Item 2. Properties

~~Centrus’~~Our corporate headquarters is located at 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817, where ~~it leases~~we lease 24,000 square feet of office space through October 2027. ~~Centrus owns~~We own a 440,000 square foot manufacturing facility, including supporting office space, on 72 acres at 400 Centrifuge Way, Oak Ridge, Tennessee 37830. ~~Centrus leases~~We lease 50,400 square feet of centrifuge testing facilities from DOE at the East Tennessee Technology Park, 2010 Hwy 58, Oak Ridge, Tennessee 37830. The current lease term is through December ~~2017. Centrus leases~~2019. We also lease industrial buildings and ~~197,000~~110,000 square feet of supporting office space from DOE at 3930 U.S. Route 23, Piketon, Ohio 45661. The industrial buildings encompass more than 14 acres under roof and were built to contain uranium enrichment operations using centrifuge technology. ~~The current~~In May 2017, we entered into a lease ~~term is~~ through ~~June 2019. Centrus~~July 2021 for 6,000 square feet of office space at 14074 U.S. Highway 23, Waverly, Ohio. We also ~~has~~have short-term leases for small areas of office space in Washington, DC and ~~Paducah, Kentucky.~~Tokyo, Japan.

Item 3. Legal Proceedings

On May 30, 2013, the Company filed a complaint in the U.S. Court of Federal Claims against the United States requesting breach of contract damages for three claims totaling $38.0 million. The claims all relate to work the Company performed under contract with DOE during the period 2003 through 2011. The claims for payment were denied by the DOE contracting officer under the Contract Disputes Act. The claims include (1) a claim for $11.2 million for periods through December 31, 2009 that was denied by the DOE contracting officer by letter dated June 1, 2012, (2) a claim for $9.0 million for the year ended December 31, 2010 that was denied by the DOE contracting officer by letter dated August 15, 2012, and (3) a claim for $17.8 million for the year ended December 31, 2011 that was denied by the DOE contracting officer by letter dated August 15, 2012. Centrus believes DOE has breached its agreements by failing to establish appropriate provisional billing and final indirect cost rates on a timely basis. Centrus and DOE have been able to reach a resolution on a portion of the amounts claimed and DOE has now paid approximately $6.7 million of claims for work performed in 2003 through 2007. On July 28, 2014, the court dismissed certain claims related to damages resulting from subcontracts with DOE contractors amounting to approximately $3.8 million on a jurisdictional basis. Centrus is pursuing those claims separately against DOE contractors. Payments of $0.4 million were received in the fourth quarter of 2015. Further, on August 8, 2014, the Company filed an amended complaint which provided for the dismissal of counts related to the failure of DOE to establish provisional billing rates for CY 2003 through CY 2005. On October 13, 2014, the Department of Justice filed a partial motion to dismiss for lack of jurisdiction the counts in the amended complaint relating to final indirect cost payments for CY 2003 through CY 2005. On June 3, 2015, the Court denied DOJ’s motion. On October 5, 2015, the Company filed a motion for summary judgment on three issues which would be dispositive on most of the amounts claimed by USEC in the litigation. The briefing on the motion for summary judgment is complete. The parties are engaged in settlement discussions and further action on the case is stayed pending the outcome of such discussions. For additional information, see Part II, Item 7, ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contract Services Segment - Site Services Work and Related Receivables.~~

On August 30, 2013, the Company submitted ~~an additional~~a claim to DOE under the Contract Disputes Act for payment of $42.8 million, representing DOE’s share of pension and postretirement benefits costs related to the transition of Portsmouth site employees to DOE’s ~~decontamination and decommissioning~~D&D contractor. On August 27, 2014, the DOE contracting officer denied the Company’s claim. As a result, the Company filed an appeal of the decision in the U.S. Court of Federal Claims in January 2015. On February 29, 2016, the Company filed a motion for partial summary judgment regarding recovery of post-retirement benefit costs and the appropriate segment closing date for purposes of calculating DOE’s share of pension and postretirement benefits costs. As noted in Part ~~II,~~I, Item 7,1A, ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Defined Benefit Plan Funding,~~Risk Factors, Centrus has potential pension plan funding obligations under Section 4062(e) of ~~the Employee Retirement Income Security Act (“ERISA”)~~ERISA related to the Company’s de-lease of the former Portsmouth GDP and transition of employees to DOE’s D&D contractor and related to the transition of employees in connection with the Paducah GDP transition. Centrus believes that DOE is responsible for a significant portion of any pension and postretirement benefit costs associated with the transition of employees at Portsmouth. The receivable for DOE’s share of pension and postretirement benefits costs has a full valuation allowance due to the lack of a resolution with DOE and uncertainty regarding the amounts owed and the timing of collection. The ~~briefing~~parties filed cross motions for partial summary judgment to seek a judicial determination of two issues related to the calculation of the pension liability and the entitlement of Centrus to reimbursement for postretirement benefit costs. The Court ruled on the ~~motion~~pension calculation methodology and ruled Centrus was entitled to recover costs associated with postretirement benefits for ~~summary judgment is complete.~~employees afforded protection under the USEC Privatization Act. The parties are engaged in settlement discussions and further action on the case is stayed pending the outcome of such discussions.

~~Centrus is~~On October 11, 2018, the Company’s subsidiaries, Enrichment Corp. and American Centrifuge Enrichment, LLC (“ACE”, together with Enrichment Corp., the “Company Subsidiaries”) filed proofs of claim in the U.S. Bankruptcy Court for the Northern District of Ohio (the “Bankruptcy Court”) against each of FirstEnergy Nuclear Operating Company (“FENOC”), FirstEnergy Nuclear Generation, LLC (“FENG,” and together with FENOC, the “FirstEnergy Contract Parties”), FirstEnergy Solutions Corp. (“FES”) and FirstEnergy Generation, LLC (“FG”) in the amount of approximately $314.0 million. The claims relate to damages arising from the rejection and breach of a long-term contract between the Company Subsidiaries and the FirstEnergy Contract Parties that was approved by the Bankruptcy Court and made effective as of July 26, 2018. The proofs of claim filed by the Company Subsidiaries include claims against FENOC and FENG based on their liability as parties to the contract that was rejected and breached. The proofs of claim filed by the Company Subsidiaries also include claims against FES and FG based on their liability under guaranties they issued that may obligate FES and FG to satisfy the rejection and breach of contract damages claims.

We are subject to various ~~other~~ legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, other than the above, we do not believe that the outcome of any of these legal matters, individually or in the aggregate, will have a material adverse effect on our cash flows, results of operations or consolidated financial condition.

Item 4. Mine Safety Disclosures

None.

Executive Officers of the Registrant

Executive officers are elected by and serve at the discretion of the Board of Directors. Executive officers at ~~March 31, 2017,~~April 1, 2019, follow:



Name	Age	Position
Daniel B. Poneman	6163	President and Chief Executive Officer
~~Kevin Alldred~~Larry B. Cutlip	5859	Senior Vice President, ~~Business Strategy~~Field Operations
Elmer W. Dyke	5355	Senior Vice President, Business Operations and Chief Commercial Officer
~~Stephen S. Greene~~Marian K. Davis	5960	Senior Vice President, Chief Financial Officer and Treasurer
~~Larry B. Cutlip~~Stephen S. Greene	5761	Senior Vice President, ~~Field Operations~~
~~Marian K. Davis~~	58	~~Vice President~~Corporate Development and ~~Chief Audit Executive~~
~~John M.A. Donelson~~	52	~~Vice President, Marketing, Sales and Power~~
~~Richard V. Rowland~~	68	~~Vice President, Human Resources~~Strategy
Dennis J. Scott	5759	Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
John M.A. Donelson	54	Vice President, Sales and Chief Marketing Officer

Daniel B. Poneman has been President and Chief Executive Officer ~~effective~~ since April 2015 and was Chief Strategic Officer in March 2015. Prior to joining the Company, Mr. Poneman was Deputy Secretary of Energy from May 2009 to October 2014, in which capacity he also served as Chief Operating Officer of the U.S. Department of Energy.

~~Kevin Alldred~~Larry B. Cutlip has been Senior Vice President, ~~Business Strategy~~Field Operations since ~~October 2015. Prior~~January 2018, was Vice President, Field Operations from May 2016 through December 2017, was Deputy Director of the American Centrifuge Project from January 2015 to ~~joining~~May 2016, was Director, Centrifuge Manufacturing from April 2008 to December 2014, was Director, Program Management and Strategic Planning from December 2005 to April 2008, was Manager, Engineering from May 1999 to December 2005, and held positions in operations management and engineering at the Company ~~Mr. Alldred worked for the International Atomic Energy Agency (“IAEA”), where he was most recently project manager for the IAEA LEU Bank from April 2012 to September 2015.~~and its predecessors since 1981.

Elmer W. Dyke has been Senior Vice President, Business Operations and Chief Commercial Officer since January 2018 and was Senior Vice President, Business Operations from September ~~2015.~~2015 through December 2017. Prior to joining the Company, Mr. Dyke was a Senior Vice President of NAC International’s global consulting business and Vice President of International Sales from August 2010 to September 2015.

~~Stephen S. Greene~~Marian K. Davis has been Senior Vice President, Chief Financial Officer and Treasurer since April 3, 2018, was Vice President, Finance and Accounting from January 2018 to April 2018 and was Vice President and Chief Audit Executive from July 2011 through December 31, 2017.

Stephen S. Greene has been Senior Vice President, Corporate Development and Strategy since April 3, 2018, was Senior Vice President, Chief Financial Officer and Treasurer from July 2015 to April 2018, and was Vice President, Finance and Treasurer from February 2007 to July 2015.

Larry B. Cutlip has been Vice President, Field Operations since May 2016 and was Deputy Director of the American Centrifuge Project from January 2015 to May 2016, Director, Centrifuge Manufacturing from April 2008 to December 2014, Director, Program Management and Strategic Planning from December 2005 to April 2008, Manager, Engineering from May 1999 to December 2005, and held positions in operations management and engineering at the Company and its predecessors since 1981.

~~Marian K. Davis has been Vice President and Chief Audit Executive since July 2011.~~

John M.A. Donelson has been Vice President, Marketing, Sales and Power since April 2011 and was Vice President, Marketing and Sales from December 2005 to April 2011, Director, North American and European Sales from June 2004 to December 2005, Director, North American Sales from August 2000 to June 2004 and Senior Sales Executive from July 1999 to August 2000.

~~Richard V. Rowland has been Vice President, Human Resources since April 2012 and was Corporate Director of Human Resources from March 1997 to April 2012.~~

Dennis J. Scott has been Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary since January 2018 and Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary from May 2016 ~~and~~through December 2017. Mr. Scott was Deputy General Counsel and Director, Corporate Compliance from April 2011 to May 2016, Acting Deputy General Counsel from August 2010 to April 2011, Assistant General Counsel and Director, Corporate Compliance from April 2005 to August 2010 and Assistant General Counsel from January 1994 to April 2005.

John M.A. Donelson has been Vice President, Sales and Chief Marketing Officer since January 2018 and Vice President, Marketing, Sales and Power from April 2011 through December 2017. Mr. Donelson was Vice President, Marketing and Sales from December 2005 to April 2011, Director, North American and European Sales from June 2004 to December 2005, Director, North American Sales from August 2000 to June 2004 and Senior Sales Executive from July 1999 to August 2000.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s certificate of incorporation authorizes 100,000,000 shares of common stock, consisting of 70,000,000 shares of Class A common stock, $0.10 par value per share (the “Class A Common Stock”) and 30,000,000 shares of Class B common stock, $0.10 par value per share (the “Class B Common Stock,” and together with the Class A Common Stock, the “Common Stock”). The Company has issued ~~9,000,000~~9,437,389 shares of Common Stock, consisting of ~~7,563,600~~8,031,307 shares of Class A Common Stock and ~~1,436,400~~1,406,082 shares of Class B Common Stock. The Class B Common Stock was issued to Toshiba America Nuclear Energy Corporation (“Toshiba”) and Babcock & Wilcox Investment Company (“B&W”) and has the same rights, powers, preferences and restrictions and ranks equally in all matters with the Class A Common Stock, except voting. Holders of Class B Common Stock are entitled to elect, in the aggregate, two members of the Board of Directors of the Company, subject to certain holding requirements. Additionally, the Company has reserved ~~1,000,000~~1,200,000 shares of Class A Common Stock under its management incentive plan, of which approximately ~~414,000~~596,000 shares ~~are~~were available for future awards as of December 31, ~~2016,~~2018, including approximately ~~63,000~~120,000 shares associated with awards which terminated or were cancelled without being exercised.

The Class A Common Stock ~~trade~~trades on the NYSE ~~MKT~~American under the symbol “LEU”. ~~High and low sales prices per share follow:~~

2016 2015
High Low High Low
First Quarter ended March 31 $5.44 $1.00 $5.72 $3.75
Second Quarter ended June 30 $4.74 $2.53 $5.77 $4.06
Third Quarter ended September 30 $4.30 $3.05 $4.16 $2.61
Fourth Quarter ended December 31 $7.08 $3.75 $3.51 $1.20

As of March ~~31, 2017,~~1, 2019, there were ~~7,563,600~~8,031,307 shares of Class A Common Stock outstanding. As of March 1, ~~2017,~~2019, there were approximately ~~1,000~~930 holders of record and approximately ~~9,900~~7,550 beneficial owners of the Company’s Class A ~~common stock.~~Common Stock.

No cash dividends were paid in ~~2015~~2017 or ~~2016,~~2018, and we have no intention to pay cash dividends in the foreseeable future. Our Series B Preferred Stock provides that so long as any shares of our Series B Preferred Stock are outstanding, we may not pay dividends on our Class A Common Stock (other than dividends payable in shares of Class A Common Stock). In addition, the indentures governing our 8% PIK Toggle Notes and 8.25% Notes, subject to certain exceptions, place certain restrictions on the ability of our subsidiary, Enrichment Corp. to transfer cash and other assets to us. This could act as an additional constraint on our ability to pay dividends on our Class A Common Stock.

In addition, we are obligated to pay cash dividends on our Series B Preferred ~~stock~~Stock to the extent that (1) our pension plans and Enrichment Corp.’s pension plans are at least 90% funded on a variable rate premium calculation in the current plan ~~year;~~year, (2) our net income calculated in accordance with ~~generally accepted accounting principles in the United States~~U.S. GAAP (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 ~~million;~~million, (3) our free cash flow (defined as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds ~~$35 million;~~$35.0 million, (4) the balance of cash and cash equivalents calculated in accordance with ~~generally accepted accounting principles in the United States~~U.S. GAAP on the last day of the immediately preceding quarter would exceed ~~$150~~$150.0 million after pro forma application of the dividend ~~payment;~~payment, and (5) dividends may be legally payable under Delaware law. We did not meet the criteria for a dividend payment obligation for the year ended December 31, 2018, and we have not declared, accrued or paid dividends on the Series B Preferred Stock since issuance on February 14, 2017.

There were no unregistered sales of equity securities by the Company during the years ended December 31, 2018 or 2017.

Fourth Quarter ~~2016~~2018 Issuer ~~Purchases~~Repurchases of Equity Securities

None.

Matters Affecting our Foreign Stockholders

In order to aid in our compliance with our ~~U.S. Nuclear Regulatory Commission (“NRC”)~~NRC license, our certificate of incorporation gives us certain rights with respect to shares of our ~~common stock~~Common Stock held (beneficially or of record) by foreign persons. Foreign persons are defined in our certificate of incorporation to include, among others, an individual who is not a U.S. citizen, an entity that is organized under the laws of a non-U.S. jurisdiction and an entity that is controlled by individuals who are not U.S. citizens or by entities that are organized under the laws of non-U.S. jurisdictions.

The occurrence of any one or more of the following events is a “foreign ownership review event” and triggers the board of directors’ right to take various actions under our certificate of incorporation: (1) the beneficial ownership by a foreign person of (a) 5% or more of the issued and outstanding shares of any class of our equity securities, (b) 5% or more in voting power of the issued and outstanding shares of all classes of our equity securities, or (c) less than 5% of the issued and outstanding shares of any class of our equity securities or less than 5% of the voting power of the issued and outstanding shares of all classes of our equity securities, if such foreign person is entitled to control the appointment and tenure of any of our management positions or any director; (2) the beneficial ownership of any shares of any class of our equity securities by or for the account of a foreign uranium enrichment provider or a foreign competitor (referred to as “contravening persons”); or (3) any ownership of, or exercise of rights with respect to, shares of any class of our equity securities or other exercise or attempt to exercise control of us that is inconsistent with, or in violation of, any regulatory restrictions, or that could jeopardize the continued operations of our facilities (an “adverse regulatory occurrence”). These rights include requesting information from holders (or proposed holders) of our securities, refusing to permit the transfer of securities by such holders, suspending or limiting voting rights of such holders, redeeming or exchanging shares of our stock owned by such holders on terms set forth in our certificate of incorporation, and taking other actions that we deem necessary or appropriate to ensure compliance with the foreign ownership restrictions.

For ~~additional~~ information regarding the foreign ownership restrictions set forth in our certificate of incorporation, please refer to — Part I, Item 1A,Risk Factors - Our certificate of incorporation gives us certain rights with respect to equity securities held (beneficially or of record) by foreign persons. If levels of foreign ownership set forth in our certificate of incorporation are exceeded, we have the right, among other things, to redeem or exchange common stock held by foreign persons, and in certain cases, the applicable redemption price or exchange value may be equal to the lower of fair market value or a foreign person’s purchase price.

Item 6. Selected Financial Data

Not provided as a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial statements and related notes appearing elsewhere in this report.

Overview

Centrus Energy Corp., a Delaware corporation (“Centrus” or the “Company”), is a trusted supplier of ~~low-enriched uranium (“LEU”)~~nuclear fuel and services for ~~commercial~~the nuclear power ~~plants.~~industry. References to “Centrus”, the “Company”, or “we” include Centrus Energy Corp. and its wholly owned subsidiaries as well as the predecessor to Centrus, unless the context otherwise indicates.

Centrus operates two business segments: low-enriched uranium (“LEU”), which supplies various components of nuclear fuel to utilities, and contract services, which provides advanced engineering, design, and manufacturing services to government and private sector customers.

Our LEU segment involves the sale of low-enriched uranium, its components, and natural uranium to utilities operating commercial nuclear power plants. LEU is a critical component in the production of nuclear fuel for reactors that produce electricity. We supply LEU to both domestic and international utilities for use in nuclear reactors worldwide. We ~~are a leader in the development of advanced uranium enrichment technology~~provide LEU from multiple sources including our inventory, medium- and ~~are performing research~~long- term supply contracts and ~~demonstration work to support U.S. energy and national security through our contract with UT-Battelle, LLC (“UT-Battelle”), the operator of Oak Ridge National Laboratory (“ORNL”).~~

spot purchases. As a long-term supplier of LEU to our customers, our ~~goal~~objective is to provide value through the reliability and diversity of our supply sources. ~~We provide LEU from multiple sources including our inventory, long- and mid-term supply contracts and spot purchases.~~ Our long-term ~~objective~~goal is to resume commercial enrichment production, and we are exploring ~~alternative~~ approaches to that end.

~~We have a~~Our contract ~~with UT-Battelle to conduct research~~services segment utilizes the unique technical expertise, operational experience and ~~development~~specialized facilities that we developed over nearly two decades as part of our uranium enrichment technology program. We are leveraging these capabilities to expand and diversify our business, offering new services to existing and new customers in complementary markets.

With the specialized capabilities and workforce at our Technology and Manufacturing Center in Oak Ridge, Tennessee, we are performing technical, engineering and manufacturing services for a range of commercial and government customers and actively working to secure new customers. Our experience developing, licensing and manufacturing advanced ~~centrifuge technology~~nuclear fuels and technologies positions us to provide critical design, engineering, manufacturing and other services to a broad range of potential clients, including those involving sensitive or classified technologies. This work includes design, engineering, manufacturing and licensing services support for advanced reactor and fuel fabrication projects. Based on our experience at our uranium enrichment facilities, we are also performing decontamination and decommissioning (“D&D”) work for the U.S. ~~government. We~~government in Oak Ridge, Tennessee.

With several decades of experience in enrichment, we also continue to be a leader in the development of an advanced U.S. uranium enrichment technology, which we believe ~~that this technology~~ could play a critical role in supplying fuel for advanced reactors, meeting ~~our~~U.S. national and energy security needs, and achieving our nation’s ~~non-proliferation~~nonproliferation objectives. To support U.S. energy and national security, we have been performing research and demonstration work on our advanced gas centrifuge uranium enrichment technology through contracts with UT-Battelle, LLC (“UT-Battelle”), the management and operating contractor of Oak Ridge National Laboratory (“ORNL”) for the United States Department of Energy (“DOE”).

On January 7, 2019, DOE issued a Notice of Intent to contract with Centrus to deploy a cascade of centrifuges to demonstrate the ability to produce high assay, low-enriched uranium (“HALEU”), suitable for a range of military and civilian applications. While existing reactors currently in operation typically operate on LEU enriched so that the uranium-235 isotope concentration is just below 5%, HALEU has a uranium-235 concentration of up to 20%. HALEU is not commercially available today, but may be required in the future for a number of advanced reactor designs currently under development, for DOE nonproliferation efforts, or for some advanced fuel designs that may be suitable in the future for existing reactors. There are no guarantees about whether or when government or commercial demand for HALEU will materialize, and there are a number of technical, regulatory and economic hurdles that must be overcome for these fuels and reactors to come to the market. Additionally, while Centrus has begun contract discussions with DOE about the proposed demonstration project, there is no assurance that a contract will be executed or that the project will go forward.

The nuclear industry in general, and the nuclear fuel industry in particular, is in a period of significant change, which ~~could significantly transform~~continues to affect the competitive ~~landscape Centrus faces. The~~landscape. In the seven years following the 2011 Fukushima accident, the published market prices for uranium enrichment declined more than 75 percent. While the monthly price indicators have gradually increased starting in September 2018, the uranium enrichment segment of the nuclear fuel ~~cycle industry~~market remains oversupplied ~~creating downward pressures on commodity pricing, with~~and faces uncertainty ~~regarding the timing of industry expansion globally.~~about future demand for nuclear power generation. Changes in the competitive landscape ~~may adversely~~ affect pricing trends, change customer spending patterns, orand create uncertainty. To address these changes, we ~~may seek~~have taken steps to adjust our cost structure and may seek further adjustments to our cost structure and operations and to evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions.

We are also actively considering, and expect to consider from time to time in the future, potential strategic transactions, which could involve, without limitation, acquisitions and/or dispositions of businesses or assets, joint ventures or investments in businesses, products or technologies. In connection with any such transaction, we may seek additional debt or equity financing, contribute or dispose of assets, assume additional indebtedness, or partner with other parties to consummate a transaction.

Refer to Part I, Item 1, Business, for additional information.

Market Conditions and Outlook

In March 2011, an earthquake and tsunami caused irreparable damage to four reactors in Fukushima, Japan. ~~Approximately~~As a consequence, approximately 60 reactors in Japan and Germany were taken offline, ~~as a consequence. Other~~and other countries ~~have~~ curtailed or slowed their construction of new ~~reactors.~~reactors or accelerated their retirement of existing plants. While some reactors in Japan have restarted and many are expected to restart within the next few years, supply and demand dynamics for nuclear fuel continue to be depressed. In addition, low natural gas prices and an increase in outputs from renewable sources have put financial pressure on some reactor operators in the United States; six reactors have been shut down in recent years and several more face the prospect of premature shut down in the next few years. The United States remains the largest market in the world for nuclear fuel, with 98 commercial reactors in operation today.

Although the market for the uranium enrichment sector for nuclear fuel is expected to remain oversupplied for the remainder of this decade and into the 2020s, the market is expected to ~~experience slow but steady growth~~grow as the nuclear power industry expands around the world. ~~After a 30-year hiatus in nuclear power plant construction, utilities in the United States are building four new reactors. One new U.S. reactor became operational during 2016.~~ According to the World Nuclear Association (“WNA”), there are 6055 reactors under construction and ~~160~~126 firmly planned around the world, compared to ~~447~~450 currently in operation. This includes ~~significant~~ growth in ~~Asia, especially in~~ China, ~~South Korea~~Russia, and India. The new reactor builds will have the potential to improve market conditions in the long-term.

Much of this growth is driven by rising concern over climate change and security of energy supplies. Nuclear power is the largest source of carbon-free energy in the United States; globally it is second only to hydropower. Climate negotiators in Paris in 2015 agreed to target limiting global average temperature increases. This could have significant long-term importance to the nuclear industry since achieving this goal will require significant reductions in carbon emissions which might not be achieved absent a major contribution by nuclear energy. The International Energy Administration has estimated that nuclear energy capacity would have to more than double, from 396 gigawatts today to 930 gigawatts by 2050, in order to prevent global average temperatures from rising more than 2 degrees Celsius.

The enrichment component of LEU is ~~customarily~~typically bought and sold ~~on long term~~under long-term contracts with ~~a typical duration~~deliveries over several years. The Company’s agreements for natural uranium sales are generally shorter-term, fixed-commitment contracts. As of ~~four to ten years. The Company retains an~~December 31, 2018, our order book of ~~such contracts with a total value of approximately $1.4~~sales under contract in the LEU segment was $1.0 billion. ~~Certain~~While new sales booked in recent years reflect the historically low prices prevalent in today’s market, certain contracts included in the order book have sales prices that are significantly above current market prices. Some long-term contracts in our order book were established with milestones related to the deployment of the American Centrifuge Plant (“ACP”) in Piketon, Ohio that permit termination with respect to portions of the contract under limited circumstances. We estimate that approximately 5%4% of our order book ~~remains~~as of December 31, 2018, is at risk ~~due to milestones~~ related to ~~ACP deployment.~~customer financial conditions or operations.

~~Business Segments~~Revenue

~~Centrus has~~We have two reportable segments: the LEU segment ~~with two components, SWU and uranium,~~ and the contract services segment.

~~LEU Segment~~

~~Revenue from Sales of SWU and Uranium~~

~~The LEU segment is currently our primary business focus.~~ Revenue from our LEU segment is derived primarily from:

sales of the SWU component of ~~LEU,~~LEU;

sales of both the SWU and uranium components of ~~LEU,~~LEU; and

sales of natural uranium.

Our contract services segment reflects our technical, manufacturing and engineering services offered to public and private sector customers, including engineering and testing activities as well as technical and resource support currently being performed by the Company.

SWU and Uranium Sales

Revenue ~~for~~from our LEU segment accounted for approximately ~~88%~~85% of our total revenue in ~~2016.~~2018. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting ~~25%~~approximately 31% of revenue from our LEU segment in ~~2016 and 41% in 2015.~~recent years. Our agreements with electric utilities are primarily long-term, fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU (or the SWU and uranium components of LEU) from us. Our agreements for natural uranium sales are generally shorter-term, fixed-commitment contracts.

Our revenues, operating results and cash flows can fluctuate significantly from quarter to quarter and year to year. Revenue is recognized at the time LEU or uranium is delivered under the terms of our contracts. ~~Customer~~The timing of customer demand is affected by, among other things, electricity markets, reactor operations, maintenance and refueling outages, and customer inventories. In the ~~timing of refueling outages. Utilities typically schedule the shutdown of their reactors for refueling~~current market environment, some customers are building inventories and may choose to ~~coincide with the low electricity demand periods of spring and fall. Thus, some reactors are scheduled for~~take deliveries under annual ~~or two-year refuelings~~purchase obligations later in the ~~spring or fall, or for 18-month cycles alternating between both seasons.~~year. Customer payments for the SWU component of LEU average roughly ~~$15~~$10 million per order. As a result, a relatively small change in the timing of customer orders for LEU ~~due to a change in a customer’s refueling schedule~~ may cause significant variability in operating ~~results to be substantially above or below expectations.~~results.

Utility customers in general have the option to defer receipt of LEU or uranium purchased from Centrus beyond the contractual sale period, resulting in the deferral of costs and revenue recognition. Refer to Note 2, Revenue and Contracts with Customers, in the consolidated financial statements for further details.

Our financial performance over time can be significantly affected by changes in prices for SWU and uranium. Since 2011, market prices for SWU and uranium have significantly declined. Since our sales order book includes contracts awarded to us in previous years, the average SWU price billed to customers typically lags behind published price indicators by several years, which means that average prices under contract today exceed current market prices. The long-term SWU price indicator, as published by TradeTech, LLC in Nuclear Market Review, is an indication of base-year prices under new long-term enrichment contracts in our primary markets. The following chart summarizes TradeTech’s long-term and spot SWU price indicators, the long-term price for natural uranium hexafluoride (“UF6”), as calculated by Centrus using indicators published in Nuclear Market Review, and TradeTech’s spot price indicator for UF6:

SWU and Uranium Market Price ~~Indicators~~Indicators*

SEVEN-YEAR VIEW

TWO-YEAR MONTHLY VIEW

* Source: Nuclear Market Review, a TradeTech publication, www.uranium.com

In a limited number of sales transactions, title to uranium or LEU is transferred to the customer without Centrus physically delivering the uranium or LEU to the customer. In such cases, risk of loss remains with Centrus until physical delivery occurs. At the time transfer of title occurs, a performance obligation for Centrus is created and a receivable is recorded. Cash is collected for the receivable under normal credit terms. The recognition of revenue and related cost of sales occurs at the time physical delivery occurs and risk of loss transfers to the customer.

Our contracts with customers ~~and suppliers~~ are primarily denominated in U.S. dollars, and although revenue has not been directly affected by changes in the foreign exchange rate of the U.S. dollar, we may have a competitive price advantage or disadvantage obtaining new contracts in a competitive bidding process depending upon the weakness or strength of the U.S. dollar. Costs of our primary competitors are denominated in other currencies. Our contracts with suppliers have historically been denominated in U.S. dollars. In April 2018, we entered into an agreement with Orano Cycle (formerly, AREVA NC) (“Orano”) for the long-term supply of SWU. We may elect to begin deliveries as early as 2021. Purchases will be payable in a combination of U.S dollars and euros and we may be subject to exchange rate risk for the portion of purchases payable in euros.

On occasion, ~~Centrus~~we will accept payment in the form of uranium. Revenue from the sale of SWU under such contracts is recognized at the time LEU is delivered and is based on the fair value of the uranium ~~received in exchange for~~at contract inception, or as the ~~SWU.~~

~~Cost~~quantity of ~~Sales for SWU and Uranium~~uranium is finalized, if variable.

Cost of sales for SWU and uranium is based on the amount of SWU and uranium sold and delivered during the period and unit inventory costs. Unit inventory costs are determined using the ~~monthly moving~~ average cost method. Changes in purchase costs have an effect on inventory costs and cost of sales over current and future periods. Cost of sales includes costs for inventory management at off-site licensed locations. Cost of sales also includes certain legacy costs related to former employees of the Portsmouth and Paducah gaseous diffusion plants. Actuarial gains and losses related to the retiree benefit plans are recognized immediately in the statement of operations when plan obligations are remeasured at year-end or when lump-sum payments reach certain levels.Gaseous Diffusion Plants.

Contract Services ~~Segment~~

~~The~~Our contract services segment ~~includes revenue~~reflects our technical, manufacturing, and ~~cost of sales for~~engineering services offered to public and private sector customers, including the American Centrifuge ~~work~~engineering and testing activities we ~~perform~~have performed as a contractor for UT-Battelle. With our private sector customers, we seek to ~~UT-Battelle. Spending levels~~leverage our domestic enrichment experience, engineering know-how, and precision manufacturing facility to ~~perform~~assist customers with a range of engineering, design, and advanced manufacturing projects including the ~~contract work are consistent with~~production of fuel for next-generation nuclear reactors and the ~~funding levels. Centrus records an unbilled receivable and revenue based on the progress towards the achievement~~development of monthly deliverables. Monthly reports and invoices affirming the achievement of monthly deliverables are submitted shortly following each month. The achievement of monthly deliverables has resulted in revenue consistent with the funding levels. The contract services segment also includes limited services provided by Centrus to the U.S. Department of Energy (“DOE”) and its contractors at the Piketon facility. related facilities.

~~American Centrifuge~~Government Contracting

~~The Company has~~We have a long record as a global leader in advanced technology, manufacturing and engineering. Our manufacturing, engineering and testing facilities and our highly-trained workforce are deeply engaged in advancing the next generation of uranium enrichment technology. We are exploring a number of options for returning to domestic production in the future.

In September 2015, Centrus completed a successful three-year demonstration of the existing American Centrifuge technology at its facility in Piketon, Ohio, with 120 machines linked together in a cascade to simulate industrial operating conditions. Since then ourOur government contracts with UT-Battelle have provided for ~~continued~~ engineering and testing work on the American Centrifuge technology at ~~the Company’s~~our facilities in Oak Ridge, Tennessee. ~~We entered into a new~~Our recently completed contract with UT-Battelle onwas for the period from October 1, 2017, through September ~~19, 2016, valued at~~30, 2018, and generated total revenue of approximately ~~$25~~$16.0 million upon completion of defined milestones. These contracts have been funded incrementally. Funding for the American Centrifuge program was provided to UT-Battelle by the federal government. Our previous contract with UT-Battelle was for the period from October 1, 2016, through September 30, 2017, ~~(the “2017 ORNL Contract”). The 2017 ORNL Contract provides for payments for monthly reports~~and generated revenue of approximately $2.0 million per month and additional aggregate payments of $1.0 million based on completion of certain milestones. The 2017 ORNL Contract is currently being funded incrementally. Funding for the program is provided to UT-Battelle by the federal government which is currently operating under a continuing resolution.

The contract with UT-Battelle that ended September 30, 2016 (the “2016 ORNL Contract”), was a firm, fixed-price contract that provided for payments for monthly reports of approximately $2.7 million per month. The amount of funding under the 2016 ORNL Contract decreased from approximately $6.9 million per month received under contract for the government fiscal year that ended September 30, 2015 (the “2015 ORNL Contract”).

$25.0 million. Although the ~~2015 ORNL Contract~~most recent contract expired September 30, ~~2015, Centrus continued~~2018, we continue to perform work attowards the expected ~~reduced scope~~milestones as the parties ~~worked~~work toward a successor agreement. However, we have no assurance that a successor agreement will be executed.

On September 27, 2018, we leveraged our D&D experience and entered into an agreement with DOE to D&D the K-1600 facility of DOE located at the East Tennessee Technology Park. Under the terms of the agreement, pursuant to a work authorization under our lease with DOE, we will remove and dispose of government owned materials and equipment in order to render the facility non-contaminated and unclassified. The ~~2016 ORNL Contract, which was signed in March 2016, provided for payment for reports related~~work to ~~work~~be performed ~~since October 1, 2015.~~ ~~Revenue~~ ~~in 2016 includes $8.1 million for March 2016 reports on work performed in~~is expected to be completed by September 30, 2019. The contract is a cost-plus fixed fee contract totaling approximately $15 million. The contract is incrementally funded and subject to appropriations by the ~~three months ended December 31, 2015, and $30.4 million for reports on work performed in 2016. Expenses for contract work performed in year ended December 31, 2016, are included in~~ ~~Cost of Sales. Expenses for work performed in the three months ended December 31, 2015, before there was a contract were included in~~ ~~Advanced Technology License and Decommissioning Costs~~ ~~in 2015.~~federal government.

In addition, we have entered into other contracts with DOE, other agencies and their contractors to provide engineering, design and manufacturing services.

American Centrifuge expenses that are outside of our ~~contracts with~~work for UT-Battelle are included in Advanced Technology License and Decommissioning Costs, on the consolidated statement of operations, including ongoing costs for work related to ~~maintain~~ the ~~demobilized~~U.S. Nuclear Regulatory Commission (“NRC”) license and the DOE lease for the Piketon ~~facility~~facility. The lease expires on June 30, 2019, absent any mutual agreement between us and ~~our NRC licenses at that location. In the second quarter of 2016, the Company commenced with the decontamination and decommissioning (“D&D”) of~~DOE regarding other possible uses for the Piketon facility ~~in accordance with the requirements of the NRC and DOE. For additional details on costs, schedule and accrued liabilities related to~~such as deploying a demonstration cascade for HALEU production. Centrus commenced the D&D of the Piketon demonstration facility ~~refer to~~ ~~Results of Operations~~ ~~below~~in 2016, and ~~American Centrifuge - Piketon Facility Costs and~~we believe the D&D ~~Obligations~~work required under NRC license requirements has been completed. As of December 31, 2018, we have remaining accrued liabilities of $1.6 million for lease turnover obligations and $3.2 million for termination benefits related to the Piketon facility. In addition, we anticipate incurring expenses of approximately $6 million in ~~Note 16, Commitments and Contingencies,~~the first half of 2019 to continue to maintain the ~~consolidated financial statements.~~lease facilities in accordance with the lease.

Commercial Contracting

On March 26, 2018, we entered into a services agreement with X Energy, LLC (“X-energy”). Under the terms of the services agreement, we provided (i) technical and resource support to X-energy for criticality safety evaluation of processing equipment, design of fresh fuel transport packages, and conceptual mock-up of a nuclear fuel production facility and (ii) non-cash in-kind contributions to X-energy subject to a cooperative agreement between X-energy and the U.S. government. The technical and resource support provided by us to X-energy was performed pursuant to separate task orders issued under and pursuant to the services agreement. The initial task orders ran through December 31, 2018. Depending upon the pricing outlined in the task orders, payment for work performed by us pursuant to the services agreement was either fixed price based or time-and-materials based. The initial task orders in 2018 provided for time-and-materials based pricing with payments to us totaling approximately $4.4 million. In addition, we contributed non-cash in-kind contributions with a value of approximately $2.5 million.

On November 29, 2018, we entered into a second services agreement with X-energy. Under the terms of the second services agreement, we will provide (i) technical and resource support to the design and license application development of X-energy’s nuclear fuel production facility and (ii) non-cash in-kind contributions to X-energy subject to a cooperative agreement between X-energy and the United States government. The technical and resource support provided by us to X-energy will be performed pursuant to separate task orders issued under and pursuant to the second services agreement. The initial task orders run through September 30, 2019 with deliverables to be completed through November 30, 2019. The awarding of any additional task orders to us will be dependent upon the receipt of additional funding. Depending upon the pricing outlined in the task orders, payment for work performed by us pursuant to the services agreement will either be fixed-price based or time-and-materials based. The initial task orders provide for time-and-materials based pricing with payments to be made to us totaling approximately $4.2 million. In addition, we have agreed to provide non-cash in-kind contributions with a value of approximately $2.4 million.

In addition, we have entered into other contracts for the engineering, design, and advanced manufacturing services with other commercial entities.

Prior Site Services Work ~~and Related Receivables~~

We formerly performed sites services work under contracts with DOE and its contractors ~~to maintain and prepare~~at the former Portsmouth ~~Gaseous Diffusion Plant (the “Portsmouth GDP”) for D&D. In September 2011, our contracts for maintaining the Portsmouth facilities~~ and performing services for DOE at Portsmouth expired and we completed the transition of facilities to DOE’s D&D contractor for the Portsmouth site. Additionally, we provided limited services to DOE and its contractors at the Paducah Gaseous Diffusion ~~Plant (the “Paducah GDP”) until~~Plants. On January 11, 2018, we entered into a settlement agreement with DOE and the ~~leased portions~~U.S. government regarding breach of ~~the Paducah GDP were returned~~contract claims relating to ~~DOE on October 21, 2014.~~this work. Refer to Note 2, Revenue and Contracts with Customers.

The Company and DOE have yet to fully settle the Company’s claims for reimbursements for certain pension and postretirement benefits costs related to past contract work performed at the Portsmouth and Paducah plant sites. There is the potential for additional revenue to be recognized ~~based on~~for this work pending the outcome of ~~DOE reviews~~legal proceedings related to the Company’s claims for payment and ~~audits, as~~ the ~~result of the~~potential release of previously established ~~receivable related reserves. However, uncertainty exists because contract billing periods since June 2002 have not been finalized with DOE, and we have not yet recognized this~~valuation allowances on receivables. Refer to Part I, Item 3, Legal Proceedings, for additional ~~revenue. Certain receivables from DOE are included in other long-term assets based on the extended timeframe expected to resolve claims for payment. Additional details are provided in~~ ~~Note 4, Receivables~~ ~~to the consolidated financial statements.~~information.

~~2017~~2019 Outlook

We anticipate 2019 SWU and uranium revenue to be in ~~2017~~the range of $85 million to $120 million and total revenue to be in a range of ~~$175~~$125 million to ~~$200 million, reflecting an expected decline in SWU volume delivered compared~~$160 million. Consistent with prior years, revenue continues to ~~2016. We anticipate total revenue in a range~~be most heavily weighted to the second half of ~~$200 million to $225 million. More than two-thirds of our annual revenue is expected in~~ the ~~fourth quarter of 2017.~~year. We expect to end ~~2017~~2019 with a cash and cash equivalents balance in a range of ~~$150~~$120 million to ~~$175~~$140 million.

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 differences between our guidance and our ultimate results. Among the factors that could affect our results are:

Additional ~~short-term~~ purchases or sales of SWU and uranium;

Conditions in the LEU and energy markets, including pricing, demand, operations, and regulations

Timing of customer orders, related deliveries, and purchases of LEU or components;

Timing of execution of letter agreement for HALEU and terms established in a definitized contract;

Financial market conditions and other factors that may affect pension and benefit liabilities and the value of related assets

The outcome of legal proceedings and other contingencies;

Execution and funding of a new agreement with UT-Battelle, the operator of ORNL, for the continuation of American Centrifuge development and testing activities in Oak Ridge following the expiration of the agreement on September 30, 2017;

Potential use of cash for strategic initiatives;

Actions taken by customers, including actions that might affect existing contracts, as a result of market and other conditions impacting Centrus’ customers and the industry; and

~~Additional costs~~Timing of return of cash collateral supporting financial assurance for ~~decontamination and decommissioning of~~ the ~~Company’s facility in Ohio.~~Piketon facility.

See also “Forward Looking Statements” earlier in this report for additional information.

Critical Accounting Policies and Estimates

Our significant accounting policies are summarized in Note 1, toSummary of Significant Accounting Policies, of our consolidated financial statements, which were prepared in accordance with generally accepted accounting principles. Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business are complex and involve many subjective assumptions, estimates and judgments that are, by their nature, subject to substantial risks and uncertainties. Critical accounting estimates are those that require management to make assumptions about matters that are uncertain at the time the estimate is made and for which different estimates, often based on complex judgments, probabilities and assumptions that we believe to be reasonable, but are inherently uncertain and unpredictable, could have a material impact on our operating results and financial condition. It is also possible that other professionals, applying their own judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. We are also subject to risks and uncertainties that may cause actual results to differ from estimated amounts, such as the healthcare environment, legislation and regulation. Additionally, changes in accounting rules or their interpretation could significantly affect our results of operations and financial condition.

The sensitivity analyses used below are not intended to provide a reader with our predictions of the variability of the estimates used. Rather, the sensitivities used are included to allow the reader to understand a general cause and effect of changes in estimates.

We have identified the following to be our critical accounting estimates:

Asset Valuations

The accounting for SWU and uranium inventories includes estimates and judgments. SWU and uranium inventory costs are determined using the ~~monthly moving~~ average cost method. Inventories of SWU and uranium are valued at the lower of cost or net realizable value (“NRV”). NRV is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. The estimated selling price for SWU and uranium is based on the pricing terms of contracts in our sales order book, and, for uranium not under contract, the estimated selling price is based primarily on published price indicators at the balance sheet date.

Intangible assets originated from our reorganization and application of fresh start accounting as of September 30, 2014. The intangible assets represented the fair value adjustment to the assets and liabilities for our LEU segment. The identifiable intangible assets relate to our order book and customer relationships. The order book intangible asset is amortized as the order book valued at emergence is reduced, principally as a result of deliveries to customers. The customer relationships intangible asset is amortized using the straight-line method over the estimated average useful life of 15 years. The aggregate net balance of identifiable intangible assets was ~~$93.3~~$76.0 million as of December 31, ~~2016.~~

The excess of the reorganization value over the fair value of identified tangible and intangible assets resulted in a nonamortizing intangible asset of $137.2 million as of September 30, 2014. The excess reorganization value (or “goodwill”, as defined by the accounting standards) was tested for impairment and was determined to be fully impaired as of October 1, 2015. Therefore, we recorded an impairment charge of $137.2 million in the fourth quarter of 2015.2018.

The carrying values of the intangible assets are subject to impairment tests whenever ~~adverse conditions~~events or changes in business circumstances indicate that the carrying amount of the intangible assets may not be fully recoverable. The carrying amount of a ~~possible~~long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment ~~loss. If impairment~~loss is ~~indicated,~~measured as the amount by which the carrying amount of a long-lived asset, ~~carrying value will be reduced to~~or asset group exceeds its fair value.

Inherent in our fair value determinations are certain judgments and estimates, including projections of future cash flows, the discount rate reflecting the risk inherent in future cash flows, the interpretation of current economic indicators and market valuations, and strategic plans with regard to operations. A change in these underlying assumptions would cause a change in the results of the tests, which could cause the fair value of the intangible asset to be less than its respective carrying amount.

~~American Centrifuge Decontamination and Decommissioning Obligations~~

We lease facilities in Piketon, Ohio from DOE for the ACP. At the conclusion of the lease, we are obligated to return these leased facilities to DOE in a condition that meets NRC requirements and in the same condition as the facilities were in when they were leased to us (other than due to normal wear and tear). We must remove all of our capital improvements at the ACP, unless otherwise consented to by DOE, by the conclusion of the lease term.

In the second quarter of 2016, we commenced with the D&D of the Piketon facility. We have experienced delays in obtaining the necessary regulatory approvals and therefore implementing the D&D process has been delayed. We are working to finalize remaining contractual and regulatory arrangements for the preparation, removal and disposition of equipment and materials. The D&D work is expected to extend through 2017 and be substantially completed by year-end. As of December 31, 2016, we have accrued $38.6 million on the balance sheet as ~~Decontamination and Decommissioning Obligations~~ for the estimated fair value of the remaining costs to complete the D&D work. Our projection of costs includes detailed estimates of work to be performed, internal labor costs, contract labor and services costs, DOE site services charges and general and administrative costs. As we continue to finalize contractual and regulatory arrangements and proceed on the remaining schedule of work, our costs to complete D&D could be greater than our estimates which could have an adverse impact on our results of operations and liquidity.

In addition to expenditures for workforce reductions and D&D, we anticipate that we will incur ongoing costs of approximately $40 million to maintain the facilities at Piketon and our NRC licenses at that location through the current term of our DOE lease, which will expire on June 30, 2019, unless extended.

We are required to provide financial assurance to the NRC and DOE for D&D costs under a regulatorily-prescribed methodology that includes potential contingent costs and reserves. As of December 31, 2016, and December 31, 2015, we have provided financial assurance to the NRC and DOE in the form of surety bonds totaling $29.4 million, which are fully cash collateralized by us. We expect to receive cash when surety bonds are reduced and/or cancelled as we fulfill our D&D and lease obligations.

Pension and Postretirement Health and Life Benefit Costs and Obligations

We provide retirement benefits to certain employees and retirees under defined benefit pension plans and postretirement health and life benefit plans. The valuation of benefit obligations and costs is based on provisions of the plans and actuarial assumptions that involve judgments and estimates.

Assets and obligations related to our retiree benefit plans are remeasured each year as of the balance sheet date resulting in differences between actual and projected results for the year. The Company has elected the accounting option to recognize these actuarial gains and losses in the statement of operations in the fourth quarter. The alternative would be to amortize gains and losses into operating results over time. The Company’s treatment of recognizing actuarial gains and losses immediately is intended to increase transparency into how movements in plan assets and benefit obligations impact financial results. Immediate recognition of such gains and losses in the statement of operations may cause significant fluctuations in our results of operations. In addition, an interim remeasurement and recognition of gains or losses may be required for a plan during the year if ~~lump-sum~~lump sum payments exceed certain levels.

Effective January 1, 2018, a new accounting standard requires components of retirement benefit expense/income other than service cost to be presented below the subtotal for operating income (loss), and are presented in our consolidated statement of operations as Nonoperating Components of Net Periodic Benefit Expense (Income). Service cost continues to be recognized in Cost of Sales for the LEU segment and to Selling, General and Administrative expense. For the year ended December 31, 2017, components of retirement benefit expense/income other than service cost were reclassified from Cost of Sales in the LEU segment and Selling, General and Administrative expense to conform with the current presentation.

We recognized ~~$1.4~~$17.3 million of net actuarial losses in ~~2016~~2018 compared to net actuarial gains of ~~$29.6~~$25.8 million in ~~2015.~~2017 related to our retiree benefit plans. In ~~2016, the~~2018, major U.S. stock indices posted their largest annual losses since 2008. The net loss in 2018 reflects ~~declines~~unfavorable investment returns relative to the expected return assumption, partially offset by increases in market interest rates, ~~and was largely offset by favorable investment returns,~~ changes in mortality and healthcare claim assumptions, and favorable claims experience. In ~~2015,~~2017, the net gain reflects ~~increases~~favorable investment returns relative to the expected return assumption, changes in mortality and healthcare claim assumptions, and favorable claims experience, partially offset by declines in market interest rates and changes in ~~mortality~~retiree benefits. The changes in retiree benefits as of December 31, 2017, are not treated as prior service cost as they are attributed to a settlement with a collective bargaining unit and ~~healthcare claim assumptions, partially offset by unfavorable investment returns relative~~are recognized in Nonoperating Components of Net Periodic Benefit Expense (Income) in 2017. Refer to Note 11, Pension and Postretirement Health and Life Benefits, of the ~~expected return assumption.~~

consolidated financial statements.

Changes in actuarial assumptions could impact the measurement of benefit obligations and benefit costs, as follows:

The expected return on benefit plan assets is approximately 6.8% for ~~2017.~~2019. The expected return is based on historical returns and expectations of future returns for the composition of the plans’ equity and debt securities. A one-half percentage point decrease in the expected return on plan assets would increase annual pension costs by ~~$3.1~~$2.6 million in ~~2017.~~2019. However, the net impact of any changes in the expected return on benefit plan assets on the final benefit cost recognized for fiscal year ~~2017~~2019 would be $0 since the actual return on assets would effectively be reflected at December 31, ~~2017,~~2019, under our mark-to-market accounting methodology.

The present value of pension obligations is calculated by discounting long-term obligations using a market interest rate. This discount rate is the estimated rate at which the benefit obligations could be effectively settled on the measurement date and is based on yields of high quality fixed income investments whose cash flows match the timing and amount of expected benefit payments of the plan. Discount rates of approximately ~~4.1%~~4.3% were used as of December 31, ~~2016.~~2018. A one-half percentage point reduction in the discount rate would increase the valuation of pension benefit obligations by ~~$44.4~~$41.2 million and postretirement health and life benefit obligations by ~~$8.4~~$2.6 million, and the resulting changes in the valuations would decrease the service cost and interest cost components of annual pension costs and postretirement health and life benefit costs by ~~$2.4~~$2.5 million and ~~$0.7~~$0.1 million, respectively.

The healthcare costs trend rates are 7%6.0% projected in ~~2017~~2019 reducing to a final trend rate of 5% by 2021. The healthcare costs trend rate represents our estimate of the annual rate of increase in the gross cost of providing benefits. The trend rate is a reflection of health care inflation assumptions, changes in healthcare utilization and delivery patterns, technological advances, and changes in the health status of our plan participants. A one-percentage point increase in the healthcare cost trend rates would increase postretirement health benefit obligations by about ~~$4.0~~$2.9 million and would increase the service cost and interest cost components of annual benefit costs by about ~~$0.3~~$0.1 million.

In December 2012, we invoiced DOE for $42.8 million, representing its share of pension and postretirement benefits costs related to the transition of Portsmouth site employees to DOE’s D&D contractor, as permitted by ~~government cost accounting standards (“CAS”)~~CAS and based on CAS calculation methodology. DOE has denied our claim, and Centrus filed a complaint with the U.S. Court of Federal Claims in January 2015. There is no assurance we will be successful in our appeal, and we have not recognized revenue or a receivable due to uncertainty regarding the amounts owed and the timing of collection. The parties are engaged in settlement discussions, and further action on the case is stayed pending the outcome of ~~such discussions.~~

such discussions. Refer to Part I, Item 3, Legal Proceedings, for additional information.

Income Taxes

During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, we recognize tax liabilities based on estimates of whether additional taxes and interest will be due. To the extent that the final tax outcome of these matters is different than the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made.

Accounting standards prescribe a minimum recognition threshold that a tax position is required to meet before the related tax benefit may be recognized in the financial statements. As of December 31, ~~2016,~~2018, the liability for unrecognized tax benefits, included in ~~other long-term liabilities,~~Other Long-Term Liabilities, was ~~$0.4~~$0.2 million and accrued interest and penalties totaled less than $0.1 million.

Accounting for income taxes involves estimates and judgments relating to the tax bases of assets and liabilities and the future recoverability of deferred tax assets. In assessing the realization of deferred tax assets, we determine whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse. Factors that may affect estimates of future taxable income include, but are not limited to, competition, changes in revenue, costs or profit margins, market share and developments related to the American Centrifuge technology. In practice, positive and negative evidence is reviewed with objective evidence receiving greater weight. If, based on the weight of available evidence, it is more likely than not that all, or some portion, of the deferred tax assets will not be realized, we record a valuation allowance. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed for all, or some portion, ~~or all~~ of the deferred tax ~~asset.~~assets. A cumulative loss in recent years is a significant piece of negative evidence and one of the most difficult forms of negative evidence to overcome. We have incurred cumulative operating losses since 2011.

Our inability to overcome the strong negative objective evidence of a cumulative loss in recent years with sufficient objective positive evidence of future taxable income to realize our deferred tax assets required us to record a valuation allowance. To determine the amount of the valuation allowance, all sources of taxable income, including tax planning strategies, were analyzed. We determined that it is more likely than not that our net deferred tax assets will not be realized in the immediate future. A full valuation allowance was first recorded in the fourth quarter of 2011 for the net deferred tax asset created by the expensing of previously capitalized costs related to a number of earlier centrifuge machines used in the demonstration cascade test program, as well as all other previously recorded net deferred tax assets, including state deferred taxes. As of December 31, ~~2016,~~2018, the valuation allowance against net deferred taxes was ~~$702.2~~$456.6 million.

The valuation allowance results in our inability to record tax benefits on future losses until we generate sufficient taxable income to support the elimination of the valuation allowance. However, the valuation allowance will not affect the Company’s ability to use its deferred tax assets if it generates taxable income in the future. In connection with the 2014 bankruptcy plan, tax attributes, such as net operating losses (“NOLs”), tax credits, and tax basis in property have been reduced. When tax attributes are reduced, deferred taxes related to the tax attributes and the corresponding valuation allowance are adjusted. Management will reassess the realization of the deferred tax assets each reporting period. To the extent that the financial results improve and the deferred tax assets become realizable, we will reduce the valuation allowance accordingly.

The Tax Cut and Jobs Act of 2017 (the “Tax Act”) contains several significant changes to the Internal Revenue Code of 1986, as amended (the “Code”). The change in tax law required us to remeasure existing net deferred tax assets resulting in a 2017 deferred income tax expense of $288.9 million, fully offset by a valuation allowance and no net impact to the income tax provision for the year.

The following provisions in the Tax Act impact our federal income taxes starting in 2018:

The federal corporate income tax rate is 21%;

Federal NOLs originating after 2017 are limited to 80% of taxable income computed without regard to the NOL deduction and will have an indefinite carryforward period;

The deduction for business interest expense is limited to 1) business interest income, plus 2) 30% of the taxpayer’s taxable income without regard to net interest expense, depreciation and amortization, and the NOL deduction. Any business interest expense that is not deductible can be carried forward indefinitely and is treated as an item of pre-change loss subject to the annual limitation under Section 382 of the Code if there is an ownership change; and

Revenue associated with advanced payments is accelerated.

Based on our available NOLs, the impact to our federal income taxes is currently not material. However, if we have a tax ownership change under Section 382 of the Code, our ability to utilize existing NOLs will be significantly limited.

Results of Operations

~~Segment Information~~Overview

~~We have two reportable segments measured and presented through~~Declining prices in the ~~gross profit line~~enrichment market - which reached a historic low in August - were the biggest driver in our losses for the year. A greater proportion of our ~~income statement: the LEU segment with two components, SWU and uranium, and the contract services segment. There were no intersegment~~ sales in 2018 were made under contracts signed since market prices began to fall, both because of the natural evolution of our order book and because of the specific deliveries made during the year, but our cost of sales in 2018 - which is calculated on a rolling average - was still based on legacy prices that predated the fall. While spot market prices have risen more than 25 percent since August, our supply costs are lower starting in 2019 due to the price adjustment in our Russian supply agreement as well as other low-cost supply we have secured. Centrus anticipates a return to profitability in 2020 as the impact of lower supply costs become more fully reflected in our results.

Basis of Presentation

On January 1, 2018, we adopted several new accounting standards and certain prior period amounts have been recast to conform with the current presentation. For the adoption of the new revenue standard using the modified retrospective method, results for reporting periods ~~presented.~~beginning after January 1, 2018, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance. Refer to Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements for further details.

Segment Information

The following table presents elements of the accompanying consolidated statements of operations that are categorized by segment (dollar amounts in millions):


	Year Ended December 31,										Year Ended December 31,
	2016		2015			Change			%		2018			2017			$ Change			% Change
LEU segment
Revenue:
SWU revenue	$	258.5	$	289.9		$	(31.4	)	(11	)%	$	130.6		$	195.4		$	(64.8	)	(33	)%
Uranium revenue	14.3		65.5			(51.2		)	(78	)%	33.8			—			33.8			–
Total	272.8		355.4			(82.6		)	(23	)%	164.4			195.4			(31.0		)	(16	)%
Cost of sales	234.3		285.3			51.0			18	%	187.7			162.7			(25.0		)	(15	)%
Gross profit	$	38.5	$	70.1		$	(31.6	)	(45	)%
Gross profit (loss)											$	(23.3	)	$	32.7		$	(56.0	)

Contract services segment
Revenue	$	38.5	$	62.8		$	(24.3	)	(39	)%	$	28.6		$	23.0		$	5.6		24	%
Cost of sales	31.9		64.0			32.1			50	%	23.2			25.5			2.3			9	%
Gross profit (loss)	$	6.6	$	(1.2	)	$	7.8		650	%	$	5.4		$	(2.5	)	$	7.9

Total
Revenue	$	311.3	$	418.2		$	(106.9	)	(26	)%	$	193.0		$	218.4		$	(25.4	)	(12	)%
Cost of sales	266.2		349.3			83.1			24	%	210.9			188.2			(22.7		)	(12	)%
Gross profit	$	45.1	$	68.9		$	(23.8	)	(35	)%
Gross profit (loss)											$	(17.9	)	$	30.2		$	(48.1	)

Revenue

Revenue from the LEU segment declined ~~$82.6~~$31.0 million (or ~~23%~~16%) in ~~2016~~2018 compared to ~~2015.~~2017. Revenue for 2018 included uranium revenue of $33.8 million, with no uranium revenue in the corresponding prior period. The volume of SWU sales increased ~~2%.~~24% primarily due to increased short-term sales and the variability in timing of utility customer orders. The average price billed to customers for sales of SWU declined ~~5%,~~46% primarily reflecting the trend of lower SWU market prices in recent years and the particular contracts under which SWU were sold during the periods and the trend of lower SWU market prices in recent years. Uranium revenue declined $51.2 million (or 78%) in 2016 compared to 2015. The volume of uranium sales declined 84% reflecting a strategic purchase and sale of uranium in 2015 to facilitate a SWU sale and the sale of uranium in 2015 that was acquired in exchange for SWU delivered under a barter contract. The average sales price increased 36%, reflecting the particular contracts under which uranium was sold during the periods.

Revenue from the ~~contract services~~Contract Service segment ~~declined $24.3~~increased $5.6 million (or ~~39%~~24%) in ~~2016~~2018 compared to ~~2015 due to~~2017 primarily reflecting services provided under the X-energy contract beginning in the second quarter of 2018, partially offset by the reduced scope of ~~contract~~ work for American Centrifuge technology services performed for the U.S. government. The decline was partially offset by $8.1 million in revenue in 2016 for work performed in the fourth quarter of 2015 before there was a contract. As a result ofunder the contract ~~signed~~ with UT-Battelle in ~~March 2016,~~2018. The increase in 2018 also reflects $9.5 million of revenue ~~in 2016 included $30.4 million for reports on~~related to the January 2018 settlement with DOE related to past work ~~performed in 2016 as well as $8.1 million for March 2016 reports for work performed in the fourth quarter of 2015.~~

performed.

Cost of Sales

Cost of sales for the LEU segment ~~declined $51.0~~increased $25.0 million (or ~~18%~~15%) in ~~2016~~2018 compared to ~~2015. Cost of sales is affected by~~2017, primarily reflecting changes in SWU and uranium sales volumes, ~~unit costs of inventory, and direct charges to~~partially offset by a decline in the average cost of sales ~~such as inventory valuation adjustments and legacy costs related to former GDP employees and other residual costs related to the Paducah GDP.~~

Our inventories are valued at the lower of cost or net realizable value. Valuation adjustments for our uranium inventory to reflect declines in uranium market price indicators totaled $3.0 million in 2016.

~~Paducah and Portsmouth retiree benefit costs resulted in a~~ ~~charge~~ ~~to cost of sales of $4.2 million in 2016 compared to a~~ ~~credit~~ to cost of sales of $24.7 million in 2015. These results included the impacts of periodic remeasurements of pension and postretirement benefit obligations. We recognized $0.2 million of net actuarial gains in cost of sales in 2016 compared to $27.2 million in 2015.per SWU. In 2016, the net gain reflects declines in market interest rates and was largely offset by favorable investment returns, changes in mortality and healthcare claim assumptions, and favorable claims experience. In 2015, the net gain reflects increases in market interest rates and changes in mortality and healthcare claim assumptions, partially offset by unfavorable investment returns relative to the expected return assumption. Excluding direct charges for the retiree benefit costs,2018, the average cost of sales per SWU declined ~~14% reflecting~~approximately 22%. We anticipate our average cost of sales per SWU to decline again in 2019, with further declines in ~~our purchase~~subsequent years, primarily due to lower pricing in new supply contracts and the pricing provisions of existing contracts. Cost of sales includes legacy costs ~~per SWU~~of $3.4 million in ~~recent periods.~~

~~Refer to~~ ~~Impact~~each of ~~Legacy Costs~~ ~~below for a summary of costs~~2018 and 2017 related to ~~benefits for~~ former ~~GDP~~ employees of the Portsmouth and ~~other residual costs related to the~~ Paducah ~~GDP.~~Gaseous Diffusion Plants.

Cost of sales for the contract services segment declined ~~$32.1~~$2.3 million (or ~~50%~~9%) in ~~2016~~2018 compared to ~~2015 due to~~2017, reflecting the reduced scope of work under the contract ~~work~~with UT-Battelle in 2018, partially offset by costs for ~~American Centrifuge technology~~ services ~~performed for~~provided under the ~~U.S. government.~~X-energy contract beginning in the second quarter of 2018.

Gross Profit (Loss)

We ~~recorded~~realized a gross loss of $17.9 million in 2018, a decline of $48.1 million compared to the gross profit of ~~$45.1~~$30.2 million in ~~2016 compared to $68.9~~2017. Excluding the $9.5 million ~~in 2015. The gross profit~~of revenue in the current period ~~included $8.1 million in revenue under~~from the ~~UT-Battelle contract for March 2016 reports on~~January 2018 settlement with DOE related to past work performed, ~~and expensed~~we realized a gross loss in ~~the fourth quarter~~2018, of ~~2015 before there was a contract. Our gross profit margin was 14.5% in 2016 compared to 16.5% in 2015.~~$27.4 million.

~~Our~~The gross ~~profit for the LEU segment declined $31.6 million in 2016 compared to 2015, primarily due to direct charges to cost of sales related to legacy costs. Refer to~~ ~~Impact of Legacy Costs~~ ~~below to see the impact of these costs on gross profits and margins for the LEU segment. The decline in gross profit~~loss for the LEU segment was ~~also the effect of an inventory valuation adjustment~~$23.3 million in ~~2016 and~~2018 compared to a ~~contract termination fee of $18.5 million received in 2015. The~~ gross profit ~~on uranium~~of $32.7 million in 2017. The decline of $56.0 million was primarily due to the decline in the average price billed to customers for sales of SWU. SWU sales in ~~2016 was comparable~~2018 reflect a greater concentration of sales made under contracts that reflect lower prices under more recent market conditions.

For the contract services segment, we realized a gross profit of $5.4 million in 2018, including $9.5 million of revenue from the January 2018 settlement with DOE, compared to ~~2015.~~a gross loss of $2.5 million in 2017. Gross losses are primarily due to costs incurred which are greater than the revenue under the contracts with UT-Battelle and X-energy. We continue to invest in the contract services segment because of the potential for future growth into new areas of business for the company, while also preserving our unique workforce at the Technology and Manufacturing Center in Oak Ridge, Tennessee. Our near-term goal is to make the segment profitable.

~~Impact of Legacy Costs~~

The Company ceased uranium enrichment at the Portsmouth GDP in 2001 and the Paducah GDP in 2013. Included in cost of sales are costs related to benefits for former GDP employees and other residual costs related to the Paducah GDP. These legacy costs are distinct from the Company’s current costs of acquiring SWU and uranium for sale. The following table presents the impact of legacy costs on gross profit for the LEU segment (dollar amounts in millions):

Year Ended December 31,
2016 2015
LEU segment (GAAP)
Gross profit $ 38.5
$ 70.1
Gross margin 14.1 % 19.7 %

Legacy costs (credits) included in cost of sales:
Pension and postretirement health and life benefits (a) $ 4.2
$ (24.7 )
Disability obligations and other (b) 1.5
(0.2 )
Legacy costs $ 5.7
$ (24.9 )

LEU segment excluding legacy costs (Non-GAAP)
Gross profit excluding legacy costs $ 44.2
$ 45.2
Gross margin excluding legacy costs 16.2 % 12.7 %

(a) The Company’s policy is to immediately recognize gains and losses for retiree benefit plans in the statement of operations to provide transparency regarding the impacts of changes in plan assets and benefit obligations.
(b) Costs for disability payment obligations increased $1.6 million in 2016 compared to 2015 due to disability status changes and other factors related to the fixed population receiving benefits.

We believe the non-GAAP financial measures above, when considered together with the corresponding GAAP measures and the reconciliation above, can provide additional understanding of the Company’s financial performance and underlying profitability. Management uses the non-GAAP financial measures to provide investors with a more complete understanding of the Company’s historical results and trends.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with our GAAP results. The non-GAAP financial measures should be viewed in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.

Non-Segment Information

The following table presents elements of the accompanying consolidated statements of operations that are not categorized by segment (dollar amounts in millions):


	Year Ended December 31,											Year Ended December 31,
	2016			2015			Change			%		2018			2017			$ Change			% Change
Gross profit	$	45.1		$	68.9		$	(23.8	)	(35	)%
Gross profit (loss)												$	(17.9	)	30.2			$	(48.1	)
Advanced technology license and decommissioning costs	47.9			33.0			(14.9		)	(45	)%	26.1			15.7			(10.4		)	(66	)%
Selling, general and administrative	46.2			42.6			(3.6		)	(8	)%	39.9			43.7			3.8			9	%
Amortization of intangible assets	12.5			13.4			0.9			7	%	6.6			10.6			4.0			38	%
Impairment of excess reorganization value	—			137.2			137.2			-
Special charges for workforce reductions and advisory costs	1.4			13.2			11.8			89	%	2.2			9.5			7.3			77	%
Gains on sales of assets	(1.2		)	(2.1		)	(0.9		)	(43	)%	(0.3		)	(4.6		)	(4.3		)	(93	)%
Operating loss	(61.7		)	(168.4		)	106.7			63	%	(92.4		)	(44.7		)	(47.7		)	107	%
Gain on early extinguishment of debt and debt restructuring costs	(13.0		)	—			13.0			-
Gain on early extinguishment of debt												(0.5		)	(33.6		)	(33.1		)	(99	)%
Nonoperating components of net periodic benefit expense (income)												10.6			(27.2		)	(37.8		)	139	%
Interest expense	19.7			19.6			(0.1		)	(1	)%	4.1			5.3			1.2			23	%
Investment income	(0.8		)	(0.3		)	0.5			167	%	(2.5		)	(1.3		)	1.2			92	%
Loss before income taxes	(67.6		)	(187.7		)	120.1			64	%
Provision (benefit) for income taxes	(0.6		)	(0.3		)	0.3			100	%
Net loss	(67.0		)	(187.4		)	120.4			64	%
Income (loss) before income taxes												(104.1		)	12.1			(116.2		)
Income tax benefit												—			(0.1		)	(0.1		)	(100	)%
Net income (loss)												(104.1		)	12.2			(116.3		)
Preferred stock dividends - undeclared and cumulative												7.8			6.9			(0.9		)	(13	)%
Net income (loss) allocable to common stockholders												$	(111.9	)	$	5.3		$	(117.2	)

Advanced Technology License and Decommissioning Costs

Advanced technology license and decommissioning costs consist of American Centrifuge expenses that are outside of our customer contracts ~~with UT-Battelle,~~in the contract services segment, including ongoing costs for work at the Piketon facility. Costs increased $10.4 million (or 66%) in 2018 compared to ~~maintain~~2017. In the ~~demobilized~~current period, efforts at the Piketon facility were focused on supporting NRC requirements, including working towards elimination of the required financial assurance, and ~~our NRC licenses at that location. Costs increased $14.9 million in 2016 compared~~DOE lease turnover activities and the related costs were charged to ~~2015, as the~~expense. In addition, a greater allocation of Piketon ~~demonstration~~ facility ~~is no longer under contract effective October 1, 2015, and is now undergoing D&D. Charges~~costs was charged to advanced technology license and decommissioning costs ~~included approximately $19 million~~ in ~~2016 and approximately $7 million in 2015 to increase~~ the ~~accrued D&D liability based~~current period following the relocation of certain corporate functions from the Piketon facility. In the prior period, efforts were primarily focused on ~~updated cost estimates. For additional details on costs, schedule and accrued liabilities related to the~~ D&D of the Piketon facility, ~~refer to~~ ~~American Centrifuge - Piketon Facility Costs~~ and ~~D&D Obligations~~ ~~in Note 16,~~ ~~Commitments and Contingencies,~~the related costs were recorded as a reduction of the ~~consolidated financial statements.~~D&D liability. A credit of $5.9 million to advanced technology license and decommissioning costs was recognized in the fourth quarter of 2017 as a result of completing the D&D work using primarily internal resources and less contractor support as well as efficiencies achieved.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses ~~increased $3.6~~declined $3.8 million (or 9%) in ~~2016~~2018 compared to 2015, of which $4.0 million relates to the remeasurement of assets and obligations under certain defined benefit pension plans. Remeasurements in 2016 resulted in a net loss of $1.6 million and remeasurements in 2015 resulted in a net gain of $2.4 million. The loss and gain are mainly attributable to (a) changes in market interest rates used to measure long-term pension obligations and (b) investment returns relative to expected return assumptions.

2017. Overhead ~~costs~~ allocated to SG&A ~~increased $1.3~~expenses declined $2.4 million in ~~2016 compared to 2015, as less overhead~~2018, following the relocation of certain corporate functions from the Piketon facility and compensation and benefits declined $0.8 million in 2018. These decreases were partially offset by an increase in consulting costs ~~are allocated to the reduced scope~~ of ~~work under our contract with UT-Battelle. Salaries and other compensation increased $0.8 million. Recruiting costs declined $1.0 million and office lease expense declined~~ $0.6 million in ~~2016 compared~~2018, primarily for work related to ~~2015.~~business development.

Amortization of Intangible Assets

Amortization expense for the intangible asset related to the September 2014 sales order book is a function of SWU sales volume under that order book, which declined to $6.6 million in ~~2016 compared to 2015.~~2018 from $10.6 million in 2017. Amortization expense for the intangible asset related to customer relationships is amortized on a straight-line basis.

~~Impairment of Excess Reorganization Value~~

Excess reorganization value originated on the balance sheet from the Company’s reorganization and application of fresh start accounting in 2014. In the fourth quarter of 2015, the excess reorganization value was determined to be fully impaired and the Company recorded an impairment charge of $137.2 million.

Special Charges for Workforce Reductions and Advisory Costs

~~In the second quarter~~Special charges were $2.2 million in 2018, compared to $9.5 million in 2017, a decline of ~~2016, the Company commenced a project to align its corporate structure to the scale~~$7.3 million (or 77%). Special charges in 2018 consisted of ~~its ongoing business operations~~estimated employee termination benefits of $2.1 million and ~~to update related information technology. The company has incurred~~ advisory costs related to updating the ~~reengineering project~~Company’s information technology systems of ~~$1.0 million in 2016. In addition, special charges in 2016 included termination benefits of $0.3 million related to voluntary workforce reductions.~~

~~The cessation of enrichment at the Paducah GDP and evolving business needs have resulted in workforce reductions since 2013.~~$0.1 million. Special charges ~~in 2015~~for 2017 included ~~related termination benefits of $4.9 million, less $0.4 million for severance paid by the Company and invoiced to DOE for its share of employee severance.~~

In addition, Centrus completed a successful three-year demonstration of American Centrifuge technology at its facility in Piketon, Ohio, in September 2015. The demonstration effort was primarily funded by the U.S. government. As a result of reduced program funding, the centrifuge demonstration was ended and Centrus incurred a special charge of $8.7 million in 2015 for estimated employee termination benefits ~~consisting primarily~~ of ~~payments under its pre-existing severance plan. An additional $0.1~~$3.5 million, ~~special charge was incurred in 2016 as an adjustment to accrued severance benefits~~less $0.3 million for ~~current salary levels.~~unvested employee departures and advisory costs of $6.3 million.

Gain on Early Extinguishment of Debt ~~and Debt Restructuring Costs~~

In ~~June 2016,~~the fourth quarter of 2018, we ~~repurchased PIK Toggle Notes having an aggregate principal and accrued interest balance~~recognized a gain of ~~$26.6~~$0.5 million ~~for cash payments of $9.8 million. The gain on the early extinguishment of the notes was $16.7 million, net of commissions and unamortized deferred issuance costs totaling $0.1 million.~~

~~Debt restructuring costs of $3.7 million were incurred in 2016~~ related to the exchange of securities and cash on December 6, 2018 related to the early extinguishment of $6.3 million of the 8% PIK Toggle Notes.

In the first quarter of 2017, we recognized a gain of $33.6 million related to the exchange of securities and cash on February 14, 2017, which is net of transaction costs of $9.0 million and previously deferred issuance costs related to the 8% PIK Toggle Notes ~~completed in February 2017.~~of $0.4 million. Refer to ~~Liquidity and Capital Resources~~Note 9, Debt, ~~below for details on~~of the ~~exchange.~~consolidated financial statements.

~~Provision (Benefit)~~Nonoperating Components of Net Periodic Benefit Expense (Income)

Effective January 1, 2018, a new accounting standard requires components of retirement benefit expense/income other than service cost to be presented below the subtotal for operating income (loss). For the year ended December 31, 2017, $26.6 million of income was reclassified from Cost of Sales in the LEU segment and $0.6 million of income was reclassified from SG&A to conform with the current presentation.

In 2018, major U.S. stock indices posted their largest annual losses since 2008. The net expense in 2018 reflects unfavorable investment returns relative to the expected return assumption, partially offset by increases in market interest rates, changes in mortality and healthcare claim assumptions, and favorable claims experience. In 2017, the net gain reflects favorable investment returns relative to the expected return assumption, changes in mortality and healthcare claim assumptions, and favorable claims experience, partially offset by declines in market interest rates and changes in retiree benefits.

Interest Expense

Interest expense declined $1.2 million (or 23%) in 2018, compared to 2017, primarily as a result of the decrease in the outstanding debt balance and the early extinguishment of $6.3 million of the outstanding principal amount of the 8% PIK Toggle Notes on December 6, 2018. No interest expense is recognized on the 8.25% Notes as described in Note 9, Debt, of the consolidated financial statements.

Income ~~Taxes~~Tax Benefit

The income tax benefit ~~for income taxes~~ was ~~$0.6~~less than $0.1 million in ~~2016 with an~~2018 and $0.1 million in 2017, respectively. The income tax ~~effective tax rate~~benefit in both 2018 and 2017 consists mainly of ~~1% and $0.3 million in 2015 with an effective income tax rate of 0%. The 2016 benefit includes $0.6 million and the 2015 benefit includes $0.3 million~~discrete items for reversals of previously accrued amounts associated with liabilities for unrecognized benefits.

Net ~~Loss~~Income (Loss)

Our net loss was ~~$67.0~~$104.1 million in ~~2016 and $187.4~~2018, compared to net income of $12.2 million in ~~2015.~~2017. The ~~improvement is primarily due to~~unfavorable variance of $116.3 million was a result of a $37.8 million unfavorable variance in the ~~impairment~~nonoperating components of ~~excess reorganization value~~net periodic benefit expense (income), a $48.1 million unfavorable variance in ~~2015. Favorable factors~~the gross loss ($57.6 million excluding the settlement with DOE), a $33.1 million decrease in ~~2016 include~~ the gain onfrom the early extinguishment of debt and a $10.4 million increase in advanced technology license and decommissioning costs. These unfavorable variances were partially offset by a $7.3 million decline in special charges and ~~an increase~~a $3.8 million decline in gross profit for our contract services segment. Gross profit in 2016 included $8.1 million in billings for March 2016 reports on technology services work performed and expensed in the fourth quarter of 2015. Partially offsetting the favorable variance was an increase inSG&A expenses.

Preferred Stock Dividends - Undeclared and Cumulative

~~advanced technology license~~Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the aggregate liquidation preference at origination of $104.6 million. We did not meet the criteria for a dividend payment obligation for the years ended December 31, 2018 and ~~decommissioning costs related~~2017, and we have not declared, accrued or paid dividends on the Series B Preferred Stock since issuance on February 14, 2017. Dividends on the Series B Preferred Stock are cumulative to the ~~demobilized Piketon facility~~extent not paid at any quarter-end, whether or not declared and ~~a decline~~whether or not there are assets of the Company legally available for the payment of such dividends in ~~gross profit for our LEU segment due~~whole or in part. Refer to Note 15, Stockholders’ Equity, of the ~~remeasurement of pension obligations and other factors noted above.~~consolidated financial statements.

Liquidity and Capital Resources

We ended ~~2016~~2018 with a consolidated cash balance of ~~$260.7~~$123.1 million. We anticipate having adequate liquidity to support our business operations for at least the next 12 ~~months.~~months from the date of this report. Our view of liquidity is dependent on, among other things, our operations and the level of expenditures and government funding for our services contracts and the ~~American Centrifuge program.~~timing of customer payments. Liquidity requirements for our existing operations are affected primarily by the timing and amount of customer sales and our inventory purchases.

We believe our sales order book in our LEU segment is a source of stability for our liquidity position. Our~~Centrus’~~ sales order book extends ~~for more than a decade.~~to 2030. Although, based on current market conditions, we see limited uncommitted demand for LEU for the remainder of this decade ~~and into~~before an anticipated rise in uncommitted demand in the 2020s, ~~based on current market conditions,~~ we continue to seek and make additional sales, including sales for delivery during that time period.

Substantially all revenue-generating operations of the Company are conducted at the subsidiary level. Centrus’ principal source of funding for American Centrifuge activities ~~is provided~~has been provided: (i) under the contract with UT-Battelle for the period October 1, 2017 through September 30, 2018, the operator of ORNL; and (ii) from Centrus’ ~~wholly owned~~wholly-owned subsidiary, ~~United States Enrichment Corporation (“~~Enrichment Corp.”) to Centrus and its 100% indirectly owned subsidiary American Centrifuge Operating, LLC pursuant to two secured intercompany financing ~~notes (the “Intercompany Notes”).~~notes. The financing obtained from Enrichment Corp. funds American Centrifuge activities pending receipt of payments related to work performed under the contract with UT-Battelle, American Centrifuge costs that are outside the scope of work under the contract with UT-Battelle, including D&D and other costs ~~and ongoing costs to maintain~~of the Piketon facility, ~~and our NRC licenses at that location,~~ and general corporate expenses, including cash interest payments on our debt.

~~On February 14, 2017, pursuant~~ Although the most recent contract with UT-Battelle expired September 30, 2018, we continue to an exchange offer and consent solicitation, we exchanged $204.9 million of our 8% paid-in-kind (“PIK”) toggle notes (“PIK Toggle Notes”) for $74.3 million of 8.25% notes due 2027 (the “8.25% Notes”), 104,574 shares of Series B Preferred Stock with liquidation preference of $1,000 per share, and $27.6 million of cash. Followingperform work towards the ~~exchange offer, $29.6 million of PIK Toggle Notes remained outstanding. Transaction costs related to the exchange of approximately $9 million were incurred in the first quarter of 2017. Refer to~~ ~~Note 19,Subsequent Event, to the consolidated financial statements for additional information.~~

The Company is obligated to pay interest on the remaining $29.6 million of PIK Toggle Notes outstanding. The Company has the option to pay up to 5.5% per annum of interest due on the PIK Toggle Notes in the form of PIK payments, and has elected PIK payments at 5.5% per annum for the interest period ending March 31, 2017.

We are obligated to pay cash dividends on our Series B Preferred Stock to the extent that our pension plans and Enrichment Corp.’s pension plans, are at least 90% funded on a variable rate premium calculation in the current plan year; our net income calculated in accordance with generally accepted accounting principles in the United States (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 million; our free cash flow (definedexpected milestones as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds $35 million; the balance of cash and cash equivalents calculated in accordance with generally accepted accounting principles in the United States on the last day of the immediately preceding quarter would exceed $150 million after pro forma application of the dividend payment; and dividends mayparties work toward a successor agreement. However, we have no assurance that a successor agreement will be ~~legally payable under Delaware law.~~

In the second quarter of 2016, the Company commenced a project to align its corporate structure to the scale of its ongoing business operations and to update related information technology. The company expects to incur advisory costs related to information technology projects of approximately $3 million in 2017.executed.

Capital expenditures are expected to be insignificant for at least the next 12 months.

In ~~September 2015,~~February 2016, Centrus completed a successful three-year demonstration of the American Centrifuge technology at its facility in Piketon, Ohio. U.S. government funding for American Centrifuge since October 2015 is now limited to research and development work at our facilities in Oak Ridge, Tennessee. We notified our American Centrifuge employees in September 2015 of possible layoffs as a result of reduced program funding and have incurred special charges of $8.8 million for estimated employee termination benefits to date, consisting primarily of payments under its pre-existing severance plan. Workforce reductions commenced in the fourth quarter of 2015. We expect to make payments of $5.4 million for remaining workforce reductions through 2019.

Centrus began to incur expenditures in the second quarter of 2016 associated with the D&D of the Piketon facility in accordance with the requirements of the NRC and DOE. The D&D work is expected to extend through 2017 and be substantially completed by year-end. As of December 31, 2016, we have accrued $38.6 million on the balance sheet as ~~Decontamination and Decommissioning Obligations~~ ~~for the estimated fair value of the remaining costs to complete the D&D work.~~

Centrus has previously provided financial assurance to the NRC and DOE for D&D and lease turnover costs in the form of surety bonds of approximately $16 million and $13 million, respectively, which are fully cash collateralized by Centrus. Centrus expects to receive cash when surety bonds are reduced and/or cancelled as the Company fulfills its D&D and lease obligations.

In the event that funding by the U.S. government is further reduced or discontinued, the American Centrifuge project may be subject to further demobilization, costs, delays and termination. Any such actions may have a material adverse impact on our ability to deploy the American Centrifuge technology and on our liquidity.

We ~~had~~have previously provided financial assurance to the NRC for the D&D of the Piketon demonstration facility in the form of surety bonds that are fully cash collateralized by us for $16.3 million. We believe the D&D work required for elimination of financial assurance under NRC license requirements has been ~~engaged in discussions~~completed, and we are working with the ~~PBGC regarding~~NRC to have the status of our qualified defined benefit pension plans, including potential liabilities under ERISA Section 4062(e) related to employee reductions resulting from ceasing enrichment operations at the Portsmouth and Paducah GDP facilities. In February 2017, the PBGC confirmed that given changes to ERISA Section 4062(e) enacted by Congress in recent years,surety bonds cancelled, which would permit the Company ~~is able~~ to ~~waive liability with respect~~receive the cash collateral.

We lease the Piketon facility from DOE. At the conclusion of the lease on June 30, 2019, absent mutual agreement between us and DOE regarding other possible uses for the facility, we are obligated to ~~employee reductions at~~return the ~~Portsmouth~~facility to DOE in a condition that meets NRC requirements and ~~Paducah GDP facilities.~~ in the same condition as the facility was in when it was leased to us (other than due to normal wear and tear). As of December 31, 2018, we have remaining accrued lease turnover obligations of $1.6 million. We have previously provided financial assurance to DOE for the lease turnover obligations in the form of surety bonds that are fully cash collateralized by us for $13.8 million. We expect to receive cash when these surety bonds are reduced and/or cancelled as the Company fulfills its lease turnover obligations.

In addition ~~the PBGC stated that it agrees~~ to ~~forbear from future action under ERISA Section 4062(e)~~remaining lease turnover obligations of $1.6 million and accrued employee termination benefits of $3.2 million related to the ~~American Centrifuge project. In its notification~~Piketon facility, we anticipate incurring expenses of approximately $6 million in the first half of 2019 to continue to maintain the lease facilities in accordance with the lease. If remaining costs related to the ~~Company, the PBGC cited the positive~~Piketon facility are greater than our estimates, then such increased costs could have an adverse impact on our results of ~~our exchange offer~~operations and ~~consent solicitation described above.~~liquidity.

The change in cash, ~~and~~ cash equivalents and restricted cash from our consolidated statements of cash flows are as follows on a summarized basis (in millions):

Year Ended December 31,
2016 2015
Cash provided by operating activities $ 37.7
$ 8.5
Cash (used in) provided by investing activities (1.2 ) 6.7
Cash used in financing activities (9.8 ) —
Increase in cash and cash equivalents $ 26.7
$ 15.2



	Year Ended December 31,
	2018			2017
Cash used in operating activities	$	(74.4	)	$	(16.1	)
Cash provided by investing activities	0.4			4.2
Cash used in financing activities	(11.1		)	(40.0		)
Decrease in cash, cash equivalents and restricted cash	$	(85.1	)	$	(51.9	)

Operating Activities

During ~~2016,~~2018, net cash ~~provided by~~used in operating activities was ~~$37.7~~$74.4 million. Sources of cash included the monetization of inventory purchased in prior ~~periods. Inventories declined $89.5~~periods, with inventories declining $61.0 million in ~~2016.~~2018. The net reduction of ~~$25.8~~$33.4 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash in 2018. Uses of cash also included the net loss of $104.1 million in 2018, net of non-cash expenses, and the increase in receivables from utility customers of $15.8 million.

During 2017, net cash used in operating activities was $16.1 million. American Centrifuge expenditures have been a use of cash, including the significant reduction in the D&D obligation. Sources of cash included the monetization of inventory purchased in prior periods, with inventories declining $44.7 million in 2017. The impact is partially offset by the timing of utility customer payments, with utility customer receivables increasing $27.0 million. The net increase of $19.8 million in the SWU purchase payables balance, due to the timing and quantity of purchase deliveries, was a ~~use~~source of cash in ~~2016. The net loss~~2017. Net income of ~~$67.0~~$12.2 million in ~~2016,~~2017, net of non-cash expenses, was a ~~use~~source of cash. ~~American Centrifuge expenses have been a major use of cash, including demobilization expenses and D&D expenditures.~~

During 2015, net cash provided by operating activities was $8.5 million. Monetization of inventory purchased or produced in prior periods provided cash in 2015 as inventories declined $90.9 million due to sales deliveries exceeding product received under SWU purchase agreements. In addition, current accounts receivable declined $32.4 million in 2015 due to monetization without increased sales and billings. The net reduction of the SWU purchase payables balance of $54.7 million, due to the timing of purchase deliveries, was a significant use of cash in 2015. The net loss of $187.4 million in 2015, net of non-cash charges including depreciation, amortization, excess reorganization value impairment, and actuarial gains and losses, was a use of cash in 2015.

Investing Activities

Capital expenditures totaled $3.0 million in 2016, including leasehold improvements of $1.7 million that were funded by the owner of the Company’s corporate headquarters. The Company funded leasehold improvements and furniture totaling $1.3 million. There were no significant capital expenditures in ~~2015. Cash collateral deposits decreased $0.3~~2018 and 2017. Sales of unneeded assets and property yielded net proceeds of $0.5 million and $4.7 million in ~~2016~~2018 and ~~$5.0 million in 2015, commensurate with declines in surety bonds required for waste disposition.~~2017, respectively.

Financing Activities

~~In June 2016,~~On December 6, 2018, Centrus ~~repurchased~~entered into Exchange Agreements (the “Exchange Agreements”) with certain holders of the Company’s outstanding 8% paid-in-kind (“PIK”) toggle notes (the “8% PIK Toggle Notes). Under the terms of the Exchange Agreements, the Company exchanged $6.3 million aggregate principal amount of 8% PIK Toggle Notes ~~having an aggregate principal balance~~for 398,638 shares of ~~$26.1~~Class A Common Stock and approximately $5.1 million in cash, which includes accrued and ~~accrued~~unpaid interest ~~payable balance~~on the 8% PIK Toggle Notes. The Company recognized a gain on extinguishment of $0.5 million, which is net of transaction costs of less than $0.1 million. Refer to Note 15, Stockholders’ Equityfor ~~cash payments of $9.8 million.~~

~~Working Capital~~

December 31,
2016 2015
(millions)
Cash and cash equivalents $ 260.7
$ 234.0
Accounts receivable, net 19.9
26.5
Inventories, net 119.9
212.4
Other current assets and liabilities, net (165.6 ) (165.2 )
Working capital $ 234.9
$ 307.7

~~Capital Structure and Financial Resources~~details related to the Common Stock.

~~Our~~In 2018, the $6.1 million payment of interest classified as debt ~~consists~~is classified as a financing activity. Refer to Note 9, Debt, of ~~PIK Toggle Notes with a~~the consolidated financial statements regarding the accounting for the 8.25% Notes.

In February 2017, Centrus exchanged $204.9 million principal amount of ~~$234.6 million as of December 31, 2016, and $247.6 million as of December 31, 2015. In June 2016, we repurchased some of~~ the PIK Toggle Notes pursuant to a pre-arranged trading plan. We made cash payments of $9.8 million for PIK Toggle Notes having an aggregate principal balance of $26.1 million and accrued interest payable balance of $0.5 million. The gain on the early extinguishment of the PIK Toggle Notes was $16.7 million, net of commissions and unamortized deferred issuance costs totaling $0.1 million. Additional details on the PIK Toggle Notes and the pre-arranged trading plan are provided in ~~Note 9,Debt,~~ ~~to the consolidated financial statements.~~

~~On February 14, 2017, pursuant to an exchange offer and consent solicitation, we exchanged $204.9 million of~~Company’s 8% PIK Toggle Notes for $74.3 million principal amount of 8.25% Notes, 104,574 shares of Series B Preferred Stock ~~with liquidation preference of $1,000 per share,~~ and $27.6 million of cash. ~~Following~~Refer to Note 9, Debt of the ~~exchange offer, $29.6 million~~consolidated financial statements.

Working Capital

The following table summarizes the Company’s working capital (in millions):



	December 31,
	2018			2017

Cash and cash equivalents	$	123.1		$	208.8
Accounts receivable	60.2			60.2
Inventories, net	26.7			75.2
Deposits for financial assurance	30.3			16.3
Current debt	(32.8		)	(6.1		)
Other current assets and liabilities, net	(161.7		)	(190.9		)
Working capital	$	45.8		$	163.5

Capital Structure and Financial Resources

Interest on the 8.25% Notes is payable semi-annually in arrears as of February 28 and August 31 based on a 360-day year consisting of twelve 30-day months. The 8.25% Notes are guaranteed on a subordinated and limited basis by, and secured by substantially all assets of, Enrichment Corp. The 8.25% Notes mature on February 28, 2027.

The principal amount of the 8% PIK Toggle Notes ~~remained outstanding.~~is increased by any payment of interest in the form of PIK payments. We have the option to pay up to 5.5% per annum of interest due on the 8% PIK Toggle Notes in the form of PIK payments. The 8% PIK Toggle Notes are guaranteed and secured on a subordinated, conditional, and limited basis by Enrichment Corp. The 8% PIK Toggle Notes mature on September 30, 2019. However, the maturity date can be extended to September 30, 2024, upon the satisfaction of certain funding conditions described in the applicable indenture relating to the funding, under binding agreements, of (i) the American Centrifuge project or (ii) the implementation and deployment of a National Security Train Program utilizing American Centrifuge technology.

Additional terms and conditions of the 8.25% Notes and the 8% PIK Toggle Notes are described in Note 9, Debt, of the consolidated financial statements.

Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the Liquidation Preference. We are obligated to pay cash dividends on our Series B Preferred Stock to the extent dividends are declared by the Board of Directors and certain criteria are met. We have not met these criteria for the periods from issuance through December 31, 2018, and have not declared, accrued or paid dividends on the Series B Preferred Stock as of December 31, 2018. Additional terms and conditions of the Series B Preferred Stock, including the criteria that must be met for the payment of dividends, are described in Note 15, Stockholders’ Equity of the consolidated financial statements.

The nuclear industry in general, and the nuclear fuel industry in particular, are in a period of significant change. We are actively considering, and expect to consider from time to time ~~may consider~~in the future, potential strategic ~~acquisitions and other opportunities,~~transactions, which at any given time may be in various stages of discussions, diligence or ~~negotiation with respect to a number of potential acquisitions.~~negotiation. If we pursue opportunities that require capital, we believe we would seek to satisfy these needs through a combination of working capital, cash generated from operations or additional debt or equity financing.

We are managing our working capital to seek to improve the long-term value of our LEU business and are planning to continue funding the Company’s qualified pension plans in the ordinary course because we believe that is in the best interest of all stakeholders. We expect that any other uses of working capital will be undertaken in light of these strategic priorities and will be based on the Company’s determination as to the relative strength of its operating performance and prospects, financial position and expected liquidity requirements. In addition, we expect that any such other uses of working capital will be subject to compliance with contractual restrictions to which the Company and its subsidiaries are subject, including the terms and conditions of ~~the indenture. The Company~~their debt securities and credit facilities. We continually ~~evaluates~~evaluate alternatives to manage our capital structure, and may opportunistically repurchase, exchange or redeem Company securities from time to time.

~~NYSE MKT Listing Standards Notice~~Commitments under SWU Purchase Agreements

~~On November 17, 2015, we received notice~~The Company purchases SWU contained in LEU from Russia supplied to us under a 2011 agreement, as amended, with the ~~NYSE MKT LLC (the “NYSE MKT”) indicating that~~Russian government entity Joint Stock Company “TENEX”. Under a 2018 agreement, the Company ~~is not~~will purchase SWU contained in ~~compliance~~LEU from Orano with ~~Sections 1003(a)(i)~~deliveries starting as early as 2021. Refer to Note 16,Commitments and ~~(ii)~~Contingencies, of the NYSE MKT’s Company Guide since the Company reported a stockholders’ deficit as of September 30, 2015, and net losses in its fiscal years ended December 31, 2011, 2012 and 2013. We submitted a plan to regain compliance with the NYSE MKT’s continued listing standards and the NYSE MKT notified us in January 2016 that it accepted our plan. With the NYSE MKT’s acceptance of the plan, we have until May 17, 2017, to regain compliance. If the Company is not in compliance with the continued listing standards by May 17, 2017, or if the Company does not make progress consistent with the plan, the NYSE MKT may initiate delisting procedures as appropriate. In the meantime, our common stock will continue to be traded on the NYSE MKT, subject to ongoing monitoring by the NYSE MKT and our compliance with all other applicable NYSE MKT requirements.

~~Financial Assurance~~

~~The NRC and DOE require that we provide~~consolidated financial ~~assurance~~statements for ~~the D&D of the American Centrifuge facilities. The amount of financial assurance needed for D&D of the ACP is dependent on decommissioning cost projections.~~

~~Our level of cash collateral supporting financial assurance and our ability to secure~~ additional financial assurance are subject to a surety bond provider’s view of our creditworthiness. Issuers of the surety bonds have the ability, under certain circumstances, to request additional collateral or to cancel the surety bond, which would adversely affect our liquidity.

~~Surety bonds for the D&D of the American Centrifuge facilities and for the disposition of wastes are fully collateralized by interest earning cash deposits included in other long-term assets.~~

~~A summary of financial assurance and related cash collateral follows (in millions):~~

December 31,
2016 2015

Decontamination and decommissioning of American Centrifuge $ 29.4
$ 29.4
Waste disposition —
0.3
Other financial assurance 6.3
6.3
Total financial assurance requirements $ 35.7
$ 36.0

Letters of credit $ 1.6
$ 1.6
Surety bonds 34.1
34.4
Total financial assurance instruments $ 35.7
$ 36.0

Cash collateral deposit for surety bonds $ 29.5
$ 29.8

information.

DOE Technology License

We have a non-exclusive license in DOE inventions that pertain to enriching uranium using gas centrifuge technology. The license agreement with DOE provides for annual royalty payments based on a varying percentage (1% up to 2%) of our annual revenues from sales of the SWU component of LEU produced by us at the ACP and any other facility using DOE centrifuge technology. There is a minimum annual royalty payment of $100,000 and the maximum cumulative royalty over the life of the license is $100 million. There is currently no commercial enrichment facility producing LEU using DOE centrifuge technology. We are continuing to advance our U.S. centrifuge technology that has evolved from DOE inventions at specialized facilities in Oak Ridge, Tennessee, with a view to deploying a commercial enrichment facility over the long term once market conditions recover.

~~Commitments under SWU Purchase Agreement~~

~~The Company purchases SWU contained in LEU from Russia supplied to us under a 2011 agreement, as amended in December 2015, with the Russian government entity Joint Stock Company “TENEX”. Refer to~~ ~~Note 16,Commitments and Contingencies~~ ~~to the consolidated financial statements for additional information.~~

Off-Balance Sheet Arrangements

Other than outstanding letters of credit and surety bonds, ~~described above,~~ our SWU purchase commitments and the license agreement with DOE relating to the American Centrifuge technology, there were no material off-balance sheet arrangements ~~obligations, or other relationships as of~~at December 31, ~~2016,~~2018, or December 31, ~~2015.~~2017.

New Accounting Standards ~~Not Yet Implemented~~

Reference is made to New Accounting Standards in Note 1, Summary of Significant Accounting Policies, of the consolidated financial statements for information on new accounting standards.

Item 7A. Quantitative and Qualitative Disclosures ~~about~~About Market Risk

As of December 31, 2016, the balance sheet carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and payables under SWU purchase agreements approximate fair value becauseNot provided as a smaller reporting company as defined in Rule 12b-2 of the ~~short-term nature of the instruments.~~Exchange Act.

We have not entered into financial instruments for trading purposes. As of December 31, 2016, our debt consisted of the PIK Toggle Notes with a principal amount of $234.6 million. The estimated fair value of the PIK Toggle Notes was $107.4 million based on the most recent trading price as of December 31, 2016.

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements, together with related notes and the report of PricewaterhouseCoopers LLP, our independent registered public accounting firm, are set forth ~~on the pages indicated~~ in Part IV, Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, ~~2016,~~2018, the end of the period covered by this report, our management performed an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting described below in Management’s Annual Report on Internal Control Over Financial Reporting.

Notwithstanding the material weakness described below, management believes that the consolidated financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in ~~Rule13a-15(f)~~Rule 13a-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2016.~~2018. This evaluation was based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this assessment, our management concluded that a material weakness exists in our internal control over financial reporting as described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design and maintain effective controls over the ~~calculation~~evaluation of ~~the decontamination and decommissioning (“D&D”) obligation.~~arrangements with customers that could result in modification accounting or other impacts for a sales contract. Specifically, we did not maintain effective controls ~~at an appropriate level of precision~~ over the ~~review~~determination and assessment of ~~the spreadsheets used in the calculation of the D&D obligation and the cost estimates supporting the calculation. This resulted in a~~accounting impacts for these arrangements when executed. The material ~~adjustment in the fourth quarter D&D obligation balance, which was recorded prior to the issuance of our consolidated financial statements as of and for the year ended December 31, 2016.~~

~~The errors arising from the underlying deficiency did not impact any prior interim or annual period and therefore,~~weakness did not result in a ~~revision to previously filed~~material misstatement of our annual or interim financial statements. However, ~~this~~the material weakness could result in ~~misstatements~~a misstatement of the ~~aforementioned D&D obligation and~~revenue or inventory-related account balances or disclosures that would result in a material misstatement to the annual or interim ~~consolidated~~ financial statements which would not be prevented or detected in a timely manner.

Because of this material weakness, management concluded that we did not maintain effective internal control over financial reporting as of December 31, ~~2016,~~2018, based on criteria described in Internal Control - Integrated Framework (2013) issued by COSO.

This annual report does not include an audit report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to audit by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Remediation Efforts to Address Material Weakness

Management is evaluating the material weakness and developing a plan of remediation to strengthen our overall internal control over determination and assessment of accounting impacts for ~~our D&D obligation.~~these arrangements when executed. The remediation plan is expected to include, at a minimum, implementing additional review controls as well as enhancing and formalizing existing processes over ~~the D&D obligation.~~these arrangements with customers.

The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting

There were no changes in ~~our~~ internal control over financial reporting during our most recently completed fiscal quarter ended December 31, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

On March 28, 2017, we amended our Second Amended and Restated Bylaws and such amendments became effective on the same date. The amendment amends Article II, Sections 1 (Place of Meetings), Section 2 (Annual Meetings) and Section 7 (List of Stockholders Entitled to Vote), and adds a new Article X (Electronic Transmission) that permits our Board of Directors, at their sole discretion, to authorize our stockholders and proxy holders not physically present at a meeting of stockholders to use remote communication (a) to participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) we implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder; (ii) we implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, we retain a record of such vote or other action. The amendment also amends Article VII, Section 1 (Notices) to allow for notices given by electronic transmission to directors, committee members and stockholders. The foregoing summary of the amendment is qualified in its entirety by reference to the text of our Third Amended and Restated Bylaws, as amended as described above, which is attached as Exhibit 3.2 hereto and incorporated herein by reference.None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information regarding executive officers is included in Part I of this Annual Report. Additional information concerning directors, executive officers and corporate governance appearing under the captions Proposal 1. Election of Directors, Governance Information, Section 16(a) Beneficial Ownership Reporting Compliance, and Board and Committee Membership in the Company’s Proxy Statement for the ~~2017~~2019 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2018 (the ~~“2017~~“2019 Proxy Statement”), is incorporated herein by reference.

Item 11. Executive Compensation

Information concerning executive and director compensation appearing under the captions Executive Compensation, and Compensation of Directors in the ~~2017~~2019 Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information concerning security ownership of certain beneficial owners and management appearing under the caption Security Ownership of Certain Beneficial Owners and Management in the ~~2017~~2019 Proxy Statement is incorporated herein by reference.

Information concerning the common stock that may be issued under the 2014 Equity Incentive Plan appearing under the caption Equity Compensation Plan Information in the ~~2017~~2019 Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information concerning certain relationships and related transactions and director independence appearing under the captions Transactions with Related Persons, and Director Independence in the ~~2017~~2019 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

Information concerning principal accounting fees and services appearing under the caption Audit and Non-Audit Fees in the ~~2017~~2019 Proxy Statement is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules


(a)	(1) Consolidated Financial Statements

Reference is made to the consolidated financial statements appearing elsewhere in this Annual Report.

(2) Financial Statement Schedules

No financial statement schedules are required to be filed as part of this Annual Report.

(3) Exhibits

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference. The accompanying Exhibit Index identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.

Item 16. Form 10-K Summary

None.

EXHIBIT INDEX



Exhibit No.	Description

2.1	Plan of Reorganization of USEC Inc. dated July 11, 2014 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed with the SEC on September 5, 2014).

3.1	Amended and Restated Certificate of Incorporation of Centrus Energy Corp. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form 8-A, filed with the SEC on September 30, 2014).

3.2	Third Amended and Restated Bylaws of Centrus Energy Corp. (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 31, 2017)

3.3	Certificate of the Voting Powers, Designations, Preferences and Relative Participating, Optional and Other Special Rights and Qualifications, Limitations or Restrictions of Series A Participating Cumulative Preferred Stock of Centrus Energy Corp. (filed as Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on April 7, 2016).

3.4	Certificate of Designation of Rights, Powers, Preferences, Qualifications, Limitations and Restrictions of Series B Senior Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).

4.1	Indenture by and among Centrus Energy Corp., as Issuer, United States Enrichment Corporation, as Note Guarantor and Delaware Trust Company, as Trustee and Collateral Agent, dated as of September 30, 2014 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014).

4.2	Supplemental Indenture by and among Centrus Energy Corp., as Issuer, United States Enrichment Corporation, as Note Guarantor and Delaware Trust Company, as Trustee and Collateral Agent (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2017).

4.3	Pledge and Security Agreement by and among Delaware Trust Company, as Collateral Agent, and United States Enrichment Corporation, dated as of September 30, 2014 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014).

4.4	Note Subordination Agreement by and among United States Enrichment Corporation and Delaware Trust Company, as Trustee, dated as of September 30, 2014 (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014).

4.5	Outstanding Notes Note Subordination Agreement by and among United States Enrichment Corporation and Delaware Trust Company, as Trustee, dated as of February 14, 2017 (incorporated by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).

4.6	Rights Agreement dated as of April 6, 2016, among Centrus Energy Corp., Computershare Inc. (“Computershare”) and Computershare Trust Company, N.A., together with Computershare, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on April 7, 2016).

4.7	Form of Rights Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on April 7, 2016).

4.8	Form of First Amendment to Section 382 Rights Agreement by and between Centrus Energy Corp., Computershare Trust Company, N.A. and Computershare Inc., to be dated on or about February 7, 2017 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 5, 2017).

4.9	Indenture by and among Centrus Energy Corp., as Issuer, United States Enrichment Corporation, as Note Guarantor and Delaware Trust Company, as Trustee and Collateral Agent, dated as of February 14, 2017 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).



4.10	Pledge and Security Agreement, dated as of February 14, 2017 by and among Delaware Trust Company, as Collateral Agent, and United States Enrichment Corporation dated as of February 14, 2017 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).

4.11	New Notes Note Subordination Agreement by and among United States Enrichment Corporation and Delaware Trust Company, as Trustee, dated as of February 14, 2017 (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).

4.12	Pari Passu Intercreditor Agreement by and among United States Enrichment Corporation and Delaware Trust Company, as Trustee, dated as of February 14, 2017 (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2017).

10.1	Lease Agreement between the United States Department of Energy (“DOE”) and United States Enrichment Corporation, dated as of July 1, 1993, including notice of exercise of option to renew (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1, filed with the SEC on June 29, 1998).

10.2	Supplemental Agreement No. 1 to the Lease Agreement between DOE and United States Enrichment Corporation, dated as of December 7, 2006 (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on February 27, 2007). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.3	Memorandum of Agreement, dated April 6, 1998, between the Office of Management and Budget and United States Enrichment Corporation relating to post-privatization liabilities (incorporated by reference to Exhibit 10.18 of the Company’s Registration Statement on Form S-1, filed with the SEC on June 29, 1998).

10.4	Agreement, dated June 17, 2002, between DOE and USEC Inc. (“2002 DOE-USEC Agreement”) (incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2002).

10.5	Modification 1 to 2002 DOE-USEC Agreement, dated August 20, 2002 (incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on February 24, 2006).

10.6	Modification No. 2 dated January 12, 2009, to 2002 DOE-USEC Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 13, 2009).

10.7	Modification No. 3 dated January 28, 2010, to 2002 DOE-USEC Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 2, 2010).

10.8	Modification No. 4 dated February 11, 2011, to 2002 DOE-USEC Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 16, 2011).

10.9	Modification No. 5 dated June 12, 2012, to the Agreement dated June 17, 2002, between DOE and USEC Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the SEC on August 1, 2012).

10.10	License dated December 7, 2006 between the United States of America, as represented by DOE, as licensor, and USEC Inc., as licensee (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on February 27, 2007).

10.11	Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and Joint Stock Company “Techsnabexport” (“TENEX”) (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the SEC on May 4, 2011). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.12	Amendment No. 001 dated April 22, 2013 to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 6, 2013). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).



10.13	Amendment No. 002 dated July 29, 2013 to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed with the SEC on November 5, 2013). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.14	Amendment No. 003 dated July 23, 2014 to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 14, 2014). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.15	Amendment No. 004 dated September 10, 2014 to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 14, 2014). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.16	Letter Agreement, dated June 22, 2015, supplementing the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on August 7, 2015). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.17	Amendment No. 005 dated July 7, 2015, to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on November 12, 2015). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.18	Amendment No. 006 dated September 4, 2015, to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on November 12, 2015). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.19	Amendment No. 007 dated October 19, 2015, to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 23, 2016). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.20	Amendment No. 008 dated December 22, 2015, to the Enriched Product Transitional Supply Contract dated March 23, 2011 between United States Enrichment Corporation and TENEX (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 23, 2016). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.21	Letter Agreement, dated August 1, 2016, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the SEC on November 10, 2016). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.22	Form of Plan Support Agreement dated December 13, 2013 between USEC Inc. and certain holders of USEC Inc.’s 3.0% convertible senior notes due October 1, 2014, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on December 16, 2013.

10.23	Plan Support Agreement dated December 13, 2013 between USEC Inc. and certain holders of USEC Inc.’s 3.0% convertible senior notes due October 1, 2014, as amended through February 28, 2014 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on March 5, 2014).

10.24	Plan Support Agreement dated March 4, 2014 between USEC Inc. and Toshiba America Nuclear Energy Company (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on March 5, 2014).



10.25	Plan Support Agreement dated March 4, 2014 between USEC Inc. and Babcock & Wilcox Investment Company (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on March 5, 2014).

10.26	Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.77 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 16, 2015).

10.27	Form of Change in Control Agreement with executive officers (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed with the SEC on January 16, 2013). (b)

10.28	Employment Agreement, dated March 6, 2015, by and between Centrus Energy Corp. and Daniel B. Poneman (incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 7, 2015). (b)

10.29	Amended Employment Agreement, dated November 28, 2018, by and between Centrus Energy Corp. and Daniel B. Poneman. (a) (b)

10.30	2016 Executive Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 12, 2016) (b)

10.31	2015 Executive Incentive Plan (incorporated by reference to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2015). (b)

1032	Centrus Energy Corp. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014). (b)

10.33	Form of Employee Non-qualified Stock Option Award Agreement under the Centrus Energy Corp. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.80 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 16, 2015). (b)

10.34	Form of Non-Employee Director Restricted Stock Unit Award Agreement (Annual Retainers and Meeting Fees) under the Centrus Energy Corp. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.81 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 16, 2015). (b)

10.35	Centrus Energy Corp. 2014 Post-Restructuring Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014). (b)

10.36	Amended and Restated Centrus Energy Corp. Executive Severance Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed with the SEC on September 30, 2014). (b)

10.37	USEC Inc. Pension Restoration Plan, as amended and restated, dated November 1, 2007 (incorporated by reference to Exhibit 10.55 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2007, filed with the SEC on February 29, 2008). (b)

10.38	First Amendment, dated August 1, 2008, to USEC Inc. Pension Restoration Plan, as amended and restated, dated November 1, 2007 (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, filed with the SEC on November 5, 2008). (b)

10.39	Second Amendment dated July 25, 2013 to the USEC Inc. Pension Restoration Plan, as amended and restated effective January 1, 2008 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on July 26, 2013). (b)

10.40	USEC Inc. 1999 Supplemental Executive Retirement Plan, as amended and restated, dated November 1, 2010 (incorporated by reference to Exhibit 10.65 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 24, 2011). (b)

10.41	USEC Inc. 2006 Supplemental Executive Retirement Plan, as amended and restated, dated November 1, 2007 (incorporated by reference to Exhibit 10.64 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2007, filed with the SEC on February 29, 2008). (b)

10.42	First Amendment dated October 28, 2009 to the USEC Inc. 2006 Supplemental Executive Retirement Plan, as amended and restated (incorporated by reference to Exhibit 10.71 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 1, 2010). (b)

10.43	Centrus Energy Corp. Executive Deferred Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on August 7, 2015). (b)



10.44	Form of Support Agreement (including the Term Sheet) between Centrus Energy Corp. and the Support Parties, dated January 5, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 5, 2017).

10.45	Agreement between Centrus Energy Corp. and UT-Battelle, LLC dated October 1, 2017 (incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 15, 2018.

10.46	Settlement Agreement between United States Enrichment Corporation and the United States, dated January 11, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 17, 2018).

10.47	Services Agreement to Provide Technical and Resource Support - effective March 26, 2018, by and between Centrus Energy Corp., American Centrifuge Operating, LLC and X-Energy, LLC (incorporated by reference to Exhibit 10.46 of the Company’s Quarterly Report on Form 10-Q, for the quarter ended March 31, 2018, filed with the SEC on May 10, 2018). (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

10.48	Purchase and Sale Agreement dated April 27, 2018 between Orano Cycle and United States Enrichment Corporation (incorporated by reference to Exhibit 10.47 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed with the SEC on August 9, 2018). (Certain information has been omitted and filed separately, pursuant to confidential treatment under Rule 24.b2)
10.49	Centrus Energy Corp. 2014 Equity Incentive Plan (as amended and restated in May 2017) (incorporated by reference to Exhibit 10.48 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed with the SEC on November 8, 2018).

10.50	Work Authorization dated September 27, 2018 under the Supply of Service Agreement Between United States Department of Energy and Centrus Energy Corp., Exhibit J to the Centrifuge Deployment Project Lease Agreement between the Department of Energy and USEC Inc. (incorporated by reference to Exhibit 10.49 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed with the SEC on November 8, 2018).

10.51	Form of Exchange Agreement, dated December 6, 2018, by and among Centrus Energy Corp. and certain noteholders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on December 6, 2018).

10.52	Services Agreement to Provide Technical and Resource Support, dated November 29, 2018, by and between American Centrifuge Operating, LLC and X Energy, LLC (Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2). (a)

21	Subsidiaries of Centrus Energy Corp. (a)

23.1	Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. (a)

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). (a)

31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a). (a)

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. (a)

101	Consolidated financial statements from the Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed in interactive data file (XBRL) format. (a)


(a)	Filed herewith.


(b)	Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	Centrus Energy Corp.

~~March 31, 2017~~April 1, 2019	/s/ Daniel B. Poneman
	Daniel B. Poneman
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on ~~March 31, 2017:~~

April 1, 2019:



Signature		Title

/s/ Daniel B. Poneman		President and Chief Executive Officer (Principal Executive Officer) and Director
Daniel B. Poneman

/s/ ~~Stephen S. Greene~~Marian K. Davis		Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
~~Stephen S. Greene~~Marian K. Davis

/s/ John C. Dorrian		Controller and Chief Accounting Officer (Principal Accounting Officer)
John C. Dorrian

/s/ Mikel H. Williams		Chairman of the Board and Director
Mikel H. Williams

/s/ ~~Theodore J. Dalheim, Jr.~~		~~Director~~
~~Theodore J. Dalheim, Jr.~~

~~/s/~~ Michael Diament		Director
Michael Diament

/s/ ~~Osbert Hood~~Tetsuo Iguchi		Director
~~Osbert Hood~~Tetsuo Iguchi

/s/ W. Thomas Jagodinski		Director
W. Thomas Jagodinski

/s/ Patricia J. Jamieson		Director
Patricia J. Jamieson




~~/s/ Suleman E. Lunat~~		~~Director~~
~~Suleman E. Lunat~~

/s/ William J. Madia		Director
William J. Madia

/s/ ~~Michael P. Morrell~~Neil S. Subin		Director
~~Michael P. Morrell~~

~~/s/ Hiroshi Sakamoto~~		~~Director~~
~~Hiroshi Sakamoto~~Neil S. Subin

CENTRUS ENERGY CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



	Page
Reports of Independent Registered Public Accounting Firm	5867
Consolidated Balance Sheets	5968
Consolidated Statements of Operations	6069
Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)	6170
Consolidated Statements of Cash Flows	6271
Consolidated Statements of Stockholders’ ~~Equity (Deficit)~~Deficit	6372
Notes to Consolidated Financial Statements	6473

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Stockholders of Centrus Energy Corp.:

~~In our opinion,~~Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Centrus Energy Corp. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, of comprehensive ~~loss,~~income (loss), of ~~stockholders' equity (deficit)~~stockholders’ deficit and of ~~cash flows present fairly, in all material respects, the financial position of Centrus Energy Corp. and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their~~ cash flows for each of the two years in the period ended December 31, ~~2016~~ 2018, including the related notes (collectively referred to as the “consolidatedfinancial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Companyas of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~these~~the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material ~~misstatement. An~~misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit ~~includes~~of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the consolidated financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the consolidated financial ~~statement presentation.~~statements. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Baltimore, Maryland

~~March 31, 2017~~April 1, 2019

We have served as the Company's auditor since 2002.

CENTRUS ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)


	December 31,
	2016			2015			December 31, 2018			December 31, 2017
ASSETS
Current assets
Current assets:
Cash and cash equivalents	$	260.7		$	234.0		$	123.1		$	208.8
Accounts receivable, net	19.9			26.5
Accounts receivable							60.2			60.2
Inventories	177.4			319.2			129.7			153.1
Deferred costs associated with deferred revenue	89.3			63.1			134.9			122.3
Deposits for financial assurance							30.3			16.3
Other current assets	13.3			15.2			6.3			6.2
Total current assets	560.6			658.0			484.5			566.9
Property, plant and equipment, net	6.0			3.5			4.2			4.9
Deposits for surety bonds	29.5			29.8
Deposits for financial assurance							6.3			19.7
Intangible assets, net	93.3			105.8			76.0			82.7
Other long-term assets	24.1			23.0			0.7			1.1
Total assets	$	713.5		$	820.1		$	571.7		$	675.3

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current liabilities:
Accounts payable and accrued liabilities	$	46.4		$	44.8		$	52.4		$	48.2
Payables under SWU purchase agreements	59.6			85.4			46.0			79.4
Inventories owed to customers and suppliers	57.5			106.8			103.0			77.9
Deferred revenue	123.6			83.9
Decontamination and decommissioning obligations	38.6			29.4
Deferred revenue and advances from customers							204.5			191.8
Current debt							32.8			6.1
Total current liabilities	325.7			350.3			438.7			403.4
Long-term debt	234.1			247.0			120.2			157.5
Postretirement health and life benefit obligations	171.3			184.3			136.2			154.2
Pension benefit liabilities	179.9			172.3			168.9			161.6
Advances from customers							15.0			—
Other long-term liabilities	38.6			31.9			14.6			17.5
Total liabilities	949.6			985.8			893.6			894.2
Commitments and contingencies (note 16)
Stockholders’ deficit
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized, none issued	—			—
Common stock, Class A, par value $0.10 per share, 70,000,000 shares authorized, 7,563,600 shares issued and outstanding	0.8			0.8
Common stock, Class B, par value $0.10 per share, 30,000,000 shares authorized, 1,436,400 shares issued and outstanding	0.1			0.1
Commitments and contingencies (Note 16)
Stockholders’ deficit:
Preferred stock, par value $1.00 per share, 20,000,000 shares authorized
Series A Participating Cumulative Preferred Stock, none issued							—			—
Series B Senior Preferred Stock, 7.5% cumulative, 104,574 shares issued and outstanding and an aggregate liquidation preference of $119.3 and $111.5 as of December 31, 2018 and 2017, respectively							4.6			4.6
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 8,031,307 shares and 7,632,669 shares issued and outstanding as of December 31, 2018 and 2017, respectively							0.8			0.8
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 1,406,082 shares issued and outstanding as of December 31, 2018 and December 31, 2017							0.1			0.1
Excess of capital over par value	59.5			59.0			61.2			60.0
Accumulated deficit	(296.7		)	(229.7		)	(388.5		)	(284.5		)
Accumulated other comprehensive income, net of tax	0.2			4.1			(0.1		)	0.1
Total stockholders’ deficit	(236.1		)	(165.7		)	(321.9		)	(218.9		)
Total liabilities and stockholders’ deficit	$	713.5		$	820.1		$	571.7		$	675.3

The accompanying notes are an integral part of these consolidated financial statements.

CENTRUS ENERGY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share and per share data)


	Year Ended December 31,						Year Ended December 31,
	2016			2015			2018			2017
Revenue:
Separative work units	$	258.5		$	289.9		$	130.6		$	195.4
Uranium	14.3			65.5			33.8			—
Contract services	38.5			62.8			28.6			23.0
Total revenue	311.3			418.2			193.0			218.4
Cost of Sales:
Separative work units and uranium	234.3			285.3			187.7			162.7
Contract services	31.9			64.0			23.2			25.5
Total cost of sales	266.2			349.3			210.9			188.2
Gross profit	45.1			68.9
Gross profit (loss)							(17.9		)	30.2
Advanced technology license and decommissioning costs	47.9			33.0			26.1			15.7
Selling, general and administrative	46.2			42.6			39.9			43.7
Amortization of intangible assets	12.5			13.4			6.6			10.6
Impairment of excess reorganization value	—			137.2
Special charges for workforce reductions and advisory costs	1.4			13.2			2.2			9.5
Gains on sales of assets	(1.2		)	(2.1		)	(0.3		)	(4.6		)
Operating loss	(61.7		)	(168.4		)	(92.4		)	(44.7		)
Gain on early extinguishment of debt and debt restructuring costs	(13.0		)	—
Gain on early extinguishment of debt							(0.5		)	(33.6		)
Nonoperating components of net periodic benefit expense (income)							10.6			(27.2		)
Interest expense	19.7			19.6			4.1			5.3
Investment income	(0.8		)	(0.3		)	(2.5		)	(1.3		)
Loss before income taxes	(67.6		)	(187.7		)
Provision (benefit) for income taxes	(0.6		)	(0.3		)
Net loss	$	(67.0	)	$	(187.4	)
Income (loss) before income taxes							(104.1		)	12.1
Income tax benefit							—			(0.1		)
Net income (loss)							(104.1		)	12.2
Preferred stock dividends - undeclared and cumulative							7.8			6.9
Net income (loss) allocable to common stockholders							$	(111.9	)	$	5.3

Net loss per share - basic and diluted	$	(7.36	)	$	(20.82	)
Weighted-average number of shares outstanding - basic and diluted	9.1			9.0
Net income (loss) per common share - basic and diluted							$	(12.23	)	$	0.58
Average number of common shares outstanding - basic and diluted (in thousands)							9,151			9,081



Delaware	52-2107911
(State of incorporation)	(IRS Employer Identification No.)



Title of each class	Name of each exchange on which registered
Class A Common Stock, par value $0.10 per share	NYSE ~~MKT LLC~~American
Rights to purchase Series A Participating Cumulative Preferred Stock, par value $1.00 per share	NYSE ~~MKT LLC~~American



Large accelerated filer	o	~~Accelerated filer~~	o	~~Non-accelerated filer~~	o	Smaller reporting company	ý
Accelerated filer	o		Emerging growth company	o
Non-accelerated filer	ý



	Balance at December 31, 2017			Adjustment for ASC 606		Balance at January 1, 2018
Assets:
Unbilled contract revenue	$	—		$	0.1	$	0.1
Stockholders’ Deficit:
Accumulated Deficit	(284.5		)	0.1		(284.4		)



	Deferred Sales in the Period		Previously Deferred Sales Recognized in the Period			Year-To-Date Change
Deferred costs associated with deferred revenue	$	25.4	$	(12.8	)	$	12.6
Deferred revenue	55.3		(23.3		)	32.0



		Page
	PART I
Items 1.	Business	4
Item 1A.	Risk Factors	1316
Item 1B.	Unresolved Staff Comments	2732
Item 2.	Properties	2733
Item 3.	Legal Proceedings	2833
Item 4.	Mine Safety Disclosures	2833
	Executive Officers of the Registrant	2934
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3035
Item 6.	Selected Financial Data	3136
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
	~~Liquidity and Capital Resources~~	46
~~Item 7A.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	5037
Item 8.	Financial Statements and Supplementary Data	5156
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5156
Item 9A.	Controls and Procedures	5156
Item 9B.	Other Information	5257
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	5358
Item 11.	Executive Compensation	5358
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5358
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5358
Item 14.	Principal Accounting Fees and Services	5358
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	5459
Item 16.	Form 10-K Summary	5459
Exhibit Index		60
Signatures		5565
Consolidated Financial Statements		56
~~Exhibit Index~~		9666


	No. of Employees at December 31,		No. of Employees at December 31,
Location	2016	2015	2018	2017
Oak Ridge, TN			105	106
Piketon, OH	152	255	65	123
Oak Ridge, TN	116	120
Bethesda, MD	58	58	51	53
Paducah, KY	12	13
Other			5	8
Total Employees	338	446	226	290



	2016		2015
	High	Low	High	Low
First Quarter ended March 31	$5.44	$1.00	$5.72	$3.75
Second Quarter ended June 30	$4.74	$2.53	$5.77	$4.06
Third Quarter ended September 30	$4.30	$3.05	$4.16	$2.61
Fourth Quarter ended December 31	$7.08	$3.75	$3.51	$1.20


	Common Stock, Class A, Par Value $.10 per Share		Common Stock, Class B, Par Value $.10 per Share		Excess of Capital over Par Value		Accumulated Deficit			Accumulated Other Comprehensive Income			Total			Preferred Stock, Series B		Common Stock, Class A, Par Value $.10 per Share		Common Stock, Class B, Par Value $.10 per Share		Excess of Capital Over Par Value		Accumulated Deficit			Accumulated Other Comprehensive Income			Total
Balance at December 31, 2014	$	0.8	$	0.1	$	58.6	$	(42.3	)	$	4.4		$	21.6

Balance at December 31, 2016																$	—	$	0.8	$	0.1	$	59.5	$	(296.7	)	$	0.2		$	(236.1	)
Net income																—		—		—		—		12.2			—			12.2
Issuance of preferred stock																4.6		—		—		—		—			—			4.6
Other comprehensive loss, net of tax benefit (Note 17)																—		—		—		—		—			(0.1		)	(0.1		)
Restricted stock units and stock options issued, net of amortization																—		—		—		0.5		—			—			0.5
Balance at December 31, 2017																$	4.6	$	0.8	$	0.1	$	60.0	$	(284.5	)	$	0.1		$	(218.9	)

Balance at December 31, 2017																$	4.6	$	0.8	$	0.1	$	60.0	$	(284.5	)	$	0.1		$	(218.9	)
Adoption of ASC 606 as of January 1, 2018 (Note 1)																—		—		—		—		0.1			—			0.1
Net loss	—		—		—		(187.4		)	—			(187.4		)	—		—		—		—		(104.1		)	—			(104.1		)
Other comprehensive loss, net of tax (Note 17)	—		—		—		—			(0.3		)	(0.3		)
Issuance of common stock																—		—		—		0.8		—			—			0.8
Other comprehensive loss, net of tax benefit (Note 17)																—		—		—		—		—			(0.2		)	(0.2		)
Restricted stock units and stock options issued, net of amortization	—		—		0.4		—			—			0.4			—		—		—		0.4		—			—			0.4
Balance at December 31, 2015	$	0.8	$	0.1	$	59.0	$	(229.7	)	$	4.1		$	(165.7	)

Net loss	—		—		—		(67.0		)	—			(67.0		)
Other comprehensive loss, net of tax (Note 17)	—		—		—		—			(3.9		)	(3.9		)
Restricted stock units and stock options issued, net of amortization	—		—		0.5		—			—			0.5
Balance at December 31, 2016	$	0.8	$	0.1	$	59.5	$	(296.7	)	$	0.2		$	(236.1	)
Balance at December 31, 2018																$	4.6	$	0.8	$	0.1	$	61.2	$	(388.5	)	$	(0.1	)	$	(321.9	)



	Year Ended December 31, 2018
	As Reported			Under Previous Accounting			Effect of Adoption
Revenue	$	193.0		$	193.1		$	(0.1	)
Net loss	(104.1		)	(104.0		)	(0.1		)



	Year Ended December 31, 2017
	As Previously Reported		Adjustments			Current Presentation
Cost of sales - separative work units and uranium	$	136.1	$	26.6		$	162.7
Selling, general and administrative	43.1		0.6			43.7
Nonoperating components of net periodic benefit expense (income)	—		(27.2		)	(27.2		)



	December 31, 2018		January 1, 2018		Year-To-Date Change
Contract assets
Accounts receivable:
Billed	$	50.4	$	60.2	$	(9.8	)
Uranium feed receivable	9.8		—		9.8
Unbilled contract revenue	—		0.1		(0.1		)
Accounts receivable	$	60.2	$	60.3	$	(0.1	)

Deferred costs associated with deferred revenue	$	134.9	$	122.3	$	12.6

Contract liabilities
Deferred revenue and advances from customers - current:
Deferred revenue	$	204.5	$	172.5	$	32.0
Advances from customers	—		19.3		(19.3		)
Deferred revenue and advances from customers - current	$	204.5	$	191.8	$	12.7

Advances from customers - noncurrent	$	15.0	$	—	$	15.0



	Liability Dec. 31, 2014		2015							Liability Dec. 31, 2015		2016					Liability Dec. 31, 2016
	Liability Dec. 31, 2014		Special Charges			Paid				Liability Dec. 31, 2015		Special Charges		Paid			Liability Dec. 31, 2016
Workforce reductions:
Enrichment cessation and evolving business needs	$	2.4	$	4.5	(a)	$	(6.6	)	(a)	$	0.3	$	0.3	$	(0.5	)	$	0.1
Piketon demonstration facility	—		8.7			(0.3		)		8.4		0.1		(3.1		)	5.4		(b)
	$	2.4	$	13.2		$	(6.9	)		$	8.7	$	0.4	$	(3.6	)	$	5.5



	Liability Dec. 31, 2016		2017					Liability Dec. 31, 2017		2018					Liability Dec. 31, 2018
	Liability Dec. 31, 2016		Charges for Termination Benefits		Paid/ Settled			Liability Dec. 31, 2017		Charges for Termination Benefits		Paid/ Settled			Liability Dec. 31, 2018
Workforce reductions:
Evolving business needs	$	0.1	$	2.4	$	(1.7	)	$	0.8	$	2.1	$	(2.0	)	$	0.9
Piketon demonstration facility	5.4		1.1		(0.8		)	5.7		0.1		(2.6		)	3.2
Total	$	5.5	$	3.5	$	(2.5	)	$	6.5	$	2.2	$	(4.6	)	$	4.1



	December 31, 2018		December 31, 2017

Cash and cash equivalents	$	123.1	$	208.8
Deposits for financial assurance - current	30.3		16.3
Deposits for financial assurance - noncurrent	6.3		19.7
Total cash, cash equivalents and restricted cash	$	159.7	$	244.8



	December 31, 2018				December 31, 2017
	Current		Long-Term		Current		Long-Term
NRC license	$	16.3	$	—	$	16.1	$	—
DOE lease	13.8		—		—		13.5
Workers compensation	—		6.0		—		5.9
Other	0.2		0.3		0.2		0.3
Total deposits for financial assurance	$	30.3	$	6.3	$	16.3	$	19.7


	December 31, 2016						December 31, 2015						December 31, 2018						December 31, 2017
	Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net
Separative work units	$	115.8	$	15.2	$	100.6	$	221.5	$	33.1	$	188.4	$	20.1	$	3.6	$	16.5	$	47.2	$	15.0	$	32.2
Uranium	61.4		42.3		19.1		97.5		73.7		23.8		109.6		99.4		10.2		105.9		62.9		43.0
Materials and supplies	0.2		—		0.2		0.2		—		0.2
	$	177.4	$	57.5	$	119.9	$	319.2	$	106.8	$	212.4
Total													$	129.7	$	103.0	$	26.7	$	153.1	$	77.9	$	75.2


	December 31, 2015			Additions / (Depreciation)			Retirements			December 31, 2016			December 31, 2017			Additions / (Depreciation)			Retirements			December 31, 2018
Land	$	1.2		$	—		$	—		$	1.2		$	1.2		$	—		$	—		$	1.2
Leasehold improvements	0.9			2.3			(0.2		)	3.0			3.2			—			(0.7		)	2.5
Machinery and equipment	1.6			0.1			—			1.7			1.3			0.1			(0.4		)	1.0
Other	0.3			0.6			—			0.9			1.1			—			—			1.1
Property, plant and equipment, gross	4.0			3.0			(0.2		)	6.8			6.8			0.1			(1.1		)	5.8
Accumulated depreciation	(0.5		)	(0.5		)	0.2			(0.8		)	(1.9		)	(0.8		)	1.1			(1.6		)
Property, plant and equipment, net	$	3.5		$	2.5		$	—		$	6.0		$	4.9		$	(0.7	)	$	—		$	4.2



2019	$	5.4
2020	8.0
2021	8.8
2022	9.7
2023	8.3
Thereafter	35.8
Total	$	76.0


	December 31,				December 31,
($ millions)	2016		2015
					2018		2017

Trade payables	$	11.5	$	5.4	$	3.9	$	6.3
Compensation and employee benefits	12.5		19.2		21.0		17.4
Postretirement health and life benefit obligations - current	13.8		5.3		15.4		14.7
Severance	3.4		8.7		4.1		3.9
Lease turnover obligations					1.6		1.8
Accrued interest on 8% PIK Toggle Notes					0.6		0.2
Other accrued liabilities	5.2		6.2		5.8		3.9
	$	46.4	$	44.8
Total accounts payable and accrued liabilities					$	52.4	$	48.2



	8% Paid-in-Kind Toggle Notes			Deferred Issuance Costs			Total Long-Term Debt
December 31, 2014	$	240.4		$	(0.7	)	$	239.7
PIK Interest	7.2			—			7.2
Amortization	—			0.1			0.1
December 31, 2015	$	247.6		$	(0.6	)	$	247.0
PIK Interest	13.1			—			13.1
Repurchases	(26.1		)	—			(26.1		)
Amortization/Repurchases	—			0.1			0.1
December 31, 2016	$	234.6		$	(0.5	)	$	234.1



		December 31, 2018				December 31, 2017
	Maturity	Current		Long-Term		Current		Long-Term
8.25% Notes:	Feb. 2027
Principal		$	—	$	74.3	$	—	$	74.3
Interest		6.1		45.9		6.1		52.0
8.25% Notes		$	6.1	$	120.2	$	6.1	$	126.3

8% PIK Toggle Notes	Sep. 2019^(a)	$	26.7	$	—	$	—	$	31.3
Less deferred issuance costs		—		—		—		0.1
8% PIK Toggle Notes		$	26.7	$	—	$	—	$	31.2

Total		$	32.8	$	120.2	$	6.1	$	157.5



	December 31, 2018					December 31, 2017
	Carrying Value			Estimated Fair Value ^(a)		Carrying Value			Estimated Fair Value ^(a)
8.25% Notes	$	126.3	^(b)	$	57.9	$	132.4	^(b)	$	61.7
8% PIK Toggle Notes	26.7			21.8		31.3			25.1


^(b)	The carrying value of the 8.25% Notes consists of the principal balance of $74.3 million and the sum of current and noncurrent interest payment obligations until maturity. Refer to Note 9, Debt.


	Defined Benefit Pension Plans						Postretirement Health and Life Benefit Plans						Defined Benefit Pension Plans						Postretirement Health and Life Benefit Plans
	Year Ended December 31,						Year Ended December 31,
($ millions)													Year Ended December 31,						Year Ended December 31,
	2016			2015			2016			2015			2018			2017			2018			2017
Changes in Benefit Obligations:
Obligations at beginning of period	$	832.8		$	961.4		$	203.5		$	237.7		$	817.9		$	814.6		$	170.7		$	192.8
Actuarial (gains) losses, net	19.1			(55.2		)	(9.2		)	(30.2		)	(50.8		)	32.8			(13.1		)	(24.8		)
Service costs	3.8			5.8			—			0.2			3.4			3.7			—			—
Interest costs	35.4			36.9			8.2			8.8			28.7			32.2			5.8			7.2
Benefits paid	(60.9		)	(62.1		)	(13.3		)	(13.1		)	(57.5		)	(59.3		)	(11.8		)	(14.5		)
Lump sum benefits paid	(12.2		)	(50.6		)	—			—			(4.8		)	(2.9		)	—			—
Less federal subsidy on benefits paid	—			—			—			0.1
Plan change	—			—			3.6			—			—			—			—			10.0
Administrative expenses paid	(3.4		)	(3.4		)	—			—			(3.1		)	(3.2		)	—			—
Obligations at end of period	814.6			832.8			192.8			203.5			733.8			817.9			151.6			170.7
Changes in Plan Assets:
Fair value of plan assets at beginning of period	656.3			772.4			13.8			26.3			654.6			634.1			1.8			7.7
Actual return on plan assets	50.2			(8.0		)	0.5			0.4			(40.2		)	84.4			—			0.1
Company contributions	4.1			8.0			6.7			0.2			14.5			1.5			10.0			8.5
Benefits paid	(60.9		)	(62.1		)	(13.3		)	(13.1		)	(57.5		)	(59.3		)	(11.8		)	(14.5		)
Lump sum benefits paid	(12.2		)	(50.6		)	—			—			(4.8		)	(2.9		)	—			—
Administrative expenses paid	(3.4		)	(3.4		)	—			—			(3.1		)	(3.2		)	—			—
Fair value of plan assets at end of period	634.1			656.3			7.7			13.8			563.5			654.6			—			1.8
(Unfunded) status at end of period	(180.5		)	(176.5		)	(185.1		)	(189.7		)
Unfunded status at end of period													$	(170.3	)	$	(163.3	)	$	(151.6	)	$	(168.9	)

Amounts recognized in assets and liabilities:
Current liabilities	$	(0.6	)	$	(4.2	)	(13.8		)	(5.4		)	$	(1.4	)	$	(1.7	)	(15.4		)	(14.7		)
Noncurrent liabilities	(179.9		)	(172.3		)	(171.3		)	(184.3		)	(168.9		)	(161.6		)	(136.2		)	(154.2		)
	$	(180.5	)	$	(176.5	)	$	(185.1	)	$	(189.7	)	$	(170.3	)	$	(163.3	)	$	(151.6	)	$	(168.9	)
Amounts in accumulated other comprehensive income (loss), pre-tax:
Prior service cost (credit)	$	—		$	—		$	(2.6	)	$	(6.6	)	$	—		$	—		$	(2.4	)	$	(2.5	)

Discount rate used to determine benefit obligations at end of period:	4.1%			4.5%			3.9%			4.2%			4.3		%	3.7		%	4.3		%	3.6		%



Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)
Net prior service costs (credits)	—		—			3.6		—
Amortization of prior service (costs) credits, net	—		—			0.3		0.3
Total (gain) loss recognized in other comprehensive income (loss), pre-tax	$	—	$	—		$	3.9	$	0.3
Total recognized in net periodic benefit costs (income) and other comprehensive income (loss), pre-tax	$	8.1	$	(4.5	)	$	2.0	$	(21.6	)



Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)
Amortization of prior service (costs) credits, net	$	—	$	—		$	0.2		$	0.1
Total loss recognized in other comprehensive income (loss), pre-tax	$	—	$	—		$	0.2		$	0.1
Total recognized in net periodic benefit costs (income) and other comprehensive income (loss), pre-tax	$	21.5	$	(15.7	)	$	(7.3	)	$	(7.7	)


	One Percentage Point
(in millions)						One-Percentage Point
	Increase		Decrease			Increase		Decrease
Postretirement health benefit obligation	$	4.0	$	(3.8	)	$	2.9	$	(2.7	)
Net periodic benefit costs (service and interest cost components only)	$	0.3	$	(0.3	)	$	0.1	$	(0.1	)


	Defined Benefit Pension Plans																	Defined Benefit Pension Plans
	Level 1				Level 2				Level 3				Total
(in millions)																		Level 1				Level 2				Level 3				Total
	2016		2015		2016		2015		2016		2015		2016			2015		2018		2017		2018		2017		2018		2017		2018		2017
U.S. government securities	$	—	$	—	$	84.7	$	61.8	$	—	$	—	$	84.7		$	61.8	$	—	$	—	$	34.6	$	34.6	$	—	$	—	$	34.6	$	34.6
Corporate debt	—		—		217.0		206.9		—		—		217.0			206.9		—		—		104.7		119.7		—		—		104.7		119.7
Municipal bonds	—		—		6.2		6.8		—		—		6.2			6.8
Municipal bonds and non-U.S. government securities																		—		—		2.0		3.5		—		—		2.0		3.5
Mortgage and asset backed securities	—		—		5.4		—		—		—		5.4			—		—		—		4.2		0.3		—		—		4.2		0.3
Fair value of investments by hierarchy level	$	—	$	—	$	313.3	$	275.5	$	—	$	—	$	313.3		$	275.5	$	—	$	—	$	145.5	$	158.1	$	—	$	—	$	145.5	$	158.1
Investments measured at NAV (a)													318.3			377.2														416.1		494.7
Accrued interest receivable													3.5			3.5														1.8		1.9
Unsettled transactions													(1.0		)	0.1														0.1		(0.1		)
Plan assets													$	634.1		$	656.3													$	563.5	$	654.6


	Postretirement Health and Life Benefit Plans																Postretirement Health and Life Benefit Plans
	Level 1				Level 2				Level 3				Total
(in millions)																	Level 1				Level 2				Level 3				Total
	2016		2015		2016		2015		2016		2015		2016		2015		2018		2017		2018		2017		2018		2017		2018		2017
Money market funds	$	0.2	$	1.0	$	—	$	—	$	—	$	—	$	0.2	$	1.0	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Bond mutual funds	7.5		4.0		—		—		—		—		7.5		4.0		—		1.8		—		—		—		—		—		1.8
Equity mutual funds	—		8.8		—		—		—		—		—		8.8
Fair value of investments by hierarchy level	$	7.7	$	13.8	$	—	$	—	$	—	$	—	$	7.7	$	13.8	$	—	$	1.8	$	—	$	—	$	—	$	—	$	—	$	1.8



	Stock Options (thousands)	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (millions)

Outstanding at December 31, 2015	475	$4.09	9.3	$—
Granted	15	$2.68
Exercised	—	—
Forfeited/Cancelled	(7)	$5.62
Outstanding at December 31, 2016	483	$4.02	8.4	$1.1
Exercisable at December 31, 2016	141	$4.12	8.3	$0.3


Stock Exercise Price	Options Outstanding (thousands)	Weighted Average Remaining Contractual Life in Years	Options Exercisable (thousands)	Options Outstanding (thousands)	Remaining Contractual Life in Years	Options Exercisable (thousands)

$5.62	30	7.9	20.0	22	5.9	22
$4.37	300	8.2	75.0	300	6.2	225
$3.90	23	8.6	8.0	23	6.6	23
$3.93	15	8.6	5.0	15	6.6	15
$2.71	50	8.8	16.0	50	6.8	50
$2.75	50	8.8	17.0
$2.68	15	9.5	—	15	7.4	10



	Year Ended December 31,
(in millions, except per share amounts)	2016			2015

Numerator for basic and diluted calculation:
Net loss	$	(67.0	)	$	(187.4	)

Denominator:
Weighted average common shares	9.1			9.0
Denominator for basic calculation	9.1			9.0

Weighted average effect of dilutive securities:
Stock compensation awards (a)	—			—
Denominator for diluted calculation	9.1			9.0

Net loss per share - basic and diluted	$	(7.36	)	$	(20.82	)


~~(a)~~	Compensation awards under the 2014 Equity Incentive Plan resulted in common stock equivalents of less than 0.1 million shares of common stock and are excluded from the diluted calculation as a result of net losses in the years ended December 31, 2016 and 2015.


(a)	its pension plans and Enrichment Corp.’s pension plans are at least 90% funded on a variable rate premium calculation in the current plan year;