USEC this week reported a net loss of $50.8 million in the first quarter of 2014 compared to a loss of just $2 million in the same quarter last year, with the heavier losses largely a result of the end of enrichment operations at the Paducah Gaseous Diffusion Plant. USEC ceased operations at Paducah in the summer of 2013 and is planning to return the plant to the Department of Energy later this year. The bulk of the company’s reported loss stems from $34.9 million in transition expenses at the Paducah plant. “Other factors affecting financial results for the quarter were lower SWU sales volume and expenses for our reorganization efforts, workforce reductions, advisory costs and USEC’s share of costs under the 2012 Cooperative Agreement for research, development and demonstration of the American Centrifuge technology,” states a USEC release.
Since the end of enrichment at the Paducah plant, USEC has not enriched uranium and instead has acted as a broker and focused on its supply agreement with Russia for revenue. Revenue for the first quarter added up to $148.6 million, a decrease of $171.8 million over the same quarter in 2013. On March 31 USEC had a cash balance of $85.1 million compared to $314.2 million at the end of 2013, much of which went to $340.7 million in Russian contract payables. Given a bleak commercial outlook and significant bonds that come due later this year, USEC is in the midst of chapter 11 bankruptcy proceedings. “Our ability to continue as a going concern is contingent upon the bankruptcy court’s approval of our proposed reorganization plan and our ability to successfully implement the proposed reorganization plan, among other factors,” the company said in a release.
USEC made progress in the first quarter in developing its American Centrifuge enrichment technology under a research, demonstration and deployment program with the Department of Energy that ended April 30. But because it is not able to commercialize the technology, the Department handed management of the program over to Oak Ridge National Laboratory, which this month began a subcontract with USEC to keep American Centrifuge running. “On May 1, we signed an agreement with Oak Ridge National Laboratory (ORNL) to continue cascade operations in Piketon, Ohio and core American Centrifuge research and technology activities through the end of the federal fiscal year, September 30, 2014,” USEC CEO John Welch said in a statement. “Under the American Centrifuge Technology Demonstration and Operations Agreement, or ACTDO Agreement, USEC is maintaining the American Centrifuge technology capability as a subcontractor to ORNL. The agreement calls for fixed-cost funding of approximately $33.7 million for the remainder of this fiscal year, with an option for two, six-month extensions.”
Welch added: “ORNL has been involved with America’s centrifuge technology for many years, and the new agreement builds on our cooperative research and development relationship. Our goal is to preserve a reliable and economic domestic uranium enrichment capability for national security while laying the groundwork for future private sector deployment for commercial purposes.”
122 Layoffs at American Centrifuge Manufacturing Facility
Meanwhile, operations are ramping down at the American Centrifuge manufacturing facility in Oak Ridge, which had been jointly run by B&W and USEC but this month transferred to 100 percent USEC ownership. The manufacturing capability is not supported by the new ORNL subcontract. B&W this week confirmed that all 122 B&W employees who earlier this year received WARN notices will be laid off. “We are in the process of demobilizing, which includes out-processing employees,” Aimee Mills, a spokeswoman at B&W headquarters in Charlotte, N.C., said in an email response to questions.
Mills said the layoffs are being carried out in phases, but she said all employees would be paid through May 19. That’s the date that meets the 60-day warning period required by the federal Worker Adjustment and Retraining Notification Act. USEC previously had a 55 percent stake in ACM (with B&W holding 45 percent) but has now taken 100 percent control. It’s not clear whether the Oak Ridge manufacturing center will continue operations, with USEC now working under a subcontract to Oak Ridge National Laboratory. USEC spokesman Paul Jacobson said the effort “will be significantly smaller if anything at all.” While all of the B&W employees received layoff notices, fewer than 10 USEC employees in Oak Ridge have been laid off so far.
