USEC Reports Second Quarter 2011 Results and Provides ACP Update

USEC Inc. (NYSE:USU) today reported a net loss of $21.2 million or 18
cents per share for the quarter ended June 30, 2011, compared to net
income of $7.2 million or 4 cents per diluted share (6 cents per basic
share) for the second quarter of 2010. For the six-month period ended
June 30, 2011, USEC reported a loss of $37.8 million or 31 cents per
share compared to a loss of $2.5 million or 2 cents per share in the
first half of 2010.

The financial results for the quarter and six-month period ended June
30, 2011, reflect the anticipated decline in the gross profit margin and
higher advanced technology costs associated with the American Centrifuge
project year-over-year that were not offset by a cost-sharing program
that was in place in 2010 with the Department of Energy (DOE).

'Although our bottom line was a net loss, the quarterly gross profit of
$33 million was higher than initially projected. Our efforts to manage
costs are expected to result in a gross profit margin for the full year
of 6 percent, up from the 4 to 5 percent in our original guidance,? said
John K. Welch, USEC president and chief executive officer. 'Our
continued investment in the American Centrifuge project resulted in the
net loss, but that spending keeps the project in a condition where it
can be ramped up again more quickly and at less cost than if it was
fully demobilized.

'Our ongoing discussions with DOE on a loan guarantee were not concluded
in July as we had hoped. These discussions have made it clear that DOE
wants to see the project move forward. We believe they recognize the
national significance of the project, the importance of having a
U.S.-owned and operated enrichment plant, the long-term implication for
both nuclear energy and national security, and the project′s economic
benefits, including approximately 8,000 jobs during construction,? Welch
said.

'We have continued to work constructively with DOE, and our strategic
investors Babcock & Wilcox and Toshiba, on the deployment of the
American Centrifuge project. DOE has recently indicated that USEC needs
additional financial and project execution depth to achieve a manageable
credit subsidy cost and to proceed with our loan guarantee.

'We continue to strengthen the project by adopting the best operating
practices developed over 50 years of safe operations at the Paducah
plant and by working closely with our strategic investors to optimize
our execution of the project,? Welch said.

'We are working with DOE and its advisors on reviewing structuring
options to address DOE′s remaining concerns. We have retained financial
advisors who are helping us to review these options and our strategic
alternatives. We expect to make decisions on the path to follow in the
near term,? Welch said. 'We remain very mindful of the company′s
financial ability to continue spending on the project, as well as the
patience of our investors, customers and suppliers.?

Revenue

Revenue for the second quarter was $454.4 million, a decrease of $5.3
million compared to the same quarter of 2010. Revenue from the sale of
separative work units (SWU) for the quarter was $330.3 million, a
decrease of less than $1 million compared to the same period last year.
The volume of SWU sales declined 1 percent in the quarter and the
average price billed to customers increased 1 percent. For the six-month
period, SWU revenue was $638.8 million, an increase of 7 percent over
the same period in 2010. The volume of SWU sold increased 3 percent and
the average price billed to customers increased 3 percent, reflecting
the specific contracts under which SWU were sold during the periods as
well as the general trend of higher prices under contracts signed in
recent years.

Revenue from the sale of uranium in the second quarter was $67.8
million, a decrease of $1.8 million from the same quarter last year. The
quarterly results reflect a 27 percent decrease in uranium volume sold
but average prices that were 35 percent higher compared to the 2010
period due to the mix and timing of uranium contracts. Uranium revenue
in the six-month period was $81.8 million with a similar decline in
volume sold and higher prices billed to customers.

Revenues from our contract services segment in the second quarter and
six-month periods ended June 30, 2011 were $56.3 million and $114.3
million, a decrease of 5 percent and 6 percent, respectively, compared
to the corresponding periods of 2010. These declines reflect reduced
site services at Portsmouth as work is transferred to the new
decontamination and decommissioning contractor as well as fee
recognition on certain contracts in the first quarter of 2010. Revenues
by NAC International increased $7.9 million in the three-month period
and $10.7 million in the six-month period primarily as result of
increased sales of dry cask storage systems.

In a number of sales transactions, USEC transfers title and collects
cash from customers but does not recognize the revenue until low
enriched uranium is physically delivered. At June 30, 2011, deferred
revenue totaled $158.5 million, a decrease of $17.6 million from
December 31, 2010. The gross profit associated with deferred revenue as
of June 30, 2011, was $6 million.

A majority of reactors served by USEC are refueled on an 18-to-24-month
cycle, and this can lead to significant quarterly and annual swings in
SWU sales volume that reflects the mix of refueling cycles. Therefore,
short-term comparisons of USEC′s financial results are not necessarily
indicative of longer-term results.

Cost of Sales, Gross Profit Margin, Other Income and Expenses

Cost of sales for the quarter and six-month period ended June 30, 2011,
for SWU and uranium was $368.6 million and $675.8 million, an increase
of 3 percent and 8 percent, respectively, compared to the corresponding
periods in 2010. The increased cost of sales was due to higher SWU unit
costs, partially offset by lower uranium sales volume. Cost of sales per
SWU was 10 percent higher in the quarter and 9 percent higher in the
six-month period compared to the corresponding periods of 2010.
Excluding the effect of a change to the estimate of our share of future
demolition and severance costs for a power plant built to supply power
to the Paducah plant that reduced cost of sales and other long-term
liabilities by $7.8 million in the second quarter of 2010, cost of sales
per SWU was 7% higher in both the three and six-month periods of 2011
compared to the corresponding periods of 2010. Cost of sales for SWU and
uranium reflects monthly moving average inventory costs based on
production and purchase costs.

Production costs declined $38.0 million or 18 percent and $50.2 million
or 11 percent in the quarter and six-month periods, respectively, as
production volume declined to more closely match anticipated sales for
the year. The unit production cost increased 9 percent and 10 percent in
the three and six-month periods compared to the corresponding periods in
2010. We purchased 21 percent less electricity in the first half of 2011
than we did in 2010 under our contract with Tennessee Valley Authority
(TVA), but the average cost per megawatt hour increased 7 percent due to
higher TVA fuel cost adjustments as well as the fixed annual increase in
the contract price. We expect to purchase approximately 5.5 million SWU
under the Megatons to Megawatts program in 2011 at a price paid to
Russia that is 3 percent higher than in 2010. Purchase costs declined
$43.1 million in the six-month period reflecting reduced volumes due to
timing of deliveries.

Cost of sales for contract services was $52.6 million in the second
quarter, a decrease of $4.4 million or 8 percent over the same period
last year, reflecting a decreasing level of contract services work at
the Portsmouth site, partially offset by higher costs associated with
increased sales at our subsidiary NAC International and a curtailment
charge. In the six-month period of 2011, cost of sales for contract
services was $112.0 million, an increase of $4.2 million or 4 percent.
Cost of sales in the three and six months ended June 30, 2011 for the
contract services segment reflect curtailment charges of $1.9 million
and $5.1 million, respectively, for the retirement benefit plans in
connection with the transition of USEC employees to a new contractor
following the expiration of the cold shutdown contract on March 28, 2011.

The gross profit for the second quarter was $33.2 million, a decrease of
$10.9 million or 25 percent over the same quarter in 2010. In the
six-month period, the gross profit was $47.1 million, a decrease of
$23.7 million or 33 percent compared to the same period last year. The
gross profit margin for the 2011 periods was 7.3 percent and 5.6
percent, respectively. Gross profit for the LEU segment in both 2011
periods was lower due to higher costs, partially offset by higher
average selling prices for SWU and uranium.

Selling, general and administrative expenses in the six-month period
were $32.2 million, an increase of $2.8 million over the same period in
2010, primarily due to slightly higher salary and employee benefit costs
in 2011 and a favorable lease adjustment of $0.5 million in the second
quarter of 2010.

Advanced technology expense, primarily related to the demonstration of
the American Centrifuge technology, was $33.5 million in the quarter
compared to $26.0 million in the second quarter of 2010. For the
six-month period of 2011, advanced technology expense was $60.2 million,
compared to $51.7 million in the corresponding period last year. In
March 2010, we reached a cooperative agreement with DOE to provide for
pro-rata cost sharing support for American Centrifuge activities. We
completed that program in January 2011 and recorded $0.6 million in
other income for the six-month period ending June 30, 2011. During the
same six-month period of 2010, the DOE′s 50 percent pro-rata share
recorded in other income was $20 million. For the 2011 periods, USEC
expensed $9.6 million of previously capitalized construction work in
progress costs relating to a number of centrifuge machines and
associated capitalized interest costs. 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. Advanced technology expense includes
expenses by NAC to develop its MAGNASTOR? storage and transportation
technology of $0.7 million during the six-month period of 2011 compared
to $1.0 million in the same period of 2010.

Cash Flow

At June 30, 2011, USEC had a cash balance of $340.2 million compared to
$149.8 million at March 31, 2011 and $151.0 million at December 31,
2010. Cash flow provided by operations in the first half of 2011 was
$285.6 million, compared to cash flow provided by operations of $173.2
million in the previous year. The decline in accounts receivable
provided cash of $174.6 million in the six months ended June 30, 2011.
The decrease resulted from above-average sales in the fourth quarter of
2010 due to the timing of customer orders and deliveries. Net
inventories declined $173.9 million in the six-month period, monetizing
inventory produced in the prior year. Payables under the Russian
Contract declined $56.0 million due to the timing of deliveries,
representing a significant use of cash flow in the first half of 2011.
Capital expenditures, primarily related to the ACP, totaled $91.0
million during the 2011 six-month period compared to $87.9 million in
the same period last year.

Update on the American Centrifuge Project

The American Centrifuge project is at a critical point regarding
continued funding. To continue our current pace of spending and maintain
our current investment in the ACP, we need to obtain a conditional
commitment for the loan guarantee from DOE and close on the $50 million
second phase of the strategic investment by Toshiba and Babcock & Wilcox
(B&W). The second closing of the strategic investment by Toshiba and B&W
is conditioned on our obtaining a conditional commitment for a loan
guarantee of not less than $2 billion from DOE. The securities purchase
agreement governing the transaction provided that it may be terminated
by us or each of the investors (as to such investor′s obligations) if
the second closing did not occur by June 30, 2011. We did not receive a
conditional commitment from DOE by June 30th and therefore did not close
on the second phase of the strategic investment by that date. On June
30, 2011, we entered into a standstill agreement with Toshiba and B&W
pursuant to which each party agreed not to exercise its right to
terminate the securities purchase agreement prior to August 15, 2011.
Our ability to continue spending will be subject to our cash flow from
operations and liquidity. Without a conditional commitment, we likely
would have to further demobilize and reduce investment in the project.

We have been working with DOE since October 2010 on the terms of a
conditional commitment for a $2 billion loan guarantee for the American
Centrifuge project. In April 2011, the DOE Loan Guarantee Program Office
substantially completed the due diligence and negotiation stage of the
application process, including a draft term sheet, and advanced the ACP
application to the next phase for review in parallel by DOE′s credit
group and by the White House Office of Management and Budget and the
National Economic Council, as well as the Department of the Treasury.
This review includes the establishment of an estimated range of credit
subsidy cost. Credit subsidy cost is charged by the U.S. government to
cover the risk of estimated shortfalls in loan repayments. It represents
the net present value of the estimated long-term cost to the U.S.
government of the loan guarantee. As discussed above, on June 30, 2011,
we entered into a standstill agreement with Toshiba and B&W through
August 15, 2011, to provide an additional limited period of time to
complete this review process and obtain a decision from DOE on the
conditional commitment. DOE has recently indicated that it believes that
USEC needs to further improve its financial and project execution depth
to achieve a manageable credit subsidy cost estimate and to proceed with
the DOE loan guarantee. We are working with DOE and DOE′s advisors on
reviewing structuring options to address DOE′s remaining concerns in
order to move forward on the American Centrifuge Project and to obtain a
conditional commitment and DOE loan guarantee.  In addition, USEC has
retained financial and other advisors to assist USEC in this review of
structuring options and in reviewing and pursuing strategic alternatives.

In parallel, we are continuing discussions with Toshiba and B&W with
respect to the status and timing of the DOE loan guarantee process and
its impact on closing of the next phase of the Toshiba and B&W
investment and on the current standstill agreement. After obtaining a
conditional commitment, we will need to conclude final documentation and
satisfy any technical, financial and other conditions to funding in
order to close on financing. USEC also continues discussions with
Japanese export credit agencies regarding financing $1 billion of the
cost of completing the ACP. However, USEC has no assurance that it will
be successful in obtaining any or all of the financing it is seeking or
that it will not need additional capital.

In support of our DOE loan guarantee application, we continue to operate
a lead cascade test and demonstration program with AC100 commercial
plant machines at the Piketon, Ohio plant. On May 20, 2011, we submitted
to the NRC a request to extend our operating license for the lead
cascade which was scheduled to expire on August 23, 2011. On July 15,
2011, the NRC concluded that our application was complete, but deferred
conducting a review of our application unless we request to continue
lead cascade operations beyond the summer of 2012. Under applicable law,
our license will not expire pending NRC's review of a complete
application. Our suppliers are building components and we are assembling
machines for the lead cascade program, demonstrating machine
manufacturing capability and sustaining key infrastructure for
remobilization. By increasing the number of operating machine hours we
provide additional assurance of performance, reliability and plant
availability.

On June 11, 2011, during a routine monthly maintenance action, an
electrical fault in the plant support systems caused a power
interruption that eventually led to the failure of some of the machines
in the Lead Cascade. There were no injuries and there was no release of
radiation or contamination as a result of this event even though most of
the machines were operating on uranium gas at the time. The cost of
these damaged machines was included in the $9.6 million expensed in the
second quarter of previously capitalized construction work in progress
costs. A thorough analysis of the event was completed and has been
provided to DOE. The June event was not related to machine technology,
machine design or machine manufacture. All of the available centrifuges
have returned to operation in the lead cascade test and demonstration
program, and additional centrifuges will be added over the next several
months.

Effective May 1, 2011, we launched with B&W a joint company for
the  manufacture and assembly of AC100  centrifuge machines.  The joint
company, known as American Centrifuge Manufacturing, consolidates the
authority and accountability for centrifuge machine manufacturing and
assembly in one business unit which assumes contractual accountability
over the family of centrifuge parts manufacturers. With this
consolidation, the entire manufacturing program can be managed centrally
for cost efficiency, lean manufacturing, and application of consistent
standards of high quality across the entire machine manufacturing base.

In recent months, as part of our effort to reduce or mitigate project
risks, certain key suppliers and sub-suppliers conducted production runs
in their facilities for a period of time to successfully demonstrate
production of machine components and assembly at a sustained production
rate that we expect to reach during high-volume machine manufacturing.
The production demonstration was also intended to provide suppliers with
experience that would facilitate a transition to fixed-price contracts.

Fluor Corporation is the primary engineering supplier for the commercial
plant and will perform certain construction activities. Other commercial
plant work will be performed by other contractors, with USEC performing
construction management for those activities.

2011 Outlook Updated

USEC is providing a mid-year update to our 2011 financial guidance. We
expect revenue for the full year to be $1.7 billion, unchanged from our
initial guidance. Within that total revenue, we expect SWU revenue to be
slightly below $1.4 billion and uranium revenue to be $150 million. Our
projection for SWU volume sold has declined by 3 percent from earlier
guidance but we continue to see a 3 percent increase in the average
price billed to customers. The contract services segment, which includes
the close-out of work for DOE at the former Portsmouth Gaseous Diffusion
Plant, is now expected to have revenue of approximately $200 million or
$50 million more than our initial guidance. The higher revenue reflects
additional services provided by USEC as the decontamination and
decommissioning project at Portsmouth is handed over to a DOE contractor
and additional sales of dry storage systems by our subsidiary, NAC
International.

On the cost side of the LEU segment, electric power continues to be the
largest cost component at approximately 70 percent of the cost of SWU
production. Under the terms of our contract with TVA, we are buying less
electricity in 2011 than in 2010. We also coordinated with TVA to ramp
down power purchases to our summer operations level earlier than planned
due to flooding in the Tennessee Valley. The resulting reduction in
power purchases will lower our cost of sales, partially offset by higher
than expected fuel cost adjustments paid to TVA. We continue to evaluate
our TVA load profile and production requirements through the end of our
power supply contract with a goal of optimizing power purchases and
decreasing our exposure to TVA fuel cost volatility. We produce
approximately half of our SWU supply and purchase half from Russia under
the Megatons to Megawatts program. The purchase price paid to Russia in
2011 is 3 percent higher than in 2010, but the average inventory cost
reflects the impact of an 8 percent increase in purchase cost in 2010
compared to 2009.

Over the past several years, the year-over-year increase in the cost of
electricity and purchase price of SWU from Russia has been greater than
the increase in our average price billed to customers, which has
tightened gross margins. However, based on lower production costs in
2011 and slightly higher average prices billed to customers than
anticipated in our prior guidance, we now anticipate our gross profit
margin for 2011 will be approximately 6%, an improvement over our
initial guidance of 4% to 5%. Based on this revised guidance, we expect
the gross profit for 2011 to be approximately $100 million.

Below the gross profit line, we expect our selling, general and
administrative expense to be approximately $60 million. The amount of
spending related to the American Centrifuge project continues to be a
function of our progress toward a conditional commitment and timely
financial closing on a DOE loan guarantee and related funding. We expect
total spending, both capitalized and expensed, to be approximately $145
million through August 31, 2011. As previously disclosed, our spending
on the American Centrifuge in 2011 has been incrementally allocated as
we continue to evaluate our spending plan and our path toward a DOE loan
guarantee commitment. Spending on the project has a significant effect
on net income and cash flow, and because the spending level continues to
be uncertain, USEC is not providing guidance on net income or cash flow
at this time. Taking into account spending on the project to date and
our anticipated gross profit margin, we expect to report a net loss each
quarter in 2011. We do, however, expect our current enrichment
operations to generate positive cash flow from operations.

Our financial guidance is subject to a number of assumptions and
uncertainties that could affect results either positively or negatively.
Variations from our expectations could cause substantial differences
between our guidance and ultimate results. Among the factors that could
affect our results are:

• 
  Changes to the electric power fuel cost adjustment or changes to our
  power purchases from our current projection;
  
• 
  Closing out contract services work at Portsmouth and recognition of
  estimated contract closeout costs to be recovered from DOE as well as
  amounts previously billed and owed;
  
• 
  Movement and timing of customer orders;
  
• 
  Actions by DOE regarding financing of the American Centrifuge and
  supporting its continued development;
  
• 
  Ongoing review and evaluation of the value of capitalized costs that
  are part of ACP construction that could be charged to expense;
  
• 
  Changes to SWU and uranium price indicators, and changes in inflation
  that can affect the price of SWU billed to customers; and
  
• 
  The timing of recognition of previously deferred revenue.
  

USEC Inc., a global energy company, is a leading supplier of enriched
uranium fuel and nuclear industry related services for commercial
nuclear power plants.

Forward Looking Statements

This news release contains 'forward-looking statements? within the
meaning of Section 21E of the Securities Exchange Act of 1934 ? that is,
statements related to future events. In this context, forward-looking
statements may address our expected future business and financial
performance, and often contain words such as 'expects,? 'anticipates,?
'intends,? 'plans,? 'believes,? 'will? and other words of similar
meaning. Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. For USEC, particular risks and
uncertainties that could cause our actual future results to differ
materially from those expressed in our forward-looking statements
include, but are not limited to: risks related to the deployment of the
American Centrifuge technology, including risks related to performance,
cost, schedule and financing; our success in obtaining a loan guarantee
from the U.S. Department of Energy ('DOE?) for the American Centrifuge
Plant, including our ability to address the technical and financial
concerns raised by DOE and the timing of any loan guarantee; our ability
to develop and consummate a structuring option acceptable to DOE or to
develop and consummate a strategic alternative transaction, and the
timing thereof; our ability to reach agreement with DOE on acceptable
terms of a conditional commitment, including the timing of any decision
and the determination of credit subsidy cost, and our ability to meet
all required conditions to funding; our ability to obtain additional
financing beyond the $2 billion of DOE loan guarantee funding for which
we have applied, including our success in obtaining Japanese export
credit agency financing of $1 billion; the impact of the demobilization
of the American Centrifuge project and uncertainty regarding our ability
to remobilize the project and the potential for termination of the
project; our ability to meet the November 2011 financing milestone and
other milestones under the June 2002 DOE-USEC Agreement; restrictions in
our credit facility that may impact our operating and financial
flexibility and spending on the American Centrifuge project; risks
related to the completion of the remaining two phases of the
three-phased strategic investment by Toshiba Corporation ('Toshiba?) and
Babcock & Wilcox Investment Company ('B&W?), including our ability to
satisfy the significant closing conditions in the securities purchase
agreement governing the transactions and our ability to close on the
second phase of the transactions prior to the outside date of August 15,
2011 under the standstill agreement, and the impact of a failure to
consummate the transactions on our business and prospects; certain
restrictions that may be placed on our business as a result of  the
transactions with Toshiba and B&W our ability to achieve the benefits of
any strategic relationships with Toshiba and B&W uncertainty regarding
the cost of electric power used at our gaseous diffusion plant; the
economics of extended Paducah plant operations, including our ability to
negotiate an acceptable power arrangement and our ability to obtain a
contract to enrich DOE′s depleted uranium; our dependence on deliveries
of LEU from Russia under the Russian Contract and on a single production
facility; risks related to the implementing agreements needed for our
new supply contract with TENEX to become effective; limitations on our
ability to import the Russian LEU we buy under the new supply contract
into the United States and other countries; our inability under many
existing long-term contracts to directly pass on to customers increases
in our costs; the decrease or elimination of duties charged on imports
of foreign-produced low enriched uranium; pricing trends and demand in
the uranium and enrichment markets and their impact on our
profitability; movement and timing of customer orders; changes to, or
termination of, our contracts with the U.S. government including
uncertainty regarding the impacts on our business of the transition of
government services performed by us at the former Portsmouth gaseous
diffusion plant to the new decontamination and decommissioning
contractor; limitations on our ability to compete for potential
contracts with the U.S. government; changes in U.S. government
priorities and the availability of government funding, including loan
guarantees; the impact of government regulation by DOE and the U.S.
Nuclear Regulatory Commission; the outcome of legal proceedings and
other contingencies (including lawsuits and government investigations or
audits); the competitive environment for our products and services;
changes in the nuclear energy industry; the impact of the recent natural
disaster in Japan on the nuclear industry and on our business, results
of operations and prospects; the impact of volatile financial market
conditions on our business, liquidity, prospects, pension assets and
credit and insurance facilities; uncertainty regarding the continued
capitalization of certain assets related to the American Centrifuge
Plant and the impact on our results of operations; the timing of
recognition of previously deferred revenue; and other risks and
uncertainties discussed in our filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K and quarterly
reports on Form 10-Q, which are available on our website at www.usec.com.
Revenue and operating results can fluctuate significantly from quarter
to quarter, and in some cases, year to year. We do not undertake to
update our forward-looking statements to reflect events or circumstances
that may arise after the date of this news release except as required by
law.

USEC Inc.

Media: Paul Jacobson (301) 564-3399

or

Investors:
Steve Wingfield (301) 564-3354