Daniel B. Poneman has been President and Chief Executive Officer 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.

Larry B. Cutlip has been Senior Vice President, Field Operations since 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 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 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 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.

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.

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 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,~~Common Stock, $0.10 par value per share (the “Class A Common Stock”) and 30,000,000 shares of Class B ~~common stock,~~Common Stock, $0.10 par value per share (the “Class B Common ~~Stock,” and together with~~Stock”), As of March 1, 2022, the ~~Class A Common Stock, the “Common Stock”). The~~ Company has issued ~~9,437,389~~14,393,133 shares of Common Stock, consisting of ~~8,031,307~~13,673,933 shares of Class A Common Stock and ~~1,406,082~~719,200 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 ~~1,200,000~~1,900,000 shares of Class A Common Stock under its management incentive plan, of which ~~approximately 596,000~~844,293 shares were available for future awards as of December 31, ~~2018,~~2021, including ~~approximately~~ 120,000 shares associated with awards which terminated or were cancelled without being exercised.

The Class A Common Stock trades on the NYSE American LLC (the “NYSE American”) under the symbol “LEU”.

As of March 1, ~~2019,~~2022, there were ~~8,031,307~~13,673,933 shares of Class A Common Stock outstanding. As of March 1, ~~2019,~~2022, there were approximately ~~930~~850 holders of record and approximately ~~7,550~~14,360 beneficial owners of the Company’s Class A Common Stock. As of March 1, 2022, there were two holders of record of the Company’s Class B Common Stock.

No cash dividends were paid in ~~2017~~2021 or ~~2018,~~2020, 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 indenturesThe indenture governing our ~~8% PIK Toggle Notes and~~ 8.25% Notes, subject to certain exceptions, ~~place~~places certain restrictions on the ability of ~~our subsidiary,~~ Enrichment Corp. to transfer cash and other assets to us. This could act as ~~an additional~~a 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 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, (2) our net income calculated in accordance with U.S. GAAP (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 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 $35.0 million, (4) the balance of cash and cash equivalents calculated in accordance with U.S. GAAP on the last day of the immediately preceding quarter would exceed $150.0 million after pro forma application of the dividend 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~~2021 or ~~2017.~~2020.

Fourth Quarter ~~2018~~2021 Issuer Repurchases of Equity Securities

~~None.~~ On November 23, 2021, pursuant to a tender offer announced on October 20, 2021, the Company completed the purchase of 36,867 shares of its outstanding Series B Senior Preferred Stock, par value $1.00 per share, at a price per share of $1,145.20, less any applicable withholding taxes, for an aggregate purchase price of approximately $42.2 million. The accepted shares represent 97.4% of the Company’s outstanding Series B Senior Preferred Stock as of September 30, 2021. Based on the final results, the requisite consent of at least 90% of the outstanding Series B Senior Preferred Stock required to approve the Series B Preferred Amendment was obtained. On November 23, 2021, the Company issued a Notice of Full Redemption providing for the redemption of any and all shares of the Company’s Series B Senior Preferred Stock outstanding after consummation of the Company’s tender offer to purchase all of its issued and outstanding Series B Senior Preferred Stock. On December 15, 2021, the Company completed the redemption of all 980 outstanding Series B Senior Preferred Stock for aggregate cash consideration of $1.1 million. The purchase price per share represented a 15% discount from the aggregate liquidation preference, included accrued but unpaid dividends, of $1,347.29 per share as of September 30, 2021. These shares represented all of the Company’s remaining outstanding Series B Senior Preferred Stock.

Matters Affecting our Foreign Stockholders

In order to aid in our compliance with our NRC license, our certificate of incorporation gives us certain rights with respect to shares of our 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 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~~[Reserved]

~~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.

This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements particularly in light of the economic, social and market uncertainty created by the COVID-19 pandemic and the evolving events regarding the war in Ukraine. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.

Overview

Centrus Energy Corp., a Delaware corporation (“Centrus” or the “Company”), is a trusted supplier of nuclear fuel and services for the nuclear power ~~industry.~~industry, which provides a reliable source of carbon free energy. References to “Centrus”, the “Company”, “our”, or “we” include Centrus Energy Corp. and its ~~wholly owned~~wholly-owned subsidiaries as well as the predecessor to Centrus, unless the context ~~otherwise indicates.~~indicates otherwise.

Centrus operates two business segments: (a) low-enriched uranium (“LEU”), which supplies various components of nuclear fuel to ~~utilities,~~commercial customers from our global network of suppliers, and ~~contract services,~~(b) technical solutions, which provides advanced engineering, design, and manufacturing services to government and private sector ~~customers.~~customers and is deploying uranium enrichment and other capabilities necessary for production of advanced nuclear fuel to power existing and next-generation reactors around the world.

Our LEU segment provides most of the Company’s revenue and involves the sale of ~~low-enriched uranium, its components, and natural uranium~~nuclear fuel to customers that are primarily utilities ~~operating~~that operate commercial nuclear power plants. The majority of these sales are for the enrichment component of LEU, which is measured in separative work units (“SWU”). Centrus also sells natural uranium (the raw material needed to produce LEU) and occasionally sells LEU with the natural uranium, uranium conversion, and SWU components combined into one sale.

LEU is a critical component in the production of nuclear fuel for reactors that produce electricity. We supply LEU and its components to both domestic and international utilities for use in nuclear reactors worldwide. We provide LEU from multiple sources, including our inventory, ~~medium-~~medium and ~~long- term~~long-term supply contracts, and spot purchases. As a long-term supplier of LEU to our customers, our objective is to provide value through the reliability and diversity of our supply sources. ~~Our long-term goal is to resume commercial enrichment production, and we are exploring approaches to that end.~~

Our global order book includes long-term sales contracts with major utilities through 2029. We have secured cost-competitive supplies of SWU under long-term contracts through the end of this decade to allow us to fill our existing customer orders and make new sales. A market-related price reset provision in our largest supply contract ~~services~~took effect at the beginning of 2019 – when market prices for SWU were near historic lows – which has significantly lowered our cost of sales and contributed to improved margins. Spot price indicators for SWU have risen by approximately 65% to $56 as of December 31, 2021, since bottoming out in August 2018.

In October 2020, the U.S. Department of Commerce reached agreement with the Russian Federation on an extension of the 1992 Russian Suspension Agreement (“RSA”), a trade agreement which allows for Russian-origin nuclear fuel to be exported to the United States in limited quantities. The two parties agreed to extend the agreement through 2040 and to set aside a significant portion of the quota for Centrus’ shipments to the United States through 2028 to execute our long-term supply (purchase) agreement (the “TENEX Supply Contract”) with the Russian government entity, TENEX, Joint-Stock Company (“TENEX”). This outcome allows for sufficient quota for Centrus to continue serving its utility customers.

Our technical solutions segment ~~utilizes~~is deploying uranium enrichment and other capabilities necessary for production of advanced nuclear fuel to meet the evolving needs of the global nuclear industry and the U.S. government, while also leveraging our unique technical expertise, operational experience and 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 beyond uranium enrichment, offering new services to existing and new customers in complementary markets.

~~With~~Our technical solutions segment is dedicated to 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~~restoration of commercial and government customers and actively working to secure new customers. Our experience developing, licensing and manufacturing advanced 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 ourAmerica’s domestic uranium enrichment ~~facilities, we are also performing decontamination and decommissioning (“D&D”) work for the U.S. government in Oak Ridge, Tennessee.~~

~~With several decades of experience in enrichment, we also continue~~capability to ~~be a leader in the development of an advanced U.S. uranium enrichment technology, which we believe could~~ play a critical role in ~~supplying fuel for advanced reactors,~~ meeting U.S. national security and energy security ~~needs,~~requirements, advancing America’s nonproliferation objectives, repairing broken and ~~achieving our nation’s nonproliferation objectives. To support~~vulnerable supply chains, providing good clean energy jobs and supporting the communities in which we operate, and in delivering the next-generation nuclear fuels that will power the future of nuclear energy as it provides reliable carbon-free power around the world.

The United States has not had a domestic uranium enrichment capability suitable to meet U.S. ~~energy and~~ national security ~~we have been performing research~~requirements since the Paducah Gaseous Diffusion Plant (“Paducah GDP”) shut down in 2013. Longstanding U.S. policy and ~~demonstration work on our advanced gas~~binding nonproliferation agreements prohibit the use of foreign-origin enrichment technology for U.S. national security missions. Our AC100M centrifuge is currently the only deployment-ready U.S. uranium enrichment technology ~~through contracts with UT-Battelle, LLC (“UT-Battelle”),~~in the ~~management and operating contractor~~U.S. that can meet these national security requirements.

Centrus is working to pioneer U.S. production 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~~High-Assay, Low-Enriched Uranium (“HALEU”), ~~suitable~~enabling the deployment of a new generation of HALEU-fueled reactors to meet the world’s growing need for carbon-free power. HALEU is a ~~range~~high-performance nuclear fuel component which is expected to be required by a number of ~~military~~advanced reactor and ~~civilian applications.~~fuel designs that are now under development for commercial and government uses. While existing reactors ~~currently in operation~~ typically operate on LEU with the uranium-235 isotope concentration below 5%, HALEU is further enriched so that the uranium-235 ~~isotope~~ concentration is ~~just below~~between 5%, and 20%. The higher U-235 concentration offers a number of potential advantages, which may include better fuel utilization, improved performance, fewer refueling outages, simpler reactor designs, reduced waste volumes, and greater nonproliferation resistance.

The lack of a domestic HALEU ~~has~~supply is widely viewed as a ~~uranium-235 concentration~~major obstacle to the successful commercialization of these new reactors. For example, in surveys conducted by the U.S. Nuclear Industry Council in 2021 and 2020, advanced reactor developers indicated that the number one issue that “keeps you up at night” was access to HALEU. As the only company with a license from the Nuclear Regulatory Commission (“NRC”) to enrich up to 20%. uranium-235 assay HALEU, Centrus is uniquely positioned to fill a critical gap in the supply chain and facilitate the deployment of these promising next-generation reactors.

The DOE has experienced a COVID-19 related supply chain delay in obtaining the HALEU storage cylinders. Since it is not ~~commercially available today,~~possible to begin HALEU production without the storage cylinders, it would not be possible to complete the operational portion of the demonstration before the June 1, 2022 expiration date of the existing HALEU Contract. As a result, the DOE elected to change the scope of the HALEU Contract and move the operational portion of the demonstration to a new, competitively-awarded contract that would provide for operations beyond the term of the existing contract. On February 7, 2022, DOE issued a pre-solicitation notice for a request for proposal to complete the HALEU demonstration facility and to produce HALEU, noting that the “the Administration supports longer-term demonstration of production capability.” The pre-solicitation notice outlines a two-phase approach. Phase 1 consists of completing installation of the centrifuges – which DOE expects will take up to one year from contract signing – followed by one full year of cascade operations. The second phase consists of three optional, 3-year extensions to produce HALEU, so that the prospective contract could help support a total of one to ten years of cascade operations in addition to completing construction and centrifuge installation.

Centrus believes it is well-positioned to compete for a follow-on contract with DOE to operate the machines in Piketon but there is no assurance that the DOE will award such a contract to the Company. Congress has not yet adopted a Fiscal Year 2022 appropriations bill for the DOE, and there is no assurance that the proposed program, which would go beyond the scope and expiration of our existing contract, will be approved and funded.

The U.S. government has been operating under a series of continuing resolutions in Fiscal Year 2022. The DOE continues to support the HALEU program during the continuing resolution period, and has incrementally increased the government’s cost share ceiling as funds have become available. Currently, DOE has provided additional funding, and increased the government’s cost share ceiling to $126.7 million.

Additional COVID-19 related impacts, delays in DOE furnishing equipment, or changes to the existing scope of the HALEU Contract could result in further material increases to our estimate of the costs required to complete the existing HALEU Contract, as well as delay completion of the contract. The Company does not currently have a contractual obligation to perform work in excess of the funding provided by DOE and, therefore, no additional loss has been accrued as of December 31, 2021. If DOE does not commit to fully fund

the additional costs, and the Company nevertheless commits to a plan to complete the demonstration cascade and produce HALEU, we may ~~be required~~incur material additional costs or losses in future periods that could have an adverse impact on our financial condition and liquidity.

We believe our investment in the HALEU technology will position the Company to meet the needs of government and commercial customers in the future ~~for~~as they deploy advanced reactors and next generation fuels. At present, there are a number of advanced reactors under development. For example, of the ten advanced reactor designs ~~currently under development,~~selected by the U.S. Department of Energy for ~~DOE nonproliferation efforts, or for some advanced fuel designs that may be suitable~~its Advanced Reactor Demonstration Program, nine will require HALEU.In addition, the first non-light water reactor to have begun active NRC-license review requires HALEU.The U.S. Department of Defense also plans to construct a prototype HALEU-fueled mobile microreactor in the ~~future~~next three to four years as part of a program called “Project Pele.”The U.S. Air Force also announced plans to deploy a microreactor at Eielson Air Force Base in Alaska.While the use of HALEU is not an express requirement of the Air Force program, the vast majority of microreactor designs are expected to need HALEU.

Advanced nuclear reactors promise to provide an important source of reliable carbon-free power. By investing in HALEU technology now, and as the only American-based company currently pursuing HALEU enrichment capability, we believe the Company is well positioned to capitalize on a potential new market as the demand for ~~existing~~HALEU-based fuels increases in the mid to late-2020s with the development of advanced reactors. ~~There~~However, 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~~Also, foreign government-owned and government-operated competitors could seek to enter the market and offer HALEU at more competitive prices. There is one known foreign government-owned source which currently has ~~begun contract discussions with DOE about~~ the ~~proposed demonstration project, there~~capability to produce HALEU although this source is ~~no assurance~~currently subject to trade restrictions that ~~a contract will~~limit the amount of material from this source which may be ~~executed or~~imported into the United States. Other foreign government-owned entities which are not currently subject to U.S. trade restrictions, however, may enter the market. One such foreign-government owned entity has expressed an interest in and potential capability for HALEU production but has not committed publicly to enter the market to enrich above 10% uranium-235 enrichment assays. This entity has indicated publicly that ~~the project will go forward.~~it would take six to seven years to be able to produce HALEU.

The ~~nuclear industry in general, and the nuclear fuel industry in particular, is in a period of significant change, which~~Company continues to ~~affect~~review opportunities to improve its capital structure and to enhance shareholder value. As a result, pursuant to a sales agreement with its agents, the ~~competitive landscape.~~ Company sold at the market price an aggregate of 1,516,467 shares of its Class A Common Stock in 2021, for a total of $44.2 million. After expenses and commissions paid to the agents the Company’s proceeds total $42.4 million. Additionally, the Company recorded direct costs of $0.3 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and a prospectus supplement dated December 31, 2020 to the prospectus, dated August 5, 2020. At present, the Company has $5.8 million remaining available for sale under the prospectus supplement dated December 31, 2020, and may from time to time sell additional shares through the sales agreement at the then market price. The Company currently intends to use the net proceeds from this offering for general working capital purposes, to invest in technology development, or to repay outstanding debt.

In addition and in connection with the entry into an amendment (the “Voting Agreement Amendment”) to its existing Voting and Nomination Agreement with Mr. Morris Bawabeh, Kulayba LLC and M&D Bawabeh Foundation, Inc., the Company and Kulayba LLC also entered into an Exchange Agreement, dated February 2, 2021 (the “Exchange Agreement”), pursuant to which Kulayba LLC agreed to exchange (the “Exchange”) 3,873 shares of the Company’s outstanding Series B Senior Preferred Stock, par value $1.00 per share, representing a $5,000,198 liquidation preference (including accrued and unpaid dividends), for (i) 231,276 shares of the Company’s Class A Common Stock, priced at the closing market price of $21.62 on the date the Exchange Agreement was signed and (ii) a Centrus Energy Corp. Warrant to Purchase Common Stock (the “Warrant”), exercisable for 250,000 shares of Common Stock at an exercise price of $21.62 per share, which

was the closing market price on the date the Exchange Agreement was signed, subject to certain customary adjustments pursuant to the terms of the Warrant. The Company retired the 3,873 shares of Series B Senior Preferred Stock received by the Company under the Exchange Agreement.

On November 23, 2021, pursuant to a tender offer announced on October 20, 2021, the Company completed the purchase of 36,867 shares of its outstanding Series B Senior Preferred Stock at a price per share of $1,145.20, less any applicable withholding taxes, for an aggregate purchase price of approximately $42.2 million. On November 23, 2021, the Company issued a Notice of Full Redemption providing for the redemption of any and all shares of the Company’s Series B Senior Preferred Stock outstanding after consummation of the Company’s tender offer to purchase all of its issued and outstanding Series B Senior Preferred Stock. On December 15, 2021, the Company completed the redemption of all 980 outstanding Series B Senior Preferred Stock for aggregate cash consideration of $1.1 million. The aggregate purchase price of $43.3 million was offset by direct costs totaling $0.9 million. For additional details, refer to Note 15,Stockholders’ Equity, of the consolidated financial statements in Part IV of this Annual Report.

In the ~~seven~~ years following the 2011 Fukushima accident in Japan, the published market prices for uranium enrichment declined more than ~~75 percent.~~75% through mid-2018. While the monthly price indicators have ~~gradually~~since increased, ~~starting in September 2018,~~ the uranium enrichment segment of the nuclear fuel market remains oversupplied and faces uncertainty about future demand for nuclear power generation. Changes in the competitive landscape affect pricing trends, change customer spending patterns, and create uncertainty. To address these changes, we have taken steps to adjust our cost ~~structure and~~structure; we 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.~~technologies, or changes to our capital structure. 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.

COVID-19 Update

The Company has taken actions to protect its workforce and to maintain critical operations during the COVID-19 pandemic. Travel, operational, and other restrictions imposed by the U.S. and foreign governments may impact our ability to make future sales and may impact the ability of our suppliers, including our suppliers of low enriched uranium, to perform under their contracts. As of the date of this filing, our LEU segment operations have not been materially affected by the COVID-19 pandemic and we are working with our suppliers, fabricators, and customers to monitor the situation closely, including with respect to the impact of emerging variants. However, our technical solutions segment has been impacted by supply chain disruptions and increased costs as a result of the COVID-19 pandemic.

Further, the governments of states and counties in which we operate have from time to time issued orders imposing various restrictions, including prohibiting holding gatherings and closing nonessential businesses. Many of these restrictions remain in place and we continue to monitor and adjust as necessary. The Company has issued a policy requiring vaccinations subject to medical, religious and other exemptions as required by law. In some cases, state laws preclude us from fully implementing our vaccination policy. The Company has also continued other measures to protect its workforce such as expanded telework to protect our workforce, to comply with government orders, and to maintain critical operations. We are working closely with DOE and we are continuing to make progress while implementing measures to protect our workforce. Further, the actions taken by our suppliers and government regulatory agencies to protect their workforces may impact our ability to obtain the necessary supplies and governmental reviews and approvals to timely complete the HALEU

project. We are experiencing delays by our suppliers and increased costs from them as a result of the impact of the COVID-19.

For further discussion, refer to Part I, Item 1A, Risk Factors - Our business, financial and operating performance could be adversely affected by epidemics and other health related issues including but not limited to the coronavirus disease 2019 (“COVID-19”) pandemic.

Market Conditions and Outlook

The global nuclear industry outlook has begun to improve after many years of decline or stagnation. The development of advanced small and large-scale reactors, innovative advanced fuel types, and the commitment of nations to begin deploying or to increase the share of nuclear power in their nations has created optimism in the market. Part of the momentum has resulted from efforts to lower greenhouse gas emissions to combat climate change and improve health and safety.

According to the World Nuclear Association, as of January 2022, there were 57 reactors under construction worldwide, almost a third of which are in China. The United States, with 93 operating reactors, remains the world’s largest market for nuclear fuel. The nuclear industry in the United States, Japan, and Europe faces headwinds as well as opportunities. In the United States, the industry is under pressure from lower cost natural gas resources and the expansion of subsidized renewable energy. Eight U.S. reactors have prematurely shut down in recent years and several others could shut down in the next few years. At the same time, there are active efforts to develop, demonstrate, and deploy next generation reactors in the United States, many of which are expected to require HALEU.

The nuclear fuel industry continues to attempt to recover from the March 2011 an earthquake and tsunami which caused irreparable damage to four reactors in ~~Fukushima, Japan.~~Fukushima. As a consequence, approximately 60 reactors in Japan and Germany were taken offline, and other countries curtailed or slowed their construction of new reactors or accelerated ~~their~~the retirement of existing plants. While ~~some~~ten reactors in Japan have restarted and ~~many~~more 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.impacted.

~~Although~~While the market for ~~the~~ uranium enrichment ~~sector for nuclear fuel~~ is ~~expected to remain~~currently oversupplied, ~~for the remainder of this decade and into the 2020s, the~~ market demand is expected to grow as the nuclear power industry expands around the world. Over the past few years, prices for nuclear fuel, especially conversion and enrichment, have risen significantly. According to the World Nuclear Association, ~~(“WNA”), there~~around 10% of the world's electricity is generated by about 437 nuclear reactors, and an additional 57 or so reactors are ~~55 reactors~~ under ~~construction and 126 firmly planned around the world, compared~~construction. Recently, two nations new to ~~450 currently~~nuclear energy generation started their first commercial reactors. New reactor builds have added new demand for nuclear fuel suppliers.

The recent action of Russian military forces in ~~operation. This includes growth in China,~~Ukraine has escalated tensions between Russia and ~~India.~~the U.S. The ~~new reactor builds will have~~U.S. has imposed, and is likely to impose additional, financial and economic sanctions and export controls against certain Russian organizations and/or individuals. The U.S. imposed financial and economic sanctions that, in various ways, constrain transactions with Russian entities and individuals. While the current sanctions and export controls do not affect the Company’s supply agreement with TENEX, additional sanctions and trade restrictions by the U.S., as well as any actions by Russia, could adversely affect our business. The Company is monitoring the situation closely and assessing the potential impact of any new sanctions and how the impact on the Company might be mitigated.

Operating Results

Our revenues, operating results, and cash flows can fluctuate significantly from quarter to ~~improve~~quarter and year to year.Our sales order book in the LEU segment consists primarily of long-term, fixed commitment contracts, and we have visibility on a significant portion of our revenue for 2022-2026.

In 2021 and 2020, we benefited from collections of $43.5 million and $32.6 million, respectively. In 2021, we collected $43.5 million related to the settlement of the Company’s claims for reimbursements for certain pension and postretirement benefits costs incurred in connection with a past cost-reimbursable contract performed at the Portsmouth GDP, recognized as revenue within our technical solutions segment. In 2020, we collected $32.6 million from a customer in settlement of a supply contract that was subject to the customer’s bankruptcy proceeding, recognized as revenue within our LEU segment.

Based on our current order book and under current market conditions, we anticipate fiscal year 2022 revenues and gross margins in the ~~long-term.~~LEU segment to be higher than 2021. Please see Forward Looking Statements at the beginning of this Annual Report.

With respect to our technical solutions segment, work under the HALEU Contract currently remains on schedule but we have been experiencing increased delays from vendors and increased costs due to the continuing COVID pandemic. We are working with DOE to minimize the impacts and to obtain funding for these additional costs. Additional funding commitments from DOE and a contract amendment will be required to complete the project. Refer to Overview above for additional details.

~~The enrichment component of LEU is~~ ~~typically bought and sold under long-term contracts with deliveries over several years.~~ ~~The Company’s agreements for natural uranium sales are generally shorter-term, fixed-commitment contracts. As of December 31, 2018,~~ ~~our~~Our order book of sales under contract in the LEU segment ~~was $1.0 billion. While new sales booked in recent~~(“order book”) extends to 2029. For the years ~~reflect the historically low prices prevalent in today’s market, certain contracts included in the~~ended December 31, 2021 and 2020, our order book was approximately $986 million and $960 million, respectively. The order book is the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries, and includes approximately $348.2 million of deferred revenue and advances from customers as of December 31, 2021, whereby customers have ~~sales prices that are significantly above current market prices.~~made advance payments to be applied against future deliveries. We estimate that approximately 4%3% of our order book ~~as of December 31, 2018,~~ is at risk related to customer operations. Due to the nature of the long-term contracts and our order book, we have visibility of a significant portion of our anticipated revenue for 2022 and 2023 in the LEU segment. However, these long-term contracts are subject to significant risks and uncertainties, including existing import laws and restrictions under current contracts such as, the Russian Suspension Agreement, which limits imports of Russian uranium products into the United States and applies to our sales using material procured under the TENEX Supply Contract, as well as the potential for sanctions and other restrictions on trade with Russia or in dealings with Russian person and entities, in response to the evolving situation regarding the war in Ukraine. For further discussion of these risks and uncertainties, refer to Part I, Item 1A, Risk Factors - (1) Restrictions on imports or sales of SWU or uranium that we buy from our Russian supplier and our other sources of supply could adversely affect profitability and the viability of our business, and - (2) The dollar amount of the sales order book, as stated at any given time, is not necessarily indicative of future sales revenues and is subject to uncertainty.

Our future operating results are subject to a number of uncertainties that could affect results either positively or negatively. Among the factors that could affect our results are the following:

•Additional purchases or sales of SWU and uranium;

•Conditions in the LEU and energy markets, including pricing, demand, operations, government restrictions on imports, exports or investments, and regulations of our business and activities and those of our customers, suppliers, contractors, and subcontractors;

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

•Costs, future funding, and demand for HALEU;

•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;

•Potential use of cash for strategic or financial initiatives;

•Actions taken by customers, including actions that might affect existing contracts;

•Market, international trade, and other conditions impacting Centrus’ customers and the industry;

•Armed conflicts, including the war in Ukraine, government actions and other events that disrupt supply chains, production, transportation, payments and importation of nuclear materials or ~~operations.~~other critical supplies or services; and,

•The length and severity of the COVID-19 pandemic and its impact on our operations.

Revenue

We have two reportable segments: the LEU segment and the ~~contract services~~technical solutions segment.

Revenue from our LEU segment is derived primarily from:

•sales of the SWU component of LEU;

•sales of both the SWU and natural uranium components of LEU; and

•sales of natural uranium.

Our ~~contract services~~technical solutions segment reflects our technical, manufacturing, engineering, and ~~engineering~~operations 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. This includes the HALEU Contract and a variety of other contracts with public and private sector customers.

SWU and Uranium Sales

Revenue from our LEU segment accounted for approximately ~~85%~~62% of our total revenue in ~~2018.~~2021. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting ~~approximately 31%~~over one-third of revenue from our LEU segment in recent years. Our agreements with electric utilities are primarily medium and long-term fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU ~~(or~~from us. Contracts where we sell both the SWU and ~~uranium components of LEU) from us. Our agreements for~~ natural uranium ~~sales~~component of LEU to utilities or where we sell natural uranium to utilities and other nuclear fuel related companies 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. The timing of customer ~~demand~~deliveries is affected by, among other things, electricity markets, reactor operations, maintenance and refueling outages, and customer inventories. ~~In the current market environment,~~Based on customers’ individual needs, some customers are building inventories and may choose to take deliveries under annual purchase obligations later in the ~~year.~~year or in subsequent years. Customer payments for the SWU component of LEU average ~~roughly $10~~$7.4 million per order. As a result, a relatively small ~~change~~shift in the timing of customer orders for LEU may cause significant variability in operating ~~results.~~results year over year.

Utility customers, in general, have the option to defer receipt of ~~LEU or~~SWU and natural uranium products 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 in Part IV of this Annual Report for further details.

Our financial performance over time can be significantly affected by changes in prices for SWU and natural uranium. Since 2011, market prices for SWU and uranium ~~have~~ significantly ~~declined.~~declined until mid-2018, when they began to trend upward. 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. While newer sales reflect the low prices prevalent in recent years, ~~which means~~certain older contracts included in our order book have sales prices that ~~average prices under contract today exceed~~are significantly above 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~~and a spot price indicator for natural uranium hexafluoride (“UF6”), as ~~calculated~~published by ~~Centrus using indicators published~~TradeTech, LLC in Nuclear Market Review~~, and TradeTech’s spot price indicator for UF6:~~:

SWU and Uranium Market Price Indicators*

~~SEVEN-YEAR VIEW~~

~~TWO-YEAR MONTHLY VIEW~~

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

Our contracts with customers are denominated primarily ~~denominated~~ in U.S. dollars and although revenue has not been ~~directly~~materially 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. On occasion, we will accept payment in euros for spot sales that may be subject to short-term exchange rate risk. Costs of our primary competitors are denominated in other currencies. Our contracts with suppliers ~~have historically been~~are primarily denominated in U.S. dollars. ~~In April 2018, we entered into an~~We have a SWU supply agreement, nominally commencing in 2023, 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~~prices payable in a combination of ~~U.S~~U.S. dollars and euros, ~~and we may be subject to~~but with a contract defined exchange ~~rate risk for the portion of purchases payable in euros.~~rate.

On occasion, we will accept payment for SWU in the form of natural 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 natural uranium at contract inception, or as the quantity of natural uranium is finalized, if variable.

Cost of sales for SWU and natural uranium is based on the amount of SWU and natural uranium sold and delivered during the period and unit inventory costs. Unit inventory costs are determined using the average cost method. Changes in purchase costs have an effect on inventory costs and cost of ~~sales over current and future periods.~~sales. 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 GDP and Paducah ~~Gaseous Diffusion Plants.~~GDP.

~~Contract Services~~Technical Solutions

Our ~~contract services~~technical solutions segment reflects our technical, manufacturing, engineering and ~~engineering~~operations services offered to public and private sector customers, including the American Centrifuge engineering, procurement, construction, manufacturing and ~~testing activities we have~~operations services being performed ~~as a contractor for UT-Battelle.~~under the HALEU Contract. With our government and private sector customers, we seek to leverage our domestic enrichment experience, engineering know-how, and precision manufacturing facility to assist customers with a range of engineering, design, and advanced manufacturing projects, including the production of fuel for next-generation nuclear reactors and the development of related facilities. We continue to invest in advanced technology because of the potential for future growth into new areas of business for the Company, while also preserving our unique workforce at our Technology and Manufacturing Center in Oak Ridge, Tennessee, and our production facility near Piketon, Ohio.

Government Contracting

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 advancingOn October 31, 2019, we signed the ~~next generation of uranium enrichment technology. We are exploring a number of options for returning to domestic production in the future.~~

Our government contracts with UT-Battelle have provided for engineering and testing work on the American Centrifuge technology at our facilities in Oak Ridge, Tennessee. Our recently completed contract with UT-Battelle was for the period from October 1, 2017, through September 30, 2018, and generated total revenue of approximately $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, and generated revenue of approximately $25.0 million. Although the most recent contract expired September 30, 2018, we continue to perform work towards the expected milestones as the parties 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~~cost-share HALEU Contract with DOE to ~~D&D~~deploy a cascade of centrifuges to demonstrate production of HALEU for advanced reactors. The three-year program has been under way since May 31, 2019, when the ~~K-1600 facility~~Company and DOE signed an interim HALEU letter agreement that allowed work to begin while the full contract was being finalized. The Company entered into this cost-share contract with DOE as a critical first step on the road back to the commercial production of ~~DOE located at~~enriched uranium, which the ~~East Tennessee Technology Park. Under~~Company had terminated in 2013 with the ~~terms~~closure 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.Paducah GDP. The ~~work to be performed~~HALEU Contract, if fully implemented, is expected to result in the Company having constructed the AC100M technology and prepared the systems to enrich uranium to the 20% concentration in the uranium-235 isotope that is required by many of the advanced reactor concepts now under development. Centrus is the only company with an NRC license to enrich HALEU.

In 2019, under the HALEU Contract, DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract, up to a maximum of $115 million which was increased to $126.7 million. In addition, on March 4, 2022, the DOE informed the Company of their intent to fund an additional $9.0 million above the $126.7 million, as disclosed above. The Company’s cost share is the corresponding 20% and any costs the Company elects to incur above these amounts. Costs under the HALEU Contract include program costs, including internal labor, third-party services and materials and associated indirect costs that are classified as Cost of Sales, and an allocation of corporate costs supporting the program that are classified as Selling, General and Administrative Expenses. Services to be ~~completed by September 30, 2019. The~~provided over the three-year contract include constructing and assembling centrifuge machines and related infrastructure in a cascade formation. When estimates of total costs for such an integrated, construction-type contract exceed estimates of total revenue to be earned, a provision for the remaining loss on the contract is ~~a cost-plus fixed fee~~recorded to Cost of Sales in the period the loss is determined. Our corporate costs supporting the program are recognized as expense as incurred over the duration of the contract ~~totaling approximately $15 million.~~term. The accrued loss on the contract is ~~incrementally funded and subject to appropriations by~~being adjusted over the ~~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 work for UT-Battelle are included in~~ ~~Advanced Technology License and Decommissioning Costs~~remaining contract term based on ~~the consolidated statement of operations, including ongoing costs for work related to the U.S. Nuclear Regulatory Commission (“NRC”) license~~ actual results, remaining program cost projections, and the ~~DOE lease~~ Company’s anticipated cost-share. The impact to Cost of Sales for the ~~Piketon facility. The lease expires on June 30, 2019, absent any mutual agreement between us~~year ended December 31, 2021, and ~~DOE regarding other possible uses~~2020, is $7.2 million and $10.6 million, respectively, for previously accrued contract losses attributable to work performed in the Piketon facility such as deploying a demonstration cascade for HALEU production. Centrus commenced the D&D of the Piketon demonstration facility in 2016, and we believe the D&D work required under NRC license requirements has been completed.periods. As of December 31, ~~2018,~~2021, a total of $19.1 million of previously accrued contract losses have been realized and the accrued contract loss balance included in Accounts Payable and Accrued Liabilities is $0.5 million.

Our HALEU Contract expires June 1, 2022, and although we ~~have remaining accrued liabilities~~believe demand for HALEU will emerge over the next several years thereafter, there are no guarantees that we will be awarded a contract to operate the demonstration facility plant or about whether or when government or commercial demand for HALEU will materialize, and there are a number of ~~$1.6 million~~technical, regulatory, and economic hurdles that must be overcome for ~~lease turnover obligations~~these fuels and ~~$3.2 million for termination benefits related~~reactors to come to the market.

The U.S. government has been operating under a series of Continuing Resolutions in Fiscal Year 2022. The DOE continues to support the HALEU program during the continuing resolution period, and has incrementally increased the government’s cost share ceiling as funds have become available. Currently, DOE has provided incremental funding, and increased the government’s cost share ceiling to $126.7 million.

While the existing contract ends on June 1, 2022, the DOE has unilaterally changed the scope of the existing contract and plans to compete the operational portion of the demonstration in a new, competitively-awarded contract, with operations to begin in mid-2022. Centrus believes it is well-positioned to compete for a follow-on contract to operate the machines in Piketon ~~facility. In addition,~~but there is no assurance that DOE will award such a contract to the Company. Congress has not yet adopted a Fiscal Year 2022 appropriations bill for the Department, and there is no assurance that the proposed program, which would go beyond the scope and expiration of our existing contract, will be approved and funded.

Additional COVID-19-related impacts, delays in DOE furnishing equipment, or changes to the existing scope of the HALEU Contract could result in further material increases to our estimate of the costs required to complete the demonstration cascade and produce HALEU, as well as delay completion of the HALEU Contract. The Company does not currently have a contractual obligation to perform work in excess of the funding provided by DOE and, therefore, no additional costs have been accrued as of December 31, 2021. If the DOE elects not to provide funding for production and the Company nonetheless commits to a plan to complete the demonstration cascade and produce HALEU, we ~~anticipate incurring expenses of approximately $6 million~~may incur material additional costs or losses in ~~the first half of 2019 to continue to maintain the lease facilities in accordance with the lease.~~future periods that could have an adverse impact on our financial condition and liquidity.

Commercial Contracting

OnIn March ~~26,~~ 2018, we entered into aan initial services agreement with ~~X Energy, LLC (“X-energy”). Under the terms of the services agreement, we provided (i)~~X-energy to provide technical and resource support ~~to X-energy~~ for ~~criticality safety evaluation of processing equipment,~~conceptual design of ~~fresh~~its TRISO 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.manufacturing process. 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.~~ X-energy to proceed with preliminary design of the TRISO facility. Under both agreements, which were funded by two separate cooperative agreement awards by DOE, we provided X-energy with in-kind contributions pursuant to X-energy’s obligations under those agreements. Both of these contracts have been completed. In November 2020, the parties extended the period of performance through August 2021. In August 2021, we entered into a new services agreement with X-energy to provide design services for detailed design of the TRISO fuel manufacturing facility and various support services for establishing their TRISO Research and Development Center. X-energy is funded under the current DOE cooperative agreement titled Advanced Reactor Demonstration Program (ARDP). The task orders under the new agreement may include in-kind contributions that we are not currently, but may provide, at our discretion.

Under the ~~terms of the second~~X-energy agreements, Centrus performs 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 ordersthat provide for time-and-materials based ~~pricing with~~pricing. The cumulative task orders issued through December 31, 2021 under the three agreements provided for payments to ~~be made to~~ us ~~totaling approximately $4.2 million. In addition, we have agreed to provide non-cash~~of $26.3 million and in-kind contributions ~~with a value~~provided by us of ~~approximately $2.4~~$10.4 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

We formerly performed sites services work under contracts with DOE and its contractors at the former Portsmouth ~~and Paducah Gaseous Diffusion Plants. On January 11, 2018, we entered into a settlement agreement with DOE and~~GDP. In September 2021, the ~~U.S. government regarding breach of contract claims relating to this work. Refer to~~ ~~Note 2, Revenue and Contracts with Customers.~~

~~The~~ Company and DOE ~~have yet to~~ fully ~~settle~~settled the Company’s claims for ~~reimbursements for~~reimbursement of certain pension and postretirement ~~benefits~~benefit costs ~~related to~~incurred in connection with a past cost-

reimbursable contract for work performed at the Portsmouth ~~and Paducah plant sites. There is~~GDP. Under the ~~potential for additional revenue to be recognized for this work pending~~terms of the ~~outcome~~settlement agreement, DOE paid the Company $43.5 million in September 2021, of ~~legal proceedings related~~which $33.8 million was contributed in September 2021 to the ~~Company’s claims~~pension plan for its subsidiary United States Enrichment Corp. (“Enrichment Corp.”) and $9.7 million was deposited in October 2021 in a trust for payment ~~and the potential release~~ of ~~previously established valuation allowances on receivables. Refer to Part I, Item 3,~~ ~~Legal Proceedings,~~ ~~for additional information.~~

~~2019 Outlook~~

~~We anticipate 2019 SWU and uranium~~postretirement health benefits payable by Enrichment Corp. The payment of $43.5 million is included in revenue to be in the range of $85 million to $120 million and total revenue to be in a range of $125 million to $160 million. Consistent with prior years, revenue continues to be most heavily weighted to the second half of the ~~year. We expect to end 2019 with a cash and cash equivalents balance in a range of $120 million to $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 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;~~

~~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~~

~~Timing of return of cash collateral supporting financial assurance~~technical solutions segment for the ~~Piketon facility.~~year ended December 31, 2021.

~~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, Summary of Significant Accounting Policies, of our consolidated financial statements, which were prepared in accordance with generally accepted accounting principles. Generally accepted accounting principles in the United States 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:

Revenue Recognition - Technical Solutions

Revenue for the technical solutions segment is recognized over the contractual period as services are rendered. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer. For public sector contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and assume control of any work in progress. The Company’s private sector contracts generally contain contractual termination clauses or entitle the Company to payment for work performed to date for goods and services that do not have an alternative use. With control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. A contract may contain one or more performance obligations. Two or more promises to transfer goods or services to a customer may be considered a single performance obligation if the goods or services are highly interdependent or highly interrelated such that utility of the promised goods or services to the customer includes integration services provided by the Company.

The Company determines the transaction price for each contract based on the consideration it expects to receive for the products or services being provided under the contract. If transaction prices are not stated in the contract for each performance obligation, contractual prices are allocated to performance obligations based on estimated relative standalone selling prices of the promised services.

The Company generally uses the cost-to-cost input method of progress for performance obligations to deliver products with continual transfer of control to the customer, because it best depicts the transfer of control to the customer that occurs as the Company incurs costs. Under the cost-to-cost method, the extent of

progress towards completion is measured based on the proportion of direct costs incurred to date to the total estimated direct costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. For performance obligations to provide services to the customer, revenue is recognized over time based on direct costs incurred or the right to invoice method (in situations where the value transferred matches the Company’s billing rights) as the customer receives and consumes the benefits.

Use of the cost-to-cost method requires the Company to make reasonably dependable estimates of costs at completion associated with the design, manufacture and delivery of products and services in order to calculate revenue. Significant judgment is used to estimate total revenue and costs at completion, particularly in the assumptions related to internal labor hours and third-party services for which a vendor invoice or quote is not yet available. As a significant change in one or more estimates could affect the profitability of the Company’s contracts, the Company reviews and updates its contract-related estimates regularly. Adjustments in estimated profits/losses are recognized under the cumulative catch-up method. Under this method, the impact of the adjustments is recognized in the period the adjustment is recognized. When estimates of total costs at completion for an integrated, construction type contract exceed total estimates of revenue to be earned on a performance obligation related to complex equipment or related services, a provision for the remaining loss on the performance obligation is recognized in the period the loss is determined.

Asset Valuations

The accounting for SWU and uranium inventories includes estimates and judgments. SWU and uranium inventory costs are determined using the 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 under contract is based on the pricing terms of contracts in our sales order ~~book, and, for~~book. 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.~~years, with 7 ¾ years of scheduled amortization remaining. The aggregate net balance of identifiable intangible assets was ~~$76.0~~$54.7 million as of December 31, ~~2018.~~2021.

The carrying values of the intangible assets are subject to impairment tests whenever 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 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 is measured as the amount by which the carrying amount of a long-lived asset, 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.

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 payments exceed certain levels.

~~Effective January 1, 2018, a new accounting standard requires components~~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)~~Income. These components consist primarily of the return on plan assets, offset by interest cost as the discounted present value of benefit obligations nears payment. Results also reflect claims experience, changes in mortality and healthcare claim assumptions and changes in market interest rates. Service cost ~~continues to be~~is recognized in Cost of Sales ~~for~~ (for the LEU ~~segment~~segment) and to Selling, General and Administrative expense. ~~For the year ended December 31, 2017,~~

Nonoperating components of ~~retirement~~net periodic benefit ~~expense/~~income netted to income ~~other than service cost were reclassified from~~ ~~Cost~~ of ~~Sales~~$67.6 million in ~~the LEU segment~~2021 and ~~Selling, General and Administrative~~ ~~expense to conform with the current presentation.~~

~~We recognized $17.3~~$1.6 million ofin 2020, including a net actuarial ~~losses~~gain of $50.5 million in ~~2018 compared to~~2021 and net actuarial ~~gains~~loss of ~~$25.8~~$7.2 million in ~~2017 related~~2020. In 2021, the net actuarial gain reflected an increase in interest rates from approximately 2.5% to ~~our retiree benefit plans. In 2018, major U.S. stock indices posted their largest annual losses since 2008. The net loss in 2018 reflects unfavorable~~2.8%, favorable investment returns relative to the expected return assumption, and healthcare claims assumption, partially offset by ~~increases~~changes in mortality, healthcare costs trend assumptions, and claims experience. In 2020, the net actuarial loss reflected a decline in market interest rates ~~changes in mortality and healthcare claim assumptions, and favorable claims experience. In 2017, the net gain reflects~~from approximately 3.3% to 2.5%, partially offset by 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. 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 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 consolidated financial statements.~~assumptions.

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%~~5.50% for ~~2019.~~2022. 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 ~~$2.6~~$3.2 million in ~~2019.~~2022. However, the net impact of any changes in the expected return on benefit plan assets on the final benefit cost recognized for fiscal year ~~2019~~2022 would be $0 since the actual return on assets would effectively be reflected at December 31, ~~2019,~~2022, 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 ~~4.3%~~2.8% were used as of December 31, ~~2018.~~2021. A one-half percentage point reduction in the discount rate would increase the valuation of pension benefit obligations by ~~$41.2~~$35.5 million and postretirement health and life benefit obligations by ~~$2.6~~$6.9 million, and the resulting changes in the valuations would decrease the aggregate service cost and interest cost components of annual pension costs and postretirement health and life benefit costs by ~~$2.5~~$2.6 million and ~~$0.1~~$0.4 million, respectively.

•The healthcare costs trend rates are ~~6.0%~~6% projected in ~~2019~~2022 reducing to a final trend rate of 5% by ~~2021.~~2026. 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 $2.9 million and would increase the service cost and interest cost components of annual benefit costs by about $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 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. 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, ~~2018,~~2021, the liability for unrecognized tax benefits, included in Other Long-Term Liabilities, on the consolidated balance sheet in Part IV of this Annual Report was ~~$0.2~~$1.0 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, of the deferred tax assets. ~~A cumulative loss in recent years is a significant piece of~~

All available positive and negative evidence ~~and one of the most difficult forms of negative evidence~~is analyzed quarterly 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.allowance. A full valuation allowance against the federal and state net deferred assets was first recorded in the fourth quarter of 2011 ~~for~~because of significant losses and other negative evidence.

In the ~~net deferred tax asset created by~~second quarter of 2020, the ~~expensing of previously capitalized costs related to a number of earlier centrifuge machines used in~~valuation allowance on the ~~demonstration cascade test program, as well as all other previously recorded~~state net deferred tax assets for the LEU segment was released due to a return to profitability that led to cumulative income for state income tax purposes. A full valuation allowance against the federal and state net deferred tax assets for the rest of the business remained throughout 2020 because negative evidence, including ~~state~~cumulative losses, outweighed positive evidence.

Centrus evaluated both positive and negative evidence that was objectively verifiable to determine the amount of the federal valuation allowance that is required on Centrus’ federal deferred ~~taxes.~~tax assets. As discussed in Operating Results, Centrus has visibility on a significant portion of revenue in the LEU segment through 2026, primarily from its long-term sales contracts. Centrus considered both its achievement ofsustained profitability and cumulative income in 2021, as well as the forecasted income to be significant forms of positive evidence. Negative evidence included uncertainty in and the lack of objectively verifiable evidence for profitability in later years when Centrus’ existing sales order book and supply contracts reach expiration in its LEU segment. In Centrus’ technical solutions segment, negative evidence included uncertainty in the future funding of the HALEU enrichment facility and thus, no assumptions for the future funding of the HALEU enrichment facility were included in the forecast model because it was not objectively verifiable. Centrus

determined that the positive evidence outweighed the negative evidence and supported a release of the federal valuation allowance. However, due to lack of objectively verifiable information in later years, it was determined that forecasted future income was not sufficient to realize all the deferred tax assets. Therefore, the Company recorded a $40.7 million partial release of its federal valuation allowance in the fourth quarter of 2021. As of December 31, ~~2018,~~2021, the valuation allowance against ~~net deferred taxes was $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,~~remaining federal 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 existingstate net deferred tax assets ~~resulting~~was $414.7 million.

Going forward, the Company will continue to evaluate both positive and negative evidence that would support any further changes to the remaining valuation allowances. Such evidence in its technical solutions segment may include signing new contracts which could have a ~~2017 deferred~~significant impact on pre-tax income, ~~tax expense~~follow-on work related to the HALEU program, or abandonment of ~~$288.9 million, fully offset~~the commercial deployment of the centrifuge technology. Refer to Part I, Item 1A, Risk Factors for more information. Such evidence in our LEU segment may include renewing SWU sales contracts with existing customers and/or signing new SWU sales or purchase contracts with significantly higher or lower margins than currently forecasted. Additional evidence in the LEU segment may include potential deferrals in the timing of deliveries requested by aits customers, which would impact revenue recognition timing. The impact of these and other potential positive and negative events will be weighed and evaluated to determine if the valuation allowance should be increased or decreased in the future.

Results of Operations

A discussion of the results of operations from 2019 can be found in Item 7, Management Discussion and ~~no net impact to~~Analysis, of the ~~income tax provision~~Company’s Annual Report on Form 10-K 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~~

~~Overview~~

Declining prices in the enrichment market - which reached a historic low in August - were the biggest driver in our losses for the year. A greater proportion of our 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 thefiscal 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 inended December 31, 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~~filed with the current presentation. For the adoption of the new revenue standard using the modified retrospective method, results for reporting periods 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.~~SEC on March 22, 2021.

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,
	2021		2020		$ Change		% Change
LEU segment
Revenue:
SWU revenue	$	163.3	$	151.5	$	11.8	8	%
Uranium revenue	22.8		39.0		(16.2)		(42)	%
Total	186.1		190.5		(4.4)		(2)	%
Cost of sales	113.1		92.7		(20.4)		(22)	%
Gross profit	$	73.0	$	97.8	$	(24.8)

Technical solutions segment
Revenue	$	112.2	$	56.7	$	55.5	98	%
Cost of sales	70.7		56.9		(13.8)		(24)	%
Gross profit (loss)	$	41.5	$	(0.2)	$	41.7

Total
Revenue	$	298.3	$	247.2	$	51.1	21	%
Cost of sales	183.8		149.6		(34.2)		(23)	%
Gross profit	$	114.5	$	97.6	$	16.9

Year Ended December 31,
2018 2017 $ Change % Change
LEU segment
Revenue:
SWU revenue $ 130.6
$ 195.4
$ (64.8 ) (33 )%
Uranium revenue 33.8
—
33.8
–
Total 164.4
195.4
(31.0 ) (16 )%
Cost of sales 187.7
162.7
(25.0 ) (15 )%
Gross profit (loss) $ (23.3 ) $ 32.7
$ (56.0 )

Contract services segment

Revenue $ 28.6
$ 23.0
$ 5.6
24 %
Cost of sales 23.2
25.5
2.3
9 %
Gross profit (loss) $ 5.4
$ (2.5 ) $ 7.9

Total

Revenue $ 193.0
$ 218.4
$ (25.4 ) (12 )%
Cost of sales 210.9
188.2
(22.7 ) (12 )%
Gross profit (loss) $ (17.9 ) $ 30.2
$ (48.1 )

Revenue

Revenue from the LEU segment ~~declined $31.0~~decreased $4.4 million ~~(or 16%~~or (2%) in ~~2018~~2021 compared to ~~2017. Revenue for 2018 included uranium~~2020. SWU revenue ~~of $33.8~~increased $11.8 million ~~with no uranium revenue~~or 8% in ~~the corresponding prior period.~~2021 compared to 2020. The volume of SWU sales increased ~~24% primarily due~~64%. SWU revenue in 2020 includes $32.6 million collected from a customer in settlement of a supply contract that was subject to ~~increased short-term sales and~~ the ~~variability in timing of utility customer orders. The~~customer’s bankruptcy proceeding. Excluding this payment, the average SWU price billed to customers ~~for sales of SWU declined 46% primarily~~decreased 16%, reflecting ~~the trend of lower SWU market prices in recent years and~~ the particular contracts under which SWU were sold during the periods. Uranium revenue decreased $16.2 million or (42%) in 2021 compared to 2020. The volume of uranium sales decreased (46%).

Revenue from the ~~Contract Service~~technical solutions segment increased ~~$5.6~~$55.5 million ~~(or 24%)~~or 98% in ~~2018~~2021 compared to ~~2017 primarily reflecting services provided under the X-energy contract beginning~~2020. Revenue in ~~the second quarter of 2018, partially offset by the reduced scope of work under the contract with UT-Battelle in 2018. The increase in 2018 also reflects $9.5~~2021 included $43.5 million ~~of revenue~~ related to the ~~January 2018~~ settlement of the Company’s claims for reimbursements for certain pension and postretirement benefits costs incurred in connection with ~~DOE related~~a past cost-reimbursable contract performed at the Portsmouth GDP. Excluding this payment, revenue from the technical solutions segment increased $12.0 million or 21% in 2021, due to ~~past~~increased work ~~performed.~~performed under the HALEU and other contracts.

Cost of Sales

Cost of sales for the LEU segment increased ~~$25.0~~$20.4 million ~~(or 15%)~~or 22% in ~~2018~~2021 compared to ~~2017, primarily~~2020, reflecting ~~changes~~the increase in SWU ~~and uranium~~ sales ~~volumes,~~volume, partially offset by ~~a decline~~the decrease in ~~the~~uranium sales volume. The average cost of sales ~~per SWU. In 2018, the average cost of sales~~

per SWU declined approximately 22%. We anticipate our average cost of sales per SWU to decline again in 2019, with further declines in subsequent years, primarily due to lower pricing in new supply contracts and the pricing provisions of existing contracts.was unchanged from 2020. Cost of sales includes legacy costs ~~of $3.4 million in each of 2018 and 2017~~ related to former employees of the Portsmouth GDP and Paducah ~~Gaseous Diffusion Plants.~~GDP of $2.7 million in 2021 and $3.7 million in 2020.

Cost of sales for the ~~contract services~~technical solutions segment ~~declined $2.3~~increased $13.8 million ~~(or 9%)~~or 24% in ~~2018~~2021 compared to ~~2017,~~2020, largely reflecting the ~~reduced scope~~increase in contract work performed. The impact to cost of sales is $7.2 million in 2021 and $10.6 million in 2020 for previously accrued contract losses attributable to work performed under the ~~contract with UT-Battelle in 2018, partially offset by costs for services provided under the X-energy contract beginning in the second quarter of 2018.~~HALEU Contract. For details on HALEU Contract accounting, refer to Technical Solutions - Government Contracting above.

Gross Profit ~~(Loss)~~

We ~~realized~~recognized a gross ~~loss~~profit of ~~$17.9~~$114.5 million in ~~2018, a decline~~2021, an improvement of ~~$48.1~~$16.9 million compared to the gross profit of ~~$30.2~~$97.6 million in ~~2017. Excluding the $9.5 million of revenue in the current period from the January 2018 settlement with DOE related to past work performed, we realized a gross loss in 2018, of $27.4 million.~~2020.

The gross ~~loss~~profit for the LEU segment was ~~$23.3~~$73.0 million in ~~2018~~2021 compared to ~~a gross profit of $32.7~~$97.8 million in ~~2017.~~2020. The ~~decline~~decrease for the LEU segment of ~~$56.0~~$24.8 million was primarily due to the ~~decline~~payment of $32.6 million in 2020 from a customer in settlement of a supply contract that was subject to the customer’s bankruptcy proceeding and the decrease in the average ~~price billed to customers for sales of SWU.~~ SWU sales price, partially offset by the increase in ~~2018 reflect a greater concentration of~~SWU and uranium sales ~~made under contracts that reflect lower prices under more recent market conditions.~~volumes.

For the ~~contract services~~technical solutions segment, we ~~realized~~recognized a gross profit of ~~$5.4~~$41.5 million in ~~2018, including $9.5 million of revenue from the January 2018 settlement with DOE,~~2021 compared to a gross loss of ~~$2.5~~$0.2 million in ~~2017. Gross losses are primarily due~~2020. Excluding the settlement with DOE, gross profit (loss) from the technical solutions segment increased to ~~costs incurred which are greater than the revenue under the contracts with UT-Battelle and X-energy. We continue to invest~~a loss of $2.0 million in ~~the contract services segment because~~2021 from a loss 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~~$0.2 million in ~~Oak Ridge, Tennessee. Our near-term goal is to make the segment profitable.~~2020.

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,
	2021		2020		$ Change		% Change
Gross profit	$	114.5	$	97.6	$	16.9	17	%
Advanced technology costs	2.1		2.8		0.7		25	%
Selling, general and administrative	36.0		36.0		—		—	%
Amortization of intangible assets	8.1		6.8		(1.3)		(19)	%
Special charges for workforce reductions	—		0.6		0.6		100	%
Other expense, net	—		0.4		0.4		100	%
Operating income	68.3		51.0		17.3		34	%
Nonoperating components of net periodic benefit income	(67.6)		(1.6)		66.0		4,125	%
Interest expense	0.1		0.1		—		—	%
Investment income	(0.1)		(0.5)		(0.4)		(80)	%
Income before income taxes	135.9		53.0		82.9		156	%
Income tax benefit	(39.1)		(1.4)		37.7		-
Net income	$	175.0	$	54.4	$	120.6	222	%

Year Ended December 31,
2018 2017 $ Change % Change
Gross profit (loss) $ (17.9 ) 30.2
$ (48.1 )

Advanced technology license and decommissioning costs 26.1
15.7
(10.4 ) (66 )%
Selling, general and administrative 39.9
43.7
3.8
9 %
Amortization of intangible assets 6.6
10.6
4.0
38 %
Special charges for workforce reductions and advisory costs 2.2
9.5
7.3
77 %
Gains on sales of assets (0.3 ) (4.6 ) (4.3 ) (93 )%
Operating loss (92.4 ) (44.7 ) (47.7 ) 107 %
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 4.1
5.3
1.2
23 %
Investment income (2.5 ) (1.3 ) 1.2
92 %
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 and related expenses that are outside of our customer contracts in the ~~contract services~~technical solutions segment, including ~~ongoing~~ costs for work at the Piketon ~~facility.~~facility prior to the commencement of the HALEU work in June 2020 and costs to continue to advance our advanced technology. Costs ~~increased $10.4~~declined $0.7 million (or ~~66%~~25%) in ~~2018~~2021 compared to 2017. In the current period, efforts at the Piketon facility were focused on supporting NRC requirements, including working towards elimination of the required financial assurance, and DOE lease turnover activities and the related costs were charged to expense. In addition, a greater allocation of Piketon facility costs was charged to advanced technology license and decommissioning costs in the current period following the relocation of certain corporate functions from the Piketon facility. In the prior period, efforts were primarily focused on D&D of the Piketon facility, and the related costs were recorded as a reduction of the 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.2020.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses ~~declined $3.8 million (or 9%) in 2018 compared to 2017. Overhead allocated to SG&A expenses declined $2.4~~were $36.0 million in ~~2018, following the relocation~~each of ~~certain corporate functions from the Piketon facility~~2021 and ~~compensation and benefits declined $0.8 million in 2018.~~2020. These ~~decreases were partially offset by an increase in consulting costs of $0.6 million in 2018, primarily for work related to business development.~~expenses remained flat year over year.

Amortization of Intangible Assets

Amortization of intangible assets increased $1.3 million or 19% in 2021 compared to 2020. 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 2018 from $10.6 million in 2017. Amortization~~and amortization expense for the intangible asset related to customer relationships is amortized on a straight-line basis.

Special Charges for Workforce Reductions ~~and Advisory Costs~~

There were no special charges in 2021. Special charges ~~were $2.2~~of $0.6 million in ~~2018, compared to $9.5 million in 2017, a decline of $7.3 million (or 77%). Special charges in 2018~~2020 consisted of estimated employee termination benefits of $2.1 million and advisory costs related to updating the Company’s information technology systems of $0.1 million. Special charges for 2017 included estimated employee termination benefits of $3.5 million, less $0.3 million for unvested employee departures and advisory costs of $6.3$0.6 million.

~~Gain on Early Extinguishment of Debt~~

In the fourth quarter of 2018, we recognized a gain of $0.5 million 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 of $0.4 million. Refer to ~~Note 9, Debt,~~ ~~of the consolidated financial statements.~~

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

~~Effective January 1, 2018, a new accounting standard requires~~Nonoperating components of ~~retirement~~net periodic 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~~($67.6) million in 2021, compared to ($1.6) million in 2020. Nonoperating components of ~~Sales~~net periodic benefit income in 2021 consists primarily of a return on plan assets of ($58.2) million and future impacts of the change in the ~~LEU segment and $0.6~~discount rate of ($31.0) 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~~interest cost of $21.5 million, as the discounted present value of benefit obligations nears payment. Nonoperating components of net periodic benefit income in ~~market~~2020 consists primarily of a return on plan assets of ($85.8) million offset by future impacts of the change in the discount rate of $74.0 million, interest ~~rates, changes in~~cost of $29.1 million, as the discounted present value of benefit obligations nears payment, and other actuarial items, which includes mortality and healthcare claim assumptions ~~and favorable claims experience. In 2017, the~~which 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.($18.9) million.

Interest Expense

Interest expense ~~declined $1.2~~was $0.1 million ~~(or 23%)~~ in ~~2018, compared to 2017, primarily as a result of the decrease in the outstanding debt balance~~2021 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.~~2020.

Income Tax Benefit

The income tax benefit was ~~less than $0.1~~$39.1 million in ~~2018~~2021 and ~~$0.1~~$1.4 million in ~~2017, respectively.~~2020. The income tax benefit in ~~both 2018~~2021 relates to the release of the federal valuation allowance of $40.7 million offset by the effect of state rate changes of $1.2 million and ~~2017 consists mainly~~state income tax expense of ~~discrete items~~$0.4 million. The income tax benefit in 2020 relates to the release of the state valuation allowance against state net deferred tax assets for ~~reversals~~the LEU segment of $2.0 million offset primarily by state income tax expense of $0.6 million. The state income tax expense in 2021 and 2020, primarily relates to an accrual for a current unrecognized tax benefit offset by the reversal of a previously accrued ~~amounts associated with liabilities for~~ unrecognized ~~benefits.~~tax benefit.

Net Income ~~(Loss)~~

~~Our net loss~~Net income was ~~$104.1~~$175.0 million in ~~2018,~~2021, compared to ~~net income of $12.2~~$54.4 million in ~~2017.~~2020. The ~~unfavorable~~favorable variance of ~~$116.3~~$120.6 million was primarily a result of a ~~$37.8~~$66.0 million ~~unfavorable~~favorable variance in ~~the~~ nonoperating components of net periodic benefit ~~expense (income), a $48.1~~income, $16.9 million ~~unfavorable~~favorable variance in gross profit and $37.7 million favorable variance in income tax benefit.

Net Income per Share

The Company measures Net Income per Share both on a U.S. GAAP basis and adjusted to exclude deemed dividends allocable to retired preferred stock shares (“Adjusted Net Income per Share”).

On November 17, 2020, the ~~gross loss ($57.6 million excluding~~Company completed the ~~settlement with DOE),~~purchase of 62,854 shares of its outstanding Series B Senior Preferred Stock at a ~~$33.1 million decrease~~price per share of $954.59, less any applicable withholding taxes. (Refer below to Liquidity and Capital Resources for additional details.) The purchase price per share represented a 25% discount from the aggregate liquidation preference, including accrued but unpaid dividends, of $1,272.78 per share as of September 30, 2020. Since origination, the carrying value on the Balance Sheet was $43.80 per share based on values assigned in the ~~gain from~~originating securities exchange. The liquidation amount at origination was $1,000.00 per share.

The aggregate purchase price of approximately $60 million, less accrued but unpaid dividends attributable to the ~~early extinguishment of debt~~purchased 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 a $3.8 million decline in SG&A expenses.

retired Series B Senior Preferred Stock, ~~Dividends - Undeclared~~is considered for purposes of Net Income per Share to be a deemed dividend to the extent it exceeds the carrying value on the Balance Sheet, or $41.9 million.

~~Holders~~(ii) a warrant to purchase 250,000 shares of Class A Common Stock at an exercise price of $21.62 per share, for an aggregate valuation of approximately $7.5 million. The carrying value of the Series B Senior Preferred Stock ~~are entitled to cumulative dividends of 7.5%~~on the Balance Sheet was $1.00 per ~~annum of the~~share par value. 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 2017, and we have not declared, accrued or paid dividends on~~ the Series B Senior Preferred Stock, ~~since issuance~~including accrued but unpaid dividends, was $1,291.04 per share as of December 31, 2020.

On November 23, 2021, the Company completed the purchase of 36,867 shares of its outstanding Series B Senior Preferred Stock at a price per share of $1,145.20, less any applicable withholding taxes. The Company also completed the purchase of the remaining 980 shares of its outstanding Series B Senior Preferred Stock at a price per share of $1,149.99, less any applicable withholding taxes, on ~~February 14, 2017. Dividends on~~December 15, 2021. For more information refer to Note 15 - Stockholders’ Equity in the consolidated financial statements in Part IV of this Annual Report. The aggregate purchase price of both transactions was $43.3 million. The carrying value of the Series B Senior Preferred Stock ~~are cumulative~~on the Balance Sheet was $1.00 per share par value.

The aggregate valuation of all 2021 preferred stock transactions of approximately $50.8 million, less accrued but unpaid dividends attributable to the ~~extent not paid at any quarter-end, whether or not declared~~acquired and ~~whether or not there are assets~~retired shares of Preferred Stock, is considered for purposes of Net Income per Share to be a deemed dividend in the aggregate amount equal to the amount by which it exceeds the carrying value of the Preferred Stock on the Balance Sheet, or $37.6 million.

The Company ~~legally available for~~measures Net Income and Net Income per Share both on a GAAP basis and on an adjusted basis to exclude deemed dividends allocable to retired preferred stock shares (“Adjusted Net Income” and “Adjusted Net Income per Share”). We believe Adjusted Net Income and Adjusted Net Income per Share, which are non-GAAP financial measures, provide investors with additional understanding of the ~~payment~~Company’s financial performance as well as its strategic financial planning analysis and period-to-period comparability. These metrics are useful to investors because they reflect how management evaluates the Company’s ongoing operating performance from period-to-period after removing certain transactions and activities that affect comparability of ~~such dividends in whole or in part. Refer~~the metrics and are not reflective of the Company’s core operations.


	Three Months Ended December 31,				Year Ended December 31,
	2021		2020		2021		2020
Numerator (in millions):
Net income	$	116.2	$	16.4	$	175.0	$	54.4
Less: Preferred stock dividends - undeclared and cumulative	—		0.8		2.1		6.7
Less: Distributed earnings allocable to retired preferred shares	31.0		41.9		37.6		41.9
Net income (loss) allocable to common stockholders	$	85.2	$	(26.3)	$	135.3	$	5.8

Plus: Distributed earnings allocable to retired preferred shares	$	31.0	$	41.9	$	37.6	$	41.9

Adjusted net income, including distributed earnings allocable to retired preferred shares (Non-GAAP)	$	116.2	$	15.6	$	172.9	$	47.7

Denominator (in thousands) (a):
Average common shares outstanding - basic	13,873		10,322		13,493		9,825
Average common shares outstanding - diluted (b)	14,278		10,322		13,879		10,123

Net Income (Loss) per Share (in dollars):
Basic	$	6.14	$	(2.55)	$	10.03	$	0.59
Diluted	$	5.97	$	(2.55)	$	9.75	$	0.57

Plus: Effect of distributed earnings allocable to retired preferred shares, per common share (in dollars):
Basic	$	2.24	$	4.06	$	2.78	$	4.26
Diluted	$	2.17	$	4.01	$	2.71	$	4.14

Adjusted Net Income per Share (Non-GAAP) (in dollars):
Basic	$	8.38	$	1.51	$	12.81	$	4.85
Diluted	$	8.14	$	1.46	$	12.46	$	4.71

(a) For details related to average shares outstanding, refer to Note ~~15, Stockholders’ Equity,~~ 14, Net Income (Loss) Per Shareof the consolidated financial ~~statements~~.statements.

(b) For purposes of Adjusted Net Income per Share for the three months ended December 31, 2020, average common shares outstanding - diluted is 10,659,000 shares. No dilutive effect is recognized in a period in which a net loss has occurred.

Liquidity and Capital Resources

We ended ~~2018~~2021 with a consolidated cash balance of ~~$123.1~~$193.8 million. We anticipate having adequate liquidity to support our business operations for at least the next 12 months from the date of this report. Our view of liquidity is dependent on, among other things, conditions affecting our operations, including market, international trade restrictions, COVID-19 and other conditions, the level of expenditures and government funding for our services contracts, and the 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~~ ~~sales order book extends~~Subject to ~~2030.~~ ~~Although, based on current~~ market conditions, we see ~~limited~~the potential for growing uncommitted demand for LEU ~~for~~during the ~~remainder of this decade before an anticipated rise in uncommitted~~next few years with accelerated open demand in ~~the 2020s, we continue to seek~~2025 and ~~make additional~~beyond.

Cash resources and net 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 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)proceeds from Centrus’ wholly-owned subsidiary, Enrichment Corp. to Centrus and its 100% indirectly owned subsidiary American Centrifuge Operating, LLC pursuant to two secured intercompany financing 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 Centrifugeour LEU segment fund technology costs that are outside of our customer contracts in the ~~scope of work under the contract with UT-Battelle, including D&D and other costs of the Piketon facility,~~technical solutions segment and general corporate expenses, including cash interest payments on our debt. ~~Although~~ We believe our investment in advanced U.S. uranium enrichment technology will position

the ~~most recent~~Company to meet the needs of our customers as they deploy advanced reactors and next generation fuels. We signed the three-year HALEU Contract with DOE in October 2019. Under the HALEU Contract, the Company is contributing a portion of the program costs. The program has been under way since May 31, 2019, when Centrus and DOE signed a preliminary letter agreement that allowed work to begin while the full contract was being finalized.

In 2019, under the HALEU Contract, DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract, up to a maximum of $115 million (which was recently increased to $126.7 million). The Company’s cost share is the corresponding 20% and any costs incurred above these amounts. The Company has received aggregate cash payments of $120.3 million through December 31, 2021.

The Company entered into this cost-share contract with ~~UT-Battelle expired September 30, 2018,~~DOE as a critical first step on the road back to the commercial production of enriched uranium, which the Company had terminated in 2013 with the closure of the Paducah GDP. HALEU is expected to be required by many of the advanced reactor designs now under development, including nine out of the ten reactor designs that were selected in 2020 for the ARDP. Our HALEU Contract expires in 2022 and although we ~~continue~~believe demand for HALEU will emerge over the next several years, 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 ~~perform work towards~~come to the ~~expected milestones~~market. Assuming that we are able to win a contract from DOE to operate the cascade, our goal is to scale up the facility in modular fashion as demand for HALEU grows in the ~~parties work toward a successor agreement. However, we have~~commercial and government sectors, subject to the availability of funding and/or contracts to purchase the output of the plant. At this time, however, there is no assurance that ~~a successor agreement~~sufficient government or commercial funding or demand for material will be ~~executed.~~timely secured, that we will be awarded a contract by the DOE to operate or that we will be permitted by DOE to expand the demonstration cascade. For further discussion, refer to Part I, Item 1A, Risk Factors.

~~Capital expenditures are expected~~We lease facilities and related personal property near Piketon, Ohio from DOE. In September 2021, DOE and Centrus extended the lease term through December 31, 2025. Any facilities or equipment constructed or installed in leased facilities under contract with DOE, including the HALEU Contract, will be owned by DOE. DOE-owned property may be returned to ~~be insignificant for~~DOE in an “as is” condition at ~~least~~ the ~~next 12 months.~~

~~In February 2016, Centrus completed a successful three-year demonstration~~end of the ~~American Centrifuge technology at~~lease term and DOE would be responsible for its D&D. If we determine the equipment and facilities may benefit Centrus after completion of the HALEU Contract, we can extend the facility ~~in Piketon, Ohio. U.S. government funding~~lease and ownership of the equipment will be transferred to us, subject to mutual agreement regarding D&D and other issues, including those impacted by DOE’s recent decision to competitively bid the contract for ~~American Centrifuge since October 2015 is now limited to research and development work at our facilities in Oak Ridge, Tennessee.~~ operations of the HALEU cascade.

In the event that funding by the U.S. government for research, development and demonstration of gas centrifuge technology is ~~further~~ reduced or discontinued, or we are not awarded a DOE contract to operate the ~~American Centrifuge project may be subject to further demobilization, costs, delays and termination. Any~~cascade we are now constructing under the HALEU Contract, such actions may have a material adverse impact on our ability to deploy the American Centrifuge technology and on our liquidity.

We have ~~previously provided financial assurance~~taken steps over the last several years to reduce the size and volatility of our defined benefit pension obligations, including offering the option for pension-eligible employees to receive a lump sum payment upon termination of their employment. In the fourth quarter of 2020, the Company entered into an arrangement with an insurance company and transferred certain future benefit obligations and administrative costs from our primary qualified pension plan. In this transaction, we transferred approximately $30 million of pension plan assets to the ~~NRC for the D&D of the Piketon demonstration facility~~insurance company in ~~the form of surety bonds that are fully cash collateralized~~order to reduce our pension plan obligations by ~~us for $16.3~~approximately $30 million. ~~We believe the D&D work required for elimination of financial assurance under NRC license requirements has been completed, and we are working~~This transaction will save administrative costs associated with the ~~NRC to have~~PBGC and reduce the ~~surety bonds cancelled, which would permit the Company to receive the cash collateral.~~

~~We lease the Piketon facility from DOE. At the conclusion~~volatility 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 return the facility to DOE in a condition that meets NRC requirements and 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 turnoverfuture pension obligations.

~~In addition to remaining lease turnover obligations of $1.6 million and accrued employee termination benefits of $3.2 million related to the Piketon facility, we anticipate incurring expenses~~Capital expenditures of approximately $6$1 million inare anticipated over the first half of 2019 to continue to maintain the lease facilities in accordance with the lease. If remaining costs related to the Piketon facility are greater than our estimates, then such increased costs could have an adverse impact on our results of operations and liquidity.next 12 months.

~~The change in cash, 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,
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 2018, net cash used in operating activities was $74.4 million. Sources of cash included the monetization of inventory purchased in prior periods, with inventories declining $61.0 million in 2018. The net reduction of $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 source of cash in 2017. Net income of $12.2 million in 2017, net of non-cash expenses, was a source of cash.

~~Investing Activities~~

~~There were no significant capital expenditures in 2018 and 2017. Sales of unneeded assets and property yielded net proceeds of $0.5 million and $4.7 million in 2018 and 2017, respectively.~~

~~Financing Activities~~

On December 6, 2018, Centrus 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 for 398,638 shares of Class A Common Stock and approximately $5.1 million in cash, which includes accrued and unpaid interest 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’ Equity~~ ~~for details related to the Common Stock.~~

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

In February 2017, Centrus exchanged $204.9 million principal amount of the Company’s 8% PIK Toggle Notes for $74.3 million principal amount of 8.25% Notes, 104,574 shares of Series B Preferred Stock and $27.6 million of cash. Refer to ~~Note 9, Debt~~ ~~of the 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~~

The principal amount of the 8% PIK Toggle Notes 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 in the future, potential strategic transactions, which at any given time may be in various stages of discussions, diligence, or 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.

The change in cash, 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,
	2021		2020
Cash provided by operating activities	$	50.0	$	67.1
Cash used in investing activities	(1.2)		(1.4)
Cash used in financing activities	(9.9)		(44.4)
Increase in cash, cash equivalents and restricted cash	$	38.9	$	21.3

Operating Activities

During 2021, net cash provided by operating activities was $50.0 million. Net income of $175.0 million in 2021, net of non-cash expenses, was a significant source of cash. Income included the $43.5 million recovery of claims for reimbursement for costs related to past contract services performed. The net increase is also the result of a $16.6 million increase in accounts payable and other liabilities and a $13.2 million increase in deferred revenue and advances from customers. These increases were partially offset by a $57.0 million reduction in pension and postretirement benefit liabilities and a $10.7 million increase in inventories.

During 2020, net cash provided by operating activities was $67.1 million. Net income of $54.4 million in 2020, net of non-cash expenses, was a significant source of cash. Income included $32.6 million on recovery of bankruptcy court claims. The net increase is also the result of a decrease in inventories of $25.8 million and a $13.2 million increase in payables under SWU purchase agreements. These increases were partially offset by a $32.7 million reduction in pension and postretirement benefit liabilities.

Investing Activities

Investing activities consisted of capital expenditures of $1.2 million in 2021 and $1.4 million in 2020.

Financing Activities

In 2021, net cash used in financing activities included the redemption of preferred stock for $44.4 million, net of direct costs, pursuant to a tender offer and net proceeds received of $42.1 million from the issuance of common stock pursuant to a Registration Statement on Form S-3.

In 2020, net cash used in financing activities included the purchase of preferred stock for $61.6 million, including transaction costs, pursuant to a tender offer and net proceeds received of $23.1 million from the issuance of common stock pursuant to a Registration Statement on Form S-3. See Common Stock Issuance and 2021 Tender Offer below.

In both 2021 and 2020, payments of $6.1 million of interest classified as debt are classified as a financing activity. Refer to Note 8, Debt, of the consolidated financial statements in Part IV of this Annual Report regarding the accounting for the 8.25% Notes.

Working Capital

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


	December 31,
	2021		2020
Cash and cash equivalents	$	193.8	$	152.0
Accounts receivable	29.1		29.6
Inventories, net	82.7		59.9
Current debt	(6.1)		(6.1)
Deferred revenue and advances from customers, net of deferred costs	(159.8)		(131.3)
Other current assets and liabilities, net	(67.1)		(64.1)
Working capital	$	72.6	$	40.0

We are managing our working capital to seek to improve the long-term value of our LEU ~~business~~and technical solutions businesses 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 ~~their~~our debt securities and credit facilities. We continually evaluate alternatives to manage our capital structure, and may opportunistically repurchase, exchange, or redeem Company securities from time to time.

Common Stock Issuance

Pursuant to a sales agreement with its agents, the Company sold at the market price an aggregate of 1,516,467 shares of its Class A Common Stock in 2021, for a total of $44.2 million. After expenses and commissions paid to the agents, the Company’s proceeds total $42.4 million. Additionally, the Company recorded direct costs of $0.3 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and a prospectus supplement dated December 31, 2020, to the prospectus. At present, the Company has $5.8 million remaining available for sale under the prospectus supplement dated December 31, 2020, and may from time to time sell additional shares through the sales agreement. The Company used the net proceeds from this offering for general working capital purposes, to invest in technology development, repay outstanding debt and retire shares of its Series B Senior Preferred Stock.

As previously disclosed in our Current Report on Form 8-K filed February 5, 2021, on February 2, 2021, the Company entered into an amendment (the “Voting Agreement Amendment”) to its existing Voting and Nomination Agreement with Mr. Morris Bawabeh, Kulayba LLC and M&D Bawabeh Foundation, Inc. (collectively, the “MB Group”) and an Exchange Agreement (as described below) whereby the MB Group agreed to support management’s recommendation on certain matters at the Company’s 2021 annual meeting of stockholders (the “Annual Meeting”) and Kulayba LLC agreed to exchange shares of Preferred Stock for shares of Class A Common Stock and a warrant to acquire additional shares of Class A Common Stock. Pursuant to the First Amendment to the Voting and Nomination Agreement, the MB Group agreed to cause all shares of Class A Common Stock owned of record or beneficially owned by the MB Group at the Annual Meeting to be voted in favor of (i) an amendment to extend the length of the term of the Company’s Section 382 Rights Agreement dated as of April 6, 2016, as amended to date, for two years from June 30, 2021, to June 30, 2023, and (ii) an increase of shares of Class A Common Stock reserved for delivery under the Company’s 2014 Equity Incentive Plan, as amended to date, of an additional 700,000 shares of Class A Common Stock.

In connection with the entry into the Voting Agreement Amendment, the Company and Kulayba LLC also entered into the Exchange Agreement, pursuant to which Kulayba LLC agreed to the Exchange, representing a $5,000,198 liquidation preference (including accrued and unpaid dividends), for (i) 231,276 shares of Class A Common Stock priced at the closing market price of $21.62 on the date the Exchange Agreement was signed and (ii) a warrant (the “Warrant”), exercisable for 250,000 shares of Class A Common Stock at an exercise price of $21.62 per share, which was the closing market price on the date the Exchange Agreement was signed, subject to certain customary adjustments pursuant to the terms of the Warrant. The Warrant is exercisable by Kulayba LLC for a period commencing on the closing date of the Exchange and ending, unless sooner terminated as provided in the Warrant, on the first to occur of: (a) the second anniversary of the closing date of the Exchange or (b) the last business day immediately prior to the consummation of a Fundamental Transaction (as defined in the Warrant) which results in the shareholders of the Company immediately prior to such Fundamental Transaction owning less than 50% of the voting equity of the surviving entity immediately after the consummation of the Fundamental Transaction. The Company retired the 3,873 shares of Preferred Stock received by the Company under the Exchange Agreement.

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. Additional terms and conditions of the 8.25% Notes are described in Note 8, Debt, of the consolidated financial statements in Part IV of this Annual Report.

2021 Tender Offer

On October 20, 2021, the Company announced the commencement of a tender offer to purchase all of its outstanding Series B Senior Preferred Stock, par value $1.00 per share (the “Series B Senior Preferred Stock”), at a price of $1,145.20 per Series B Senior Preferred Stock (inclusive of any rights to accrued but unpaid dividends), to the sellers in cash, less any applicable withholding taxes (the “Offer”). The Offer was made pursuant to the Tender Offer Statement on Schedule TO filed by the Company on October 20, 2021, with the SEC. The aggregate liquidation preference per Series B Senior Preferred Stock (including accrued but unpaid dividends) was $1,347.29 as of September 30, 2021.

On November 23, 2021, the Company announced the results of the tender offer and the related consent solicitation (the “Consent Solicitation”) to amend the certificate of designation of the Series B Senior Preferred Stock (the “Series B Preferred Amendment”). 36,867 shares of the Series B Senior Preferred Stock were properly tendered and not properly withdrawn in the Offer, and corresponding consents have been delivered in the Consent Solicitation. Pursuant to the terms of the Offer and Consent Solicitation, the Company has accepted for purchase all of the Series B Senior Preferred Stock tendered in the Offer, for an aggregate purchase price of $42.2 million. The accepted shares represent 97.4% of the Company’s outstanding Series B Senior Preferred Stock as of September 30, 2021. Based on the final results, the requisite consent of at least 90% of the outstanding Series B Senior Preferred Stock required to approve the Series B Preferred Amendment was obtained. On November 23, 2021, the Company issued a Notice of Full Redemption providing for the redemption of any and all shares Series B Senior Preferred Stock outstanding after consummation of the Company’s tender offer to purchase all of its issued and outstanding Series B Senior Preferred Stock. On December 15, 2021, the Company completed the redemption of all 980 outstanding Series B Senior Preferred Stock for aggregate cash consideration of $1.1 million. The aggregate purchase price of $43.3 million was offset by direct costs totaling $0.9 million.

The effect of the Series B Preferred Amendment was to: (i) cease any obligation to pay dividends on Series B Senior Preferred Stock (other than the payment of accrued dividends in connection with a redemption or distribution of assets upon liquidation, dissolution or winding up), (ii) permit the Company to redeem Series B Senior Preferred Stock during the 90 days following the date of effectiveness of the Series B Preferred Amendment at a redemption price per share equal to $1,145.20 (plus any additional accrued dividends for the period from and including the date

of effectiveness of the Series B Preferred Amendment to the date of redemption), (iii) remove the prohibition on the declaration and payment of dividends on junior stock of the Company, which includes all shares of the Company’s capital stock defined as “Common Stock” in the Company’s Amended and Restated Certificate of Incorporation, or the redemption, purchase or acquisition of such junior stock, and (iv) remove the restriction on redemption, purchase or acquisition of capital stock of the Company ranking on parity with the Series B Senior Preferred Stock.

On December 16, 2021, the Company filed a Certificate of Elimination of the Series B Senior Preferred Stock of Centrus Energy Corp. with the Secretary of State of Delaware (the “Certificate of Elimination”) to eliminate the designation of the Series B Senior Preferred Stock and to return all shares of preferred stock of the Company previously designated as Series B Senior Preferred Stock to authorized but unissued and undesignated shares of preferred stock of the Company.

2020 Tender Offer

On November 17, 2020, pursuant to a tender offer announced on October 19, 2020, the Company completed the purchase of 62,854 shares of its outstanding Series B Senior Preferred Stock at a price per share of $954.59, less any applicable withholding taxes, for an aggregate purchase price of approximately $60 million. The purchase price per share represented a 25% discount from the aggregate liquidation preference, including accrued but unpaid dividends, of $1,272.78 per share as of September 30, 2020. These shares represented approximately 60% of the Company's outstanding Series B Senior Preferred Stock as of September 30, 2020. The remaining Series B Senior Preferred Stock outstanding after the transaction was 41,720 shares.

Commitments under Long-Term SWU Purchase Agreements

The Company purchases SWU contained in LEU from Russia, supplied to us under a ~~2011~~long-term agreement, as amended, signed in 2011 with ~~the Russian government entity Joint Stock Company “TENEX”.~~TENEX. Under a 2018 agreement, the Company will purchase SWU contained in LEU from ~~Orano with deliveries starting as early as 2021.~~the French government owned company, Orano. Refer to Note 16,Commitments and Contingencies, of the consolidated financial statements for additional 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, and near Piketon, Ohio, with a ~~view~~plan to ~~deploying~~deploy a commercial enrichment facility over the ~~long term once market conditions recover.~~long-term.

~~Off-Balance Sheet Arrangements~~

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

New Accounting Standards

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

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

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

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 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

Centrus maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by Centrus in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported in the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosures.

As of December 31, ~~2018,~~2021, 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”))~~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.~~effective.

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 ~~Rule~~Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed by, and under the supervision of the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel, 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, ~~2018.~~2021. 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 was effective 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~~December 31, 2021.

The effectiveness 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 evaluation of arrangements with customers that could result in modification accounting or other impacts for a sales contract. Specifically, we did not maintain effective controls over the determination and assessment of accounting impacts for these arrangements when executed. The material weakness did not result in a material misstatement of our annual or interim financial statements. However, the material weakness could result in a misstatement of the revenue or inventory-related account balances or disclosures that would result in a material misstatement to the annual or interim 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, ~~2018, based on criteria described in~~ ~~Internal Control - Integrated Framework~~ ~~(2013) issued~~2021 has been audited by ~~COSO.~~

~~This annual report does not include~~PricewaterhouseCoopers LLP, an ~~audit report of the Company’s~~ independent registered public accounting firm, ~~regarding internal control over financial reporting. Management’s~~as stated in their 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.herein.

~~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 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 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~~the quarter ended December 31, ~~2018~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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 ~~2019~~2022 annual meeting of stockholders, which will be filed no later than 120 days after December 31, ~~2018~~2021 (the ~~“2019~~“2022 Proxy Statement”), is incorporated herein by reference.

We have adopted a code of business conduct (the “Code of Business Conduct”) that applies to our employees, including our principal executive officer, principal financial officer and principal accounting officer, as well as to members of our board of directors. Our Code of Business Conduct provides a brief summary of the standards of conduct that are at the foundation of our business operations. The Code of Business Conduct states that we conduct our business in strict compliance with all applicable laws. Each employee must read the Code of Business Conduct and sign a form stating that he or she has read, understands and agrees to comply with the Code of Business Conduct. A copy of the Code of Business Conduct is available in the Corporate Governance section of our website at www.centrusenergy.com or upon request without charge. We will disclose on the website any amendments to, or waivers from, the Code of Business Conduct that are required to be publicly disclosed.

Item 11. Executive Compensation

Information concerning executive and director compensation appearing under the captions Executive Compensation and Compensation of Directors in the ~~2019~~2022 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 ~~2019~~2022 Proxy Statement is incorporated herein by reference.

Information concerning the common stock that may be issued under the 2014 Equity Incentive Plan (as amended and restated in May 2017) appearing under the caption Equity Compensation Plan Information in the ~~2019~~2022 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 ~~2019~~2022 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 ~~2019~~2022 Proxy Statement is incorporated herein by reference.

PART IV

Item 15.Exhibits and Financial Statement Schedules


~~(a)~~	~~(1)~~ ~~Consolidated Financial Statements~~

(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 INDEX
Exhibit No.		Description


~~Exhibit No.~~		~~Description~~

~~2.1~~1.1	~~Plan of Reorganization of USEC~~Centrus Energy Corp. Common Stock (par value $0.10 per share) At Market Issuance Sales Agreement dated December 31, 2020, by and among the Company, B. Riley Securities, Inc. ~~dated July 11, 2014~~and Lake Street Capital Markets, LLC (incorporated by reference to Exhibit ~~2.1~~1.1 of the Company’s Current Report on Form 8-K, filed with the SEC on ~~September 5, 2014)~~December 31, 2020).

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~~3.5		Certificate of Retirement of 62,854 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 December 22, 2020).

3.6		Form of Certificate of Retirement of 3,873 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 5, 2021).

3.7		Amended and Restated 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 November 23, 2021).

3.8		Certificate of Elimination of the 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 December 17, 2021).

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~~4.13			Second Amendment to Section 382 Rights Agreement by and between Centrus Energy Corp., Computershare Trust Company, N.A. and Computershare Inc., dated April 3, 2019 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 4, 2019).

4.14			Third Amendment to the Section 382 Rights Agreement, dated as of April 13, 2020, by and among the Company, Computershare Trust Company N.A. and Computershare Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 14, 2020).

4.15			Fourth Amendment to the Section 382 Rights Agreement, dated as of June 16, 2021, by and among the Company, Computershare Trust Company N.A. and Computershare Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 16, 2021).

4.16			Description of the Securities of the Company. (a)`

4.17			Form of Warrant to Purchase Common Stock by and between the Company and Kulayba LLC (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed with the SEC on February 5, 2021).

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			Amendment to Appendix 1 Lease Agreement between the U.S. Department of Energy and United States Enrichment Corporation for the Gas Centrifuge Enrichment Plant, dated as of May 31, 2019 (certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2) (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed with the SEC on August 12, 2019).


10.3			Amendment 2 to Appendix 1 Lease Agreement between the U.S. Department of Energy and United States Enrichment Corporation for the Gas Centrifuge Enrichment Plant, dated as of September 9, 2021, (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 12, 2021).

10.4			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~~10.5			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).

10.6			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~~10.7			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~~10.8			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~~10.9			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~~10.10			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~~10.11			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~~10.12			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~~10.13			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~~10.14			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~~10.15			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~~
10.16			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~~10.17			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~~(Certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2).

~~10.15~~10.18			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~~10.19			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~~10.20			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~~10.21			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~~10.22			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~~10.23			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~~10.24			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~~10.25			~~Form of Plan Support~~Letter Agreement, dated ~~December 13, 2013~~September 23, 2019, by and between ~~USEC Inc.~~Joint Stock Company “TENEX” and ~~certain holders of USEC Inc.’s 3.0% convertible senior notes due October 1, 2014, incorporated~~United States Enrichment Corporation (certain information has been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed) (incorporated by reference to Exhibit 10.1 ofto the ~~Current~~Company’s Quarterly Report on Form ~~8-K~~10-Q for the quarter ended September 30, 2019, filed with the SEC on ~~December 16, 2013.~~November 8, 2019).


~~10.23~~10.26			~~Plan Support~~Amendment No. 009, dated September 23, 2019, to the Enriched Product Transitional Supply Contract dated March 23, 2011, between United States Enrichment Corporation and TENEX (certain information has been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 8, 2019).

10.27			Letter Agreement, dated ~~December 13, 2013~~June 12, 2018, by and between ~~USEC Inc.~~Joint Stock Company “TENEX” and ~~certain holders of USEC Inc.’s 3.0% convertible senior notes due October 1, 2014, as amended through February 28, 2014~~United States Enrichment Corporation (certain information has been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed) (incorporated by reference to Exhibit 10.3 ofto the ~~Current~~Company’s Quarterly Report on Form ~~8-K~~10-Q for the quarter ended September 30, 2019, filed with the SEC on ~~March 5, 2014)~~November 8, 2019).

~~10.24~~10.28			~~Plan Support~~Letter Agreement, dated September 28, 2019, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (certain information has been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed)(incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 filed with the SEC on November 8, 2019).

10.29			Letter Agreement, dated June 9, 2020, to the Enriched Product Transitional Supply Contract, dated March ~~4, 2014~~23, 2011, between ~~USEC Inc.~~TENEX, Joint-Stock Company and ~~Toshiba America Nuclear Energy Company~~United States Enrichment Corporation (incorporated by reference to Exhibit ~~10.1 of~~10.3 to the ~~Current~~Company’s Quarterly Report on Form ~~8-K~~10-Q for the quarter ended June 30, 2020 filed with the SEC on ~~March 5, 2014)~~August 6, 2020).



~~10.25~~10.30		~~Plan Support Agreement~~Amendment No. 010, dated February 11, 202 2 , to the Enriched Product Transitional Supply Contract dated March ~~4, 2014~~23, 2011, between ~~USEC Inc.~~United States Enrichment Corporation and ~~Babcock & Wilcox Investment Company (incorporated by reference to Exhibit 10.2 of~~TENEX (certain information has been omitted because the ~~Current Report on Form 8-K filed on March 5, 2014)~~identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed).

~~10.26~~10.31		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~~10.32		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~~10.33		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~~10.34		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~~Poneman (incorporated by reference to Exhibit ~~10.1~~10.29 of the Company’s ~~Quarterly~~Annual Report on Form ~~10-Q,~~10-K for the year ended December 31, 2019, filed with the SEC on ~~August 12, 2016)~~March 27, 2020). (b)

~~10.31~~10.35		~~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~~Nonqualified 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~~10.36		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~~10.37		~~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~~10.38		2019 Executive Incentive Plan (incorporated by reference to Exhibit 10.60 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 27, 2020). (b)

10.39		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~~10.40		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~~10.41		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~~10.42		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~~10.43		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~~th e 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. 2014 Equity Incentive Plan (as Amended and Restated June 16, 2021) (incorporated by reference to Appendix C of the ~~Support Parties, dated January 5, 2017~~Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 28, 2021. (b)

10.45		Centrus Energy Corp. Employee Notional Stock Unit Award Agreement and Centrus Energy Corp. Employee Stock Appreciation Right Award Agreement (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).~~November 12, 2021)

~~10.48~~10.46		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~~
10.47		~~Centrus Energy Corp. 2014 Equity Incentive Plan (as amended~~First Amendment, dated June 5, 2020, to the Purchase and ~~restated in May 2017)~~Sale Agreement, dated April 27, 2018, between Orano Cycle and United States Enrichment Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 filed with the SEC on August 6, 2020).

10.48		Letter Agreement, dated May 31, 2019 between Centrus Energy Corp. and the U.S. Department of Energy (certain information has been omitted and filed separately pursuant to confidential treatment under Rule 24b-2) (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2018,~~2019, filed with the SEC on ~~November 8, 2018).~~August 12, 2019)

~~10.50~~10.49		~~Work Authorization~~Agreement, dated ~~September 27, 2018 under~~October 31, 2019, by and between American Centrifuge Operating, LLC and 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~~10.59 of the Company’s ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~September 30, 2018,~~December 31, 2019, filed with the SEC on ~~November 8, 2018)~~March 27, 2020).

~~10.51~~10.50		~~Form of Exchange~~Modification 14 to Agreement, dated as of December ~~6, 2018,~~7, 2021, by and between American Centrifuge Operating, LLC and the U.S. Department of Energy. (a)

10.51		Voting and Nomination Agreement, dated April 13, 2020, by and between the Company and the MB Group (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 14, 2020).

10.52		First Amendment to the Voting and Nomination Agreement dated February 2, 2021, by and among ~~Centrus Energy Corp.~~the Company, Morris Bawabeh, Kulayba LLC, and ~~certain noteholders~~M&D Bawabeh Foundation, Inc. (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)~~February 5, 2021).

~~10.52~~10.53		~~Services~~Exchange Agreement ~~to Provide Technical and Resource Support,~~ dated ~~November 29, 2018,~~February 2, 2021, by and between ~~American Centrifuge Operating,~~the Company and Kulayba LLC ~~and X Energy, LLC (Certain information has been omitted and~~(incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed ~~separately pursuant to confidential treatment under Rule 24b-2)~~with the SEC on February 5, 2021). ~~(a)~~

2110.54		Agreement, dated as of September 7, 2021 by and between United States Enrichment Corporation and the U.S. Department of Energy (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 12, 2021).

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)~~(a)

101			Consolidated financial statements from the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2021, 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.~~

(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.

		~~Centrus Energy Corp.~~

~~April 1, 2019~~March 11, 2022	/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 ~~April 1, 2019:~~

March 11, 2022:


Signature			Title

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

~~Signature~~		~~Title~~

/s/ ~~Daniel B. Poneman~~Philip O. Strawbridge		~~President and Chief Executive Officer~~ ~~(Principal Executive Officer) and Director~~
~~Daniel B. Poneman~~

~~/s/ Marian K. Davis~~	Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer (Principal Financial Officer)
~~Marian K. Davis~~Philip O. Strawbridge

/s/ ~~John C. Dorrian~~Kevin J. Harrill			Controller and Chief Accounting Officer (Principal Accounting Officer)
~~John C. Dorrian~~Kevin J. Harrill

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

/s/ ~~Michael Diament~~Kirkland H. Donald			Director
~~Michael Diament~~Kirkland H. Donald

/s/ Tetsuo Iguchi			Director
Tetsuo Iguchi

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

/s/ ~~Patricia J. Jamieson~~Tina W. Jonas			Director
~~Patricia J. Jamieson~~Tina W. Jonas

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

/s/ Bradley K. Sawatzke			Director
Bradley K. Sawatzke

/s/ Neil S. Subin			Director
Neil S. Subin

CENTRUS ENERGY CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



	Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID 238)		6774
Consolidated Balance Sheets		77
~~Consolidated Balance Sheets~~		68
Consolidated Statements of Operations	69
~~Consolidated Statements of~~ and Comprehensive Income (Loss)	7078
Consolidated Statements of Cash Flows		7179
Consolidated Statements of Stockholders’ Deficit		7281
Notes to Consolidated Financial Statements		7382

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Stockholders of Centrus Energy Corp.

~~Opinion~~Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Centrus Energy Corp. and its subsidiaries (the “Company”) as of December 31, ~~2018~~2021 and ~~2017,~~2020, and the related consolidated statements of operations ofand comprehensive income, ~~(loss),~~ of ~~stockholders’~~stockholders' deficit and of cash flows for ~~each of~~ the ~~two~~ years ~~in the period~~then ended, ~~December 31, 2018,~~ including the related notes (collectively referred to as the “consolidatedfinancial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Companyas of December 31, ~~2018~~2021 and ~~2017,~~2020, and the results of its operations and its cash flows for ~~each of~~ the ~~two~~ years ~~in the period~~then ended ~~December 31, 2018~~in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for ~~Opinion~~Opinions

~~These~~The Company's management is responsible for these consolidated financial statements, ~~are the responsibility~~for maintaining effective internal control over financial reporting, and for its assessment of the ~~Company’s management.~~effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express ~~an opinion~~opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting 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 PCAOB. Those standards require that we plan and perform the ~~audit~~audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding offraud, and whether effective internal control over financial reporting ~~but not for the purpose of expressing an opinion on the effectiveness~~was maintained in all material respects.

Our audits of the ~~Company's internal control over~~consolidated financial ~~reporting. Accordingly, we express no such opinion.~~

~~Our audits~~statements 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 regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our ~~opinion.~~opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation Allowance related to Federal Deferred Tax Assets

As described in Notes 1 and 13 to the consolidated financial statements, as of December 31, 2021, the Company’s deferred tax assets were $464.8 million, net of a valuation allowance of $414.7 million, both of which a significant portion relates to federal deferred tax assets. In prior years, management maintained a full valuation allowance against federal deferred tax assets, and in the fourth quarter of 2021, management released $40.7 million of the valuation allowance against federal deferred taxes that most likely will be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient income in future years when deferred tax assets are recoverable or are expected to reverse. A valuation allowance is provided if it is more likely than not that the deferred tax assets may not be realized. Management evaluates both positive and negative evidence that is objectively verifiable to determine the amount of the federal valuation allowance. Sustained profitability and cumulative income, as well as, forecasted income, are considered to be significant forms of positive evidence. Negative evidence includes uncertainty in and the lack of objectively verifiable evidence for profitability in later years when the Company’s existing sales order book and supply contracts reach expiration.

The principal considerations for our determination that performing procedures relating to the valuation allowance related to federal deferred tax assets is a critical audit matter are (i) the significant judgment by management when assessing the ability to realize the federal deferred tax assets and whether a valuation allowance is necessary, particularly as it relates to forecasted income and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions related to forecasted income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the ability to realize federal deferred tax assets and whether a valuation allowance is necessary, including controls over forecasted income. These procedures also included, among others (i) testing management’s process for assessing the ability to realize federal deferred tax assets and whether a valuation allowance is necessary; (ii) testing the completeness and accuracy of underlying data used in management’s process for assessing the ability to realize federal deferred tax assets and whether a valuation allowance is necessary; and (iii) evaluating the reasonableness of the significant assumptions used by management related to forecasted income. Evaluating management’s assumption related to the forecasted income involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company; (ii) the terms of the Company’s existing contractual agreements with its customers and suppliers; (iii) the source and reliability of market related inputs; and (iv) whether the assumptions were consistent with evidence obtained in other areas of the audit.

/s/PricewaterhouseCoopers LLP

Baltimore, Maryland

~~April 1, 2019~~March 11, 2022

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

CENTRUS ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)


	December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	193.8	$	152.0
Accounts receivable	29.1		29.6
Inventories	91.1		64.8
Deferred costs associated with deferred revenue	143.3		151.9
Other current assets	8.6		7.8
Total current assets	465.9		406.1
Property, plant and equipment, net	5.3		4.9
Deposits for financial assurance	2.8		5.7
Intangible assets, net	54.7		62.8
Deferred tax assets, net	41.4		1.9
Other long-term assets	2.3		4.9
Total assets	$	572.4	$	486.3

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	37.8	$	50.6
Payables under inventory purchase agreements	37.9		21.3
Inventories owed to customers and suppliers	8.4		4.9
Deferred revenue and advances from customers	303.1		283.2
Current debt	6.1		6.1
Total current liabilities	393.3		366.1
Long-term debt	101.8		108.0
Postretirement health and life benefit obligations	114.9		130.8
Pension benefit liabilities	23.1		124.4
Advances from customers	45.1		45.2
Other long-term liabilities	36.1		32.4
Total liabilities	714.3		806.9
Commitments and contingencies (Note 16)	0		0
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, 0 and 41,720 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $53.9 as of December 31, 2020	—		0.1
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 13,649,933 and 11,390,189 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively	1.4		1.1
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 719,200 shares issued and outstanding as of December 31, 2021 and December 31, 2020	0.1		0.1
Excess of capital over par value	140.7		85.0
Accumulated deficit	(284.6)		(407.7)
Accumulated other comprehensive income, net of tax	0.5		0.8
Total stockholders’ deficit	(141.9)		(320.6)
Total liabilities and stockholders’ deficit	$	572.4	$	486.3

December 31,
2018 December 31,
2017
ASSETS
Current assets:
Cash and cash equivalents $ 123.1
$ 208.8
Accounts receivable 60.2
60.2
Inventories 129.7
153.1
Deferred costs associated with deferred revenue 134.9
122.3
Deposits for financial assurance 30.3
16.3
Other current assets 6.3
6.2
Total current assets 484.5
566.9
Property, plant and equipment, net 4.2
4.9
Deposits for financial assurance 6.3
19.7
Intangible assets, net 76.0
82.7
Other long-term assets 0.7
1.1
Total assets $ 571.7
$ 675.3

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable and accrued liabilities $ 52.4
$ 48.2
Payables under SWU purchase agreements 46.0
79.4
Inventories owed to customers and suppliers 103.0
77.9
Deferred revenue and advances from customers 204.5
191.8
Current debt 32.8
6.1
Total current liabilities 438.7
403.4
Long-term debt 120.2
157.5
Postretirement health and life benefit obligations 136.2
154.2
Pension benefit liabilities 168.9
161.6
Advances from customers 15.0
—
Other long-term liabilities 14.6
17.5
Total liabilities 893.6
894.2
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 61.2
60.0
Accumulated deficit (388.5 ) (284.5 )
Accumulated other comprehensive income, net of tax (0.1 ) 0.1
Total stockholders’ deficit (321.9 ) (218.9 )
Total liabilities and stockholders’ deficit $ 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,
2018 2017
Revenue:
Separative work units $ 130.6
$ 195.4
Uranium 33.8
—
Contract services 28.6
23.0
Total revenue 193.0
218.4
Cost of Sales:
Separative work units and uranium 187.7
162.7
Contract services 23.2
25.5
Total cost of sales 210.9
188.2
Gross profit (loss) (17.9 ) 30.2
Advanced technology license and decommissioning costs 26.1
15.7
Selling, general and administrative 39.9
43.7
Amortization of intangible assets 6.6
10.6
Special charges for workforce reductions and advisory costs 2.2
9.5
Gains on sales of assets (0.3 ) (4.6 )
Operating loss (92.4 ) (44.7 )
Gain on early extinguishment of debt (0.5 ) (33.6 )
Nonoperating components of net periodic benefit expense (income) 10.6
(27.2 )
Interest expense 4.1
5.3
Investment income (2.5 ) (1.3 )
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 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

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

CENTRUS ENERGY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ~~(LOSS)~~

(in ~~millions)~~millions, except share and per share data)


	Year Ended December 31,
	2021		2020
Revenue:
Separative work units	$	163.3	$	151.5
Uranium	22.8		39.0
Technical solutions	112.2		56.7
Total revenue	298.3		247.2
Cost of Sales:
Separative work units and uranium	113.1		92.7
Technical solutions	70.7		56.9
Total cost of sales	183.8		149.6
Gross profit	114.5		97.6
Advanced technology costs	2.1		2.8
Selling, general and administrative	36.0		36.0
Amortization of intangible assets	8.1		6.8
Special charges for workforce reductions	—		0.6
Other expense, net	—		0.4
Operating income	68.3		51.0
Nonoperating components of net periodic benefit (income) expense	(67.6)		(1.6)
Interest expense	0.1		0.1
Investment income	(0.1)		(0.5)
Income before income taxes	135.9		53.0
Income tax benefit	(39.1)		(1.4)
Net income and comprehensive income	175.0		54.4
Preferred stock dividends - undeclared and cumulative	2.1		6.7
Distributed earnings allocable to retired preferred shares	37.6		41.9
Net income allocable to common stockholders	$	135.3	$	5.8

Net income per common share:
Basic	$	10.03	$	0.59
Diluted	$	9.75	$	0.57
Average number of common shares outstanding (in thousands):
Basic	13,493		9,825
Diluted	13,879		10,123

Year Ended December 31,
2018 2017
Net income (loss) $ (104.1 ) $ 12.2
Other comprehensive loss, before tax (Note 17):
Amortization of prior service credits, net (0.2 ) (0.1 )
Other comprehensive loss, before tax (0.2 ) (0.1 )
Income tax benefit related to items of other comprehensive income —
—
Other comprehensive loss, net of tax benefit (0.2 ) (0.1 )
Comprehensive income (loss) $ (104.3 ) $ 12.1

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

CENTRUS ENERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Year Ended December 31,
	2021		2020
OPERATING
Net income	$	175.0	$	54.4
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	8.6		7.3
Accrued loss on long-term contract	(7.2)		(10.6)
Deferred tax assets	(39.5)		(1.9)
Retirement benefit plans (gains) losses, net	(50.5)		7.2
Revaluation of inventory borrowing	4.8		—
Equity related compensation	12.1		7.1
Changes in operating assets and liabilities:
Accounts receivable	0.5		(8.6)
Inventories, net	(10.7)		25.8
Payables under inventory purchase agreements	16.6		13.2
Deferred revenue and advances from customers, net of deferred costs	13.2		9.7
Accounts payable and other liabilities	(4.6)		(5.2)
Pension and postretirement liabilities	(67.0)		(32.7)
Other, net	(1.3)		1.4
Cash provided by operating activities	50.0		67.1

INVESTING
Capital expenditures	(1.2)		(1.4)
Cash used in investing activities	(1.2)		(1.4)

FINANCING
Proceeds from the sale of common stock, net	42.1		23.1
Redemption of preferred stock, net	(44.4)		(61.6)
Payment of interest classified as debt	(6.1)		(6.1)
Exercise of stock options	0.9		0.3
Shares withheld for employee taxes	(2.4)		—
Payments for deferred issuance costs	—		(0.1)
Cash used in financing activities	(9.9)		(44.4)

Increase in cash, cash equivalents and restricted cash	38.9		21.3
Cash, cash equivalents and restricted cash, beginning of period (Note 3)	157.9		136.6
Cash, cash equivalents and restricted cash, end of period (Note 3)	$	196.8	$	157.9

Supplemental cash flow information:
Non-cash activities:
Property, plant and equipment included in accounts payable and accrued liabilities	$	—	$	0.3

Year Ended December 31,
2018 2017
Operating Activities:
Net income (loss) $ (104.1 ) $ 12.2
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 7.4
12.0
Immediate recognition of retirement benefit plans (gains) losses, net 17.3
(25.8 )
PIK interest on paid-in-kind toggle notes 1.7
2.9
Gain on early extinguishment of debt (0.5 ) (33.6 )
Gain on sales of assets (0.4 ) (4.6 )
Changes in operating assets and liabilities:
Accounts receivable 9.7
(17.6 )
Inventories, net 61.0
44.7
Payables under SWU purchase agreements (33.4 ) 19.8
Deferred revenue, net of deferred costs 0.1
15.9
Accounts payable and other liabilities 3.7
(25.2 )
Pension and postretirement liabilities (28.0 ) (9.6 )
Other, net (8.9 ) (7.2 )
Cash used in operating activities (74.4 ) (16.1 )

Investing Activities:
Capital expenditures (0.1 ) (0.5 )
Proceeds from sales of assets 0.5
4.7
Cash provided by investing activities 0.4
4.2

Financing Activities:
Payment of interest classified as debt (6.1 ) (3.4 )
Extinguishment of debt (5.0 ) (27.6 )
Payment of securities transaction costs —
(9.0 )
Cash used in financing activities (11.1 ) (40.0 )

Decrease in cash, cash equivalents and restricted cash (85.1 ) (51.9 )
Cash, cash equivalents and restricted cash, beginning of period⁽¹⁾
244.8
296.7
Cash, cash equivalents and restricted cash, end of period⁽¹⁾
$ 159.7
$ 244.8

Supplemental cash flow information:
Interest paid in cash $ 7.1
$ 4.2
Non-cash activities:
Conversion of interest payable-in-kind to debt $ 1.7
$ 0.4
Exchange of debt for Series B preferred stock $ —
$ 4.6
Exchange of debt for Class A common stock $ 0.9
$ —


Equity transaction costs included in accounts payable and accrued liabilities	0.4	0.2
Disposal of right to use lease assets from lease modification	1.0	0.2
Reclassification of equity compensation liability to equity	7.5	—
Common stock and warrant issued in exchange for preferred stock	7.5	—

~~_______________~~

⁽¹⁾~~Refer to~~ ~~Note 4, Cash, Cash Equivalents and Restricted Cash.~~

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

CENTRUS ENERGY CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in millions, except per share data)


	Senior 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 (Loss)		Total

Balance at December 31, 2019	$	4.6	$	0.8	$	0.1	$	61.5	$	(405.0)	$	1.1	$	(336.9)

Net income	—		—		—		—		54.4		—		54.4
Issuance of common stock	—		0.3		—		22.8		—		—		23.1
Purchase under tender offer	(4.5)		—		—		—		(57.1)		—		(61.6)
Other comprehensive loss, net of tax benefit	—		—		—		—		—		(0.3)		(0.3)
Issuance and amortization of restricted stock units and stock options	—		—		—		0.7		—		—		0.7
Balance at December 31, 2020	$	0.1	$	1.1	$	0.1	$	85.0	$	(407.7)	$	0.8	$	(320.6)

Net income	—		—		—		—		175.0		—		175.0
Issuance of common stock	—		0.2		—		41.9		—		—		42.1
Exchange of preferred stock for common stock and common stock warrant	—		0.1		—		7.5		(7.6)		—		—
Purchase under tender offer	(0.1)		—		—		—		(44.3)		—		(44.4)
Reclassification of stock-based compensation liability to equity	—		—		—		7.5		—		—		7.5
Shares withheld for employee taxes	—		—		—		(2.4)		—		—		(2.4)
Other comprehensive loss, net of tax benefit	—		—		—		—		—		(0.3)		(0.3)
Issuance and amortization of restricted stock units and stock options	—		—		—		1.2		—		—		1.2
Balance at December 31, 2021	$	—	$	1.4	$	0.1	$	140.7	$	(284.6)	$	0.5	$	(141.9)

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, 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 —
—
—
—
(104.1 ) —
(104.1 )
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
Balance at December 31, 2018 $ 4.6
$ 0.8
$ 0.1
$ 61.2
$ (388.5 ) $ (0.1 ) $ (321.9 )

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

CENTRUS ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of Centrus Energy Corp. (“Centrus” or the “Company”), which include the accounts of the Company, its principal subsidiary United States Enrichment Corporation (“Enrichment Corp.”) and its other subsidiaries, were prepared in conformity with generally accepted accounting principles in the U.S. (“U.S. GAAP”). Certain prior year amounts have been reclassified for consistency with the current year presentation. All material intercompany transactions have been eliminated.

~~Correction of Error~~

~~In the second quarter of 2018, Management identified a classification error for $0.3 million of costs that had been previously included in~~ ~~Cost of Sales~~ ~~for the contract services segment in the consolidated statement of operations for the three months ended March 31, 2018. These costs are now included in~~ ~~Advanced Technology License and Decommissioning Costs~~ in the consolidated statement of operations for the year ended December 31, 2018. The Company considered quantitative and qualitative factors in assessing the materiality of the classification error and determined that the classification error was not material. This revision had no impact to the Company’s net loss for the three months ended March 31, 2018, or the year ended December 31, 2018.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts presented and disclosed in the consolidated financial statements. Significant estimates and judgments include, but are not limited to, revenue and related costs, asset valuations, pension and postretirement health and life benefit costs and obligations, the tax bases of assets and liabilities, the future recoverability of deferred tax assets, and determination of the valuation allowance for deferred tax assets. Actual results may differ from such estimates, and estimates may change if the underlying conditions or assumptions change.

Cash and Cash Equivalents

Cash and cash equivalents include short-term or highly liquid assets with original maturities of three months or less.

Inventories and Inventories Owed to Customers and Suppliers

Low-enriched uranium (“LEU”) consists of two components: separative work units (“SWU”) and uranium. SWU is a standard unit of measurement that represents the effort required to transform a given amount of natural uranium into two components: enriched uranium having a higher percentage of U²³⁵ and depleted uranium having a lower percentage of U²³⁵. The SWU contained in LEU is calculated using an industry standard formula based on the physics of enrichment. The amount of enrichment deemed to be contained in LEU under this formula is commonly referred to as its SWU component and the quantity of natural uranium deemed to be used in the production of LEU under this formula is referred to as its uranium or “feed” component.

SWU and uranium inventory costs are determined using the average cost method. SWU and uranium purchase costs include shipping costs when applicable. 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 the Company’s 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.

Inventories owed to customers and suppliers, included in current liabilities, consist primarily of SWU and uranium inventories owed to fabricators. Fabricators process LEU into fuel for use in nuclear reactors. Under inventory optimization arrangements between Centrus and domestic fabricators, fabricators order quantities of LEU from Centrus based on scheduled or anticipated orders from utility customers, for deliveries in future periods. As delivery obligations under actual customer orders arise, Centrus typically satisfies these obligations by arranging for the transfer to the customer of title to the specified quantity of LEU at the fabricator. Centrus’ balances of SWU and uranium vary over time based on the timing and size of the fabricator’s LEU orders from Centrus and the fabricator’s needs for working stock of LEU. Balances can be positive or negative at the discretion of the fabricator.

Fabricators have other inventory supplies and, where a fabricator has elected to order less material from Centrus than Centrus is required to deliver to its customers at the fabricator, the fabricator will use these other inventories to satisfy Centrus’ customer order obligations on Centrus’ behalf. In such cases, the transfer of title of LEU from Centrus to the customer results in quantities of SWU and uranium being owed by Centrus to the fabricator. The amounts of SWU and uranium owed to fabricators are satisfied as future deliveries of LEU to fabricators are made.

Deferred Taxes

Centrus follows the asset and liability approach to account for deferred taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences of temporary differences between the balance sheet carrying amounts of assets and liabilities and their respective tax bases. Deferred taxes are based on income tax rates in effect for the years in which temporary differences are expected to reverse. The effect on deferred taxes of a change in income tax rates is recognized in income when the change in rates is enacted in the law. A valuation allowance is provided if it is more likely than not that all, or some portion, of the deferred tax assets may not be realized.

Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost. Leasehold improvements and machinery and equipment are depreciated on a straight-line basis over the shorter of the useful life of the assets or the lease term, if applicable. Refer also to Carrying Value of Long-Lived Assets below.

Intangible Assets

Centrus has intangible assets resulting from fresh start accounting as a result of emergence from Chapter 11 bankruptcy on September 30, 2014. The identifiable intangible assets relate to the sales 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.~~years, with 7 ¾ years of scheduled amortization remaining. Refer also to Carrying Value of Long-Lived Assets below.

Carrying Value of Long-Lived Assets

The Company evaluates the carrying values of property, plant and equipment and identifiable intangible assets when events or changes in business circumstances indicate that the carrying amount of asset, or asset group, may not be fully recoverable. The carrying amount of a 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 is measured as the amount by which the carrying amount of a long-lived asset, or asset group, exceeds its fair value.

Financial Instruments and Fair Value Measurement

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, consideration is given to the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.

Pursuant to accounting standards, Centrus’ ~~8.0% paid-in-kind (“PIK”) toggle~~8.25% notes ~~(the “8% PIK Toggle Notes”) and its 8.25% notes~~due February 2027 (the “8.25% Notes”) are recorded at face value and the fair value is disclosed. The estimated fair value of ~~each of the 8% PIK Toggle Notes and~~ the 8.25% Notes is based on ~~the~~recent trading ~~price nearest~~prices and bid/ask quotes as of or near the balance sheet ~~date observed on secondary markets.~~date. Debt issuance costs are deferred and amortized over the life of the instrument.

The balance sheet carrying amounts for accounts receivable, accounts payable and accrued liabilities, and payables under SWU purchase agreements approximate fair value because of the short-term nature of the instruments.

Concentrations of Credit Risk

Credit risk could result from the possibility of a customer failing to perform or pay according to the terms of a contract. Extension of credit is based on an evaluation of each customer’s financial condition. Centrus regularly monitors credit risk exposure and takes steps intended to mitigate the likelihood of such exposure resulting in a loss.

Concentrations of Supply Risk and Other Considerations with the War in Ukraine

The current war in Ukraine has led to the U.S., Russia and other countries imposing sanctions and other measures that restrict international trade. The situation is rapidly changing, and it is not possible to predict future actions that could be taken. The Company has multiple sources of supply; however, the supply contract with TENEX remains our largest source. At present, sanctions have not impacted the ability of the Company or TENEX to perform under the TENEX supply contract. Recently, sanctions have been imposed by the U.S. on exports of fossil fuels. Russia has imposed sanctions on the export of commodities but does not include the export of LEU. Additional sanctions or other measures by the U.S. or foreign governments (including the Russian government) could be imposed. Any sanctions or measures directed at trade in LEU from Russia or the parties involved in such trade or otherwise could interfere with, or prevent, implementation of the TENEX Supply Contract. While the initial sanctions announced do not affect the ability of the Company or TENEX to implement the TENEX Supply Contract, the situation at this time is unpredictable and therefore there is no assurance that future developments would not have a material adverse effect on the Company’s procurement, payment, delivery or sale of LEU under the TENEX Supply Contract.

If measures were taken to limit the supply of Russian LEU or to prohibit or limit dealings with Russian entities, including, but not limited to, TENEX or ROSATOM, the Company would seek a license, waiver or other approval from the government imposing such measures to ensure that the Company could continue to fulfill its purchase and sales obligations. There is no assurance that such a license, waiver, or approval would be granted. If a license, waiver or approval were not granted, the Company would need to look to alternative sources of LEU to replace the LEU that it could not procure from TENEX. The Company has contracts for alternative sources that could be used to mitigate a portion of the near term impacts. However, to the extent these sources were insufficient or more expensive or additional supply cannot be obtained, it could have a material adverse impact on our business, results of operations, and competitive position.

Segments

Centrus operates two business segments: LEU, which supplies various components of nuclear fuel to utilities, and technical solutions, which provides advanced engineering, design, and manufacturing services to government and private sector customers.

Related Party

As previously disclosed in our Current Report on Form 8-K filed on December 31, 2020, on that same date the

Company entered into an At Market Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. and

Lake Street Capital Markets, LLC (the “Agents”), relating to the at the market offering (the “ATM Offering”) of

shares of the Company’s Class A Common Stock, $0.10 par value per share. Mr. Williams, Chairman of the Centrus

Board of Directors, also serves on the board of B. Riley Financial, Inc. Mr. Williams recused himself and took no

part in the selection of B. Riley or the negotiation of the terms of the Sales Agreement. Please refer to Note 15 - Stockholders’ Equity for a description of the ATM Offering in 2021.

Revenue

~~On January 1, 2018,~~The Company accounts for a contract when it has approval and commitment from both parties, the ~~Company adopted ASC 606 using the modified retrospective method as applied to customer contracts that were not completed as~~rights of the ~~adoption date. As a result, financial information for reporting periods beginning on or after January 1, 2018,~~parties are presented under ASC 606, while comparative financial information has not been adjusted and continues to be reported in accordance with the Company’s historical accounting policy for revenue recognition prior to the adoption of ASC 606. There was no material impact of adopting ASC 606 for sales under the LEU segment. For sales underidentified, payment terms are identified, the contract ~~services segment, revenue~~has commercial substance and collectability of consideration is ~~now primarily recognized over time as control is transferred to the customer.~~

probable. Revenue for product and service sales is recognized when or as the Company transfers control of the promised products or services to the customer. Revenue is measured at the transaction price, which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer. The transaction price will include estimates of variable consideration ~~to the extent~~until it is probable that a significant reversal of revenue recognized will not occur.

SWU and Uranium Revenue

Revenue for the Company’s LEU segment is derived from sales of the SWU component of LEU, from sales of both the SWU and uranium components of LEU, and from sales of uranium. Contracts with customers are primarily medium and long-term, fixed-commitment contracts under which its customers are obligated to purchase a specified quantity of the SWU component of LEU or the SWU and uranium components of LEU. The Company’s contracts for natural uranium are generally shorter-term, fixed-commitment contracts.

Revenue is recognized at the time the customer obtains control of the LEU or uranium. Customers generally obtain control of LEU at nuclear fuel fabricators. Centrus ships LEU to nuclear fuel fabricators for scheduled or anticipated orders from utility customers. Based on customer orders, Centrus arranges for the transfer of title of LEU from Centrus to the customer for the specified quantity of LEU at the fuel fabricator. Each such delivery to a customer is accounted for as a distinct performance obligation under a contract, and a contract may call for multiple deliveries over a number of periods. The contract’s transaction price is allocated to each performance obligation based on the observable standalone selling price of each distinct delivery of SWU or uranium. For certain contracts the customers may elect not to take control of the LEU or uranium and Centrus may have the right to enforce payment under the terms of the contractual agreement. The revenue recognition for these contracts is assessed when it occurs.

Utility customers in general have the option to defer receipt of ~~LEU or~~ uranium products purchased from the Company beyond the contractual sale period. In such cases, title to ~~LEU~~ SWU and/or uranium iscomponents are transferred to the customer and a performance obligation for Centrus is created and a receivable is recorded. Cash is collected for the receivable under normal credit terms. The performance obligation is represented as Deferred Revenue on the consolidated balance sheet and the customer-titled product is classified as Deferred Costs Associated with Deferred Revenue on the consolidated balance sheet. Risk of loss remains with Centrus until the customer obtains control of ~~LEU or uranium.~~the uranium product. The recognition of revenue and related cost of sales occurs at the point in time at which the customer obtains control of ~~LEU~~SWU or uranium and risk of loss of the product transfers to the customer, which may occur beyond one year. The timing of the transfer of control, subject to notice period requirements, is at the option of the customer. As such, deferred costs and deferred revenue are classified within current assets and current liabilities, respectively.

On occasion, the Company will accept payment in the form of uranium. Revenue from the sale of SWU under such contracts is recognized at the time transfer of control of LEU occurs and is based on the fair value of the uranium at contract inception or as the quantity of uranium is finalized, if variable. The Company may also borrow SWU from customers, in which case the Company will record the SWU and the related liability for the borrowing using a projected average purchase price over the borrowing period.

Amounts billed to customers for handling costs are included in sales. Handling costs are accounted for as a fulfillment cost and are included in cost of sales. The Company does not have shipping costs associated with outbound freight after control over a product has transferred to a customer. The Company’s contracts with customers do not provide for significant payment terms or financing components.

~~Contract Services~~

Technical Solutions Revenue

Revenue for the ~~contract services~~technical solutions segment, principally representing technical, manufacturing, engineering, procurement, construction and ~~testing activities performed by the Company, as well as technical~~operations services offered to public and ~~resource support,~~private sector customers, is recognized over the contractual period as services are rendered. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer of control to the customer. For public sector contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and assume control of any work in progress. The Company’s government and private sector contracts generally contain contractual termination clauses or entitle the Company to payments for work performed to date for goods and services that do not have an alternative use. With control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. A contract may contain one or more performance obligations. Two or more promises to transfer goods or services to a customer may be considered a single performance obligation if the goods or services are highly interdependent or highly interrelated such that utility of the promised goods or services to the customer includes integration services provided by the Company.

The Company generally uses the cost-to-cost input method of progress for ~~fixed-price contracts~~performance obligations to deliver products with continual transfer of control to the customer, because it best depicts the transfer of control to the customer that occurs as the Company incurs costs. Under the cost-to-cost method, the extent of progress towards completion is measured based on the proportion of direct costs incurred to date to the total estimated direct costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. ~~If transaction prices are not stated~~For performance obligations to provide services to the customer, revenue is recognized over time based on direct costs incurred or the right to invoice method (in situations where the value transferred matches the Company’s billing rights) as the customer receives and consumes the benefits.

Use of the cost-to-cost method requires the Company to make reasonably dependable estimates of costs at completion associated with the design, manufacture and delivery of products and services in order to calculate revenue. Significant judgment is used to estimate total revenue and costs at completion, particularly in the ~~contract for each performance obligation, contractual prices are allocated~~assumptions related to performance obligations based on estimated relative standalone selling prices of the promised services. For contracts that are not accounted for under the percentage of completion method, the Company records revenue as services are provided. The Company recognizes time-and-material contract revenue at negotiated, fixed, contractually billable rates as it deliversinternal labor hours and ~~incurs other direct expenses.~~third-party services for which a vendor invoice or quote is not yet available. As a significant change in one or more estimates could affect the profitability of the Company’s contracts, the Company reviews and updates its contract-related estimates regularly. Adjustments in estimated profits/losses are recognized under the cumulative catch-up method. Under this method, the impact of the adjustments is recognized in the period the adjustment is recognized. When estimates of total costs at completion for such an integrated, construction type contract exceed total estimates of revenue to be earned on a performance obligation related to complex equipment or related services, a provision for the remaining loss on the performance obligation is recognized in the period the loss is determined.

The Company ~~has~~ applied the practical expedient in paragraph ASC 606-10-50-14 and does not ~~provide t~~hedisclose the value of r~~emaining~~remaining performance obligations under service contracts having original expected terms of one year or less.

The timing of revenue recognition may differ from the timing of invoicing to customers. Progress on satisfying performance obligations under contracts with customers and the related billings and cash collections are recorded on the consolidated balance sheet as contract assets or contract liabilities. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

Unbilled receivables ~~(contract assets)~~ are included in Accounts Receivable on the consolidated balance sheet and arise when the timing of cash collected from customers differs from the timing of revenue ~~recognition, such as when contract provisions require specific milestones to be met before a customer can be billed.~~recognition. Those assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized when billed in

accordance with the terms of the contract. To the extent billings to the customer precede the recognition of ~~contract services~~technical solutions revenue, the Company recognizes a liability included in Deferred Revenue and Advances from Customers on the consolidated balance sheet.

Results for prior periods were reported in accordance with ASC 605. Revenue derived from sales of the SWU component of LEU, from sales of both the SWU and uranium components of LEU, and from sales of uranium was recognized at the time LEU or uranium was delivered under the terms of contracts with domestic and international electric utility customers. Most customers took title and delivery of LEU at fuel fabricators and revenue was recognized when delivery of LEU to the customer occurred at the fuel fabricator. In cases when utility customers deferred receipt of LEU or uranium purchased from the Company beyond the contractual sale period, title to LEU or uranium was transferred to the customer and risk of loss remained with Centrus until delivery occurred. The recognition of revenue and related cost of sales occurred at the time delivery occurred and risk of loss transferred to the customer. In cases where Centrus accepted payment in the form of uranium, revenue was recognized at the time LEU was delivered and was based on the fair value of the uranium received in exchange for the SWU.

Contract services revenue in prior periods included billings for fees and payments for allowable costs that were determined in accordance with the terms of the underlying contracts. For contracts that provided fixed payments for monthly reports, revenue was recognized as deliverables are completed and as fees are earned. For contracts that provided fixed payments for completion of milestones, revenue was recognized as each milestone is completed.

Advanced Technology ~~License~~Costs

American Centrifuge and ~~Decommissioning Costs~~

~~American Centrifuge~~related expenses that are outside of our customer contracts ~~with UT-Battelle~~ are included in Advanced Technology ~~License and Decommissioning~~ Costs~~, including ongoing costs to maintain the demobilized Piketon facility and our licenses from the U.S. Nuclear Regulatory Commission (“NRC”) at that location. Refer to~~ ~~Note 16, Commitments and Contingencies,~~ ~~for further details regarding the American Centrifuge project.~~.

Pension and Postretirement Health and Life Benefit Plans

The Company provides 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. Plan assets and benefit obligations are remeasured each year as of the balance sheet date, or when lump sum payments exceed certain levels, resulting in differences between actual and projected results. The Company has elected to recognize these actuarial gains and losses immediately in the statement of operations to provide transparency regarding the impacts of changes in plan assets and benefit obligations.

Stock-Based Compensation

Centrus has a stock-based compensation plan which authorizes the issuance of common stock to the Company’s employees, officers, directors, and other individuals providing services to the Company or its affiliates pursuant to options, notional stock units, stock appreciation rights, restricted stock units, restricted stock, performance awards, dividend equivalent rights, and other ~~stock based~~stock-based awards.

Stock-based compensation cost isfor options and stock-settled awards are measured at the grant date based on the fair value of the award. The cost is recognized over the requisite service period on a straight-line basis over the vesting period.

Stock-based compensation cost for awards likely to be settled with cash payments are recognized over the requisite service period and accrued as a liability and re-measured each reporting period based on the trading price of the Company’s common stock.

The Company recognizes forfeitures as they occur.

New Accounting Standards

Recently Adopted Accounting Standards

~~In 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09,~~ ~~Revenue from Contracts with Customers,~~ which requires revenue to be recognized when a customer obtains control of promised goods and services at an amount that reflects the consideration the Company expects to receive in exchange for those goods and services. In addition, ASU 2014-09 and subsequent amendments, collectively known as Accounting Standards Codification (“ASC”) 606 (“ASC 606”) require certain additional disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers.

The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method. The new standard was applied to contracts that were not completed as of the adoption date. The Company recognized the cumulative effect of initially applying ASC 606 of $0.1 million as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be presented according to accounting standards in effect for those periods. Refer to ~~Note 2, Revenue and Contracts with Customers,~~ ~~for additional information.~~

~~The following table summarizes the cumulative effect of the changes to the Company’s consolidated balance sheet as of January 1, 2018, from the adoption of ASC 606 (in millions):~~

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 )

~~The following table summarizes the impact of adopting ASC 606 on revenue and net loss for the year ended December 31, 2018 (in millions):~~

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 )

~~The effect of adoption for the year ended December 31, 2018, includes the opening balance adjustment of $0.1 million.~~

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. ASU 2017-07 requires changes to the presentation of the components of net periodic benefit cost on the statement of operations by requiring service cost to be presented with other employee compensation costs and other components of net periodic benefit cost to be presented outside of any subtotal of operating income. The Company adopted this standard on January 1, 2018, on a retrospective basis for all periods presented, and certain prior period amounts have been recast to conform with the current presentation as follows (in millions):

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 )

~~Refer to~~ ~~Note 11, Pension and Postretirement Health and Life Benefits,~~ ~~for additional information.~~

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. ASU 2016-15 addresses the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. It is intended to reduce diversity in practice by providing guidance on eight specific cash flow issues. ASU 2016-15 became effective for the Company on January 1, 2018. Upon adoption, the Company reclassified $9.0 million of transaction costs incurred in the first quarter of 2017 related to the note exchange (see ~~Note 9, Debt) in the statement of cash flows as follows (in millions):~~

Year Ended
December 31, 2017
As Previously Reported Adjustments Current Presentation
Cash used in operating activities $ (25.1 ) $ 9.0
$ (16.1 )
Cash used in financing activities (31.0 ) (9.0 ) (40.0 )

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~. ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is to be applied retrospectively for each period presented. The Company adopted the new standard on January 1, 2018. Upon adoption, the Company added its restricted cash balances to the consolidated statement of cash flows, and the prior period amounts have been recast to conform with the current presentation.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,~~ requiring the recognition of the current and deferred income taxes resulting from an intra-entity transfer of assets other than inventory when the transfer occurs. The Company adopted the new standard on January 1, 2018, on a modified retrospective basis. The adoption of ASU 2016-16 did not have a material impact on the Company’s consolidated financial statements, including the cumulative effect adjustment required upon adoption.

~~Accounting Standards Effective in Future Periods~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842),~~ which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting expense recognition in the statement of operations. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The new guidance, as amended in July 2018 by ASU 2018-11, ~~Leases (Topic 842): Targeted Improvements,~~ requires a transition adoption election using either 1) a modified retrospective approach with periods prior to the adoption date being recast or 2) a prospective adoption approach with a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. The Company is finalizing its evaluation of the impact of adoption and anticipates adopting this standard as of January 1, 2019, using the prospective adoption approach.

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cut and Jobs Act of 2017 (the “Tax Act”). However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments is permitted. The Company is currently evaluating the effect of the standard on its Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which modifies the disclosure requirements for employers that sponsor defined benefit pension plans and other postretirement plans. ASU 2018-14 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The standard is to be applied on a retrospective basis to all periods presented and early adoption is permitted. ~~The Company is evaluating~~Adoption of this new standard did not have a significant impact to the ~~effect that the provisions of ASU 2018-14 will have on its consolidated financial statements.~~Company’s annual disclosures.

2. REVENUE AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following table presents revenue from SWU and uranium sales disaggregated by geographical region, including foreign countries representing 10% or more of revenue, based on the billing addresses of customers (in millions):


	Year Ended December 31,
	2021		2020
United States	$	108.3	$	115.0
Foreign:
Belgium	36.6		35.8
Japan	34.6		23.4
Other	6.6		16.3
Total foreign	77.8		75.5
Revenue - SWU and uranium	$	186.1	$	190.5

Year Ended December 31,
2018 2017
United States $ 112.7
$ 111.5
Foreign:
   Belgium 35.2
34.9
   Japan 3.1
49.0
   Other 13.4
—
Revenue - SWU and uranium $ 164.4
$ 195.4

Refer to Note 18, Revenue by Geographic Area, Major Customers and Segment Information for disaggregation of revenue by segment. Disaggregation by end-market is provided in Note 18 and the consolidated statements of operations. SWU ~~and uranium~~ sales are made primarily to electric utility ~~customers. Contract services~~customers, and uranium sales are primarily made to other nuclear fuel related companies. Technical solutions revenue resulted primarily from services provided to the government ~~contractors~~ and ~~in the first quarter of 2018, the settlement with DOE and the U.S. government.~~its contractors. SWU and uranium revenue is recognized at point of sale and ~~contract services~~technical solutions revenue is generally recognized over time.

SWU revenue in 2020 includes $32.6 million collected from a customer in settlement of a supply contract that was subject to the customer’s bankruptcy proceeding.

Accounts Receivable


	December 31,
	2021		2020
	($ millions)
Accounts receivable:
Billed	$	23.1	$	23.0
Unbilled (a)	6.0		6.6
Accounts receivable	$	29.1	$	29.6

(a) Billings under certain contracts in the technical services segment are invoiced based on approved provisional billing rates. Unbilled revenue represents difference between actual costs incurred and invoiced amounts. The Company expects to invoice and collect the unbilled amounts after actual rates are submitted to the customer and approved. Unbilled revenue also includes unconditional rights to payment that are not yet billable under applicable contracts pending the compilation of supporting documentation.

Contract ~~Balances~~Liabilities

The following table ~~represents~~presents changes in ~~the Company’s~~ contract ~~assets and contract liabilities~~liability balances (in millions):


	December 31,
	2021		2020		Change
Accrued loss on HALEU Contract:
Current - Accounts payable and accrued liabilities	$	0.5	$	7.0	$	(6.5)
Non-current - Other long-term liabilities	$	—	$	0.7	$	(0.7)
Deferred revenue - current	$	288.1	$	281.7	$	6.4
Advances from customers - current	$	15.0	$	1.5	$	13.5
Advances from customers - non current	$	45.1	$	45.2	$	(0.1)

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

Deferred ~~cost~~sales totaled $47.2 million and ~~deferred revenue activity for~~$38.7 million in the ~~year~~years ended December 31, ~~2018, follows (in millions):~~

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

In the second quarter of 2018, the Company received uranium valued at $14.5 million from a customer that elected to defer a SWU purchase obligation for a period greater than one year. Under the contract, the customer has not received title to SWU or LEU product from the Company. The liability to the customer is included2021, and 2020, respectively. Previously deferred sales recognized in ~~Advances from Customers~~, a noncurrent liability. In December 2018, the Company borrowed $7.3 million of SWU from a customer under terms which require repayment within 48 months. The Company recorded the SWU and the related liability for the borrowing using an average purchase price over the borrowing period. The liability to the customer is included in ~~Other Liabilities,~~ ~~which is included in noncurrent liabilities.~~

On January 11, 2018, the Company entered into a settlement agreement with DOE and the U.S. government regarding breach of contract claims relating to work performed by the Company under contracts with DOE and subcontracts with DOE contractors. DOE agreed to settle all claims raised as part of and subsequent to the litigation, except with respect to certain claims for pension and postretirement benefits, for a total of $24.0revenue totaled $42.6 million and ~~provide a complete close out of all such contracts~~$0 million in the years ended December 31, 2021, and subcontracts settled under the settlement agreement without any further audit or review of the Company’s costs or incurred cost submissions. Prior to the settlement, the Company had a receivables balance related to the claims being settled of $14.5 million. In 2018, the Company (a) received $4.7 million from the U.S. government, (b) applied approximately $19.3 million of advances from the U.S.2020, respectively.

~~government received in prior years against the receivables balance, and (c) recorded additional revenue of $9.5 million.~~

Revenue for the contract services segment, principally representing engineering and testing activities performed by the Company, as well as technical and resource support, is recognized over the contractual period as services are rendered. The contract services segment also includes limited services provided by Centrus to the DOE and its contractors at the Piketon site related to facilities the Company leases from DOE. In 2018, revenue for the contract services segment included $9.5 million under a January 2018 settlement agreement with DOE and the U.S. government.

Centrus 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 for DOE. There is the potential for additional revenue to be recognized for this work pending the outcome of legal proceedings related to the Company’s claims for payment and the potential release of previously established valuation allowances on receivables. As a result of the application of fresh start accounting following the Company’s emergence from Chapter 11 bankruptcy on September 30, 2014, the receivables related to the Company’s claims for payment are carried at fair value as of September 30, 2014, which is net of the valuation allowances.

LEU Segment ~~Order Book~~

The SWU component of LEU is typically bought and sold under ~~long-term~~ contracts with deliveries over several years. The Company’s agreements for natural uranium sales are generally shorter-term, fixed-commitment contracts. The Company’s order book of sales under contract in the LEU segment (“order book”) extends to ~~2030.~~2029. For the years ended December 31, 2021 and 2020, our order book was approximately $986 million and $960 million, respectively. The order book represents the ~~Company’s remaining performance obligations~~estimated aggregate dollar amount of revenue for future SWU and uranium deliveries under ~~these contracts~~contract and includes ~~the~~ approximately $348.2 million of Deferred Revenue ~~amounts in the~~ and Advances from Customers. Refer to Contract ~~Balances~~Liabilities table above. The order book was $1.0 billion as of December 31, 2018, compared to $1.3 billion at December 31, 2017, reflecting completed deliveries and new contracts signed in 2018 and a rejection of a contract by a customer in bankruptcy proceedings. No other adjustments were required to the Company’s consolidated financial statements as a result of the contract rejection. Refer to ~~Note 16, Commitments and Contingencies, for additional information regarding the customer and claims filed by the Company.~~

Most of the Company’s customer contracts provide for fixed purchases of SWU during a given year. The Company’s ~~estimate of the aggregate dollar amount of future SWU and uranium sales~~ order book is partially based on customers’ estimates of the timing and size of their fuel requirements and other assumptions that are subject to change. For example, depending on the terms of specific contracts, the customer may be able to increase or decrease the quantity delivered within an agreed range. The Company’s order book estimate is also based on the Company’s estimates of selling prices, which ~~are~~may be subject to change. For example, depending on the terms of specific contracts, prices may be adjusted based on escalation using a general inflation index, published SWU price indicators prevailing at the time of delivery, and other factors, all of which are variable. The Company uses external composite forecasts of future market prices and inflation rates in its pricing estimates.

~~Contract Modification~~

~~In 2018~~Under the terms of certain contracts with customers in the LEU segment, the Company ~~entered into an arrangement with a fabricator to facilitate a prior arrangement with a customer that resulted~~will accept payment for SWU in ~~a modification~~the form of ~~its previous~~uranium. Revenue from the sale of SWU ~~sales arrangement with~~under such contracts is recognized at the ~~customer. The product to be~~time LEU is delivered ~~under~~and is based on the ~~modified arrangement~~fair value of the uranium at contract inception, or as the quantity of uranium is ~~distinct and, therefore, the modification is being accounted for on a prospective basis. No~~finalized, if variable. In 2020, SWU revenue of $23.4 million was recognized under such contracts based on the fair market value of uranium acquired in ~~2018 from the customer as the distinct product was not~~exchange for SWU delivered. ~~Under the new arrangement, the Company made a payment to the customer of $20.7 million that is a contract asset, which will be recovered as payments are~~Uranium received from ~~the customer~~customers as advance payments for the ~~remaining product delivery. The Company received $21.1~~future sales of SWU totaled $59.6 million ~~in December 2018 that is a contract liability~~ and ~~the net of these amounts of $0.4~~$44.4 million ~~is classified as a contract liability~~ as of December 31, ~~2018, which is~~2021, and 2020, respectively. The advance payments are included in either Advances from Customers, Current or Advances from Customers, Noncurrent, based on the anticipated SWU sales period.

Technical Solutions Segment

Revenue for the technical solutions segment, representing the Company’s technical, manufacturing, engineering, procurement, construction and operations services offered to public and private sector customers, is recognized over the contractual period as services are rendered. For details, refer to Note 1, Summary of Significant Accounting Policies — Revenue —Technical Solutions Revenue.

On October 31, 2019, the Company signed a three-year cost-share contract with the U.S. Department of Energy (“DOE”) (“the HALEU Contract”) to deploy a cascade of centrifuges to demonstrate production of high-assay, low-enriched uranium (“HALEU”) for advanced reactors. HALEU is a component of an advanced nuclear reactor fuel that is not commercially available today and may be required for a number of advanced reactor designs currently under development in both the commercial and government sectors. The program has been under way since May 31, 2019, when the Company and DOE signed a preliminary letter agreement that allowed work to begin while the full contract was being finalized.

~~3. SPECIAL CHARGES~~

~~For~~cascade formation. When estimates of remaining program costs to be incurred for such an integrated, construction-type contract exceed estimates of total revenue to be earned, a provision for the ~~years~~remaining loss on the contract is recorded to Cost of Sales in the period the loss is determined. The Company’s corporate costs supporting the program are recognized as expense as incurred over the duration of the contract term. The accrued loss on the contract is being adjusted over the remaining contract term based on actual results, remaining program cost projections, and the Company’s anticipated cost-share. The impact to Cost of Sales for the year ended December 31, ~~2018~~2021, and ~~2017, special charges totaled $2.2~~2020, is $7.2 million and ~~$9.5~~$10.6 million, respectively, ~~including advisory costs~~for previously accrued contract losses attributable to work performed in the periods. As of ~~$0.1~~December 31, 2021, a total of $19.1 million ~~and $6.3 million, respectively. In 2018 and 2017, advisory costs related to updating the Company’s information technology systems.~~

~~Workforce reductions~~of previously accrued contract losses have ~~resulted from evolving business needs~~been realized and the ~~completion of the demonstration of American Centrifuge technology at the Company’s facility~~accrued contract loss balance included in ~~Piketon, Ohio.~~ W~~ithout mutual agreement between Centrus and DOE regarding other possible uses for the Piketon facility, the remaining balance of termination benefits of~~ ~~$3.2 million~~ ~~related to the Piketon facility is expected to be paid in the third quarter of 2019 and is classified in~~ Accounts Payable and Accrued Liabilitiesis $0.5 million. The Company has received cash payments of $120.3 million through December 31, 2021.

Additional COVID-19-related impacts, delays in DOE furnishing equipment, or changes to the existing scope of the HALEU Contract could result in further material increases to our estimate of the costs required to complete the HALEU Contract, as well as delay completion of the contract. The Company does not currently have a contractual obligation to perform work in excess of the funding provided by DOE and, therefore, no additional costs have been accrued as of December 31, 2021. If DOE does not commit to fully fund the additional costs, and the Company nevertheless commits to a plan to complete the demonstration cascade and produce HALEU, we may incur material additional costs or losses in future periods that could have an adverse impact on our financial condition and liquidity.

Revenue for the technical solutions segment in the ~~consolidated balance sheet. A summary~~year ended December 31, 2021, also includes $43.5 million related to the settlement of ~~termination benefit activity and related liabilities follows (in millions):~~the Company’s claims for reimbursements for certain pension and postretirement benefits costs incurred in connection with a past cost-reimbursable contract with DOE unrelated to the HALEU Contract. On September 7, 2021, after the final approvals for the settlement were received, the settlement agreement was signed by the parties at which time it became probable that there would not be a significant reversal of revenue. Under the terms of the settlement agreement, DOE paid the Company $43.5 million, of which $33.8 million was contributed to the pension plan in September 2021 for its subsidiary United States Enrichment Corp. (“Enrichment Corp.”) and $9.7 million was deposited in October 2021 in a trust for payment of postretirement health benefits payable by Enrichment Corp. After receiving payment, at the Company’s request, the case was dismissed. Refer to Note 16, Commitments and Contingencies - Legal Matters.

Liability
Dec. 31,
2016
2017
Liability
Dec. 31,
2017
2018
Liability
Dec. 31,
2018
Charges for Termination Benefits
Paid/
Settled
Charges for Termination Benefits
Paid/
Settled

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

4.3. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table summarizes the Company’s cash, cash equivalents and restricted cash as presented on the consolidated balance sheet to amounts on the consolidated statement of cash flows (in millions):


	December 31,
	2021		2020
Cash and cash equivalents	$	193.8	$	152.0
Deposits for financial assurance - current	0.2		0.2
Deposits for financial assurance - non current	2.8		5.7
Total cash, cash equivalents and restricted cash	$	196.8	$	157.9

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

The following table provides additional detail regarding the Company’s deposits for financial assurance (in millions):


										December 31, 2021				December 31, 2020
	December 31, 2018				December 31, 2017					Current		Long-Term		Current		Long-Term
	Current		Long-Term		Current		Long-Term
NRC license	$	16.3	$	—	$	16.1	$	—
DOE lease	13.8		—		—		13.5
Workers compensation	—		6.0		—		5.9		Workers compensation	$	—	$	2.6	$	—	$	5.4
Other	0.2		0.3		0.2		0.3		Other	0.2		0.2		0.2		0.3
Total deposits for financial assurance	$	30.3	$	6.3	$	16.3	$	19.7	Total deposits for financial assurance	$	0.2	$	2.8	$	0.2	$	5.7

~~Piketon Facility Obligations and Surety Bonds~~

Centrus commenced with the decontamination and decommissioning (“D&D”) of the Piketon demonstration facility in accordance with the NRC license requirements in 2016. Centrus has previously provided financial assurance to the NRC for the D&D work in the form of surety bonds that are fully cash collateralized by Centrus for $16.3 million. Centrus believes the D&D work required for elimination of financial assurance under NRC license requirements has been completed and is working with the NRC to have the surety bonds cancelled, which would permit the Company to receive the cash collateral.

Centrus leases the Piketon facility from DOE. At the conclusion of the lease on June 30, 2019, absent mutual agreement between Centrus and DOE regarding other possible uses for the facility, Centrus is obligated to return the facility to DOE in a condition that meets NRC license requirements and in the same condition as the facility was in when it was leased to Centrus (other than due to normal wear and tear). Centrus must remove all Company-owned capital improvements at the Piketon facility, unless otherwise consented to by DOE, by the conclusion of the lease term. The estimated cost for these lease termination obligations, included in ~~Accounts Payable and Accrued Liabilities~~ on the consolidated balance sheet, is $1.6 million and $0.8 million as of December 31, 2018, and December 31, 2017, respectively. Centrus has previously provided financial assurance to DOE for the lease turnover obligations in the form of surety bonds that are fully cash collateralized by Centrus for $13.8 million. Centrus expects to receive cash when these surety bonds are reduced and/or cancelled as the Company fulfills its lease turnover obligations.

~~Financial Assurance for Workers’ Compensation~~

The Company has provided financial assurance to states in which it was previously self-insured for workers’ compensation in accordance with ~~the state~~each state’s requirements in the form of a surety bond ~~and a letter of credit~~or deposit that ~~are~~is fully cash collateralized by ~~Centrus for $6.0 million. The~~Centrus. As each state determines that the likelihood of further workers’ compensation obligations related to the period of self-insurance is reduced, the surety bond ~~and letter of credit will be cancelled,~~or deposit is subject to reduction and/or cancellation and the Company ~~expects to~~would receive the excess cash ~~when each state determines the Company has no further workers’ compensation obligations.~~collateral.

5.4. INVENTORIES

Centrus holds uranium at licensed locations in the form of natural uranium and as the uranium component of LEU. Centrus also holds SWU as the SWU component of LEU at licensed locations (e.g., fabricators) to meet book transfer requests by customers. Fabricators process LEU into fuel for use in nuclear reactors. Components of inventories ~~follow~~are as follows (in millions):


	December 31, 2021						December 31, 2020
	Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net
Separative work units	$	8.8	$	—	$	8.8	$	17.0	$	4.6	$	12.4
Uranium	82.3		8.4		73.9		47.8		0.3		47.5
Total	$	91.1	$	8.4	$	82.7	$	64.8	$	4.9	$	59.9

(a)Inventories owed to customers and suppliers, included in current liabilities, include SWU and uranium inventories owed to fabricators.

Inventories are valued at the lower of cost or net realizable value. In 2021, there was a valuation adjustment to reflect an update of projected timing and sources of inventory to be used for repayment of borrowed SWU inventory. There were no valuation adjustments in 2020. For details, refer to Note 1,Summary of Significant Accounting Policies — Contract Liabilities — LEU Segment.

December 31, 2018 December 31, 2017

Current
Assets

Current
Liabilities
(a)
Inventories, Net
Current
Assets

Current
Liabilities
(a)
Inventories, Net
Separative work units $ 20.1
$ 3.6
$ 16.5
$ 47.2
$ 15.0
$ 32.2
Uranium 109.6
99.4
10.2
105.9
62.9
43.0
Total $ 129.7
$ 103.0
$ 26.7
$ 153.1
$ 77.9
$ 75.2
The Company may also borrow SWU from customers, in which case the Company will record the SWU and the related liability for the borrowing using a projected average purchase price over the borrowing period. In 2018 through 2020 the Company borrowed SWU inventory valued at $20.7 million from a customer under an agreement signed in 2017 and recorded the SWU and the related liability using the Company’s average unit price of SWU purchases under contract projected to be used for repayment. The loan is repayable only with SWU. The cumulative liability to the customer for borrowed inventory was revalued to $25.5 million in the third quarter of 2021.The revaluation reflected an updated projection of the timing and sources of inventory to be used for repayment. In the fourth quarter of 2021, the Company repaid borrowed SWU inventory valued at $3.1 million to a customer and reduced the SWU and the related liability using an average purchase price over the borrowing period. The remaining liability to the customer of $22.4 million for borrowed inventory is included in Other Long-Term Liabilities. Cost of Sales for the twelve months ended December 31, 2021, includes the related expense of $4.8 million.


~~(a)~~	~~Inventories owed to customers and suppliers, included in current liabilities, include SWU and uranium inventories owed to fabricators.~~

6.5. PROPERTY, PLANT AND EQUIPMENT

A summary of changes in property, plant and equipment follows (in millions):


	December 31, 2020		Additions / (Depreciation)		December 31, 2021
Land	$	1.2	$	—	$	1.2
Buildings and leasehold improvements	3.9		0.7		4.6
Machinery and equipment	1.4		—		1.4
Other	1.1		—		1.1
Property, plant and equipment, gross	7.6		0.7		8.3
Accumulated depreciation	(2.7)		(0.3)		(3.0)
Property, plant and equipment, net	$	4.9	$	0.4	$	5.3

December 31,
2017 Additions / (Depreciation) Retirements December 31,
2018
Land $ 1.2
$ —
$ —
$ 1.2
Leasehold improvements 3.2
—
(0.7 ) 2.5
Machinery and equipment 1.3
0.1
(0.4 ) 1.0
Other 1.1
—
—
1.1
Property, plant and equipment, gross 6.8
0.1
(1.1 ) 5.8
Accumulated depreciation (1.9 ) (0.8 ) 1.1
(1.6 )
Property, plant and equipment, net $ 4.9
$ (0.7 ) $ —
$ 4.2

Depreciation expense was ~~$0.8~~$0.6 million in 2021 and ~~$1.4~~$0.5 million ~~for the years ended December 31, 2018 and 2017, respectively.~~in 2020.

~~The Company sold assets and property in 2018 and 2017 related to its operations and the American Centrifuge project that were no longer needed (in millions):~~

Year Ended December 31,
2018 2017
Sales of assets and property, net of auction fees and other costs $ 0.4
$ 4.8
Less: net carrying value —
(0.2 )
Gain on sales of assets $ 0.4
$ 4.6

Cash proceeds received $ 0.5
$ 4.7

~~Cash proceeds for the years ended December 31, 2018 and 2017 include $0.1 million and $0.2 million, respectively, which were included in~~ ~~Accounts Receivable~~ ~~as of December 31 of the prior year.~~

7.6. INTANGIBLE ASSETS

Intangible assets originated from the Company’s reorganization and application of fresh start accounting as of September 30, 2014, the date the Company emerged from bankruptcy, ~~September 30, 2014,~~ and reflect the conditions at that time. The intangible asset related to the sales order book is amortized as the order book existing at emergence is reduced, principally as a result of deliveries to customers. The intangible asset related to customer relationships is amortized using the straight-line method over the estimated average useful life of 15 years. Amortization expense is presented below gross profit on the consolidated statements of operations. Intangible asset balances are as follows (in millions):


	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Sales order book	$	54.6	$	35.5	$	19.1	$	54.6	$	32.0	$	22.6
Customer relationships	68.9		33.3		35.6		68.9		28.7		40.2
Total	$	123.5	$	68.8	$	54.7	$	123.5	$	60.7	$	62.8

December 31, 2018 December 31, 2017

Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount
Sales order book $ 54.6
$ 28.0
$ 26.6
$ 54.6
$ 25.9
$ 28.7
Customer relationships 68.9
19.5
49.4
68.9
14.9
54.0
Total $ 123.5
$ 47.5
$ 76.0
$ 123.5
$ 40.8
$ 82.7

The amount of amortization expense for intangible assets in each of the succeeding years is estimated to be as follows (in millions):


2022	$	9.5
2023	6.6
2024	8.6
2025	7.6
2026	9.9
Thereafter	12.5
Total	$	54.7

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

8.7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Components of accounts payable and accrued liabilities follow (in millions):


	December 31,
	2021		2020

Trade payables	$	4.9	$	4.9
Compensation and employee benefits	23.1		22.2
Postretirement health and life benefit obligations - current	7.0		11.6
Accrued HALEU Contract loss	0.5		7.0
Operating lease liability	0.9		2.4
Other accrued liabilities	1.4		2.5
Total accounts payable and accrued liabilities	$	37.8	$	50.6

December 31,
2018 2017

Trade payables $ 3.9
$ 6.3
Compensation and employee benefits 21.0
17.4
Postretirement health and life benefit obligations - current 15.4
14.7
Severance 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 5.8
3.9
Total accounts payable and accrued liabilities $ 52.4
$ 48.2

9.8. DEBT

A summary of debt follows (in millions):


		December 31, 2021				December 31, 2020
	Maturity	Current		Long-Term		Current		Long-Term
8.25% Notes:	Feb. 2027
Principal		$	—	$	74.3	$	—	$	74.3
Interest		6.1		27.5		6.1		33.7
Total		$	6.1	$	101.8	$	6.1	$	108.0

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

~~(a) Maturity can be extended to September 2024 upon the satisfaction of certain funding conditions described in the applicable indenture.~~

~~December 6, 2018 Note Exchange~~

On December 6, 2018, Centrus entered into Exchange Agreements (the “Exchange Agreements”) with certain holders of the Company’s outstanding 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 for 398,638 shares of Class A Common Stock and approximately $5.1 million in cash, which included accrued and unpaid interest on the Notes. The Company recognized a gain on extinguishment of $0.5 million, which is net of transaction costs and previously deferred costs related to the 8% PIK Toggle Notes of less than $0.1 million. Refer to ~~Note 15, Stockholders’ Equity~~ ~~for details related to the common stock.~~

~~February 14, 2017 Note Exchange~~

On February 14, 2017, pursuant to an exchange offer and consent solicitation, Centrus exchanged $204.9 million principal amount of the Company’s 8% PIK Toggle Notes for $74.3 million principal amount of 8.25% notes due February 2027 (the “8.25% Notes”), 104,574 shares of Series B Preferred Stock with a liquidation preference of $1,000 per share, and $27.6 million of cash. The exchange is accounted for as a troubled debt restructuring under ASC Subtopic 470-60, ~~Debt-Troubled Debt Restructurings by Debtors~~. The Company recognized the 8.25% Notes on the consolidated balance sheet as the sum of the principal balance and all future interest payments and recognized a gain of $33.6 million related to the note exchange for the quarter ended March 31, 2017, which is net of transaction costs of $9.0 million and previously deferred issuance costs related to the 8% PIK Toggle Notes of $0.4 million. Refer to ~~Note 15, Stockholders’ Equity~~ ~~for details related to the preferred stock.~~

~~8.25% Notes~~

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 mature on February 28, 2027. As ~~described~~shown in the table above, all future interest payment obligations on the 8.25% Notes are included in the carrying value of the 8.25% Notes. As a result, the Company’s reported interest expense will be less than its contractual interest payments throughout the term of the 8.25% Notes. As of December 31, ~~2018,~~2021, and December 31, ~~2017,~~2020, $6.1 million of interest is recorded as current and classified as Current Debt in the consolidated balance sheet.

The 8.25% Notes rank equally in right of payment with all of the Company’s existing and future unsubordinated indebtedness other than its Issuer Senior Debt and our Limited Secured Acquisition Debt (each as defined below). The 8.25% Notes rank senior in right of payment to all of the Company’s existing and future subordinated indebtedness and to certain limited secured acquisition indebtedness of the Company (the “Limited Secured Acquisition Debt”). The Limited Secured Acquisition Debt includes (i) any indebtedness, the proceeds of which are used to finance all or a portion of an acquisition or similar transaction if any lender’s lien is solely limited to the assets acquired in such a transaction and (ii) any indebtedness, the proceeds of which are used to finance all or a

portion of the American Centrifuge project or another next generation enrichment technology if any lender’s lien is solely limited to such assets, provided that a lien securing the 8.25% Notes that is junior with respect to the lien securing such indebtedness will be limited to the assets acquired with such Limited Secured Acquisition Debt.

The 8.25% Notes are subordinated in right of payment to certain indebtedness and obligations of the Company, as described in the indenture governing the 8.25% Notes ~~Indenture~~ (the “Issuer Senior Debt”), including (i) any indebtedness of the Company (inclusive of any indebtedness of Enrichment Corp.) under a future credit facility up to $50 million with a maximum net borrowing of $40 million after taking into account any minimum cash balance (unless a higher amount is approved with the consent of the holders of a majority of the aggregate principal amount of the 8.25% Notes then outstanding), (ii) any revolving credit facility to finance inventory purchases and related working capital needs, and (iii) any indebtedness of the Company to Enrichment Corp. under the secured intercompany notes.

The 8.25% Notes are guaranteed on a subordinated and limited basis by, and secured by substantially all of the assets of, Enrichment Corp. The Enrichment Corp. guarantee is a secured obligation and ranks equally in right of payment with all existing and future unsubordinated indebtedness of Enrichment Corp. (other than Designated Senior Claims (as defined below) and Limited Secured Acquisition Debt) and senior in right of payment to all existing and future subordinated indebtedness of Enrichment Corp. and Limited Secured Acquisition Debt. The Enrichment Corp. guarantee is subordinated in right of payment to certain obligations of, and claims against, Enrichment Corp. described in the indenture governing the 8.25% Notes ~~Indenture~~ (collectively, the “Designated Senior Claims”), including obligations and claims:

•under a future credit facility up to $50 million with a maximum net borrowing of $40 million after taking into account any minimum cash balance;

•under any revolving credit facility to finance inventory purchases and related working capital needs;

•held by or for the benefit of the Pension Benefit Guaranty Corporation (“PBGC”) pursuant to any settlement (including any required funding of pension plans); and

•under surety bonds or similar obligations held by or on behalf of the U.S. government pursuant to regulatory requirements.

The ~~liens~~lien securing the Enrichment Corp. guarantee of the ~~PIK Toggle Notes and the~~ 8.25% Notes ~~are pari passu with each other, and are~~is junior in priority with respect to the lien securing Limited Secured Acquisition Debt, which is limited to the assets acquired with such Limited Secured Acquisition Debt.

~~8% PIK Toggle Notes~~

9. LEASES

~~Interest on the 8% PIK Toggle Notes~~

Centrus leases facilities and equipment under operating leases. Lease expense for operating leases is payable semi-annually in arrears on March 31 and September 30 based on a 360-day year consisting of twelve 30-day months. The principal amount is increased by any payment of interest in the form of PIK payments. The Company has 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. For the semi-annual interest periods in 2017 and 2018, the Company elected to pay interest in the form of PIK payments at 5.5% per annum. Financing costs for the issuance of the 8% PIK Toggle Notes were deferred and are being amortizedrecognized on a straight-line basis ~~which approximates the effective interest method,~~ over the lease term. The Company has facility leases with terms greater than 12 months, and the Company records the related asset and obligation at the present value of lease payments over the term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease assets exclude lease incentives. Lease terms reflect options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The depreciable life of lease assets and leasehold improvements is limited by the ~~8% PIK Toggle Notes.~~expected lease term. The ~~8% PIK Toggle Notes mature~~weighted-average remaining lease term was 5.3 years at December 31, 2021, with maturity dates ranging from December 31, 2025 to September 2027, and the weighted-average discount rate was 12.5%. Lease expense totaled a credit of $0.5 million in 2021 and expense of $2.6 million for 2020. Lease expense primarily related to operating leases for the years ended December 31, 2021 and 2020 includes a $2.0 million and $0.3 million credit, respectively, from DOE for true-up of prior years’ lease expense. Other amounts related to short-term lease expense were insignificant. Operating lease expense is included in Cost of Sales, Selling, General and Administrative Expenses and Advance Technology Costs on the Statement of Operations. Cash paid for amounts included in operating cash flows for operating leases was $2.4 million for the year ended December 31, 2021.

The Company leases facilities and related personal property near Piketon, Ohio from DOE under a lease which is classified as operating. The lease was amended on May 6, 2021, resulting in a decrease in the monthly lease payment beginning with the June 2021 payment. The Company accounted for the amendment as a modification and remeasured the remaining future lease payments through May 31, 2022, resulting in the recording of a $1.0 million reduction in lease assets and liabilities. In September ~~20, 2019. However,~~2021, the ~~maturity date~~lease was extended through December 31, 2025. The Company did not remeasure the lease as under the terms of the lease amendment it may be ~~extended~~terminated early upon completion of the work under the HALEU Contract which is expected to ~~September 30, 2024, upon~~occur by June 1, 2022. Any facilities, centrifuges or other equipment constructed or installed under contract with DOE will be owned by DOE and may be returned to DOE in an “as is” condition at the ~~satisfaction~~end of ~~certain funding conditions described in~~ the ~~applicable indenture.~~lease term, and DOE would be responsible for its D&D.

Operating Lease Assets and Liabilities

The ~~8% PIK Toggle Notes mature~~table below presents the lease-related assets and liabilities recorded on ~~September 30, 2019. However,~~ the ~~maturity date can be extended to September 30, 2024, upon the satisfaction~~consolidated balance sheet (in millions).


	December 31, 2021		Classification on the Balance Sheet
Lease assets	$	2.1	Other long-term assets
Lease liabilities:
Current	$	0.9	Accounts payable and accrued liabilities
Non-current	3.0		Other long-term liabilities
Total lease liabilities	$	3.9

Maturity of ~~certain funding conditions described in the Indenture relating~~Operating Lease Liabilities

The table below reconciles undiscounted payments for operating leases with terms greater than 12 months to the ~~funding, under binding agreements, of (i)~~operating lease liabilities recorded on the ~~American Centrifuge project or (ii) the implementation and deployment of a National Security Train Program utilizing American Centrifuge technology.~~balance sheet (in millions).


2022	$	1.3
2023	1.0
2024	1.0
2025	1.0
2026	1.0
Thereafter	0.8
Total lease payments	6.1
Less imputed interest	2.2
Present value of lease payments	$	3.9

The 8% PIK Toggle Notes rank equally in right of payment with all existing and future unsubordinated indebtedness of the Company (other than the Issuer Senior Debt) and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The 8% PIK Toggle Notes are subordinated in right of payment to the Issuer Senior Debt.

The 8% PIK Toggle Notes are guaranteed and secured on a subordinated, conditional, and limited basis by Enrichment Corp. Enrichment Corp. will be released from its guarantee without the consent of the holders of the 8% PIK Toggle Notes upon the occurrence of certain termination events (other than with respect to an unconditional interest claim), including (i) the involuntary termination by the Pension Benefit Guaranty Corporation (“PBGC”) of any of the qualified pension plans of the Company or Enrichment Corp, (ii) the cessation of funding prior to completion of our ongoing American Centrifuge test programs or (iii) both a decision by the Company to abandon American Centrifuge technology and either (1) the efforts by the Company to commercialize another next generation enrichment technology funded at least in part by new capital provided or to be provided by Enrichment Corp. have been terminated or are no longer being pursued or (2) the attainment of capital necessary to commercialize another next generation enrichment technology with respect to which the issuer is involved which does not include new capital provided or to be provided by Enrichment Corp.

The Enrichment Corp. guarantee ranks equally in right of payment with all existing and future unsubordinated indebtedness of Enrichment Corp. (other than the Designated Senior Claims and Limited Secured Acquisition Debt) and senior in right of payment to all existing and future subordinated indebtedness of Enrichment Corp. and Limited Secured Acquisition Debt. The Enrichment Corp. guarantee is subordinated in right of payment to the Designated Senior Claims.

10. FAIR VALUE

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value of assets and liabilities, the following hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:

•Level 1 –assets include investments with quoted prices ~~for identical instruments~~ in active ~~markets.~~markets that the Company has the ability to liquidate as of the reporting date.

•Level 2 –assets include investments in U.S. government agency securities, corporate and municipal debt whose estimates are valued based on observable inputs, other than quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.prices.

•Level 3 –assets include investments with unobservable inputs, such as third party valuations, ~~derived using one~~due to little or ~~more significant inputs that are not observable.~~no market activity.

Financial Instruments Recorded at Fair Value (in millions):


	December 31, 2018								December 31, 2017									December 31, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:																	Assets:
Cash and cash equivalents	$	123.1	$	—	$	—	$	123.1	$	208.8	$	—	$	—	$	208.8	Cash and cash equivalents	$	193.8	$	—	$	—	$	193.8	$	152.0	$	—	$	—	$	152.0
Deferred compensation asset (a)	1.4		—		—		1.4		1.4		—		—		1.4		Deferred compensation asset (a)	3.2		—		—		3.2		2.4		—		—		2.4

Liabilities:																	Liabilities:
Deferred compensation obligation (a)	$	1.4	$	—	$	—	$	1.4	$	1.4	$	—	$	—	$	1.4	Deferred compensation obligation (a)	$	3.2	$	—	$	—	$	3.2	$	2.3	$	—	$	—	$	2.3


~~(a)~~	The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is funded through a rabbi trust. Trust funds are invested in mutual funds for which unit prices are quoted in active markets and are classified within Level 1 of the valuation hierarchy.

(a) The deferred compensation obligation represents the balance of deferred compensation plus net investment earnings. The deferred compensation plan is funded through a rabbi trust. Trust funds are invested in mutual funds for which unit prices are quoted in active markets and are classified within Level 1 of the valuation hierarchy.

There were no transfers between Level 1, 2 or 3 during the periods presented.

Other Financial Instruments

As of December 31, ~~2018~~,2021, and ~~December 31, 2017,~~2020, the consolidated balance sheet carrying amounts for Accounts Receivable, Accounts Payable and Accrued Liabilities (excluding the deferred compensation obligation described above), and Payables under SWU Purchase Agreements approximate fair value because of their short-term nature.

The carrying value and estimated fair value of long-term debt are as follows (in millions):


	December 31, 2021					December 31, 2020
	Carrying Value			Estimated Fair Value (a)		Carrying Value			Estimated Fair Value (a)
8.25% Notes	$	107.9	(b)	$	74.3	$	114.1	(b)	$	68.6

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

^(a) Based on recent trading prices and bid/ask quotes as of or near the balance sheet date, which are considered Level 2 inputs based on the frequency of trading.


^(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~~.

(b) The carrying value of the 8.25% Notes consists of the principal balance of $74.3 million and the sum of current and non-current interest payment obligations until maturity. Refer to Note 8, Debt.

11. PENSION AND POSTRETIREMENT HEALTH AND LIFE BENEFITS

There are approximately ~~5,000~~3,500 employees and retirees covered by qualified defined benefit pension plans providing retirement benefits based on compensation and years of service, and approximately ~~3,100~~2,300 employees and retirees covered by postretirement health and life benefit plans. DOE retained the obligation for postretirement health and life benefits for workers who retired prior to July 28, 1998. Pursuant to non-qualified supplemental pension plans, Centrus provides certain executive officers additional retirement benefits in excess of qualified plan limits imposed by tax law based on a targeted benefit objective. Employees hired on or after September 1, 2008, who are not covered by a collective bargaining agreement that provides for participation do not participate in a qualified defined benefit pension plan or postretirement health and life benefit plans.

Changes in the projected benefit obligations and plan assets and the funded status of the plans follow:


	Defined Benefit Pension Plans				Postretirement Health and Life Benefit Plans
($ millions)	Year Ended December 31,				Year Ended December 31,
	2021		2020		2021		2020
Changes in Benefit Obligations:
Obligations at beginning of period	$	757.9	$	763.5	$	142.4	$	152.8
Actuarial (gains) losses, net	(28.7)		56.7		(2.3)		(1.6)
Service costs	2.7		3.5		—		—
Interest costs	18.1		24.3		3.4		4.8
Benefits paid from Plan assets	(51.3)		(56.3)		(12.4)		(13.6)
Benefits paid from Company assets	(0.4)		(0.5)		—		—
Settlements	—		(30.4)		—		—
Administrative expenses paid	(2.1)		(2.9)		—		—
Obligations at end of period	696.2		757.9		131.1		142.4
Changes in Plan Assets:
Fair value of plan assets at beginning of period	633.1		621.2		—		—
Actual return on plan assets	57.8		85.4		—		—
Company contributions	35.7		16.6		21.5		13.6
Benefits paid	(51.7)		(56.8)		(12.3)		(13.6)
Settlements	—		(30.4)		—		—
Administrative expenses paid	(2.2)		(2.9)		—		—
Fair value of plan assets at end of period	672.7		633.1		9.2		—
Unfunded status at end of period	$	(23.5)	$	(124.8)	$	(121.9)	$	(142.4)

Amounts recognized in assets and liabilities:
Current liabilities	$	(0.4)	$	(0.4)	$	(7.0)	$	(11.6)
Non-current liabilities	(23.1)		(124.4)		(114.9)		(130.8)
	$	(23.5)	$	(124.8)	$	(121.9)	$	(142.4)
Amounts in accumulated other comprehensive income (loss), pre-tax:
Prior service credit	$	(0.9)	$	(1.1)	$	(2.0)	$	(2.1)

Defined Benefit Pension Plans
Postretirement Health
and Life Benefit Plans
($ millions) Year Ended December 31, Year Ended December 31,
2018 2017 2018 2017
Changes in Benefit Obligations:
Obligations at beginning of period $ 817.9
$ 814.6
$ 170.7
$ 192.8
Actuarial (gains) losses, net (50.8 ) 32.8
(13.1 ) (24.8 )
Service costs 3.4
3.7
—
—
Interest costs 28.7
32.2
5.8
7.2
Benefits paid (57.5 ) (59.3 ) (11.8 ) (14.5 )
Lump sum benefits paid (4.8 ) (2.9 ) —
—
Plan change —
—
—
10.0
Administrative expenses paid (3.1 ) (3.2 ) —
—
Obligations at end of period 733.8
817.9
151.6
170.7
Changes in Plan Assets:
Fair value of plan assets at beginning of period 654.6
634.1
1.8
7.7
Actual return on plan assets (40.2 ) 84.4
—
0.1
Company contributions 14.5
1.5
10.0
8.5
Benefits paid (57.5 ) (59.3 ) (11.8 ) (14.5 )
Lump sum benefits paid (4.8 ) (2.9 ) —
—
Administrative expenses paid (3.1 ) (3.2 ) —
—
Fair value of plan assets at end of period 563.5
654.6
—
1.8
Unfunded status at end of period $ (170.3 ) $ (163.3 ) $ (151.6 ) $ (168.9 )

Amounts recognized in assets and liabilities:
      Current liabilities $ (1.4 ) $ (1.7 ) (15.4 ) (14.7 )
      Noncurrent liabilities (168.9 ) (161.6 ) (136.2 ) (154.2 )
$ (170.3 ) $ (163.3 ) $ (151.6 ) $ (168.9 )
Amounts in accumulated other comprehensive income (loss), pre-tax:
      Prior service cost (credit) $ —
$ —
$ (2.4 ) $ (2.5 )

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

The current liabilities reflect expected contributions for benefit payments for the non-qualified plans and the postretirement health and life benefit plans in the following year.

The discount rates ~~above,~~below, rounded to the nearest 0.1%, are the estimated rates at which the benefit obligations could be effectively settled on the measurement date and are based on yields of high quality fixed income investments whose cash flows match the timing and amount of expected benefit payments of the plans.

Plan assets and benefit obligations are remeasured each year as of the balance sheet date resulting in differences between actual and projected results for the year. These actuarial gains and losses are recognized in the statement of operations in the fourth quarter. In addition, an interim remeasurement and recognition of gains or losses may be required for a plan during the year when lump sum payments exceed, or are expected to exceed, the sum of the service cost and interest cost components of the annual net periodic benefit cost for that plan for the current year. There were no interim remeasurements in ~~2018~~2021 and ~~2017.~~2020.

The defined benefit pension plans currently allow for a lump sum payment option to (a) active employees who are terminated as a result of Company reductions in force and (b) ~~periodically to terminated vested participants. The lump sum payment option was most recently extended through September 2019 to those~~ terminated vested participants who have not yet begun receiving their benefits and have been terminated as a result of a reduction in force by the Company, or due to voluntary termination or involuntary termination, other than involuntary termination as a termination for cause.

As part of the Company’s continued effort to reduce the size and volatility of its pension obligations and administrative costs, the Company transferred approximately $30.4 million of pension plan assets and approximately $30.4 million of related benefit obligations to an insurance company through the purchase of a group annuity contract in the fourth quarter of 2020.

Projected benefit obligations are based on actuarial assumptions including possible future increases in compensation. Accumulated benefit obligations are based on actuarial assumptions but do not include possible future increases in compensation. Effective August 2013, accrued benefits under the defined benefit pension plans are fixed and no longer increase to reflect changes in compensation or company service. Therefore, the accumulated benefit obligation equaled the projected benefit obligation of ~~$733.8~~$696.2 million and ~~$817.9~~$757.9 million as of December 31, ~~2018~~2021 and ~~2017,~~2020, respectively. As of December 31, ~~2018~~2021 and ~~2017,~~2020, none of Centrus’ plans had fair value of plan assets in excess of accumulated benefit obligations.

Components of Net Periodic Benefit Costs and Other Amounts Recognized in Other Comprehensive Income ~~(Loss)~~

The Company reports service costs for its defined benefit pension plans and its postretirement health and life benefit plans in Cost of Sales and Selling, General and Administrative Expenses. The remaining components of net periodic benefit ~~credits (costs)~~(credits) costs are reported as Nonoperating Components of Net Periodic Benefit ~~Expense (Income).~~Income.


	Defined Benefit Pension Plans				Postretirement Health and Life Benefit Plans
(in millions)	Year Ended December 31,				Year Ended December 31,
	2021		2020		2021		2020
Net Periodic Benefit (Credits) Costs
Service costs	$	2.7	$	3.5	$	—	$	—
Interest costs	18.1		24.3		3.4		4.8
Expected return on plan assets	(38.3)		(37.5)		—		—
Amortization of prior service credits, net	(0.2)		(0.2)		(0.1)		(0.1)
Actuarial (gains) losses, net	(48.2)		8.9		(2.3)		(1.7)
Net periodic benefit (credits) costs	$	(65.9)	$	(1.0)	$	1.0	$	3.0

Defined Benefit Pension Plans
Postretirement Health
and Life Benefit Plans
(in millions) Year Ended December 31, Year Ended December 31,
2018 2017 2018 2017
Net Periodic Benefit (Credits) Costs
Service costs $ 3.4
$ 3.7
$ —
$ —
Interest costs 28.7
32.2
5.8
7.2
Expected return on plan assets (gains) (41.0 ) (40.7 ) —
—
Amortization of prior service costs (credits), net —
—
(0.2 ) (0.1 )
Actuarial (gains) losses, net 30.4
(10.9 ) (13.1 ) (24.9 )
Loss on plan changes resulting from legal settlement —
—
—
10.0
Net periodic benefit (credits) costs $ 21.5
$ (15.7 ) $ (7.5 ) $ (7.8 )


Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)
Amortization of prior service costs, net	$	—	$	—	$	(2.0)	$	(2.1)
Prior service credit	(0.9)		(1.1)		—		—
Total recognized in other comprehensive loss, pre-tax	$	(0.9)	$	(1.1)	$	(2.0)	$	(2.1)
Total recognized in net periodic benefit costs (income) and other comprehensive income (loss), pre-tax	$	(66.8)	$	(2.1)	$	(1.0)	$	0.9

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 )

Net periodic benefit costs include service and interest costs of providing pension benefits that are accrued over the years employees render service. Prior service costs or credits are amortized over the employees’ average remaining years of service from age 40 until the date of full benefit eligibility or the average expected future lifetime of all plan participants, as applicable. Participants in the postretirement health and life benefit plans are generally eligible for benefits at retirement after age 50 with 10 years of continuous credited service at the time of retirement.

On September 7, 2021, the Company collected $43.5 million from DOE, of which $33.8 million was contributed to the pension plan in September 2021 for its subsidiary Enrichment Corp. and $9.7 million was deposited in October 2021 in a trust for payment of postretirement health benefits payable by Enrichment Corp. Refer to Note 16, Commitments and Contingencies and Note 2, Revenue And Contracts with Customers.

Effective January 1, 2014, or for certain plan participants formerly represented by a collective bargaining unit, January 1, 2015, plan participants age 65 or older (“post-65”) have access to a range of medical plan choices with varying costs and benefits through a Medicare Exchange implemented by the Company. The Company provides an annual stipend for each of the post-65 retirees and post-65 spouses who enroll in the coverage through the exchange. Depending on the level of benefits elected by the participant, the participant may be required to make contributions in excess of the stipend amount.

The transition to the post-65 Medicare Exchange was reflected as a plan amendment that reduced plan obligations by $6.8 million as of December 31, 2014. This reduction in obligation was recognized in other comprehensive income in 2014 as a prior service credit. The prior service credit is being amortized into net periodic benefit cost as a credit over time. The post-65 Medicare Exchange stipend amount was increased for 2017. This increase in obligation of $3.6 million as of December 31, 2016, was recognized in other comprehensive income in 2016 as a prior service cost and is being amortized into net periodic benefit cost over time. The post-65 Medicare Exchange stipend amount was increased in 2018, as specified in a settlement agreement with the former collective bargaining unit. The settlement agreement also specifies the addition of catastrophic drug coverage effective January 1, 2019. The benefit enhancement for 2019 has been applied to all post-65 participants regardless of past representation by the collective bargaining agreement. The increase in obligation of $10.0 million as a result of the

settlement agreement was recognized in net periodic benefit costs in 2017 as a plan change resulting from a legal settlement and is reported in Nonoperating Components of Net Periodic Benefit ~~Expense (Income)~~Income.

The defined benefits pension plans were amended in March 2019 making permanent the option for pension-eligible employees to receive a lump sum payment upon termination, regardless of benefit size, which decreased plan obligations by $1.3 million. The effect of these plan changes has been added to accumulated other comprehensive income (loss) as an unrecognized prior service cost to be amortized over the average future service of active employees starting in 2020.

Assumptions Used to Determine Net Periodic Benefit Costs


	Defined Benefit Pension Plans		Postretirement Health and Life Benefit Plans
	Year Ended December 31,		Year Ended December 31,
	2021	2020	2021	2020
Discount rate	2.8%	2.5%	2.8%	2.5%
Expected return on plan assets	6.3%	6.4%	—	—

Defined Benefit Pension Plans
Postretirement Health
and Life Benefit Plans
Year Ended December 31, Year Ended December 31,
2018 2017 2018 2017
Discount rate 4.3% 3.7% 4.3% 3.6%
Expected return on plan assets 6.8% 6.8% — —

The expected return on plan assets is based on the weighted average of long-term return expectations for the composition of the plans’ equity and debt securities. Expected returns on equity securities are based on historical long-term returns of equity markets. Expected returns on debt securities are based on the current interest rate environment.

Healthcare cost trend rates used to measure postretirement health benefit obligations follow:


	December 31,
	2021	2020
Healthcare cost trend rate for the following year	6.0%	5.5%
Long-term rate that the healthcare cost trend rate gradually declines to	5%	5%
Year that the healthcare cost trend rate is expected to reach the long-term rate	2026	2022

December 31,
2018 2017
Healthcare cost trend rate for the following year 6.0% 6.5%
Long-term rate that the healthcare cost trend rate gradually declines to 5% 5%
Year that the healthcare cost trend rate is expected to reach the long-term rate 2021 2021

~~A one-percentage-point change in the assumed healthcare cost trend rates would have an effect on the postretirement health benefit obligation and costs as follows:~~

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

Benefit Plan Assets

Independent advisors manage investment assets of Centrus’ defined benefit pension plans and postretirement health and life benefit plans. Centrus has the fiduciary responsibility for reviewing performance of the various investment advisors. The goal of the investment policy of the plans is to maximize portfolio returns within reasonable and prudent levels of risk in order to meet projected liabilities and maintain sufficient cash to make timely payments of all participant benefits. Risk is reduced by diversifying plan assets and following a strategic asset allocation approach. Additionally, as the plans are frozen and funding status has improved, the Company has shifted the investment allocations to lower risk investments in order to minimize market exposure and will continue to do so based upon approved funding milestones. Asset classes and target weights are adjusted periodically to optimize the long-term portfolio risk/return ~~tradeoff,~~trade off, to provide liquidity for benefit payments, and to align portfolio risk with the underlying obligations. The investment policy of the plans prohibits the use of leverage, direct investments in tangible assets, or any investment prohibited by applicable laws or regulations.

The allocation of plan assets between equity and debt securities and the target allocation range by asset category for the defined benefit pension plans follows:


	December 31,
	2021		2020		2022 Target
Equity securities	45	%	52	%	40	-	45%
Debt securities	51	%	42	%	50	-	55%
Cash	4	%	6	%	0	-	5%
	100	%	100	%

December 31,
2018 2017 2019 Target
Equity securities 48 % 49 % 40 - 60%
Debt securities 49 % 49 % 40 - 60%
Cash 3 % 2 % 0 - 5%
100 % 100 %

Prefunding for the postretirement health and life benefit plans was discontinued in 2012 and the remaining assets were invested in short-term bond funds as of December 31, 2017, and were expended in early 2018. Benefit costs of the postretirement health and life benefit plans are primarily funded as costs are incurred.

Plan assets are measured at fair value. Following are the plan investments as of December 31, ~~2018~~2021 and ~~2017,~~2020, categorized by the fair value hierarchy levels described in Note 10, Fair Value ~~Measurements~~:


	Defined Benefit Pension and Postretirement Health and Life Benefit Plans
(in millions)	Level 1				Level 2				Level 3				Total
	2021		2020		2021		2020		2021		2020		2021		2020
U.S. government securities	$	—	$	—	$	13.0	$	16.4	$	—	$	—	13.0		$	16.4
Corporate debt	—		—		56.4		104.2		—		—		56.4		104.2
Municipal bonds and non-U.S. government securities	—		—		1.7		2.1		—		—		1.7		2.1
Mutual funds (b)	582.9		—		—		—		—		—		582.9		—
Mortgage and asset backed securities	—		—		7.9		6.4		—		—		7.9		6.4
Fair value of investments by hierarchy level	$	582.9	$	—	$	79.0	$	129.1	$	—	$	—	661.9		129.1
Investments measured at NAV (a)													20.1		504.4
Accrued interest receivable													1.2		1.3
Unsettled transactions													(1.4)		(1.8)
Plan assets													$	681.8	$	633.0

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

Postretirement Health and Life Benefit Plans
(in millions) Level 1 Level 2 Level 3 Total
2018 2017 2018 2017 2018 2017 2018 2017
Money market funds $ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Bond mutual funds —
1.8
—
—
—
—
—
1.8
Fair value of investments by hierarchy level $ —
$ 1.8
$ —
$ —
$ —
$ —
$ —
$ 1.8

(a) Equity, bond and money market investments held in collective trusts are valued based on the net asset value (“NAV”) provided by the administrator of the funds. The NAV for each fund is based on the underlying assets owned by the fund, less any expenses accrued against the fund, divided by the number of fund shares outstanding. While the underlying investments are traded on an exchange, the funds are not. Fair values for the collective trust investments are measured using the NAVs as a practical expedient and are not categorized in the fair value hierarchy.

(b) Postretirement Health and Life Benefit Plan assets of $9.2 million are all contained within Level 1 ~~assets consist of~~ mutual ~~funds and money market funds having a publicly available NAV.~~funds.

~~Level 2 assets include investments in U.S. government agency securities, corporate and municipal debt that are valued based on estimated prices using observable, market-based inputs.~~

100

Benefit Plan Cash Flows

~~Centrus~~The Company expects to contribute ~~$9.4~~$0 million to the qualified defined benefit pension plans, ~~$1.4~~$0.4 million to the non-qualified defined benefit pension plans, and ~~$15.3~~$7.0 million to the postretirement health and life benefit plans in ~~2019.~~2022. There is no required contribution for the postretirement health and life benefit plans under Employee Retirement Income Security Act (“ERISA”).

Estimated future benefit plan payments follow (in millions):


	Defined Benefit Pension Plans		Postretirement Health and Life Benefit Plans
2022	$	52.1	$	11.2
2023	51.0		10.7
2024	49.1		10.1
2025	47.6		9.5
2026	47.6		9.0
2027 to 2031	214.0		36.3

Defined Benefit Pension Plans Postretirement Health and Life Benefit Plans
2019 $ 57.9
$ 15.3
2020 56.0
13.9
2021 54.8
13.2
2022 53.6
12.6
2023 52.4
12.1
2024 to 2028 245.1
49.3

Other Plans

~~Centrus~~The Company sponsors a 401(k) defined contribution plan for employees. Employee contributions are matched at established rates. Amounts contributed are invested in a range of investment options available to participants and the funds are administered by an independent trustee. Matching cash contributions by the Company amounted to ~~$1.8~~$2.0 million in ~~2018~~2021 and ~~$2.3~~$1.6 million in ~~2017.~~2020.

Under the Executive Deferred Compensation Plan, qualified employees may defer compensation on a tax-deferred basis subject to plan limitations. Any matching contributions under the Company’s 401(k) plan that are foregone due to annual compensation limitations of the Internal Revenue Code of 1986, as amended (the “Code”) are eligible to be received from the Company under the Executive Deferred Compensation Plan, provided that the employee deferred the maximum allowable pre-tax contribution in the 401(k) plan. ~~Centrus~~The Company matching contributions amounted to less than $0.1 million in ~~2018~~2021 and ~~2017.~~2020.

12. STOCK-BASED COMPENSATION

The Company’s 2014 Equity Incentive Plan (“2014 Plan”) authorizes the issuance of stock options, stock appreciation rights (“SARs”), restricted stock units, restricted stock, notional stock units, performance awards, dividend equivalent rights, and other stock-based awards, as well as cash-based awards, to employees, officers, directors, and other individuals providing services to the Company or its affiliates. As disclosed in Note 15 - Stockholder’s Equity, in February 2021, the Company increased the available shares of Class A Common Stock under the Company’s 2014 Plan by an additional 700,000 shares. The plan currently authorizes the issuance of up to ~~1,200,000~~1,900,000 shares. As of December 31, 2021, there were 844,293 shares available for future awards.

In January 2019, the Company adopted the 2019 Executive Incentive Plan (“2019 Plan”), which is subject to the terms of the 2014 Plan, under which participating employees are eligible to receive grants of equity awards such as notional stock units and SARs. Under this plan, the Company has granted awards that are subject to either cliff-based or performance-based vesting. The cliff-based awards vest after three years of service. The performance-based awards vest if the company reaches or exceeds a pre-defined net income target for the three-year award term. Equity awards may be payable in common stock, cash, or a combination of both, at the discretion of the Board of Directors. Compensation costs for awards that are likely to be settled with cash payments are remeasured each reporting period based on the closing price of the Company’s common stock. These cumulative vested costs are accrued in Accounts Payable and Accrued Liabilities or Other Long-Term Liabilities. Equity awards that are payable in stock are accounted for as equity and compensation costs are amortized on a straight-line basis over the vesting period.

101

In 2019, under the 2014 Plan, the Company awarded notional stock units to participating executives for the three-year period ending December 31, 2021. As the original award, at grant date, was expected to be settled in cash, the Company had recorded cumulative compensation costs in Other Long-Term Liabilities at December 31, 2020. There were 206,183 notional stock units (two-thirds of these awards) paid in shares in April 2021, with the remainder anticipated to be paid in April 2022. As of March 31, 2021, the Company reclassified these shares to equity as the Board of Directors approved settlement in shares.

In 2020, the Company awarded participating executives notional stock units and stock appreciation rights for the three-year period ending April 26, 2023. These equity awards may be payable in common stock, cash, or a combination of both at the discretion of the Board of Directors. The cumulative vested costs have been accrued in Other Long-Term Liabilities as they are likely to be settled in cash.

In September 2021, the Company awarded participating executives notional stock units and SARs. The awards granted will be paid in shares on or before May 1, 2024, provided that a defined performance condition is achieved. In order to receive the award, the total cumulative net income as reported on the Company’s Form 10-Ks for the years ending December 31, 2021, 2022, and 2023 must be equal to or greater than $160 million. The grant date fair value of notional stock units is determined based on the closing price of Class A Common Stock. As of December 31, 2018, there were approximately 596,000 shares available for future awards, including approximately 120,000 shares associated with awards that were cancelled or forfeited without being exercised.

~~A summary of stock-based compensation costs follows (in millions):~~

Year Ended December 31,
2018 2017

Total stock-based compensation costs:
Restricted stock units $ 0.1
$ 0.1
Stock options 0.3
0.4
Expense included in selling, general and administrative expense $ 0.4
$ 0.5

Total recognized tax benefit $ —
$ —

Stock on the grant date. The ~~total recognized tax benefit is reported at the federal statutory rate net~~grant date fair value of the ~~tax valuation allowance.~~SARs were determined based on the Black-Scholes option-pricing model. The Company has concluded that it is probable that the performance condition will be achieved and therefore has recorded compensation cost. Compensation costs for these notional stock units and SARs are amortized to expense on a straight-line basis over the vesting period.

~~Stock-based compensation~~Compensation cost for restricted stock units and stock options is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period. As of December 31, ~~2018,~~2021, there was ~~$0.1~~$0.4 million of unrecognized compensation cost, adjusted for actual forfeitures, related to non-vested stock-based payments granted, of which $0.3 million relates to restricted stock units and $0.1 million relates to stock ~~options and less than $0.1 million relates to restricted stock units.~~options. That cost is expected to be recognized over a weighted-average period of 312 months. ~~There were no stock options granted, exercised or forfeited during~~

A summary of stock-based compensation costs is as follows (in millions):


	Year Ended December 31,
	2021		2020

Notional stock units and stock appreciation rights	$	11.6	$	6.6
Restricted stock units	0.5		0.4
Stock options	0.1		0.1
Total stock-based compensation costs	$	12.2	$	7.1

Total recognized tax benefit	$	(1.5)	$	—

The total recognized tax benefit is reported at the ~~years ended December 31, 2018 and 2017.~~federal statutory rate net of the tax valuation allowance.

Board Restricted Stock Units

Non-employee, independent directors are granted restricted stock units as part of their compensation for serving on the Board of Directors. Settlement of these restricted stock units is made in shares of Class A Common Stock only upon the director’s retirement or other end of service. The restricted stock units generally vest over one year; however, vesting is accelerated upon (1) the director attaining eligibility for retirement, (2) termination of the director’s service by reason of death or disability, or (3) a change in control. As of December 31, ~~2018,~~2021, approximately ~~141,000~~192,000 shares of restricted stock units could potentially be converted to Class A Common Stock once vested and settled.

102

The ~~fair value~~following table summarizes Centrus’ board restricted stock units activity:


	Shares (in thousands)	Weighted Average Grant Date Fair Value (per share)

Nonvested at December 31, 2019	74	$3.09
Granted	47	$10.38
Vested	(74)	$3.09
Forfeited	—	—
Nonvested at December 31, 2020	47	$10.38
Granted	20	$25.13
Vested	(47)	$10.38
Forfeited	—	—
Nonvested at December 31, 2021	20	$25.13

Employee Restricted Stock Units

In 2021, certain employees were granted restricted stock units as part of their compensation. Settlement of these restricted stock units is ~~determined based on the closing price~~made in shares of Class A Common Stock ~~on the grant date. Compensation cost for~~upon vesting. The restricted stock units ~~is amortized~~generally vest after three years. As of December 31, 2021, approximately 4,000 shares of restricted stock units could potentially be converted to ~~expense on a straight-line basis over the vesting period.~~Class A Common Stock once vested and settled.

The following table summarizes Centrus’s employee restricted stock units activity:


	Shares (in thousands)	Weighted Average Grant Date Fair Value (per share)

Nonvested at December 31, 2020	—	$—
Granted	4	$24.01
Vested	—	—
Forfeited	—	—
Nonvested at December 31, 2021	4	$24.01

Stock Options

The intrinsic value of an option, if any, represents the excess of the fair value of the common stock over the exercise price. The fair value of stock option awards is estimated using the Black-Scholes option pricing model, which includes a number of assumptions including Centrus’ estimates of stock price volatility, employee stock option exercise behaviors, future dividend payments, and risk-free interest rates.

The expected term of options granted is the estimated period of time from the beginning of the vesting period to the date of expected exercise or other settlement, based on historical exercises and post-vesting terminations. Centrus has estimated the expected term using the simplified method described in SEC Staff Accounting Bulletin ~~No. 107/110,~~ Topic 14, Share-Based Payment, due to the lack of historical exercise and post-vesting termination information available for the Company since its reorganization. Future stock price volatility is estimated based on the Company’s historical volatility. The risk-free interest rate for the expected option term is based on the U.S. Treasury yield curve in effect at the time of grant. No cash dividends are expected in the foreseeable future and, therefore, an expected dividend yield of zero is used in the option valuation model. For reporting periods prior to January 1, 2017, the Company used historical data to estimate pre-vesting option forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from the estimates. Effective January 1, 2017, the Company recognizes forfeitures as they occur. Compensation expense is recognized for stock option awards that are expected to vest.

103

There were no option grants in the years ended December 31, ~~2018~~2021, and ~~2017.~~2020.

Stock options vest and become exercisable in equal annual installments over a three or four year period and expire ten years from the date of grant. A summary of stock option activity follows:


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

Outstanding at December 31, 2019	518	$4.02	6.2	$1.5
Granted	—	—	—	—
Exercised	(107)	$3.43	—	—
Forfeited/Cancelled	—	—	—	—
Outstanding at December 31, 2020	411	$4.18	5.3	$7.8
Granted	—	—	—	—
Exercised	(217)	$4.17	—	—
Forfeited/Cancelled	—	—	—	—
Outstanding at December 31, 2021	194	$4.18	4.4	$8.9
Exercisable at December 31, 2021	144	$4.37	3.2	$6.6

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

Outstanding at December 31, 2017 425 $4.14 7.3 $0.1
Outstanding at December 31, 2018 425 $4.14 6.3 $—
Exercisable at December 31, 2018 345 $4.11 6.3 $—

Stock options outstanding and options exercisable at December 31, ~~2018, follow:~~2021, are as follows:


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

$4.37	144	3.2	144
$3.65	50	7.8	—

Stock Appreciation Rights - 2020 Award

The intrinsic value of a SAR, if any, represents the excess of the fair value of the common stock over the exercise price. The fair value of SAR awards is estimated using the Black-Scholes option pricing model, which includes a number of assumptions including Centrus’ estimates of stock price volatility, expected term, future dividend payments, and risk-free interest rates.

These SARs generally have a defined term of three years from award and are automatically exercised at the end of its term. Future stock price volatility is estimated based on the Company’s historical volatility. The risk-free interest rate for the expected term is based on the U.S. Treasury yield curve in effect at the time of grant. No cash dividends are expected in the foreseeable future and, therefore, an expected dividend yield of zero is used in the valuation model.

104

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

$5.62 22 5.9 22
$4.37 300 6.2 225
$3.90 23 6.6 23
$3.93 15 6.6 15
$2.71 50 6.8 50
$2.68 15 7.4 10

A summary of SARs with time-based vesting granted under the 2014 plan for the year ended December 31, 2021, are as follows:


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

Outstanding at December 31, 2019	—	$—	—	$—
Granted	83.5	$5.53	—	—
Exercised	—	—	—	—
Forfeited/Cancelled	—	—	—	—
Outstanding at December 31, 2020	83.5	$5.53	2.3	$1.47
Granted	—	—	—	—
Exercised	—	—	—	—
Forfeited/Cancelled	—	—	—	—
Outstanding at December 31, 2021	83.5	$5.53	1.3	$3.71
Exercisable at December 31, 2021	83.5	$5.53	1.3	$3.71

The weighted-average assumptions used in the valuation models to determine the fair value of SARs granted to employees under the 2014 Plan are as follows:


	Year Ended December 31,
	2021	2020

SARs Granted (in thousands)	n/a	83.5
Average Risk-Free Rate	n/a	0.14%
Expected Volatility	n/a	94%
Expected Term (Years)	n/a	2.3
Dividend Yield	n/a	—

Stock Appreciation Rights (Performance Condition) - 2021 Award

These SARs generally have a defined term of three years from award and are automatically exercised at the end of its term if the performance condition has been met. Future stock price volatility is estimated based on the Company’s historical volatility. The risk-free interest rate for the expected term is based on the U.S. Treasury yield curve in effect at the time of grant. No cash dividends are expected in the foreseeable future and, therefore, an expected dividend yield of zero is used in the valuation model.

105

A summary of SARs with performance-based vesting granted under the 2014 plan in the year ended December 31, 2021, are as follows:


	Stock Appreciation Rights (Performance Condition) (in thousands)	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (in millions)

Outstanding at December 31, 2020	—	$—	—	$—
Granted	21	$19.44	—	—
Exercised	—	—	—	—
Forfeited/Cancelled	—	—	—	—
Outstanding at December 31, 2021	21	$19.44	2.3	$0.64
Exercisable at December 31, 2021	21	$19.44	2.3	$0.64

The weighted-average assumptions used in the valuation models to determine the fair value of SARs granted to employees under the 2014 Plan are as follows:


	Year Ended December 31,
	2021	2020

Stock Appreciation Rights Granted (in thousands)	21.0	n/a
Average Risk-Free Rate	0.3%	n/a
Expected Volatility	82.8%	n/a
Expected Term (Years)	2.5	n/a
Dividend Yield	—	n/a

Notional Stock Units - 2019 and 2020 Awards

A summary of notional stock units with time-based vesting granted under the 2014 plan for the year ended December 31, 2021, are as follows:


	Shares (thousands)	Weighted Average Grant Date Fair Value (per share)

Nonvested at December 31, 2019	468	$3.16
Granted	125	$5.53
Vested	—	—
Forfeited	(22)	$3.16
Nonvested at December 31, 2020	571	$3.68
Granted	—	—
Vested	(319)	$3.16
Forfeited	—	—
Nonvested at December 31, 2021	252	$4.33

106

Notional Stock Units (Performance Condition) - 2021 Award

A summary of notional stock units with performance-based vesting granted under the 2014 plan for the year ended December 31, 2021, are as follows:


	Shares (in thousands)	Weighted Average Grant Date Fair Value (per share)

Nonvested at December 31, 2020	—	$	—
Granted	10	$39.55
Vested	—	—
Forfeited	—	—
Nonvested at December 31, 2021	10	$39.55

13. INCOME TAXES

Income Tax Benefit

The ~~benefit from~~ income ~~taxes from continuing operations~~tax benefit is as follows (in millions):


	Year Ended December 31,
	2021		2020
Current:
Federal	$	—	$	—
State and local	0.4		0.5
Foreign	—		—
	0.4		0.5
Deferred:
Federal (a)	(40.7)		—
State and local	1.2		(1.9)
Foreign	—		—
	(39.5)		(1.9)
Income tax benefit	$	(39.1)	$	(1.4)

(a) The income tax benefit for 2021 includes the reversal of a portion of the federal valuation allowance on net deferred tax assets. See further discussion below.

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Year Ended December 31,
2018 2017
Current:
  Federal $ —
$ —
  State and local —
(0.1 )
  Foreign —
—
—
(0.1 )
Deferred:
  Federal —
—
  State and local —
—
  Foreign —
—
—
—
$ —
$ (0.1 )

Deferred Taxes

Future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the Company’s estimate of the tax bases of its assets and liabilities result in deferred tax assets and liabilities, as follows (in millions):


	December 31,
	2021		2020
Deferred tax assets:
Employee benefits costs	$	36.2	$	61.8
Inventory	18.6		16.2
Property, plant and equipment	191.5		193.8
Net operating loss and credit carryforwards	206.2		211.1
Accrued expenses	0.4		2.1
Long-term debt and financing costs	10.8		12.6
Lease liability	0.9		1.5
Other	0.2		0.2
Deferred tax assets	464.8		499.3
Valuation allowance	(414.7)		(486.0)
Deferred tax assets, net of valuation allowance	$	50.1	$	13.3

Deferred tax liabilities:
Intangible assets	$	7.9	$	9.9
Lease asset	0.4		1.1
Prepaid expenses	0.4		0.4
Deferred tax liabilities	$	8.7	$	11.4
Deferred tax assets, net	$	41.4	$	1.9

December 31,
2018 2017
Deferred tax assets:
Employee benefits costs $ 73.6
$ 79.9
Inventory 11.1
2.4
Property, plant and equipment 185.9
187.0
Net operating loss and credit carryforwards 187.1
166.9
Accrued expenses 0.9
0.9
Long-term debt and financing costs 15.3
17.3
Other 0.2
5.5
474.1
459.9
Valuation allowance (456.6 ) (440.7 )
Deferred tax assets, net of valuation allowance $ 17.5
$ 19.2

Deferred tax liabilities:
Intangible assets $ 16.0
$ 17.7
Prepaid expenses 1.5
1.5
Deferred tax liabilities $ 17.5
$ 19.2
$ —
$ —

The valuation allowance reduces the net deferred tax assets to their net realizable value. ~~There is a full valuation allowance against net deferred taxes due to annual operating losses since 2011 and substantial uncertainty to generate future taxable income that would lead to~~The ultimate realization of the net deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse.

The Company has maintained a full valuation allowance against federal and state net deferred tax assets since the fourth quarter of 2011 to the second quarter of 2020. In the second quarter of 2020, the Company released the valuation allowance against the state net deferred tax assets for the LEU segment that are more likely than not to be realized.

In the fourth quarter of 2021, the Company released $40.7 million of the valuation allowance against federal net deferred taxes that are more likely than not to be realized. Centrus evaluated both positive and negative evidence that was objectively verifiable to determine the amount of the federal valuation allowance that is required on Centrus’ federal deferred tax assets. Centrus has visibility on a significant portion of revenue in the LEU segment through 2026, primarily from its long-term sales contracts. Centrus considered both its achievement of sustained profitability and cumulative income in 2021, as well as, the forecasted income, to be significant forms of positive evidence. Negative evidence included uncertainty in and the lack of objectively verifiable evidence for profitability in later years when the Company’s existing sales order book and supply contracts reach expiration in its LEU segment. In the Company’s technical solutions segment, negative evidence included uncertainty in the future funding of the HALEU enrichment facility, and thus, no assumption for the future funding of the HALEU enrichment facility were included in the forecast model because it was not objectively verifiable. Centrus determined that the positive evidence outweighed the negative evidence and supported a release of the federal valuation allowance. However, due to lack of objectively verifiable information in later years, it was determined that forecasted future income was not sufficient to realize all the deferred tax assets. Therefore, the Company recorded a partial release of its federal valuation allowance.

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In addition to the partial release of the valuation allowance against federal net deferred taxes, the valuation allowance decreased in 2021 by $30.6 million due to changes in deferred tax assets since the beginning of the year. The Company continues to maintain a valuation allowance against its remaining federal and state net deferred tax assets due to significant federal and state net operating losses and insufficient future taxable income.

Going forward, the Company will continue to evaluate both positive and negative evidence that would support any further changes to the remaining valuation allowances. Such evidence in its technical solutions segment may include signing new contracts which could have a significant impact on pre-tax income, follow on-work related to the HALEU program, orabandonment of the commercial deployment of the centrifuge technology.Such evidence in our LEU segment may include renewing SWU sales contracts with existing customers and/or signing new SWU sales or purchase contracts with significantly higher or lower margins than currently forecasted.Additional evidence in the LEU segment may include potential deferrals in the timing of deliveries requested by its customers, which would impact revenue recognition timing.The impact of these and other potential positive and negative events will be weighed and evaluated to determine if the valuation allowance should be increased or decreased in the future.

The net deferred tax assets and related valuation allowance were increased as of December 31, 2020, by $39.5 million for previously unrecorded state deferred tax assets, net of federal benefit, in states where we have had historical losses and a remote likelihood of realizing a tax benefit. This increase to state deferred tax assets, net of the full valuation allowance, had no net impact on income tax expense for 2020. When a change in ~~the~~ tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the deferred taxes are expected to reverse. The Company records the impact of the change in its consolidated financial statements in the period of enactment. ~~For the year ended December 31, 2017, the Company recorded a decrease in net deferred~~

~~tax assets before valuation allowance which resulted primarily from the remeasurement at 21% in accordance with t~~he Tax Act. The ultimate realization of the net deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse.

The Company has federal net operating losses of ~~$791.3~~$732.0 million generated through December 31, 2017, that currently expire through 2037. In addition, the Company has federal net operating losses and business interest expense carry forwards of ~~$89.2~~$131.4 million and ~~$10.1~~$4.1 million, respectively, generated after December 31, 2017, that do not expire. The Company has concluded that a full valuation allowance is needed for all federal net operating losses. In 2014, the federal net operating losses as well as other tax attributes consisting primarily of tax basis in property of approximately $15.3 million were reduced as a result of Centrus’ cancellation of debt income of approximately $340 million as prescribed by Internal Revenue Code Section 108. Centrus also has state net operating losses of ~~$0.3~~$0.5 million, with no valuation allowance, and state net operating losses of $465.4 million, with a full valuation allowance, that currently expire through 2038. The deferred tax assets for state net operating losses and state unrealized built-in loss deductions have been reduced as a result of Centrus’ tax ownership change and cancellation of debt income in 2014.2037.

Centrus experienced an ownership change as defined under Internal Revenue Code Section 382 on September 30, 2014 when it emerged from bankruptcy. Generally, after an ownership change, the use of federal and state net operating loss carryforwards and tax credits generated prior to the ownership change are subject to an annual limitation. However, there is an exception available to qualifying corporations that eliminates the annual limitation. Centrus can utilize this exception for federal purposes, but not for state purposes. The pre-apportioned annual state limitation is $2.9 million. Centrus also had an unrealized built-in loss as of the ownership change date. To the extent this built-in loss is recognized during the five-year post-ownership change period through certain depreciation and loss deductions, the same annual limitation for loss and tax credit carryforwards also applies generally to a built-in loss when it is recognized, unless the exception applies. Centrus can utilize the same exception for federal purposes when the built-in loss is recognized, but not for state purposes. To the extent the built-in loss is recognized during the five-year post-ownership change period, the same pre-apportioned state limitation will apply so that the combination of loss carryforwards and recognized built-in losses cannot exceed $2.9 million annually.

Effective Tax Rate

A reconciliation of income taxes calculated based on the federal statutory income tax rate and the effective tax rate follows:


	Year Ended December 31,
	2021		2020
Federal statutory tax rate	21	%	21	%
Valuation allowance against net deferred tax assets	(53)		(26)
State rate changes	1		(1)
Executive compensation	1		2
State income tax expense, net of federal benefit	1		—
Uncertain tax positions	—		1
Effective tax rate	(29)	%	(3)	%

Year Ended December 31,
2018 2017
Federal statutory tax rate 21 % 35 %
Valuation allowance against net deferred tax assets (15 ) (2,156 )
State rate changes (6 ) —
Executive compensation (1 ) —
State income tax expense, net of federal benefit 1
1
Tax Cuts and Jobs Act of 2017 —
2,382
Gain on early extinguishment of debt —
(268 )
Interest expense —
4
Other non-deductible expenses —
1
Effective tax rate — % (1 )%

The Tax Act enacted on December 22, 2017 reduced the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740, ~~Income Taxes~~ (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but it can

determine a reasonable estimate, it must record a provisional estimate in the financial statements. The Company has completed its accounting for the tax effects of the Tax Act, and based on the Company’s net operating loss carryovers and full valuation allowance, there is no impact to its consolidated financial statements.

~~As a result of the reduction of the federal corporate income tax rate, the net deferred tax assets have been remeasured as of December 31, 2017. Primarily as a result of the remeasurement, the~~ effective tax rate for the year ended December 31, ~~2017 includes a decrease to the net deferred tax assets of $288.9 million, or an increase to the effective tax rate of 2,382%. The effective tax rate also~~2021, includes a decrease to the valuation allowance against net deferred tax assets of ~~$261.5~~$71.3 million, or a change to the effective tax rate of ~~(2,156)%, and an adjustment to~~(53%). Included in the ~~gain on early extinguishment~~valuation allowance decrease is the release of ~~debt~~the valuation allowance against federal net deferred taxes of ~~$32.5~~$40.7 million, or a change to the effective tax rate of ~~(268)%~~(30%). ~~The Tax Act did not affect the income tax provision for the year ended December 31, 2017.~~

109

The effective tax rate for the year ended December 31 ~~2018~~, 2020, includes ~~an increase~~a decrease to the valuation allowance against net deferred tax assets of ~~$15.9~~$13.9 million, or a change to the effective tax rate of ~~(15)%, and a $6~~(26%). Included in the valuation allowance decrease is the release of the valuation allowance against state net deferred taxes of $2.0 million, ~~decrease to the state deferred tax assets resulting from state rate changes,~~ or a change to the effective tax rate of ~~(6)%~~(4%).

Uncertain Tax Positions

Accounting standards require that a tax position meet a minimum recognition threshold in order for the related tax benefit to be recognized in the financial statements. The liability for unrecognized tax benefits, included in Other Long-Term Liabilities, was ~~$0.2~~$1.0 million as of December 31, ~~2018~~2021, and ~~$0.3~~$0.8 million as of December 31, ~~2017.~~2020. If recognized, these tax benefits would impact the effective tax rate. As a result of changes to unrecognized tax benefits, the income tax provision (state tax, net of federal benefit) ~~decreased $0.1~~increased $0.2 million and $0.4 million during the years ended December 31, ~~2018~~2021 and December 31, ~~2017.~~2020, respectively. The liability for unrecognized tax benefits in the table below relates to unrecognized state income tax benefits. Centrus believes that the liability for unrecognized tax benefits will not change significantly in the next 12 months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (in millions):


	Year Ended December 31,
	2021		2020
Balance at beginning of the period	$	0.8	$	0.4
Additions to tax positions of current period	0.4		0.5
Reductions to tax positions of prior years	(0.2)		(0.1)
Balance at end of the period	$	1.0	$	0.8

Year Ended December 31,
2018 2017
Balance at beginning of the period $ 0.3
$ 0.4
Additions to tax positions of current period —
0.1
Reductions to tax positions of prior years (0.1 ) (0.2 )
Balance at end of the period $ 0.2
$ 0.3

Centrus and its subsidiaries file income tax returns with the U.S. government and various states and foreign jurisdictions. As of December 31, ~~2018,~~2021, the federal, Maryland and ~~Maryland~~Tennessee statutes of limitation are closed with respect to all tax years through ~~2014, and the Kentucky statute of limitations is closed with respect to all tax years through 2013.~~2017.

Centrus recognizes accrued interest related to uncertain tax positions as a component of ~~interest expense.~~Interest Expense. Reversals of previously accrued interest for income taxes is typically offset against interest expense, but if the amount is significant, it is reclassified to interest income in the consolidated statement of operations. Centrus recognizes the increase or decrease of accrued penalties for income taxes as a component of ~~selling, general~~Selling, General and ~~administrative expense~~ Administrative in the consolidated statement of operations.

The impact of accrued interest and penalties for income taxes in the consolidated statement of operations was ~~a reduction~~an increase to expenses of less than $0.1 million for the years ended December 31, ~~2018~~2021 and ~~2017.~~December 31, 2020, respectively. Accrued interest and penalties for income taxes, included as a component of Other Long-Term Liabilities, totaled less than $0.1 million as of December 31, ~~2018~~2021 and ~~2017.~~2020.

14. NET INCOME ~~(LOSS)~~ PER COMMON SHARE

Basic net income ~~(loss)~~ per common share is calculated by dividing income ~~(loss)~~ allocable to common stockholders by the weighted average number of shares of common stock outstanding during the period. In calculating diluted net income ~~(loss)~~ per common share, the number of shares is increased by the weighted average number of potential shares related to stock compensation awards. No dilutive effect is recognized in a period in which a net loss has occurred.

On November 17, 2020, the Company completed the purchase of 62,854 shares of its outstanding Series B Senior Preferred Stock at a price per share of $954.59, less any applicable withholding taxes. (Refer to Note 15 - Stockholders’ Equity). The purchase price per share represented a 25% discount from the aggregate liquidation preference, including accrued but unpaid dividends, of $1,272.78 per share as of September 30, 2020.Since origination, the carrying value on the Balance Sheet was $43.80 per share based on values assigned in the originating securities exchange. The liquidation amount at origination was $1,000.00 per share.

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The aggregate purchase price of approximately $60 million, less accrued but unpaid dividends attributable to the purchased and retired Series B Senior Preferred Stock, is considered for purposes of Net Income per Share to be a deemed dividend to the extent it exceeds the carrying value on the consolidated Balance Sheet, or $41.9 million.

On February 2, 2021, the Company completed the exchange of 3,873 shares of its outstanding Series B Senior Preferred Stock, par value $1.00 per share (“Preferred Stock”) for (i) 231,276 shares of Class A Common Stock and (ii) a warrant to purchase 250,000 shares of Class A Common Stock at an exercise price of $21.62 per share, for an aggregate valuation of approximately $7.5 million. The carrying value of the Series B Senior Preferred Stock on the Balance Sheet was $1.00 per share par value. The aggregate liquidation preference of the Series B Senior Preferred Stock, including accrued but unpaid dividends, was $1,291.04 per share as of December 31, 2020.

On November 23, 2021, the Company completed the purchase of 36,867 shares of its outstanding Series B Senior Preferred Stock at a price per share of $1,145.20, less any applicable withholding taxes. The Company also completed the purchase of the remaining 980 shares of its outstanding Series B Senior Preferred Stock at a price per share of $1,149.99, less any applicable withholding taxes, on December 15, 2021 (Refer to Note 15 - Stockholders’ Equity). The aggregate purchase price of both transactions was $43.3 million. The carrying value of the Series B Senior Preferred Stock on the consolidated Balance Sheet was $1.00 per share par value.

The aggregate valuation of all 2021 preferred stock transactions of approximately $50.8 million, less accrued but unpaid dividends attributable to the acquired and retired shares of Series B Senior Preferred Stock, is considered for purposes of Net Income per Share to be a deemed dividend in the aggregate amount equal to the amount by which it exceeds the carrying value of the Preferred Stock on the consolidated Balance Sheet, or $37.6 million.

The weighted average number of common and common equivalent shares ~~used in~~and the calculation of basic and diluted income ~~(loss)~~ per common share are as follows:


	Year Ended December 31,
	2021		2020
Numerator (in millions):
Net income	$	175.0	$	54.4
Preferred stock dividends - undeclared and cumulative	2.1		6.7
Distributed earnings allocable to retired preferred shares	37.6		41.9
Net income allocable to common stockholders	$	135.3	$	5.8

Denominator (in thousands):
Average common shares outstanding - basic	13,493		9,825
Potentially dilutive shares related to stock options and restricted stock units (a)	386		298
Average common shares outstanding - diluted	13,879		10,123

Net income per common share (in dollars):
Basic	$	10.03	$	0.59
Diluted	$	9.75	$	0.57

There are no common stock equivalents excluded from the diluted calculation as a result of a net loss in the period or options outstanding and considered anti-dilutive as their exercise price exceeded the average share market price.

111

Year ended December 31,
2018 2017
Numerator (in millions):
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

Denominator (in thousands):
Average common shares outstanding - basic 9,151
9,081
Potentially dilutive shares related to stock options and restricted stock units^(a)
—
—
Average common shares outstanding - diluted 9,151
9,081

Net income (loss) per common share (in dollars) - basic and diluted: $ (12.23 ) $ 0.58

(a) Common stock equivalents excluded from the diluted calculation as a result of a net loss in the period (in thousands) 23
—

Options outstanding and considered anti-dilutive as their exercise price exceeded the average share market price (in thousands) 360
200

15. STOCKHOLDERS’ EQUITY

Shares Outstanding

Changes in the number of shares outstanding are as follows:


	Preferred Stock, Series B	Common Stock, Class A	Common Stock, Class B

Balance at December 31, 2019	104,574	8,347,427	1,117,462
Issuance under public offering	—	2,537,500	—
Common stock issued for options exercised	—	107,000	—
Conversion of common stock from Class B to Class A	—	398,262	(398,262)
Purchase under tender offer	(62,854)	—	—
Balance at December 31, 2020	41,720	11,390,189	719,200

Issuance under public offering	—	1,516,467	—
Common stock issued for options exercised	—	216,500	—
Issuance of previously vested restricted stock units	—	89,318	—
Notional stock units paid in shares	—	206,183	—
Common stock and warrant issued in exchange for preferred stock	(3,873)	231,276	—
Purchase under tender offer	(37,847)	—	—
Balance at December 31, 2021	—	13,649,933	719,200

Common Stock

The Company’s certificate of incorporation authorizes 20,000,000 shares of preferred stock, par value $1.00 per share, 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~~As of December 31, 2021, the Company has issued ~~9,437,389~~14,369,133 shares of Common Stock, consisting of ~~8,031,307~~13,649,933 shares of Class A Common Stock and ~~1,406,082~~719,200 shares of Class B Common Stock.

~~On December 6, 2018, Centrus issued 398,638~~Pursuant to a sales agreement with its agents, the Company sold through its ATM Offering an aggregate of 1,516,467 shares of its Class A Common Stock ~~with~~in 2021 for a ~~$0.10 par value, as part of the securities exchange described in~~ ~~Note 9, Debt. The Class A Common Stock is recorded on the consolidated balance sheet at fair value less transaction costs, or $0.8 million, as of December 31, 2018.~~

A total of ~~38,751~~$44.2 million. After expenses and commissions paid to the agents the Company’s proceeds totaled $42.4 million. Additionally, the Company recorded direct costs of $0.3 million related to the issuance. The shares of Class A Common Stock were issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239242), which became effective on August 5, 2020, and a prospectus supplement dated December 31, 2020, to the prospectus. The Company currently intends to use the net proceeds from this offering for general working capital purposes, to invest in ~~settlement~~technology development and deployment, and to repay outstanding debt.

As previously disclosed on Form 8-K filed February 5, 2021, on February 2, 2021, the Company entered into an amendment (the “Voting Agreement Amendment”) to its existing Voting and Nomination Agreement with Mr. Morris Bawabeh, Kulayba LLC and M&D Bawabeh Foundation, Inc. (collectively, the “MB Group”) and an Exchange Agreement (as described below) whereby the MB Group agreed to support management’s recommendation on certain matters at the Company’s 2021 annual meeting of ~~vested restricted stock units~~stockholders (the “Annual Meeting”) and Kulayba LLC agreed to ~~three former members~~exchange shares of the ~~Board~~Company’s Preferred Stock for shares of ~~Directors following~~ the ~~end~~Company’s Class A Common Stock and a warrant to acquire additional shares of ~~their service~~Class A Common Stock. Pursuant to the First Amendment to the Voting and Nomination Agreement, the MB Group agreed to cause all shares of Class A Common Stock owned of record or beneficially owned by the MB Group at the Annual Meeting to be voted in favor of (i) an amendment to extend the length of the term of the Company’s Section 382 Rights Agreement dated

112

as of April 6, 2016, as amended to date, for two years from June 30, 2021, to June 30, 2023, and (ii) an increase of shares of Class A Common Stock reserved for delivery under the Company’s Centrus Energy Corp 2014 Equity Incentive Plan, as amended to date, of an additional 700,000 shares of Class A Common Stock. At the Annual Meeting both of the above referenced proposals were approved by the Company’s stockholders.

In connection with the entry into the Voting Agreement Amendment, the Company and Kulayba LLC also entered into an Exchange Agreement, dated February 2, 2021 (the “Exchange Agreement”), pursuant to which Kulayba LLC agreed to exchange (the “Exchange”) 3,873 shares of Preferred Stock, representing a $5,000,198 liquidation preference (including accrued and unpaid dividends), for (i) 231,276 shares of Class A Common Stock priced at the closing market price of $21.62 on ~~May 31, 2017.~~ the date the Exchange Agreement was signed and (ii) a Centrus Energy Corp. Warrant to Purchase Class A Common Stock (the “Warrant”), exercisable for 250,000 shares of Class A Common Stock at an exercise price of $21.62 per share, which was the closing market price on the date the Exchange Agreement was signed, subject to certain customary adjustments pursuant to the terms of the Warrant. The Warrant is exercisable by Kulayba LLC for a period commencing on the closing date of the Exchange and ending, unless sooner terminated as provided in the Warrant, on the first to occur of: (a) the second anniversary of the closing date of the Exchange or (b) the last business day immediately prior to the consummation of a Fundamental Transaction (as defined in the Warrant) which results in the shareholders of the Company immediately prior to such Fundamental Transaction owning less than 50% of the voting equity of the surviving entity immediately after the consummation of the Fundamental Transaction. The Company retired the 3,873 shares of Preferred Stock received by the Company under the Exchange Agreement.

On September 1, 2020, the Company completed the sale of 2,537,500 shares of the Company’s Class A Common Stock pursuant to the Registration Statement on Form S-3 that became effective on August 5, 2020, as supplemented by the prospectus supplement filed with the SEC on August 21, 2020. The price to the public in this offering was $10.00 per share of Class A Common Stock. The aggregate gross proceeds from the offering were approximately $25.4 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company of $2.3 million.

Shares of Class B Common Stock that are sold in the market are automatically converted to shares of Class A Common Stock. ~~In the twelve months ended December 31, 2017, a total of 30,318 shares~~Shares of Class B Common Stock that were sold in the market and converted to shares of Class A Common Stock ~~as of December 31, 2017.~~totaled 0 in 2021 and 398,262 in 2020.

The Company has reserved ~~1,200,000~~1,900,000 shares of Class A Common Stock under its management incentive plan, of which ~~approximately 596,000~~844,293 shares are available for future awards as of December 31, ~~2018.~~2021. Refer to Note 12,Stock-Based Compensation, for additional information.

The Class A Common Stock trades under the symbol “LEU” on the NYSE American trading platform.

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.

Series B Senior Preferred Stock

~~On February 14,~~In 2017, Centrus issued 104,574 shares of Series B Senior Preferred Stock as part of ~~the~~a securities ~~exchange described in~~ ~~Note 9, Debt~~.exchange. The issuance of the Series B Senior Preferred Stock was a non-cash financing transaction. As detailed below, the Series B Senior Preferred Stock was purchased by the Company in 2020 and 2021 and the designation of the Series B Senior Preferred Stock was eliminated and all shares of preferred stock of the Company previously designated as Series B Senior Preferred Stock were returned to authorized but unissued and undesignated shares of preferred stock of the Company.

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The Series B Senior Preferred Stock ~~has~~had a par value of $1.00 per share and a liquidation preference of $1,000 per share (the “Liquidation Preference”). ~~The Series B Preferred Stock is recorded on the consolidated balance sheet at fair value less transaction costs, or $4.6 million, as of December 31, 2018, and December 31, 2017.~~

Holders of the Series B Senior Preferred Stock ~~are~~were entitled to cumulative dividends of 7.5% per annum of the Liquidation Preference. Centrus ~~is obligated to pay cash dividends on the Series B Preferred Stock in an amount equal to the Liquidation Preference to the extent that dividends are declared by the Board and:~~


~~(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;~~


~~(b)~~	~~its net income calculated in accordance with GAAP (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 million;~~


~~(c)~~	its 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;


~~(d)~~	the balance of cash and cash equivalents calculated in accordance with GAAP on the last day of the immediately preceding quarter would exceed $150 million after pro forma application of the dividend payment; and


~~(e)~~	~~dividends may be legally paid under Delaware law.~~

~~Centrus has~~had not met ~~these~~the criteria for payment of dividends for the periods from issuance through December 31, 2018, and has not declared, accrued or paid dividends on the Series B Preferred Stock as of December 31, 2018. Dividends on the Series B Preferred Stock are cumulative to the extent not paid at any quarter-end, whether or not declared and whether or not there are assets of the Company legally available for the payment of such dividends in whole or in part. As of December 31, 2018, the Series B Preferred Stock has an aggregate liquidation preference of $119.3 million including accumulated dividends of $14.7 million. As of December 31, 2017, the Series B Preferred Stock had an aggregate liquidation preference of $111.5 million, including accumulated dividends of $6.9 million.

~~Outstanding shares~~final redemption of the Series B Senior Preferred Stock ~~are redeemable~~in 2021.

2020 Tender Offer

On December 22, 2020, the Company filed with the Delaware Secretary of State a Certificate of Retirement of 62,854 Series B Senior Preferred Stock, par value $1.00 per share, to effect the retirement of the Company’s ~~option,~~Series B Senior Preferred Stock repurchased upon the completion of its previously announced tender offer to purchase Series B Senior Preferred Stock. Effective upon filing, the Certificate of Retirement amended the Amended and Restated Certificate of Incorporation of the Company to reduce the total number of authorized Series B Senior Preferred Stock by 62,854 shares such that the total number of authorized Series B Senior Preferred Stock of the Company was 41,720 shares.

2021 Tender Offer

On October 20, 2021, the Company announced the commencement of a tender offer to purchase all of its outstanding Series B Senior Preferred Stock, par value $1.00 per share, at a price of $1,145.20 per Series B Senior Preferred Stock (inclusive of any rights to accrued but unpaid dividends), to the sellers in ~~whole or~~cash, less any applicable withholding taxes (the “Offer”). The Offer was made pursuant to the Tender Offer Statement on Schedule TO filed by the Company on October 20, 2021 with the SEC. The aggregate liquidation preference per Series B Senior Preferred Stock (including accrued but unpaid dividends) was $1,347.29 as of September 30, 2021.

On November 23, 2021, the Company announced the results of the tender offer and the related consent solicitation (the “Consent Solicitation”) to amend the certificate of designation of the Series B Senior Preferred Stock (the “Series B Preferred Amendment”). 36,867 Series B Senior Preferred Stock were properly tendered and not properly withdrawn in ~~part,~~the Offer, and corresponding consents have been delivered in the Consent Solicitation. Pursuant to the terms of the Offer and Consent Solicitation, the Company has accepted for purchase all of the Series B Senior Preferred Stock tendered in the Offer, for an ~~amount~~aggregate purchase price of ~~cash~~$42.2 million. The accepted shares represent 97.4% of the Company’s outstanding Series B Senior Preferred Stock as of September 30, 2021. Based on the final results, the requisite consent of at least 90% of the outstanding Series B Senior Preferred Stock required to approve the Series B Preferred Amendment was obtained. On November 23, 2021, the Company issued a Notice of Full Redemption providing for the redemption of any and all shares of the Company’s Series B Senior Preferred Stock outstanding after consummation of the Company’s tender offer to purchase all of its issued and outstanding Series B Senior Preferred Stock. On December 15, 2021, the Company completed the redemption of all 980 outstanding Series B Senior Preferred Stock for an aggregate purchase price of $1.1 million. The aggregate purchase price of $43.3 million was offset by direct costs totaling $0.9 million.

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of effectiveness of the Series B Preferred Amendment to the ~~accrued and unpaid dividends, if any, whether or not declared, through~~ date of ~~redemption.~~redemption), (iii) remove the prohibition on the declaration and payment of dividends on junior stock of the Company, which includes all shares of the Company’s capital stock defined as “Common Stock” in the Company’s Amended and Restated Certificate of Incorporation, or the redemption, purchase or acquisition of such junior stock, and (iv) remove the restriction on redemption, purchase or acquisition of capital stock of the Company ranking on parity with the Series B Senior Preferred Stock.

Rights Agreement

On April 6, 2016 (the “Effective Date”), the Company’s Board of Directors (the “Board”) adopted a Section 382 Rights Agreement, ~~(the~~which was (a) amended on February 14, 2017 to, among other things, exclude acquisitions of the Series B Senior Preferred Stock issued as part of the exchange offer and consent solicitation from the definition of “Common Shares” in connection with the settlement and completion of the exchange offer and consent solicitation, and (b) further amended on April 3, 2019 to, among other things, (i) decreased the purchase price for each one one-thousandth (1/1000th) of a share of the Company’s Series A Participating Cumulative Preferred Stock, par value $1.00 per share, from $26.00 to $18.00 and (ii) extended the Final Expiration Date (as defined in the Rights Agreement) from April 5, 2019 to April 5, 2022 (as amended, the “Rights Agreement”). The Board adopted the Rights Agreement in an effort to protect shareholder value by, among other things, attempting to protect against a possible limitation on the Company’s ability to use its net operating loss carryforwards and other tax benefits, which may be used to reduce potential future income tax obligations.

In connection with the adoption of the Rights Agreement, the Board declared a dividend of one preferred-share-purchase-right for each share of the Company’s Class A Common Stock and Class B Common Stock outstanding as of the Effective Date. The rights initially trade together with the common stock and are not exercisable. In the absence of further action by the Board, the rights would generally become exercisable and allow a holder to acquire shares of a new series of the Company’s preferred stock if any person or group acquires 4.99% or more of the outstanding shares of the Company’s common stock, or if a person or group that already owns 4.99% or more of the Company’s Class A Common Stock acquires additional shares representing 0.5% or more of the outstanding shares of the Company’s Class A Common Stock. The rights beneficially owned by the acquirer would become null and void, resulting in significant dilution in the ownership interest of such acquirer.

The Board may exempt any acquisition of the Company’s common stock from the provisions of the Rights Agreement if it determines that doing so would not jeopardize or endanger the Company’s use of its tax assets or is otherwise in the best interests of the Company. The Board also has the ability to amend or terminate the Rights Agreement prior to a triggering event.

~~Effective on February 14, 2017, in connection with~~On April 8, 2020, the ~~settlement~~Company’s Board of Directors approved, and ~~completion of the exchange offer and consent solicitation,~~ the Company ~~amended~~entered into, a Third Amendment to the Rights Agreement ~~solely to exclude acquisitions of~~(the “Third Amendment”). The Third Amendment modified the ~~Series B Preferred Stock issued as part of the exchange offer and consent solicitation from the definition of “Common Shares.”~~

~~The Company’s stockholders approved~~Final Expiration Date (as defined in the Rights Agreement at the 2017 annual meeting of stockholders on May 31, 2017. Unless earlier terminated or extended in accordance with the Rights Agreement, the rights issued under the Rights Agreement expire on April 5, 2019.Agreement) to be June 30, 2023.

~~Shares Outstanding~~

~~Changes in the number of shares outstanding are as follows:~~

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Preferred Stock,
Series B

Common Stock,
Class A

Common Stock,
Class B

Balance at December 31, 2016 —
7,563,600
1,436,400
Issuance of Preferred Stock 104,574
—
—
Issuance of Class A Common Stock —
38,751
—
Conversion of Common Stock from Class B to Class A —
30,318
(30,318 )
Balance at December 31, 2017 104,574
7,632,669
1,406,082

Issuance of Class A Common Stock —
398,638
—
Balance at December 31, 2018 104,574
8,031,307
1,406,082

16. COMMITMENTS AND CONTINGENCIES

Commitments under SWU Purchase Agreements

TENEX

A major supplier of SWU to the Company is the Russian ~~government~~government-owned entity ~~Joint Stock~~TENEX, Joint-Stock Company ~~“TENEX”~~ (“TENEX”). Under a 2011 agreement with TENEX, as amended, (the ~~“Russian~~“TENEX Supply ~~Agreement”~~Contract”), the Company purchases SWU contained in LEU received from TENEX, and the Company delivers natural uranium to TENEX for the LEU’s uranium component. The LEU that the Company obtains from TENEX under the agreement is subject to quotas and other restrictions applicable to commercial Russian LEU. Further, the ability of the Company or TENEX to implement the TENEX Supply Contract is vulnerable to any new sanctions or restrictions that might be imposed by Russia, the United States, or other countries in the future, including as a result of the war in Ukraine.

The ~~Russian~~TENEX Supply ~~Agreement~~Contract originally was ~~originally~~ signed with commitments through 2022 but was modified in 2015 to give the Company the right to reschedule certain quantities of SWU of the original commitments into the period 2023 and beyond, in return for the purchase of additional SWU in those years. The Company has exercised this right to reschedule in each year through December 31, 2021. If the Company exercises this right to reschedule in full during the remaining years of the contract’s original term, the Company will have a rescheduled post-2022 purchase commitment that could extend through 2028.

The ~~Russian~~TENEX Supply ~~Agreement~~Contract provides that the Company must pay for all SWU in its minimum purchase obligation each year, even if it fails to submit orders for such SWU. ~~The~~In such a case, the Company would ~~then~~pay for the SWU but have ~~the right~~ to take the unordered SWU in the following year.

Pricing terms for SWU under the ~~Russian~~TENEX Supply ~~Agreement~~Contract are based on a combination of market-related price points and other factors. This formula iswas subject to an adjustment at the end of 2018 that ~~the Company anticipates will reduce~~reduced the unit costs of SWU under this contract in 2019 and for the duration of the contract.

Orano

~~On April 27,~~In 2018, the Company entered into an agreement (the “Orano Supply Agreement”) with the French company Orano Cycle ~~(formerly, AREVA NC)~~ (“Orano”) for the long-term supply to the Company of SWU contained in ~~LEU, nominally commencing in 2023.~~LEU. Under the Orano Supply Agreement, as amended, the ~~Company purchases~~supply of SWU ~~contained~~commenced in ~~LEU received from Orano,~~2020 and ~~the Company delivers natural uranium~~extends to ~~Orano for the natural uranium feed material component of LEU.~~2028. The Company ~~may elect to begin to accept deliveries as early as 2021 or to defer the commencement of purchases until 2024 and~~ has the option to extend the ~~six-year purchase~~supply period for an additional two years. The Orano Supply Agreement provides significant flexibility to adjust purchase volumes, subject to annual minimums and maximums in fixed amounts that vary year by year. The pricing for the SWU purchased by the Company is determined by a formula that uses a combination of market-related price points and other factors and is subject to certain floors and ceilings. ~~Prices are payable in a combination of U.S. dollars and euros.~~

~~Nuclear Fuel Industries, Ltd~~.

On August 28, 2018, Enrichment Corp. entered into an agreement with Nuclear Fuel Industries, Ltd. (“NFI”) pursuant to which Enrichment Corp. would make a one-time purchase of SWU and uranium from NFI for $7.1 million. In March 2019, Enrichment Corp. completed the purchase from NFI. Toshiba America Nuclear Energy Corporation (“TANE”) holds 718,200 shares (51%) of the Company’s Class B common stock and certain of the Company’s 8.25% senior notes due 2027. Each of NFI and TANE are wholly-owned, indirect subsidiaries of Toshiba Corporation.

Milestones Under the 2002 DOE-USEC Agreement

The ~~Company~~Company’s predecessor USEC Inc. and DOE signed an agreement dated June 17, 2002, as amended (the “2002 DOE-USEC Agreement”), pursuant to which the parties made long-term commitments directed at resolving issues related to the stability and security of the domestic uranium enrichment industry. DOE consented to the assumption by Centrus of the 2002 DOE-USEC Agreement and other agreements between the Company and DOE subject to an express reservation of all rights, remedies and defenses by DOE and Centrus under those agreements as part of the Company’s Chapter 11 bankruptcy process. The 2002 DOE-USEC Agreement requires Centrus to develop, demonstrate and deploy advanced enrichment technology in accordance with milestones, including the deployment of a commercial American Centrifuge Plant, and provides for remedies in the event of a failure to meet a milestone under certain ~~circumstances.~~

DOE has specific remedies under the 2002 DOE-USEC Agreement if Centrus fails to meet a milestone that would adversely impact its ability to begin commercial operations of the American Centrifuge Plant on schedule, and such delay was within Centrus’ control or was due to its fault or negligence or if Centrus abandons or constructively abandons the commercial deployment of an advanced enrichment technology. These remedies includecircumstances, including terminating the 2002 DOE-USEC Agreement, revoking Centrus’ access to DOE’s centrifuge technology that is required for the success of the Company’s ongoing work with the American Centrifuge ~~project,~~technology, requiring Centrus to transfer certain rights in the American Centrifuge technology and facilities to DOE, and requiring Centrus to reimburse DOE for certain costs associated with the American Centrifuge ~~project.~~

technology. The 2002 DOE-USEC Agreement provides that if a delaying event beyond the control and without the fault or negligence of Centrus occurs that could affect Centrus’

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ability to meet anthe American Centrifuge Plant milestone under the 2002 DOE-USEC Agreement, DOE and ~~Centrus~~the Company will jointly meet to discuss in good faith possible adjustments to the milestones as appropriate to accommodate the delaying event. ~~The Company notified DOE that it had not met the June~~In 2014, ~~milestone within the time period provided due to events beyond its control and without the fault or negligence of the Company. The assumption of~~ the 2002 DOE-USEC Agreement ~~provided for under~~and other agreements between the ~~Plan~~Company and DOE were assumed by Centrus subject to an express reservation of ~~Reorganization did not affect the ability of either party to assert~~ all rights, remedies and defenses under the agreement and all such rights, remedies and defenses are specifically preserved and all-time limits tolled expressly including all rights, remedies and defenses and time limits relating to any missed milestones.by DOE and ~~Centrus~~the Company under those agreements. DOE and the Company have agreed that all rights, remedies and defenses of the parties with respect to any missed ~~milestones since March 5, 2014, including the June 2014 and November 2014~~ milestones and all other matters under the 2002 DOE-USEC Agreement continue to be preserved, and that the time limits for each party to respond to any missed milestones continue to be tolled.

Legal Matters

~~On October 11, 2018,~~From time to time, the ~~Company’s subsidiaries,~~Company is involved in various pending legal proceedings, including the pending legal proceedings described below.

In 1993, the United States Enrichment Corporation, at that time a wholly-owned government corporation (“USEC-Government”), entered into a lease for the Paducah and Portsmouth Gaseous Diffusion Plants (collectively, the “GDPs”) with the U.S. Department of Energy (“DOE”). As part of that lease, DOE and USEC-Government also entered into a memorandum of understanding (“Power MOU”) regarding power purchase agreements between DOE and the providers of power to the GDPs. Under the Power MOU, DOE and USEC-Government agreed upon the allocation of rights and liabilities under the power purchase agreements. In 1998, USEC-Government was privatized and became the United States Enrichment Corporation, now a principal subsidiary of the Company (“Enrichment Corp.”). Pursuant to legislation authorizing the privatization, the lease for the GDPs, which included the Power MOU as an Appendix, was transferred to Enrichment Corp. and ~~American Centrifuge Enrichment, LLC (“ACE”, together with~~ Enrichment Corp., was given the ~~“Company Subsidiaries”~~right to purchase power from DOE. The Paducah GDP was shut down in 2013 and deleased by Enrichment Corp. in 2014. On August 4, 2021, DOE informally informed Enrichment Corp. that the Joppa power plant, which had supplied power to the Paducah GDP, was planned to be decontaminated and decommissioned (D&D). According to DOE, the power purchase agreement with Electric Energy Inc. (“EEI”) ~~filed proofs~~requires DOE to pay for a portion of ~~claim in~~ the ~~U.S. Bankruptcy Court for~~D&D costs of the ~~Northern District~~Joppa power plant and DOE has asserted that a portion of ~~Ohio (the “Bankruptcy Court”) against each~~the DOE liability is the responsibility of ~~FirstEnergy Nuclear Operating Company (“FENOC”), FirstEnergy Nuclear Generation, LLC (“FENG,” and together with FENOC,~~Enrichment Corp. under the ~~“FirstEnergy Contract Parties”), FirstEnergy Solutions Corp. (“FES”) and FirstEnergy Generation, LLC (“FG”)~~Power MOU in the amount of approximately ~~$314~~$9.6 million. The ~~claims relate~~Company is assessing DOE’s assertions including whether all or a portion of any such potential liability had been previously settled. The Company has not formed an opinion on the merits nor is it able to ~~damages arising from~~estimate the ~~rejection~~potential liability, if any, and ~~breach of a long-term contract between~~no expense or liability has been accrued.

On August 30, 2013, the Company ~~Subsidiaries~~submitted a claim to DOE under the Contract Disputes Act for payment of $42.8 million, representing DOE’s share of pension 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. No amounts have been recorded in the Company’s consolidated financial statementspostretirement benefits costs related to the ~~claims.~~transition of employees at the former Portsmouth GDP to DOE’s 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 January 13, 2021, the Company and DOE reached a tentative agreement to settle the litigation. The settlement was subject to the approval by DOE, the U.S. Department of Justice, the Company’s Board of Directors, and the Court. On September 7, 2021, after the final approvals for the settlement were received, the settlement agreement was signed by the parties. Under the terms of the settlement agreement, DOE paid the Company $43.5 million, of which $33.8 million was contributed to the pension plan in September 2021 for Enrichment Corp. and $9.7 million was deposited in October 2021 in a trust for payment of postretirement health benefits payable by Enrichment Corp. After receiving payment, at the Company’s request the case was dismissed. The payment of $43.5 million is included in revenue of the technical solutions segment for the year ended December 31, 2021.

On May 26, 2019, the Company, Enrichment Corp., and six other DOE contractors who have operated facilities at the Portsmouth GDP site (including, in the case of the Company, the American Centrifuge Plant site located on the premises) were named as defendants in a class action complaint filed by Ursula McGlone, Jason McGlone, Julia Dunham, and K.D. and C.D., minor children by and through their parent and natural guardian Julia Dunham (collectively, the “McGlone Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division.

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The complaint seeks damages for alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The McGlone Plaintiffs are seeking to represent a class of (i) all current or former residents within a seven-mile radius of the Portsmouth GDP site and (ii) all students and their parents at the Zahn’s Corner Middle School from 1993-present. The complaint was amended on December 10, 2019 and on January 10, 2020 to add additional plaintiffs and new claims. On July 31, 2020, the court granted in part and denied in part the defendants’ motion to dismiss the case. The court dismissed ten of the fifteen claims and allowed the remaining claims to proceed to the next stage of the litigation process. On August 18, 2020, the McGlone Plaintiffs filed a motion for leave to file a third amended complaint and notice of dismissal of three of the individual plaintiffs. On March 18, 2021, the McGlone Plaintiffs filed a motion for leave to file a fourth amended complaint to add new plaintiffs and allegations. On March 19, 2021, the court granted the McGlone Plaintiffs’ motion for leave to amend the complaint. On May 24, 2021, the Company, Enrichment Corp. and the other defendants filed their motion to dismiss the complaint. The court has not rendered a decision at this time. Meanwhile, the parties are in the discovery stage of litigation. The Company believes that its operations at the Portsmouth GDP site were fully in compliance with the Nuclear Regulatory Commission’s regulations. Further, the Company believes that any such liability should be indemnified under the Price-Anderson Nuclear Industries Indemnity Act (“Price-Anderson Act”). The Company and Enrichment Corp. have provided notifications to DOE required to invoke indemnification under the Price-Anderson Act and other contractual provisions.

On November 27, 2019, the Company, Enrichment Corp. and six other DOE contractors who have operated facilities at the Portsmouth GDP site were named as defendants in a class action complaint filed by James Matthews, Jennifer Brownfield Clark, Joanne Ross, the Estate of A.R., and others similarly situated (the “Matthews Plaintiffs”), in the Common Pleas Court of Pike County, Ohio. On January 3, 2020, the complaint was removed to the U.S. District Court in the Southern District of Ohio for adjudication. The complaint sought injunctive relief, compensatory damages, statutory damages, and any other relief allowed by law for alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The Matthews Plaintiffs expressly contended that the ongoing and continuous releases that injured the Plaintiffs and class members were not “nuclear incidents” as that term is defined in the Price-Anderson Act, but rather “freestanding state law claims concerning traditional-style state regulation.” On July 27, 2020, the court granted the Company, Enrichment Corp. and the other defendants’ motion to dismiss the complaint because the Matthews Plaintiffs had opted not to proceed under the Price-Anderson Act which preempts state law. On August 18, 2020, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Sixth Circuit. On October 6, 2021, the U.S. Court of Appeals for the Sixth Circuit affirmed the lower court’s decision and dismissed the case. The Plaintiffs did not file a petition for certiorari with the U.S. Supreme Court; the Plaintiffs had to file such a petition by January 4, 2022 for the U.S. Supreme Court, and therefore, the lower court’s decision to dismiss the case is final.

On September 3, 2020, the Company, Enrichment Corp., nine other DOE contractors who have operated facilities at the Portsmouth GDP site and eleven individuals in their personal capacity some of whom are current and former DOE employees were named as defendants (“Walburn Defendants”) in a class action complaint filed by Jeffrey Walburn, Charles O. Lawson Jr., Kimberly M. Lawson, James A. Brogdon, Stephen Patrick Spriggs, Donald Slone, Vicki P. Slone, Victoria Slone Moore, Toni West, Carl R. Hartley, Heather R. Hartley, Vina Colley, Antony Preston, David B. Rose, Michael E. Groves, George W. Clark, Estate of Kathy Sue Brogdon (deceased), Estate of Jay Paul Brogdon (deceased), and Jon Doe(s), and Jane Doe(s), on behalf of themselves and all similarly situated individuals (“Walburn Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division. The complaint alleged that the named defendants conspired and concealed nuclear incidents in violation of the Price-Anderson Act, the Racketeer Influenced and Corrupt Organization Act and other state claims. The complainants sought damages and equitable and injunctive relief arising from economic losses, property losses, and non-economic damages resulting from toxic and radioactive releases from the Portsmouth GDP. On November 20, 2020, the Walburn Plaintiffs filed an amended complaint to add two individuals to the complaint as defendants in their individual capacity. One of those individuals was Daniel Poneman, Centrus’ Chief Executive Officer. In the 78-page complaint, Mr. Poneman was referenced only twice, without any cited allegations against him; once in the caption and once referencing his position at the Company. The Company has notified its insurance carrier regarding the claim. On February 11, 2021, the Walburn Plaintiffs amended their complaint for a second time to replace two corporate defendants with two others (one of whom was a contractor to Enrichment Corp. and also to its

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predecessor prior to its privatization in 1998 and the other a former DOE contractor) and removed four named individual defendants from the complaint. On March 2, 2021, Walburn Defendants filed their motion to dismiss. On July 14, 2021, the court put the case on hold until November 11, 2021, to give the Plaintiffs the opportunity to retain new counsel. The court conditionally granted the Plaintiffs’ local counsel’s request to withdraw as counsel and terminated the representation of the two other co-counsel. The Company believes that its operations at the Portsmouth GDP site were fully in compliance with the Nuclear Regulatory Commission’s regulations. Further, the Company believes that any such liability should be indemnified under the Price-Anderson Act. The Company and Enrichment Corp. have provided notifications to DOE required to invoke indemnification under the Price-Anderson Act and other contractual provisions. On November 11, 2021, Plaintiffs filed a notice of voluntary dismissal without prejudice.

Centrus is subject to various 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, Centrus does not believe that the outcome of any of these legal matters, individually and in the aggregate, will have a material adverse effect on its cash flows, results of operations or consolidated financial condition.

~~Lease Commitments~~

Expenses under operating leases for office space, equipment and the Piketon and Oak Ridge facilities amounted to $3.3 million and $3.1 million in 2018 and 2017, respectively. Future estimated minimum lease payments and expected lease administration payments for leases with remaining terms in excess of one year follow (in millions):

2019 $ 0.9
2020 0.9
2021 0.9
2022 1.0
2023 1.0
Thereafter 3.8
$ 8.5

Centrus has a lease with DOE for centrifuge testing facilities in Oak Ridge through December 2019. Centrus leases facilities in Piketon for the American Centrifuge Plant from DOE. The current five-year lease term is through June 2019. Centrus has the option to extend the lease term for additional five-year terms. DOE may terminate the lease for default, including if DOE is able to exercise its remedies with respect to the ACP under the 2002 DOE-USEC Agreement.

Centrus leases the office space for its corporate headquarters in Bethesda, Maryland through October 2027 with an option to extend for five years. In May 2017, Centrus entered into a lease through July 2021 for 6,000 square feet of additional office space in Waverly, Ohio. Centrus also has short-term leases for small areas of office space in Washington, DC and Tokyo, Japan.

17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The sole component of accumulated other comprehensive income (loss) (“AOCI”) relates to activity in the accounting for pension and postretirement health and life benefit plans. The amortization of prior service costs (credits) ~~are~~is reclassified from AOCI and included in the computation of net periodic benefit ~~cost as detailed in~~ cost. For further details, refer to Note 11, Pension and Postretirement Health and Life Benefits.

18. REVENUE BY GEOGRAPHIC AREA, MAJOR CUSTOMERS AND SEGMENT INFORMATION

Revenue by customer location, including customers in a foreign country representing 10% or more of total revenue, follows (in millions):


	Year Ended December 31,
	2021		2020
United States	$	220.5	$	171.7
Foreign:
Belgium	36.6		35.8
Japan	34.6		23.4
Other	6.6		16.3
Total foreign	77.8		75.5
Total revenue	$	298.3	$	247.2
* less than 10%

Year Ended December 31,
2018 2017

United States $ 141.3
$ 134.5
Foreign:
Belgium 35.2
34.9
Japan 3.1
49.0
Other 13.4
—
Total foreign 51.7
83.9
Total revenue $ 193.0
$ 218.4

~~In 2018,~~The U.S. government and its contractors, in the Company’s ~~10 largest customers~~technical solutions segment, represented approximately ~~85%~~38% of total revenue in 2021 and ~~its three~~21% in 2020.

The ten largest customers ~~represented approximately 52% of total revenue. In~~in the Company’s LEU segment ~~revenue from Florida Power and Light, Synatom, and South Carolina Electric & Gas~~ represented approximately ~~21%, 18%, 13%, respectively,~~57% of total revenue in ~~2018. In 2017, the Company’s 10 largest customers represented approximately 97%~~2021. Revenue from each of ~~total revenue~~Synatom and ~~its four largest customers represented approximately 53% of total revenue. In our LEU segment, revenue from Synatom, Entergy, American~~Kyushu Electric Power and South Carolina Electric & Gas represented approximately 16%, 14%, 12% and 11%, respectively, of total revenue in 2017. In the Company’s contract services segment, the U.S. government and its contractorsCompany represented approximately 12% of total revenue in ~~2018~~2021.

In 2020, the ten largest customers in the Company’s LEU segment represented approximately 71% of total revenue in 2020. Revenue from Synatom, Energy Harbor Nuclear Corp. and ~~11%~~Dominion Energy South Carolina represented approximately 14%, 13% and 10%, respectively, of total revenue in ~~2017, respectively.~~ 2020.

No other customer represented more than 10% of total revenue in ~~2018~~2021 or ~~2017.~~2020.

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Centrus has two reportable segments: the LEU segment with two components, SWU and uranium, and the ~~contract services~~technical solutions segment. The LEU segment includes sales of the SWU component of LEU, sales of both the SWU and uranium components of LEU, and sales of uranium. The ~~contract services~~technical solutions segment includes revenue and cost of sales for work that Centrus performs under ~~a fixed price agreement as a contractor to UT-Battelle.~~the HALEU Contract. The ~~contract services~~technical solutions segment also includes limited services provided by Centrus to DOE and its contractors at the Piketon facility. Gross profit is Centrus’ measure for segment reporting. There were no intersegment sales in the periods presented.

The following table presents the Company’s ~~revenue and gross profit by~~ segment ~~are as follows~~information (in millions):


	Year Ended December 31,
	2021		2020
Revenue
LEU segment:
Separative work units	$	163.3	$	151.5
Uranium	22.8		39.0
Total	186.1		190.5
Technical solutions segment	112.2		56.7
Total revenue	$	298.3	$	247.2

Segment Gross Profit (Loss)
LEU segment	$	73.0	$	97.8
Technical solutions segment	41.5		(0.2)
Gross profit	$	114.5	$	97.6

Year Ended December 31,
2018 2017
Revenue
LEU segment:
Separative work units $ 130.6
$ 195.4
Uranium 33.8
—
Total 164.4
195.4
Contract services segment 28.6
23.0
Total revenue $ 193.0
$ 218.4

Segment Gross Profit (Loss)
LEU segment $ (23.3 ) $ 32.7
Contract services segment 5.4
(2.5 )
Gross profit (loss) $ (17.9 ) $ 30.2

The Company’s total assets are not presented for each reportable segment as they are not reviewed by, nor otherwise regularly provided to, the chief operating decision maker. Centrus’ long-term or long-lived assets, which include property, plant and equipment and other assets reported on the consolidated balance sheet, were located in the United States as of December 31, ~~2018,~~2021, and December 31, ~~2017.~~2020.

~~19. QUARTERLY RESULTS OF OPERATIONS (Unaudited)~~

~~(in millions, except per share data)~~

120

2018
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Revenue $ 35.7
$ 39.4
$ 34.1
$ 83.8
$ 193.0
Cost of sales 41.3
49.8
26.3
93.5
210.9
Gross profit (loss) (5.6 ) (10.4 ) 7.8
(9.7 ) (17.9 )
Advanced technology license and decommissioning costs 7.7
5.7
5.8
6.9
26.1
Selling, general and administrative 11.2
9.7
8.8
10.2
39.9
Amortization of intangible assets 1.3
1.5
1.7
2.1
6.6
Special charges for workforce reductions and advisory costs 0.6
0.3
0.6
0.7
2.2
Gains on sales of assets (0.1 ) (0.2 ) —
—
(0.3 )
Operating loss (26.3 ) (27.4 ) (9.1 ) (29.6 ) (92.4 )
Gain on early extinguishment of debt —
—
—
(0.5 ) (0.5 )
Nonoperating components of net periodic benefit expense (income) (1.6 ) (1.7 ) (1.6 ) 15.5
10.6
Interest expense 1.0
1.0
1.0
1.1
4.1
Investment income (0.6 ) (0.6 ) (0.7 ) (0.6 ) (2.5 )
Income tax benefit (0.1 ) —
—
0.1
—
Net loss $ (25.0 ) $ (26.1 ) $ (7.8 ) $ (45.2 ) $ (104.1 )
Preferred stock dividends - undeclared and cumulative 1.9
2.0
1.9
2.0
7.8
Net loss allocable to common stockholders $ (26.9 ) $ (28.1 ) $ (9.7 ) $ (47.2 ) $ (111.9 )

Net loss per share - basic and diluted $ (2.97 ) $ (3.08 ) $ (1.06 ) $ (5.10 ) $ (12.23 )

2017
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Revenue $ 7.2
$ 44.0
$ 50.3
$ 116.9
$ 218.4
Cost of sales 10.1
48.7
39.0
90.4
188.2
Gross profit (loss) (2.9 ) (4.7 ) 11.3
26.5
30.2
Advanced technology license and decommissioning costs 6.1
4.4
4.5
0.7
15.7
Selling, general and administrative 12.4
9.7
11.0
10.6
43.7
Amortization of intangible assets 1.2
2.0
2.5
4.9
10.6
Special charges for workforce reductions and advisory costs 2.4
2.3
2.4
2.4
9.5
Gains on sales of assets (1.0 ) (0.7 ) (0.6 ) (2.3 ) (4.6 )
Operating income (loss) (24.0 ) (22.4 ) (8.5 ) 10.2
(44.7 )
Gain on early extinguishment of debt (33.6 ) —
—
—
(33.6 )
Nonoperating components of net periodic benefit expense (income) (0.4 ) (0.4 ) (0.3 ) (26.1 ) (27.2 )
Interest expense 2.9
0.7
0.7
1.0
5.3
Investment income (0.3 ) (0.3 ) (0.4 ) (0.3 ) (1.3 )
Income tax (benefit) expense (0.2 ) —
—
0.1
(0.1 )
Net income (loss) $ 7.6
$ (22.4 ) $ (8.5 ) $ 35.5
$ 12.2
Preferred stock dividends - undeclared and cumulative 1.0
2.0
2.0
1.9
6.9
Net income (loss) allocable to common stockholders $ 6.6
$ (24.4 ) $ (10.5 ) $ 33.6
$ 5.3

Net income (loss) per share:
Basic $ 0.73
$ (2.69 ) $ (1.15 ) $ 3.69
$ 0.58
Diluted $ 0.72
$ (2.69 ) $ (1.15 ) $ 3.69
$ 0.58

~~The calculation of net income (loss) per share on a dilutive basis is provided in~~ ~~Note 14, Net Income (Loss) Per Share. No dilutive effect is recognized in periods in which a net loss has occurred or in which the assumed conversion effect of options or convertible securities is anti-dilutive.~~

~~109~~



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



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



~~Name~~	~~Age~~	~~Position~~
~~Daniel B. Poneman~~	63	~~President and Chief Executive Officer~~
~~Larry B. Cutlip~~	59	~~Senior Vice President, Field Operations~~
~~Elmer W. Dyke~~	55	~~Senior Vice President, Business Operations and Chief Commercial Officer~~
~~Marian K. Davis~~	60	~~Senior Vice President, Chief Financial Officer and Treasurer~~
~~Stephen S. Greene~~	61	~~Senior Vice President, Corporate Development and Strategy~~
~~Dennis J. Scott~~	59	~~Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary~~
~~John M.A. Donelson~~	54	~~Vice President, Sales and Chief Marketing Officer~~

		~~Page~~
			~~PART I~~		Page
			PART I
Items 1.			Business		~~Business~~5	4
Item 1A.			Risk Factors		~~Risk Factors~~19	16
Item 1B.			Unresolved Staff Comments		32
Item 2.			Properties		~~Properties~~	33
Item 3.			Legal Proceedings		~~Legal Proceedings~~	33
Item 4.			Mine Safety Disclosures		33
			~~Executive Officers of the Registrant~~ PART II		34
			~~PART II~~
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			3534
Item 6.			[Reserved]		~~Selected Financial Data~~35	36
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Item 8.			Financial Statements and Supplementary Data		5661
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		5662
Item 9A.			Controls and Procedures		62
Item 9B.			Other Information		62
Item ~~9A.~~9C.			~~Controls and Procedures~~Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		5662
~~Item 9B.~~			~~Other Information~~ PART III		57
			~~PART III~~
Item 10.	Directors, Executive Officers and Corporate Governance			5863
Item 11.			Executive Compensation		~~Executive Compensation~~63	58
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		5863
Item 13.			Certain Relationships and Related Transactions, and Director Independence		5863
Item 14.			Principal Accounting Fees and Services		5863
			PART IV
Item 15.			Exhibits and Financial Statement Schedules		5964
Item 16.			Form 10-K Summary		5964
Exhibit Index					6065
Signatures					6572
Consolidated Financial Statements					6673


	No. of Employees at December 31,			No. of Employees at December 31,
Location	2018	2017	Location	2021	2020
Piketon, OH			Piketon, OH	115	107
Oak Ridge, TN	105	106	Oak Ridge, TN	101	105
Piketon, OH	65	123
Bethesda, MD	51	53	Bethesda, MD	50	53
Other	5	8	Other	—	2
Total Employees	226	290	Total Employees	266	267


Name	Age	Position
Daniel B. Poneman	65	President and Chief Executive Officer
Larry B. Cutlip	62	Senior Vice President, Field Operations
Dennis J. Scott	62	Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
Philip O. Strawbridge	67	Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer
John M.A. Donelson	57	Senior Vice President and Chief Marketing Officer



	December 31, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	123.1		$	208.8
Accounts receivable	60.2			60.2
Inventories	129.7			153.1
Deferred costs associated with deferred revenue	134.9			122.3
Deposits for financial assurance	30.3			16.3
Other current assets	6.3			6.2
Total current assets	484.5			566.9
Property, plant and equipment, net	4.2			4.9
Deposits for financial assurance	6.3			19.7
Intangible assets, net	76.0			82.7
Other long-term assets	0.7			1.1
Total assets	$	571.7		$	675.3

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	52.4		$	48.2
Payables under SWU purchase agreements	46.0			79.4
Inventories owed to customers and suppliers	103.0			77.9
Deferred revenue and advances from customers	204.5			191.8
Current debt	32.8			6.1
Total current liabilities	438.7			403.4
Long-term debt	120.2			157.5
Postretirement health and life benefit obligations	136.2			154.2
Pension benefit liabilities	168.9			161.6
Advances from customers	15.0			—
Other long-term liabilities	14.6			17.5
Total liabilities	893.6			894.2
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	61.2			60.0
Accumulated deficit	(388.5		)	(284.5		)
Accumulated other comprehensive income, net of tax	(0.1		)	0.1
Total stockholders’ deficit	(321.9		)	(218.9		)
Total liabilities and stockholders’ deficit	$	571.7		$	675.3



	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		)



	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



	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



	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, 2017			Additions / (Depreciation)			Retirements			December 31, 2018
Land	$	1.2		$	—		$	—		$	1.2
Leasehold improvements	3.2			—			(0.7		)	2.5
Machinery and equipment	1.3			0.1			(0.4		)	1.0
Other	1.1			—			—			1.1
Property, plant and equipment, gross	6.8			0.1			(1.1		)	5.8
Accumulated depreciation	(1.9		)	(0.8		)	1.1			(1.6		)
Property, plant and equipment, net	$	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



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	)



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



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

Outstanding at December 31, 2017	425	$4.14	7.3	$0.1
Outstanding at December 31, 2018	425	$4.14	6.3	$—
Exercisable at December 31, 2018	345	$4.11	6.3	$—



	2018
	1st Qtr.			2nd Qtr.			3rd Qtr.			4th Qtr.			Year
Revenue	$	35.7		$	39.4		$	34.1		$	83.8		$	193.0
Cost of sales	41.3			49.8			26.3			93.5			210.9
Gross profit (loss)	(5.6		)	(10.4		)	7.8			(9.7		)	(17.9		)
Advanced technology license and decommissioning costs	7.7			5.7			5.8			6.9			26.1
Selling, general and administrative	11.2			9.7			8.8			10.2			39.9
Amortization of intangible assets	1.3			1.5			1.7			2.1			6.6
Special charges for workforce reductions and advisory costs	0.6			0.3			0.6			0.7			2.2
Gains on sales of assets	(0.1		)	(0.2		)	—			—			(0.3		)
Operating loss	(26.3		)	(27.4		)	(9.1		)	(29.6		)	(92.4		)
Gain on early extinguishment of debt	—			—			—			(0.5		)	(0.5		)
Nonoperating components of net periodic benefit expense (income)	(1.6		)	(1.7		)	(1.6		)	15.5			10.6
Interest expense	1.0			1.0			1.0			1.1			4.1
Investment income	(0.6		)	(0.6		)	(0.7		)	(0.6		)	(2.5		)
Income tax benefit	(0.1		)	—			—			0.1			—
Net loss	$	(25.0	)	$	(26.1	)	$	(7.8	)	$	(45.2	)	$	(104.1	)
Preferred stock dividends - undeclared and cumulative	1.9			2.0			1.9			2.0			7.8
Net loss allocable to common stockholders	$	(26.9	)	$	(28.1	)	$	(9.7	)	$	(47.2	)	$	(111.9	)

Net loss per share - basic and diluted	$	(2.97	)	$	(3.08	)	$	(1.06	)	$	(5.10	)	$	(12.23	)