UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-14287

Centrus Energy Corp.



Delaware	52-2107911
(State of incorporation)	(I.R.S. Employer Identification No.)

6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817

(301) 564-3200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site,~~ if any, every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ý No o

Securities registered pursuant to Section 12(b) of the Act:



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	LEU*	Not applicable

*The rights currently transfer with the shares of Common Stock

As of November 1, ~~2017,~~2019, there were ~~7,632,669~~8,051,307 shares of the registrant’s Class A Common Stock, par value $0.10 per share, and 1,406,082 shares of the registrant’s Class B Common Stock, par value $0.10 per share, outstanding.

TABLE OF CONTENTS



		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets at September 30, ~~2017~~2019 and December 31, ~~2016~~2018	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	5
	~~Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016~~	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	76
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	87
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
	~~Liquidity and Capital Resources~~	35
Item 4.	Controls and Procedures	3942

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	4043
Item 1A.	Risk Factors	4044
Item 6.	Exhibits	4044
Signatures		4145

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2, contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 - that is, statements related to future events. In this context, forward-looking statements may address our expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “will”, “should”, “could”, “would” or “may” and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For Centrus Energy Corp., particular risks and uncertainties that could cause our actual future results to differ materially from those expressed in our forward-looking statements ~~include~~include: risks related to our significant long-term liabilities, including material unfunded defined benefit pension plan obligations and postretirement health and life benefit obligations; risks relating to our ~~outstanding 8.0% paid-in-kind (“PIK”) toggle~~8.25% notes (the ~~“8% PIK Toggle~~“8.25% Notes”) maturing in ~~September 2019, our 8.25% notes maturing in~~ February 2027 ~~(the “8.25% Notes”)~~ and our Series B Senior Preferred Stock (the “Series B Preferred Stock”), including the potential termination of the guarantee by United States Enrichment Corporation (“Enrichment Corp.”) of the 8% PIK Toggle Notes; risks related to the limited trading markets in our securities; risks related to our ability to maintain the listing of our Class A Common Stock on the NYSE American LLC; risks related to decisions made by our Class B stockholders regarding their investment in the Company based upon factors that are unrelated to the Company’s performance;Stock; risks related to the use of our net operating ~~losses~~loss (“NOLs”) carryforwards and net unrealized built-in losses (“NUBILs”) to offset future taxable income and the use of the Rights Agreement (as defined herein) to prevent an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and our ability to generate taxable income to utilize all or a portion of the NOLs and NUBILs prior to the expiration thereof; risks related to the limited trading markets in our securities; risks related to our ability to maintain the listing of our Class A Common Stock on the NYSE American LLC (the “NYSE American”); risks related to decisions made by our Class B stockholders regarding their investment in the Company based upon factors that are unrelated to the Company’s performance; risks related to the Company’s capital concentration; the continued impact of the March 2011 earthquake and tsunami in Japan on the nuclear industry and on our business, results of operations and prospects; the impact and potential extended duration of the current supply/demand imbalance in the market for low-enriched uranium (“LEU”);our dependence on others fordeliveries of LEU including deliveries from the Russian ~~government~~government-owned entity ~~Joint Stock~~TENEX, Joint-Stock Company ~~“TENEX”~~ (“TENEX”), under a commercial supply agreement with

TENEX ~~(the “Russian Supply Agreement”~~and deliveries under a long-term supply agreement with Orano Cycle (“Orano”); risks related to our ability to sell the LEU we procure pursuant to our purchase obligations under our supply ~~agreements, including the Russian Supply Agreement;~~agreements; risks relating to our sales order book, including uncertainty concerning customer actions under current contracts and in future contracting due to market conditions and lack of current production capability; risks related to ~~the value of~~financial difficulties experienced by customers, including possible bankruptcies, insolvencies or any other inability to pay for our ~~intangible assets related to the sales order book and customer relationships; risks associated with our reliance on third-party suppliers to provide essential services to us;~~products or services; pricing trends and demand in the uranium and enrichment markets and their impact on our profitability; movement and timing of customer orders; risks related to the value of our intangible assets

related to the sales order book and customer relationships; risks associated with our reliance on third-party suppliers to provide essential products and services to us; risks related to existing or new trade barriers and contract terms that limit our ability to deliver LEU to customers; risks related to actions, including government reviews, that may be taken by the U.S. government, the Russian government or other governments that could affect our ability to perform under our contract obligations or the ability of our sources of supply to perform under their contract obligations to us, including the imposition of sanctions, restrictions or other requirements; the impact of government regulation including by the U.S. Department of Energy (“DOE”) and the U.S. Nuclear Regulatory Commission; uncertainty regarding our ability to commercially deploy competitive enrichment technology; risks and uncertainties regarding funding for the American Centrifuge project and our ability to perform under our agreement with DOE to demonstrate the capability to produce high assay low enriched uranium (“HALEU”) and our ability to obtain and/or perform under our future agreements with the DOE, UT-Battelle, LLC (“UT-Battelle”), the management and operating contractor for Oak Ridge National Laboratory (“ORNL”), for continued research and development of the American Centrifuge technology; the potential for further demobilization or termination of ~~the~~our American Centrifuge ~~project;~~work; risks related to our ability to perform and receive timely payment under agreements with the ~~current demobilization of portions~~DOE, including risk and uncertainties related to the ongoing funding of the ~~American Centrifuge project,~~government and potential audits; the competitive bidding process associated with obtaining a federal contract; risks related to our ability to perform fixed-price contracts, including ~~risks~~the risk that ~~the schedule could be delayed and~~ costs could be higher than expected; risks that we will be unable to obtain new business opportunities, achieve market acceptance of our products and services or that products or services provided by others will render our goods or services obsolete or noncompetitive; risks that we will not be able to timely complete the work that we are obligated to perform; failures or security breaches of our information technology systems; potential strategic transactions, which could be difficult to implement, disrupt our business or change our business profile significantly; the outcome of legal proceedings and other contingencies (including lawsuits and government investigations or audits); thecompetitive environment for our products and services; changes in the nuclear energy industry; the impact of financial market conditions on our business, liquidity, prospects, pension assets and insurance facilities; risks related to the identification of a material weakness in our internal controls over financial reporting; the risks of revenue and operating results ~~can fluctuate~~fluctuating significantly from quarter to quarter, and in some cases, year to year; and other risks and uncertainties discussed in this and our other filings with the Securities and Exchange Commission, including under Part 1. Item1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

These factors may not constitute all factors that could cause actual results to differ from those discussed in any forward-looking statement. Accordingly, forward-looking statements should be not be relied upon as a predictor of actual results. Readers are urged to carefully review and consider the various disclosures made in this report and in our other filings with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business. We do not undertake to update our forward-looking statements to reflect events or circumstances that may arise after the date of this Quarterly Report on Form 10-Q, except as required by law.

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

(Unaudited; in millions, except share and per share data)


	September 30, 2017			December 31, 2016			September 30, 2019			December 31, 2018
ASSETS
Current assets
Current assets:
Cash and cash equivalents	$	135.9		$	260.7		$	77.2		$	123.1
Accounts receivable	14.2			19.9			19.1			60.2
Inventories	124.1			177.4			105.2			129.7
Deferred costs associated with deferred revenue	94.5			89.3			136.1			134.9
Deposits for financial assurance							17.2			30.3
Other current assets	15.6			13.3			8.3			6.3
Total current assets	384.3			560.6			363.1			484.5
Property, plant and equipment, net	5.2			6.0
Deposits for surety bonds	29.6			29.5
Property, plant and equipment, net of accumulated depreciation of $2.1 as of September 30, 2019 and $1.6 as of December 31, 2018							3.8			4.2
Deposits for financial assurance							5.7			6.3
Intangible assets, net	87.6			93.3			71.9			76.0
Other long-term assets	15.2			24.1			6.7			0.7
Total assets	$	521.9		$	713.5		$	451.2		$	571.7

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Current liabilities:
Accounts payable and accrued liabilities	$	50.7		$	46.4		$	42.0		$	52.4
Payables under SWU purchase agreements	17.3			59.6			13.0			46.0
Inventories owed to customers and suppliers	22.1			57.5			36.9			103.0
Deferred revenue	131.7			123.6
Decontamination and decommissioning obligations	16.6			38.6
Deferred revenue and advances from customers							233.1			204.5
Current debt							6.1			32.8
Total current liabilities	238.4			325.7			331.1			438.7
Long-term debt	157.5			234.1			114.1			120.2
Postretirement health and life benefit obligations	170.0			171.3			130.3			136.2
Pension benefit liabilities	175.0			179.9			159.0			168.9
Advances from customers							29.4			15.0
Other long-term liabilities	35.6			38.6			22.7			14.6
Total liabilities	776.5			949.6			786.6			893.6
Commitments and contingencies (Note 12)
Stockholders’ deficit
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 $109.6 million as of September 30, 2017	4.6			—
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 7,632,669 and 7,563,600 shares issued and outstanding as of September 30, 2017 and December 31, 2016	0.8			0.8
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 1,406,082 and 1,436,400 shares issued and outstanding as of September 30, 2017 and December 31, 2016	0.1			0.1
Series B Senior Preferred Stock, 7.5% cumulative, 104,574 shares issued and outstanding and an aggregate liquidation preference of $125.2 as of September 30, 2019 and $119.3 as of December 31, 2018							4.6			4.6
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 8,051,307 and 8,031,308 shares issued and outstanding as of September 30, 2019 and December 31, 2018, 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 September 30, 2019 and December 31, 2018							0.1			0.1
Excess of capital over par value	59.8			59.5			61.4			61.2
Accumulated deficit	(320.0		)	(296.7		)	(402.2		)	(388.5		)
Accumulated other comprehensive income, net of tax	0.1			0.2			(0.1		)	(0.1		)
Total stockholders’ deficit	(254.6		)	(236.1		)	(335.4		)	(321.9		)
Total liabilities and stockholders’ deficit	$	521.9		$	713.5		$	451.2		$	571.7

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

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~(Unaudited)~~

(Unaudited; in millions, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Revenue:
Separative work units	$	43.5		$	14.1		$	82.2		$	128.3		$	75.0		$	17.6		$	87.4		$	68.2
Uranium	—			—			—			14.3			12.8			11.3			38.1			14.9
Contract services	6.8			7.3			19.3			32.2			16.9			5.2			28.5			26.1
Total revenue	50.3			21.4			101.5			174.8			104.7			34.1			154.0			109.2
Cost of Sales:
Separative work units and uranium	32.4			15.9			76.8			130.7			54.4			20.9			100.4			98.6
Contract services	6.3			7.6			19.9			24.9			14.8			5.4			27.9			18.8
Total cost of sales	38.7			23.5			96.7			155.6			69.2			26.3			128.3			117.4
Gross profit (loss)	11.6			(2.1		)	4.8			19.2			35.5			7.8			25.7			(8.2		)
Advanced technology license and decommissioning costs	4.5			21.9			15.0			38.6
Advanced technology costs													1.3			5.8			13.0			19.2
Selling, general and administrative	11.0			10.7			33.1			34.6			8.7			8.8			24.5			29.7
Amortization of intangible assets	2.5			1.7			5.7			7.6			1.8			1.7			4.1			4.5
Special charges for workforce reductions and advisory costs	2.4			0.6			7.1			1.2
Gains on sales of assets	(0.6		)	(0.3		)	(2.3		)	(1.0		)
Operating loss	(8.2		)	(36.7		)	(53.8		)	(61.8		)
Gain on early extinguishment of debt	—			—			(33.6		)	(16.7		)
Special charges (credits) for workforce reductions and advisory costs													0.8			0.6			(2.2		)	1.5
Gain on sales of assets													(0.2		)	—			(0.7		)	(0.3		)
Operating income (loss)													23.1			(9.1		)	(13.0		)	(62.8		)
Nonoperating components of net periodic benefit expense (income)													(0.1		)	(1.6		)	(0.2		)	(4.9		)
Interest expense	0.7			4.7			4.3			14.8			0.9			1.0			2.9			3.0
Investment income	(0.4		)	(0.1		)	(1.0		)	(0.5		)	(0.5		)	(0.7		)	(1.9		)	(1.9		)
Loss before income taxes	(8.5		)	(41.3		)	(23.5		)	(59.4		)
Income (loss) before income taxes													22.8			(7.8		)	(13.8		)	(59.0		)
Income tax benefit	—			—			(0.2		)	(0.6		)	—			—			(0.1		)	(0.1		)
Net loss	(8.5		)	(41.3		)	(23.3		)	(58.8		)
Net income (loss) and comprehensive income (loss)													22.8			(7.8		)	(13.7		)	(58.9		)
Preferred stock dividends - undeclared and cumulative	2.0			—			5.0			—			1.9			1.9			5.9			5.9
Net loss allocable to common stockholders	$	(10.5	)	$	(41.3	)	$	(28.3	)	$	(58.8	)
Net income (loss) allocable to common stockholders													$	20.9		$	(9.7	)	$	(19.6	)	$	(64.8	)

Net loss per common share – basic and diluted	$	(1.15	)	$	(4.54	)	$	(3.12	)	$	(6.46	)
Average number of common shares outstanding – basic and diluted (in thousands)	9,103			9,096			9,081			9,102
Net income (loss) per common share:
Basic													$	2.18		$	(1.06	)	$	(2.05	)	$	(7.11	)
Diluted													$	2.17		$	(1.06	)	$	(2.05	)	$	(7.11	)
Average number of common shares outstanding (in thousands):
Basic													9,582			9,133			9,560			9,118
Diluted													9,626			9,133			9,560			9,118

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

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~ ~~(Unaudited)~~CASH FLOWS

(Unaudited; in millions)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss $ (8.5 ) $ (41.3 ) $ (23.3 ) $ (58.8 )
Other comprehensive loss, before tax (Note 13):
Amortization of prior service credits, net —
(0.1 ) (0.1 ) (0.2 )
Other comprehensive loss, before tax —
(0.1 ) (0.1 ) (0.2 )
Income tax benefit related to items of other comprehensive income —
—
—
—
Other comprehensive loss, net of tax benefit —
(0.1 ) (0.1 ) (0.2 )
Comprehensive loss $ (8.5 ) $ (41.4 ) $ (23.4 ) $ (59.0 )



	Nine Months Ended September 30,
	2019			2018
OPERATING
Net loss	$	(13.7	)	$	(58.9	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	4.5			5.1
PIK interest on paid-in-kind toggle notes	1.1			1.2
Gain on sales of assets	(0.7		)	(0.3		)
Inventory valuation adjustments	2.3			—
Changes in operating assets and liabilities:
Accounts receivable	31.3			57.6
Inventories, net	(9.3		)	30.6
Payables under SWU purchase agreements	(33.0		)	(64.8		)
Deferred revenue and advances from customers, net of deferred costs	18.9			(16.7		)
Accounts payable and other liabilities	(11.2		)	(10.3		)
Pension and postretirement liabilities	(15.9		)	(21.4		)
Other, net	(0.8		)	0.2
Cash used in operating activities	(26.5		)	(77.7		)

INVESTING
Capital expenditures	—			(0.1		)
Proceeds from sales of assets	0.7			0.4
Cash provided by investing activities	0.7			0.3

FINANCING
Principal payments on debt	(27.5		)	—
Payments for deferred financing costs	(0.2		)	—
Payment of interest classified as debt	(6.1		)	(6.1		)
Cash used in financing activities	(33.8		)	(6.1		)

Decrease in cash, cash equivalents and restricted cash	(59.6		)	(83.5		)
Cash, cash equivalents and restricted cash, beginning of period⁽¹⁾	159.7			244.8
Cash, cash equivalents and restricted cash, end of period⁽¹⁾	$	100.1		$	161.3

Supplemental cash flow information:
Interest paid in cash	$	1.5		$	0.8
Non-cash activities:
Conversion of interest payable-in-kind to debt	$	0.7		$	1.7
Deferred financing costs included in accounts payable and accrued liabilities	$	0.4		$	—
Right to use lease assets acquired under operating lease	$	2.9		$	—
Disposal of right to use lease assets for early termination	$	0.2		$	—

_______________

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

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

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~ ~~(Unaudited)~~STOCKHOLDERS’ DEFICIT

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

Nine Months Ended
September 30,
2017 2016
Operating Activities
Net loss $ (23.3 ) $ (58.8 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 6.6
8.1
PIK interest on paid-in-kind toggle notes 1.2
9.7
Gain on early extinguishment of debt (33.6 ) (16.7 )
Gain on sales of assets (2.3 ) (1.0 )
Inventory valuation adjustments —
3.0
Changes in operating assets and liabilities:
Accounts receivable 14.5
18.4
Inventories, net 17.9
45.8
Payables under SWU purchase agreements (42.3 ) (68.9 )
Deferred revenue, net of deferred costs 2.9
5.8
Accounts payable and other liabilities (35.3 ) 2.2
Other, net (1.9 ) 0.5
Cash used in operating activities (95.6 ) (51.9 )

Investing Activities
Capital expenditures (0.3 ) (3.0 )
Proceeds from sales of assets 2.1
1.2
Deposits for surety bonds - net decrease —
0.3
Cash provided by (used in) investing activities 1.8
(1.5 )

Financing Activities
Payment of interest classified as debt (3.4 ) —
Repurchase of debt (27.6 ) (9.8 )
Cash used in financing activities (31.0 ) (9.8 )

Decrease in cash and cash equivalents (124.8 ) (63.2 )
Cash and cash equivalents at beginning of period 260.7
234.0
Cash and cash equivalents at end of period $ 135.9
$ 170.8

Supplemental cash flow information:
Interest paid in cash $ 4.2
$ 6.5
Non-cash activities:
Conversion of interest payable-in-kind to long-term debt $ 0.4
$ 3.4



	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, 2018	$	4.6	$	0.8	$	0.1	$	61.2	$	(388.5	)	$	(0.1	)	$	(321.9	)
Net loss for the three months ended March 31, 2019	—		—		—		—		(20.9		)	—			(20.9		)
Issuance and amortization of restricted stock units and stock options	—		—		—		0.1		—			—			0.1
Balance at March 31, 2019	4.6		0.8		0.1		61.3		(409.4		)	(0.1		)	(342.7		)

Net loss for the three months ended June 30, 2019	—		—		—		—		(15.6		)	—			(15.6		)
Balance at June 30, 2019	4.6		0.8		0.1		61.3		(425.0		)	(0.1		)	(358.3		)

Net income for the three months ended September 30, 2019									22.8						22.8
Issuance and amortization of restricted stock units and stock options	—		—		—		0.1		—			—			0.1
Balance at September 30, 2019	$	4.6	$	0.8	$	0.1	$	61.4	$	(402.2	)	$	(0.1	)	$	(335.4	)



	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, 2017	$	4.6	$	0.8	$	0.1	$	60.0	$	(284.5	)	$	0.1		$	(218.9	)
Adoption of Accounting Standards Codification 606 as of January 1, 2018	—		—		—		—		0.1			—			0.1
Net loss for the three months ended March 31, 2018	—		—		—		—		(25.0		)	—			(25.0		)
Issuance and amortization of restricted stock units and stock options	—		—		—		0.1		—			—			$	0.1
Balance at March 31, 2018	4.6		0.8		0.1		60.1		(309.4		)	0.1			$	(243.7	)

Net loss for the three months ended June 30, 2018	—		—		—		—		(26.1		)	—			(26.1		)
Other comprehensive loss, net of tax benefit	—		—		—		—		—			(0.1		)	(0.1		)
Issuance and amortization of restricted stock units and stock options	—		—		—		0.1		—			—			0.1
Balance at June 30, 2018	4.6		0.8		0.1		60.2		(335.5		)	—			(269.8		)

Net loss for the three months ended September 30, 2018	—		—		—		—		(7.8		)	—			(7.8		)
Issuance and amortization of restricted stock units and stock options	—		—		—		0.1		—			—			0.1
Balance at September 30, 2018	$	4.6	$	0.8	$	0.1	$	60.3	$	(343.3	)	$	—		$	(277.5	)

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

~~CENTRUS ENERGY CORP.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT~~ ~~(Unaudited)~~

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

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, 2015 $ —
$ 0.8
$ 0.1
$ 59.0
$ (229.7 ) $ 4.1
$ (165.7 )
Net loss —
—
—
—
(58.8 ) —
(58.8 )
Other comprehensive loss, net of tax benefit (Note 13) —
—
—
—
—
(0.2 ) (0.2 )
Restricted stock units and stock options issued, net of amortization —
—
—
0.4
—
—
0.4
Balance at September 30, 2016 $ —
$ 0.8
$ 0.1
$ 59.4
$ (288.5 ) $ 3.9
$ (224.3 )

Balance at December 31, 2016 $ —
$ 0.8
$ 0.1
$ 59.5
$ (296.7 ) $ 0.2
$ (236.1 )
Net loss —
—
—
—
(23.3 ) —
(23.3 )
Issuance of preferred stock 4.6
—
—
—
—
—
4.6
Other comprehensive loss, net of tax benefit (Note 13) —
—
—
—
—
(0.1 ) (0.1 )
Restricted stock units and stock options issued, net of amortization —
—
—
0.3
—
—
0.3
Balance at September 30, 2017 $ 4.6
$ 0.8
$ 0.1
$ 59.8
$ (320.0 ) $ 0.1
$ (254.6 )

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

CENTRUS ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(Unaudited)~~

1. BASIS OF PRESENTATION

Basis of Presentation and Principles of Consolidation

The unaudited condensed 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, as of September 30, ~~2017,~~2019, and for the three and nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet as of December 31, ~~2016,~~2018, was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). ~~The~~In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, ~~that are, in the opinion of management,~~including normal recurring adjustments, necessary for a fair statement of the financial results for the interim period. Certain prior year amounts have been reclassified for consistency with the current year presentation. Certain information and notes normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. All material intercompany transactions have been eliminated. The Company’s components of comprehensive income for the three and nine months ended September 30, 2019 and 2018 are insignificant.

Operating results for the three and nine months ended September 30, ~~2017,~~2019, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2019. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

New Accounting Standards

Recently Adopted Accounting Standards

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ~~(the “FASB”~~(“FASB”) issued Accounting Standards Update (“ASU”) ~~2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. ASU 2014-09 introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The FASB has since issued amendments that clarify a number of specific issues as well as require additional disclosures. The revenue recognition standard will become effective for the Company beginning with the first quarter of 2018. The Company has started an implementation process, including a review of customer contracts, to evaluate the effect this standard will have on its consolidated financial statements and related disclosures. The Company continues to assess the potential impacts of the new standard on its consolidated financial statements, including substantive new disclosures. The Company plans to select the modified retrospective transition method upon adoption effective January 1, 2018.

~~In February 2016, the FASB issued ASU~~ 2016-02, Leases (Topic 842)(“Topic 842”), which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with ~~terms~~a term longer than 12 months. ~~Leases will be classified~~The Company adopted this standard on January 1, 2019, using the modified transition method which provides for recognition of existing leases as ~~either finance or operating, with classification affecting expense recognition in~~of the ~~statement of operations. ASU 2016-02 will become effective~~adoption date without requiring comparable presentation for the ~~Company beginning in~~prior period. Lease assets and liabilities are recognized based on the ~~first quarter~~present value of ~~2019, with early adoption permitted, and is to be applied using a modified retrospective approach.~~lease payments over the lease term. The Company’s leases do not provide an implicit interest rate. The Company ~~is evaluating~~uses an estimated incremental borrowing rate based on the ~~effect that the provisions of ASU 2016-02 will have on its consolidated financial statements.~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Stock Compensation - Improvements to Employee Share-Based Payment Accounting (Topic 718). ASU 2016-09 simplifies several aspects~~term of the ~~accounting for share-based payment transactions,~~lease using information available at the adoption date or the lease commencement, if later, including ~~income tax consequences, classification of awards as either equity or liabilities, and classification~~the yield on the statement of cash flows. ASU 2016-09 became effective for the Company in the first quarter of 2017. Under ASU 2016-09, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur.Company’s collateralized debt. The Company has elected to ~~recognize forfeitures as they occur.~~adopt the package of practical expedients provided under Topic 842, which allowed the Company to not apply a reassessment of whether any existing or expired contracts contain leases, reassessment of lease classification for existing or expired leases and reassessment of initial direct costs for leases. The adoption of ~~ASU 2016-09 did not have a material~~this standard had no impact on the Company’s consolidated ~~financial statements.~~statement of operations or statement of cash flows. Refer to Note 8, Leases, for additional information.

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 Company adopted the new standard effective January 1, 2019, and elected not to reclassify the stranded tax effect resulting from the 2017 Tax Act to retained earnings.

Accounting Standards Effective in Future Periods

In August ~~2016,~~2018, the FASB issued ASU ~~2016-15,~~2018-14, ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts~~Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which modifies the disclosure requirements for employers that sponsor defined benefit pension plans and ~~Cash Payments~~.other postretirement plans. ASU ~~2016-15 addresses the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. It~~2018-14 is ~~intended to reduce diversity in practice by providing guidance on eight specific cash flow issues. ASU 2016-15 will become~~ effective for ~~the Company~~public companies for fiscal years, and interim periods within those fiscal years, beginning ~~in the first quarter of 2018, with early adoption permitted, and~~after December 15, 2020. The standard is to be applied ~~using~~on a retrospective ~~approach. The Company is evaluating the effect that the provisions of ASU 2016-15 will have on its consolidated financial statements.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,~~ ~~requiring an entity~~basis to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will become effective for the Company beginning in the first quarter of 2018, withall periods presented and early adoption is permitted. The Company is evaluating the effect that the provisions of ASU ~~2016-16~~2018-14 will have on its consolidated financial statements.

~~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, and will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is evaluating the effect that the provisions of ASU 2016-18 will have on its consolidated financial statements.Significant Accounting Policies

~~In March 2017,~~The accounting policies of 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~~Company are set forth in Note 1 to the ~~presentation~~Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Updates to those policies as a result of the ~~components~~adoption 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. ASU 2017-07 also stipulates that only the service cost component of net benefit cost is eligible for capitalizationASC 842 have been included in assets. The guidance will become effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is evaluating the effect that the provisions of ASU 2017-07 will have on its consolidated financial statements.Note 8, Leases.

2. ~~SPECIAL CHARGES~~REVENUE AND CONTRACTS WITH CUSTOMERS

~~Evolving Business Needs~~Disaggregation of Revenue

~~Evolving business needs have~~The following table presents revenue from separative work units (“SWU”) and uranium sales disaggregated by geographical region based on the billing addresses of customers (in millions):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
United States	$	53.7	$	0.3	$	91.4	$	54.3
Foreign	34.1		28.6		34.1		28.8
Revenue - SWU and uranium	$	87.8	$	28.9	$	125.5	$	83.1

Refer to Note 13, Segment Information, for disaggregation of revenue by segment. Disaggregation by end-market is provided in Note 13 and the condensed consolidated statements of operations. SWU and uranium sales are made primarily to electric utility customers. Contract services revenue resulted primarily from services provided to the government and its contractors and, in ~~workforce reductions since 2013. In~~the first quarter of 2018, the settlement with the U.S. Department of Energy (“DOE”) and the U.S. government. SWU and uranium revenue is recognized at point of sale and contract services revenue is generally recognized over time.

Contract Balances

The following table represents changes in contract assets and contract liabilities balances (in millions):



	September 30, 2019		December 31, 2018		Year-To-Date Change
Contract assets
Accounts receivable:
Billed	$	8.8	$	50.4	$	(41.6	)
Unbilled	10.3		—		10.3
Uranium feed receivable	—		9.8		(9.8		)
Accounts receivable	$	19.1	$	60.2	$	(41.1	)

Deferred costs associated with deferred revenue	$	136.1	$	134.9	$	1.2

Contract liabilities
Accounts payable and accrued liabilities	$	0.2	$	—	$	0.2
Deferred revenue - current	$	209.8	$	204.5	$	5.3
Advances from customers - current	$	23.3	$	—	$	23.3
Advances from customers - noncurrent	$	29.4	$	15.0	$	14.4

Deferred cost and deferred revenue activity in the nine months ended September 30, ~~2017, special charges~~2019, 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	$	3.8	$	(2.6	)	$	1.2
Deferred revenue	16.0		(10.7		)	5.3

LEU Segment

Under the terms of certain contracts with customers in the low-enriched uranium (“LEU”) segment, the Company will accept payment in the form of uranium. Revenue from the sale of SWU under such contracts is recognized at the time LEU is delivered and is based on the fair value of the uranium at contract inception, or as the quantity of uranium is finalized, if variable. In the three and nine months ended September 30, 2019, SWU revenue of $23.4 million was recognized under such contracts based on the fair market value of uranium acquired in exchange for SWU delivered. Uranium received from customers as advance payments for the future sales of SWU totaled $52.7 million as of September 30, 2019. The advance payments are included ~~estimated employee termination benefits of $2.2 million, including $0.7 million~~ in either Advances from Customers, Current or Advances from Customers, Noncurrent, based on the anticipated SWU sales period.

In the three months ended September 30, ~~2017.~~2019, the Company borrowed SWU inventory valued at $1.7 million from a customer under terms that require repayment within 48 months. The Company recorded the SWU and the related liability for the borrowings using an average purchase price over the borrowing period. The cumulative liability to the customer of $9.0 million for borrowed inventory is included in Other Liabilities, which is included in noncurrent liabilities.

Contract Services Segment

Revenue for the contract services 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.

On October 31, 2019, the Company signed a three-year $115 million contract with DOE (“the HALEU Agreement”) to deploy a cascade of centrifuges to demonstrate production of high-assay, low-enriched uranium (“HALEU”) fuel 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 agreement (“the HALEU Letter Agreement”) that allowed work to begin while the full contract was being finalized.

The HALEU Agreement is an incrementally funded, cost reimbursable contract with DOE reimbursing up to 80% of total program costs up to a maximum amount of $115 million. The corresponding 20 percent cost share for the Company would be $29 million. Any costs incurred above these amounts would increase the Company’s cost share. Based on current program cost estimates under review, Centrus expects to ~~make payments primarily~~recognize a portion of its anticipated total cost share as a loss in the fourth quarter of ~~2017~~2019 in the approximate range of $17-22 million. The total cost share is expected to exceed $29 million, including certain operating costs in support of the program that will be recognized as expense as incurred over the three-year contract term. The anticipated loss on the contract will be adjusted if necessary over the contract term based on actual results and remaining cost projections. Under the HALEU Agreement, DOE is currently obligated for costs up to $35 million of the $115 million and is authorized for payments to the Company up to $35 million. The Company received cash payments of $3.4 million through September 30, 2019.

For the quarter ended June 30, 2019, the Company recorded a loss provision of $0.5 million which represented the anticipated gross loss for the remaining initial phase of contract work performed under the HALEU Letter Agreement as the parties worked to enter into a definitive contract. In the three months ended September 30, 2019, the loss provision was reduced by $0.3 million and the remaining accrued loss provision as of September 30, 2019 for the remaining initial phase of the contract work through October 31, 2019, is $0.2 million.

Services to be provided over the three-year HALEU Agreement include constructing and assembling centrifuge machines and related infrastructure in a cascade formation. Provisions for losses are recognized in advance for such an integrated, construction-type contract when costs are projected to exceed estimates of total revenue to be earned. The loss provision is recorded to Cost of Sales in the period the loss is determined and is reflected in Current Liabilities.

On January 11, 2018, the Company entered into a settlement agreement with DOE and the U.S. government regarding breach of contract claims brought by the Company relating to work performed by the Company under contracts with DOE and subcontracts with DOE contractors. In connection with the settlement, the Company (a) received $4.7 million from the U.S. government, (b) applied approximately $19.3 million of advances from the U.S. government received in prior years against the receivables balance, and (c) recorded additional revenue of $9.5 million.

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 ~~$1.4 million balance payable at~~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, ~~2017.~~

In2014, the second quarter of 2016, the Company commenced a project to align its corporate structure to the scale of its ongoing business operations and to update related information technology systems. The Company incurred advisory costs of $0.3 million and $0.8 millionreceivables related to the ~~reengineering project~~Company’s claims for payment are carried at fair value as of September 30, 2014, which is net of the valuation allowances. Refer to Note 12, Commitments and Contingencies.

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 sales under contract in the LEU segment (“order book”) extends to 2030. The order book represents the Company’s remaining performance obligations under these contracts and includes the Deferred Revenue and Advances from Customers amounts in the Contract Balances table above. As of September 30, 2019 and December 31, 2018, the order book was $1.0 billion, reflecting completed deliveries and new contracts signed in the nine months ended September 30, 2019.

Most of the Company’s 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 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 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.

3. SPECIAL CHARGES

As a result of the HALEU Letter Agreement, special charges in the three and nine months ended September 30, ~~2016, respectively. The Company incurred advisory costs~~2019, included a credit of ~~$1.7~~$2.9 million ~~and $5.0 million~~for the reversal of accrued termination benefits for employees who were retained at the Company’s facility in Piketon, Ohio. For the ~~three and~~ nine months ended September 30, ~~2017, respectively.~~

~~Piketon Demonstration Facility~~

~~In September 2015, Centrus completed a successful three-year demonstration~~2018, special charges totaled $1.5 million, consisting of its American Centrifuge technology at its facility in Piketon, Ohio. The demonstration effort was primarily funded by the U.S. government. As a result of reduced program funding, Centrus incurred a special charge in the third quarter of 2015 for estimated employee termination ~~benefits. Of~~benefits related to corporate functions of $1.4 million and advisory costs related to updating the Company’s information technology systems of $0.1 million. The remaining ~~$4.9~~balance of termination benefits of $1.0 million ~~liability as of September 30, 2017, $2.8 million~~ is expected to be paid within twelve months and is classified ~~as current and included~~ in Accounts Payable and Accrued Liabilitiesin the condensed consolidated balance sheet. ~~The remaining $2.1 million is included in~~ ~~Other Long-Term Liabilities~~ ~~and is expected to be paid through 2019.~~

A summary of termination benefit activity ~~and related liabilities~~and the accrued liability follows (in millions):

Liability
December 31,
2016
Nine Months Ended
September 30, 2017 Liability
September 30,
2017
Charges for Termination Benefits Paid/ Settled
Workforce reductions:
Evolving business needs $ 0.1
$ 2.2
$ (0.9 ) $ 1.4

Piketon demonstration facility 5.4
0.1
(0.6 ) 4.9

$ 5.5
$ 2.3
$ (1.5 ) $ 6.3



	Liability December 31, 2018		Nine Months Ended September 30, 2019						Liability September 30, 2019
	Liability December 31, 2018		Charges (Credits) for Termination Benefits			Paid/ Settled			Liability September 30, 2019
Workforce reductions:
Corporate functions	$	0.9	$	0.7		$	(0.8	)	$	0.8
Piketon facility	3.2		(2.9		)	(0.1		)	0.2
Total	$	4.1	$	(2.2	)	$	(0.9	)	$	1.0

~~3. CONTRACT SERVICES~~4. CASH, CASH EQUIVALENTS AND ~~ADVANCED TECHNOLOGY LICENSE AND DECOMMISSIONING COSTS~~

~~The contract services segment includes~~ ~~Revenue~~ ~~and~~ ~~Cost of Sales~~ for engineering and testing work Centrus performs on the American Centrifuge technology under a government contract with UT-Battelle, LLC (“UT-Battelle”), the operator of Oak Ridge National Laboratory (“ORNL”). The recently completed fixed priced contract between Centrus and UT-Battelle (the “2017 ORNL Contract”) was for the period from October 1, 2016, through September 30, 2017 and generated revenue of approximately $25 million. On October 26, 2017, the parties executed a new fixed priced contract for the period from October 1, 2017, through September 30, 2018, that is expected to generate total revenue of approximately $16 million upon completion of defined milestones. The ORNL contracts have been funded incrementally. Funding for the program is provided to UT-Battelle by the U.S. government which is currently operating under a continuing resolution.RESTRICTED CASH

The ~~2017 ORNL Contract provided~~following table summarizes the Company’s cash, cash equivalents and restricted cash as presented on the condensed consolidated balance sheet to amounts on the condensed consolidated statement of cash flows (in millions):



	September 30, 2019		December 31, 2018

Cash and cash equivalents	$	77.2	$	123.1
Deposits for financial assurance - current	17.2		30.3
Deposits for financial assurance - noncurrent	5.7		6.3
Total cash, cash equivalents and restricted cash	$	100.1	$	159.7

The following table provides additional detail regarding the Company’s deposits for ~~payments for monthly reports of deliverables of approximately $2.0 million per month and additional aggregate payments of $1.0 million based on completion of defined milestones.~~financial assurance (in millions):



	September 30, 2019				December 31, 2018
	Current		Long-Term		Current		Long-Term
NRC license	$	17.0	$	—	$	16.6	$	—
DOE lease	—		—		13.5		—
Workers compensation	—		5.4		—		6.0
Other	0.2		0.3		0.2		0.3
Total deposits for financial assurance	$	17.2	$	5.7	$	30.3	$	6.3

~~The Company’s contract with UT-Battelle~~

Piketon Facility Obligations and Surety Bonds

Centrus leases gas centrifuge enrichment plant facilities and related personal property in Piketon, Ohio from DOE. Centrus previously provided financial assurance to DOE for lease turnover obligations in the form of surety bonds that ~~ended September 30, 2016 (the “2016 ORNL Contract”), provided for payments for monthly reports of deliverables of approximately $2.7 million per month. The 2016 ORNL Contract,~~were fully cash collateralized. On May 31, 2019, DOE and Centrus amended the lease agreement, which was ~~signed in March 2016, provided for payments for reports~~scheduled to expire by its terms on June 30, 2019. In the second quarter of 2019, Centrus completed its lease turnover obligations related to ~~work performed since October 1, 2015.~~ ~~Revenue~~ in the ~~nine months~~term ended ~~September~~June 30, ~~2016, includes $24.2 million for reports on work performed in~~2019. DOE released the ~~nine months ended September 30, 2016,~~bonds and ~~$8.1 million for March 2016 reports on work performed in~~Centrus received the ~~three months ended December 31, 2015. Expenses for contract work performed in the nine months ended September 30, 2016, are included in~~ ~~Cost~~cash collateral of ~~Sales. Expenses for work performed in the three months ended December 31, 2015, before entering into the 2016 ORNL Contract, were included in~~ ~~Advanced Technology License and Decommissioning Costs~~ ~~in 2015.~~

~~American Centrifuge expenses that are outside of the Company’s contracts with UT-Battelle are included in~~ ~~Advanced Technology License and Decommissioning Costs,~~ ~~including ongoing costs~~$13.5 million. In addition, Centrus has previously provided financial assurance to ~~maintain the demobilized Piketon facility and our licenses from~~ the U.S. Nuclear Regulatory Commission (“NRC”) ~~at that location. In the second quarter of 2016, the Company commenced~~for the decontamination and decommissioning (“D&D”) of the ~~Piketon~~ facility in the form of surety bonds that are fully cash collateralized by Centrus. The Company completed the D&D work and, on September 23, 2019, the NRC cancelled the financial assurance instruments. On October 4, 2019, the Company received the cash collateral of $17.0 million from the cancellation of the surety bonds.

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 each state’s requirements in the ~~requirements~~form of ~~NRC~~a surety bond or letters of credit that are fully cash collateralized by 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 or letters of credit are subject to cancellation and the ~~U.S. Department of Energy (“DOE”). Refer to~~ ~~Note 12, Commitments and Contingencies, for additional details.~~

~~4. RECEIVABLES~~

September 30,
2017 December 31,
2016
(in millions)
Utility customers and other $ 9.1
$ 15.3
Contract services, primarily DOE 5.1
4.6
Accounts receivable $ 14.2
$ 19.9

~~Centrus formerly performed site services work under contracts with DOE at~~Company would receive the ~~former Portsmouth and Paducah gaseous diffusion plants. Overdue receivables from DOE of $14.2~~cash collateral. During the three months ended September 30, 2019, the Company received $0.6 million as return of ~~September 30, 2017, and $22.8 million as~~cash collateral related to the cancellation of ~~December 31, 2016, are included in~~ ~~Other Long-Term Assets~~ ~~based on the extended timeframe expected to resolve the Company’s claims for payment.~~a letter of credit.

Centrus has unapplied payments from DOE that may be used, at DOE’s direction, (a) to pay for future services provided by the Company, or (b) to reduce outstanding receivables balances due from DOE. The balance of unapplied payments of $19.3 million as of September 30, 2017, and December 31, 2016, is included in ~~Other Long-Term Liabilities~~ ~~pending resolution of the long-term receivables from DOE described above.~~

5. INVENTORIES

Centrus holds uranium at licensed locations in the form of natural uranium and as the uranium component of ~~low enriched uranium (“LEU”).~~LEU. Centrus also holds ~~separative work units (“SWU”)~~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):


	September 30, 2017						December 31, 2016						September 30, 2019						December 31, 2018
	Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net
Separative work units	$	73.7	$	3.2	$	70.5	$	115.8	$	15.2	$	100.6	$	12.1	$	—	$	12.1	$	20.1	$	3.6	$	16.5
Uranium	50.2		18.9		31.3		61.4		42.3		19.1		93.1		36.9		56.2		109.6		99.4		10.2
Materials and supplies	0.2		—		0.2		0.2		—		0.2
	$	124.1	$	22.1	$	102.0	$	177.4	$	57.5	$	119.9
Total													$	105.2	$	36.9	$	68.3	$	129.7	$	103.0	$	26.7


(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. Valuation adjustments for uranium inventory to reflect declines in uranium market price indicators totaled $2.3 million in the nine months ended September 30, 2019. There were no valuation adjustments in the three months ended September 30, 2019, or the three and nine months ended September 30, 2018.

~~6. PROPERTY, PLANT AND EQUIPMENT~~

September 30,
2017 December 31,
2016
(in millions)
Property, plant and equipment, gross 6.9
6.8
Accumulated depreciation (1.7 ) (0.8 )
Property, plant and equipment, net $ 5.2
$ 6.0

7.6. INTANGIBLE ASSETS

Intangible assets originated from the Company’s reorganization and application of fresh start accounting as of 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 ~~condensed~~ consolidated statements of operations. Intangible asset balances are as follows (in millions):


	September 30, 2017						December 31, 2016
													September 30, 2019						December 31, 2018
					(in millions)
	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Sales order book	$	54.6	$	22.1	$	32.5	$	54.6	$	19.9	$	34.7	$	54.6	$	28.6	$	26.0	$	54.6	$	28.0	$	26.6
Customer relationships	68.9		13.8		55.1		68.9		10.3		58.6		68.9		23.0		45.9		68.9		19.5		49.4
Total	$	123.5	$	35.9	$	87.6	$	123.5	$	30.2	$	93.3	$	123.5	$	51.6	$	71.9	$	123.5	$	47.5	$	76.0

7. DEBT

A summary of ~~long-term~~ debt is as follows (in millions):


							September 30, 2019				December 31, 2018
	Maturity	September 30, 2017		December 31, 2016		Maturity	Current		Long-Term		Current		Long-Term
8.25% Notes:	Feb. 2027					Feb. 2027
Principal		$	74.3	$	—		$	—	$	74.3	$	—	$	74.3
Interest		58.1		—			6.1		39.8		6.1		45.9
8.25% Notes		132.4		—			$	6.1	$	114.1	$	6.1	$	120.2

8% PIK Toggle Notes	Sep. 2019^(a)	31.3		234.6		Sep. 2019	$	—	$	—	$	26.7	$	—
Subtotal		163.7		234.6
Less deferred issuance costs		0.1		0.5
Total debt		163.6		234.1
Less current portion		6.1		—
Long-term debt		$	157.5	$	234.1

Total							$	6.1	$	114.1	$	32.8	$	120.2

~~(a) Maturity can be extended to September 2024 upon the satisfaction~~Repayment of ~~certain funding conditions described below.~~8% PIK Toggle Notes

~~Note Exchange~~On September 30, 2019, the Company repaid the outstanding 8% PIK Toggle Notes that matured on September 30, 2019. The Company paid a total of $28.5 million, including $1.0 million in accrued interest. The payment was made in accordance with the terms of the Indenture dated September 30, 2014 (as amended, supplanted, or otherwise modified from time to time) among the Company, the Company’s subsidiary, United States Enrichment Corp., as the note guarantor, and Delaware Trust Company, as trustee and collateral agent. The payment constituted full satisfaction and discharge of the Indenture and the Notes.

On February 14, 2017, pursuant to an exchange offer and consent solicitation, Centrus exchanged $204.9 million principal amount of the Company’s 8% paid-in-kind (“PIK”) toggle notes (the “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 (a “TDR”) under Accounting Standards Codification Subtopic 470-60, ~~Debt-Troubled Debt Restructurings by Debtors~~. For an exchange classified as a TDR, if the future undiscounted cash flows of the newly issued debt and other consideration are less than the net carrying value of the original debt, a gain is recorded for the difference and the carrying value of the newly issued debt is adjusted to the future undiscounted cash flow amount and no future interest expense is recorded. All future interest paymentsInterest on the newly issued debt reduce the carrying value. Accordingly, the Company recognizes the 8.25% Notes on the condensed consolidated balance sheet as the sum of the principal balance and all future interest payments. The Company 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 was payable semi-annually in arrears on March 31 and September 30 based on a 360-day year consisting of ~~$0.4 million. Refer~~twelve 30-day months. The principal amount was increased by any payment of interest in the form of PIK payments. The Company had the option to ~~Note 13, Stockholders’ Equity~~ pay up to 5.5% per annum of interest due on the 8% PIK Toggle Notes in the form of in-kind PIK payments. For the semi-annual interest periods in 2018 and 2019, the Company elected to pay interest in the form of PIK payments at 5.5% per annum. Financing costs for ~~details related to~~ the ~~newly issued preferred stock.~~issuance of the 8% PIK Toggle Notes were deferred and were amortized on a straight-line basis, which approximates the effective interest method, over the life of the 8% PIK Toggle Notes. The remaining financing costs were amortized with the final payment on September 30, 2019.

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 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 September 30, ~~2017,~~2019, and December 31, 2018, $6.1 million of interest is recorded as current and classified as ~~Accounts Payable and Accrued Liabilities~~Current Debt in the condensed consolidated balance sheet.

The 8.25% Notes rank equally in right of payment with all of our existing and future unsubordinated indebtedness other than our 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 our 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 effected for the 8.25% Notes, which 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~~Additional terms and obligations of the Company, as described in 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 amountconditions 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 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 securing the Enrichment Corp. guarantee of~~ the 8% PIK Toggle Notes ~~and~~are described in Note 9, Debt, of the ~~8.25% Notes are pari passu with each other, and are junior~~consolidated financial statements in ~~priority with respect to~~ the ~~lien securing Limited Secured Acquisition Debt, which is limited to~~Company’s Annual Report on Form 10-K for the ~~assets acquired with such Limited Secured Acquisition Debt.~~year ended December 31, 2018.

~~8% PIK Toggle Notes~~

8. 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 ended March 31, 2017, and September 30, 2017, 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 amortized~~recognized 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. Refer to Note 1, Basis of Presentation, for information regarding the Company’s adoption of Topic 842 on January 1, 2019.

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 expected lease term. The weighted-average remaining lease term was 4.0 years at September 30, 2019, with maturity dates ranging from July 2021 to September 2027, and the weighted-average discount rate was 12.1%. Lease expense amounted to $0.8 million in the three months and $1.9 million for the nine months ended September 30, 2019. Lease expense was $0.9 million in the three months ended and $2.6 million for the nine months ended September 30, 2018. Lease expense primarily related to operating leases and for the nine months ended September 30, 2019 includes a $0.5 million credit from DOE for true up of prior year 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 $0.8 million in the three months and $2.1 million for the nine months ended September 30, 2019.

The Company leases gas centrifuge enrichment plant facilities and related personal property in Piketon, Ohio from DOE. On May 31, 2019, in connection with the HALEU Letter Agreement, DOE and the Company amended the lease agreement, which was scheduled to expire by its terms on June 30, 2019. The lease was renewed and extended until May 31, 2022, provided, however, that the lease may be terminated early upon completion of the work under the HALEU Agreement. Any facilities or 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 end of the lease term, and DOE would be responsible for its decontamination and decommissioning. The Company accounted for the amendment as a modification and reassessed its classification. The Company classified the lease as an operating lease as the lease does not contain a transfer of ownership or purchase option, the fair value of the underlying asset cannot be practicably determined, and the economic life of the ~~8% PIK Toggle Notes.~~

asset is indeterminate. The ~~8% PIK Toggle Notes mature on September 30, 2019. However,~~remeasurement of the ~~maturity date can be extended to September 30, 2024, upon the satisfaction of certain funding conditions described~~remaining future lease payments through May 31, 2022 resulted in the ~~Indenture relating~~recording of $2.9 million of additional lease assets and liabilities related to the ~~funding, under binding agreements,~~modification. The modification resulted in an insignificant impact on the consolidated statement of ~~(i) the American Centrifuge project or (ii) the implementation and deployment of a National Security Train Program utilizing American Centrifuge technology.~~

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.operations.

~~The 8% PIK Toggle Notes are guaranteed~~Centrus had a lease with DOE for centrifuge testing facilities in Oak Ridge through December 2019. In connection with the completion of work performed for decontamination and ~~secured on a subordinated, conditional, and limited basis by Enrichment Corp. Enrichment Corp. will be released from its guarantee without the consent~~decommissioning of the ~~holders~~facility, the Company terminated the lease on September 30, 2019. The Company derecognized the remaining lease asset and related liability of $0.2 million. There was no gain or loss associated with the termination 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 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 technologylease.

Operating Lease Assets 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 Company is involved which does not include new capital provided or to be provided by Enrichment Corp.Liabilities

The ~~Enrichment Corp. guarantee ranks equally in right of payment with all existing~~table below presents the lease-related assets and future unsubordinated indebtedness of Enrichment Corp. (other than 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 Designated Senior Claims.liabilities recorded on the balance sheet (in millions).



	September 30, 2019		Classification on the Balance Sheet
Lease assets	$	6.4	Other long-term assets
Lease liabilities:
Current	2.0		Accounts payable and accrued liabilities
Noncurrent	6.8		Other long-term liabilities
Total lease liabilities	$	8.8

~~As explained above, the liens securing the Enrichment Corp. guarantee~~Maturity of ~~the 8% PIK Toggle Notes and the 8.25% Notes are pari passu~~Operating Lease Liabilities

The table below reconciles undiscounted payments for operating leases with ~~each other, and are junior in priority with respect~~terms greater than 12 months to the ~~lien securing Limited Secured Acquisition Debt, which is limited~~operating lease liabilities recorded on the balance sheet (in millions).



Remainder of 2019	$	0.7
2020	2.6
2021	2.6
2022	1.7
2023	1.0
Thereafter	3.8
Total lease payments	12.4
Less imputed interest	3.6
Present value of lease payments	$	8.8

Minimum Lease Payments

Prior to the ~~assets acquired~~adoption of Topic 842, future estimated minimum lease payments as of December 31, 2018 for leases with ~~such Limited Secured Acquisition Debt.~~remaining terms in excess of one year were as follows (in millions):



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

9. 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 – quoted prices for identical instruments in active markets.

Level 2 – 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.

Level 3 – valuations derived using one or more significant inputs that are not observable.

Financial Instruments Recorded at Fair Value (in ~~Millions)~~millions):


	September 30, 2017								December 31, 2016								September 30, 2019								December 31, 2018
	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:
Cash and cash equivalents	$	135.9	$	—	$	—	$	135.9	$	260.7	$	—	$	—	$	260.7	$	77.2	$	—	$	—	$	77.2	$	123.1	$	—	$	—	$	123.1
Deferred compensation asset (a)	1.3		—		—		1.3		1.1		—		—		1.1		1.6		—		—		1.6		1.4		—		—		1.4

Liabilities:
Deferred compensation obligation (a)	1.3		—		—		1.3		1.1		—		—		1.1		$	1.6	$	—	$	—	$	1.6	$	1.4	$	—	$	—	$	1.4


(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 September 30, ~~2017~~2019, and December 31, ~~2016,~~2018, the balance sheet carrying amounts for Accounts Receivable, Accounts Payable and Accrued Liabilities (excluding the deferred compensation obligation described above), and ~~payables~~Payables under SWU ~~purchase agreements~~Purchase Agreements approximate fair value because of ~~the~~their short-term ~~nature of the instruments.~~nature.

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


	September 30, 2017					December 31, 2016		September 30, 2019					December 31, 2018
	Carrying Value			Estimated Fair Value ^(a)		Carrying Value	Estimated Fair Value ^(a)	Carrying Value			Estimated Fair Value ^(a)		Carrying Value			Estimated Fair Value ^(a)
8.25% Notes	$	138.5	^(b)	$	59.7	-	-	$	120.2	^(b)	$	59.6	$	126.3	^(b)	$	57.9
8% PIK Toggle Notes	31.3			24.0		234.6	107.4	—			—		26.7			21.8

^(a) Based on ~~the most~~ recent trading ~~price~~prices and bid/ask quotes as of or near the balance sheet date, which isare considered a Level 2 ~~input as of September 30, 2017, and a Level 1 input as of December 31, 2016,~~inputs based on the frequency of trading.


^(b)	The carrying value of the 8.25% Notes ~~as of September 30, 2017,~~ consists of the principal balance of $74.3 million and the sum of current and noncurrent interest payment obligations until maturity. Refer to Note 8,7, Debt.

10. PENSION AND POSTRETIREMENT HEALTH AND LIFE BENEFITS

The components of net periodic benefit ~~cost (credit)~~(credits) for the defined benefit pension plans were as follows (in millions):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Service costs $ 0.9
$ 1.0
$ 2.8
$ 2.9
Interest costs 8.0
8.9
24.1
26.6
Expected gains on plan assets (10.1 ) (10.6 ) (30.5 ) (31.6 )
Actuarial loss from remeasurement —
—
—
0.8
Net periodic benefit credit $ (1.2 ) $ (0.7 ) $ (3.6 ) $ (1.3 )



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Service costs	$	0.8		$	0.9		$	2.4		$	2.5
Interest costs	7.5			7.1			22.7			21.5
Expected return on plan assets (gains)	(9.1		)	(10.3		)	(27.3		)	(30.7		)
Net periodic benefit (credits)	$	(0.8	)	$	(2.3	)	$	(2.2	)	$	(6.7	)

In the second quarter of 2016, the level of lump-sum payments under the non-qualified defined benefit pension plans resulted in the remeasurement of pension obligations under settlement accounting rules. The remeasurement resulted in a loss of $0.8 million included in ~~Selling, General and Administrative Expenses~~ in the second quarter of 2016. The loss includes the effect of a decrease in the discount rate used in the remeasurement of pension obligations from approximately 4.5% as of December 31, 2015, to approximately 3.7% as of June 30, 2016.

The components of net periodic benefit ~~cost~~costs for the postretirement health and life benefit plans were as follows (in millions):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest costs $ 1.8
$ 2.1
$ 5.4
$ 6.1
Expected gains on plan assets —
(0.1 ) —
(0.2 )
Amortization of prior service credits, net —
(0.1 ) (0.1 ) (0.2 )
Net periodic benefit cost $ 1.8
$ 1.9
$ 5.3
$ 5.7



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018
Interest costs	$	1.5	$	1.5	$	4.5		$	4.4
Amortization of prior service costs (credits), net	—		—		(0.1		)	(0.1		)
Net periodic benefit costs	$	1.5	$	1.5	$	4.4		$	4.3

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 are reported as Nonoperating Components of Net Periodic Benefit Expense (Income).

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016			2017			2016			2019		2018			2019			2018
Net loss allocable to common stockholders (in millions)	$	(10.5	)	$	(41.3	)	$	(28.3	)	$	(58.8	)
Numerator (in millions):
Net income (loss)													$	22.8	$	(7.8	)	$	(13.7	)	$	(58.9	)
Preferred stock dividends - undeclared and cumulative													1.9		1.9			5.9			5.9
Net income (loss) allocable to common stockholders													$	20.9	$	(9.7	)	$	(19.6	)	$	(64.8	)

Shares in thousands:
Denominator (in thousands):
Average common shares outstanding - basic	9,103			9,096			9,081			9,102			9,582		9,133			9,560			9,118
Potentially dilutive shares related to stock options (a)	—			—			—			—
Potentially dilutive shares related to stock options and restricted stock units^(a)													44		—			—			—
Average common shares outstanding - diluted	9,103			9,096			9,081			9,102			9,626		9,133			9,560			9,118

Net loss per common share – basic and diluted	$	(1.15	)	$	(4.54	)	$	(3.12	)	$	(6.46	)
Net income (loss) per common share (in dollars):
Basic													$	2.18	$	(1.06	)	$	(2.05	)	$	(7.11	)
Diluted													$	2.17	$	(1.06	)	$	(2.05	)	$	(7.11	)

(a) Common stock equivalents excluded from the diluted calculation as a result of a net loss in the period (in thousands)	13			14			60			7			—		3			67			10

Options outstanding and considered anti-dilutive as their exercise price exceeded the average share market price (in thousands)	327			375			30			490			460		360			460			360

12. COMMITMENTS AND CONTINGENCIES

~~American Centrifuge~~Commitments under SWU Purchase Agreements

TENEX

A major supplier of SWU to the Company is the Russian government entity TENEX, Joint-Stock Company (“TENEX”). Under a 2011 agreement with TENEX, as amended, (the “Russian Supply Agreement”), 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.

The Russian Supply Agreement 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, 2018. 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 through 2028.

The Russian Supply Agreement 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. In such a case, the Company would pay for the SWU but have to take the unordered SWU in the following year.

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

Orano

On April 27, 2018, the Company entered into an agreement (the “Orano Supply Agreement”) with Orano Cycle (formerly, AREVA NC) (“Orano”) for the long-term supply to the Company of SWU contained in LEU, nominally commencing in 2023. Under the Orano Supply Agreement, the Company purchases SWU contained in LEU received from Orano, and the Company delivers natural uranium to Orano for the natural uranium feed material component of LEU. 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 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.

Milestones Under the 2002 DOE-USEC Agreement

The Company 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~~the Company under those ~~agreements as part of the Company’s Chapter 11 bankruptcy process.~~agreements. 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 include 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’ 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 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~~in the ~~Plan~~plan of ~~Reorganization~~reorganization in the Company’s 2014 Chapter 11 bankruptcy (now completed) 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~~all-time limits tolled expressly including all rights, remedies and defenses and time limits relating to any missed milestones. DOE and ~~Centrus~~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 ~~continued~~continue to be preserved, and that the time limits for each party to respond to any missed milestones continue to be tolled.

~~Piketon Facility Costs and D&D Obligations~~Legal Matters

~~Effective October 1, 2015,~~On August 30, 2013, the Company submitted a claim to DOE under the Contract Disputes Act for payment of $42.8 million, representing DOE’s share of pension and postretirement benefits costs related to the transition of Portsmouth site employees to DOE’s 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. ~~government discontinued funding~~Court of Federal Claims in January 2015. Centrus believes that DOE is responsible for a significant portion of any pension and postretirement benefit costs associated with the transition of employees at Portsmouth. The receivable for DOE’s share of pension and postretirement benefits costs has a full valuation allowance due to the lack of a resolution with DOE and uncertainty regarding the amounts owed and the timing of collection. The parties filed cross motions for partial summary judgment to seek a judicial determination of two issues related to the calculation of the pension liability and the entitlement of Centrus to reimbursement for postretirement benefit costs. The Court ruled on the pension calculation methodology and ruled Centrus was entitled to recover costs associated with postretirement benefits for employees afforded protection under the USEC Privatization Act. At the Parties’ request, the Court has issued a revised scheduling order providing for expert opinions to be disclosed by November 8, 2019, exchange of expert response reports on December 9, 2019, and expert discovery to close on January 9, 2020. A status report is due by January 15, 2020. The Company is still pursuing settlement.

On May 26, 2019, the Company, its subsidiary United States Enrichment Corp. (“Enrichment Corp.”), and five other DOE contractors who have operated facilities at the Portsmouth Gaseous Diffusion Plant (including, in the case of the Company, the American Centrifuge ~~demonstration cascade at Piketon. Funding~~Plant site located on the premises) (the “Portsmouth GDP” site) 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 “Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division. The complaint seeks damages for ~~American Centrifuge is now limited~~alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The Plaintiffs are seeking to ~~research~~represent a class of (i) all current or former residents within a 7-mile radius of the Portsmouth GDP site and ~~development work~~(ii) all students and their parents at the ~~Company’s~~Zahn’s Corner Middle School from 1993-present. 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 covered by

our indemnification under the Price-Anderson Act. The Company and Enrichment Corp. has provided notifications to DOE required to invoke indemnification under the Price-Anderson Act and other contractual provisions.

On June 28, 2019, the Company, Enrichment Corp., and four other Department of Energy (“DOE”) contractors who have operated facilities at the Portsmouth GDP site were named as defendants in ~~Oak Ridge, Tennessee. As~~ a ~~result of reduced program funding, Centrus incurred a special charge~~class action complaint filed by Ray Pritchard and Sharon Melick (collectively, the “Plaintiffs”) in the ~~third quarter of 2015 for estimated employee termination benefits, and began reductions in force. Refer to~~ ~~Note 2, Special Charges, for details. Centrus began to incur expenditures~~U.S. District Court in the ~~second quarter~~Southern District of ~~2016 associated~~Ohio, Eastern Division. The complaint seeks damages for alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The Plaintiffs are seeking to represent a class of all current or former residents within a 7-mile radius of the Portsmouth GDP site. The Company believes that its operations at the Portsmouth GDP site were fully in compliance with the ~~D&D of~~Nuclear Regulatory Commission’s regulations. Further the ~~Piketon facility in accordance with~~Company believes that any such liability should be covered by our indemnification under the ~~requirements of the NRC~~Price-Anderson Act. The Company and DOE. Centrus leases the Piketon facility from DOE. At the conclusion of the lease on June 30, 2019, without mutual agreement between Centrus and DOE regarding other possible uses for the facility, Centrus is obligated to return the facilityEnrichment Corp. has provided notifications to DOE ~~in a condition that meets NRC requirements~~required to invoke indemnification under the Price-Anderson Act 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 D&D work is expected to extend through 2017 and be substantially completed by year-end. As of September 30, 2017, Centrus has accrued $16.6 million on the balance sheet as ~~Decontamination and Decommissioning Obligations~~ ~~for the estimated fair value of the remaining costs to complete the D&D work.~~other contractual provisions.

Centrus is ~~required~~subject to ~~provide financial assurance to the NRC~~various legal proceedings and DOE for D&D costs under a regulatorily-prescribed methodology that includes potential contingent costs and reserves. As of September 30, 2017, Centrus has provided financial assurance to the NRC and DOEclaims, either asserted or unasserted, which arise in the ~~form~~ordinary course of ~~surety bonds~~business. While the outcome of these claims cannot be predicted with certainty, other than the above, Centrus does not believe that ~~are fully~~the outcome of any of these legal matters, individually and in the aggregate, will have a material adverse effect on its cash ~~collateralized by Centrus for $29.6 million. Centrus expects to receive cash when surety bonds are reduced and/~~flows, results of operations or ~~cancelled as the Company fulfills its D&D and lease obligations.~~

Centrus has received state economic incentives in exchange for commitments by the Company to make investments in capital improvements and employee training. Should the commitments under the incentive agreements not be met, the Company may be required to repay a portion of the state incentives.consolidated financial condition.

13. ~~STOCKHOLDERS’ EQUITY~~

~~Series B Preferred Stock~~

~~On February 14, 2017, Centrus issued 104,574 shares of Series B Preferred Stock as part of the securities exchange described in~~ ~~Note 8, Debt~~. The issuance of the Series B Preferred Stock was a non-cash financing transaction. The Series B Preferred Stock has 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 condensed consolidated balance sheet at fair value less transaction costs, or $4.6 million as of September 30, 2017.

Holders of the Series B Preferred Stock are 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 not met these criteria for the periods from issuance through September 30, 2017, and has not declared, accrued or paid dividends on the Series B Preferred Stock as of September 30, 2017. 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 September 30, 2017, the Series B Preferred Stock has an aggregate liquidation preference of $109.6 million, including accumulated dividends of $5.0 million.

Outstanding shares of the Series B Senior Preferred Stock are redeemable at the Company’s option, in whole or in part, for an amount of cash equal to the Liquidation Preference, plus an amount equal to the accrued and unpaid dividends, if any, whether or not declared, through date of redemption.

~~Rights Agreement~~

On April 6, 2016 (the “Effective Date”), the Company’s Board of Directors (the “Board”) adopted a Section 382 Rights Agreement (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. As reported on the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company had federal net operating losses of $725.8 million as of December 31, 2016, that currently expire through 2036.

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 the settlement and completion of the exchange offer and consent solicitation, the Company amended the Rights Agreement solely to exclude acquisitions of 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 the Rights Agreement at the 2017 annual meeting of stockholders on May 31, 2017. Unless earlier terminated in accordance with the Rights Agreement, the rights issued under the Rights Agreement expire on April 6, 2019.

~~Stock-Based Compensation~~

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

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

Total recognized tax benefit $ —
$ —
$ —
$ —

As of September 30, 2017, there was $0.5 million of unrecognized compensation cost related to unvested stock-based payments granted, of which $0.4 million relates to stock options and $0.1 million relates to unvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.2 years.

Stock-based compensation cost 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. Stock options vest and become exercisable in equal annual installments over a three- or four-year period and expire 10 years from the date of grant.

~~Assumptions used in the Black-Scholes option pricing model to value option grants follow. There were no option grants in the nine months ended September 30, 2017.~~



	~~Nine Months Ended~~ ~~September 30, 2016~~
~~Risk-free interest rate~~	~~1.9%~~
~~Expected volatility~~	~~75%~~
~~Expected option life (years)~~	6
~~Weighted-average grant date fair value~~	~~$1.77~~
~~Options granted (in thousands)~~	15

A total of 30,000 restricted stock units were issued to non-employee, independent members of the Board of Directors in the nine months ended September 30, 2017, including 5,000 restricted stock units in the three months ended September 30, 2017. The restricted stock units vest on the earlier of May 31, 2018, or the date of the 2018 Annual Meeting, absent a defined event that would accelerate vesting. Settlement of restricted stock units is made in shares of Class A Common Stock only upon the director’s retirement or other end of service.

~~Shares Outstanding~~

A total of 38,751 shares of Class A Common Stock were issued in settlement of vested restricted stock units to three former members of the Board of Directors following the end of their service on May 31, 2017.

Shares of Class B Common Stock that are sold in the market are converted to shares of Class A Common Stock. In the nine months ended September 30, 2017, a total of 30,318 shares of Class B Common Stock were sold in the market and converted to shares of Class A Common Stock as of September 30, 2017.

~~Changes in the number of shares outstanding follow:~~

Preferred Stock,
Series B

Common Stock,
Class A

Common Stock,
Class B

Balance at December 31, 2015 —
7,563,600
1,436,400
Balance at September 30, 2016 —
7,563,600
1,436,400

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 September 30, 2017 104,574
7,632,669
1,406,082

~~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. Amortization of prior service credits is reclassified from AOCI and included in the computation of net periodic benefit cost as detailed in ~~Note 10, Pension and Post-Retirement Health and Life Benefits~~.

~~14.~~ SEGMENT INFORMATION

Centrus has two reportable segments: the LEU segment with two components, SWU and uranium, and the contract services 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 segment includes revenue and cost of sales for work that Centrus performs under a fixed-price agreement as a contractor to UT-Battelle. The contract services 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. ~~For~~Refer to Note 2, Revenue and Contracts with Customers, for additional details on revenue for each segment. The following table presents the Company’s segment ~~refer to Item 2,~~ information (in millions):~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017			2016		Three Months Ended September 30,					Nine Months Ended September 30,
	(in millions)										2019		2018			2019		2018
Revenue
LEU segment:
Separative work units	$	43.5	$	14.1		$	82.2		$	128.3	$	75.0	$	17.6		$	87.4	$	68.2
Uranium	—		—			—			14.3		12.8		11.3			38.1		14.9
	43.5		14.1			82.2			142.6
Total											87.8		28.9			125.5		83.1
Contract services segment	6.8		7.3			19.3			32.2		16.9		5.2			28.5		26.1
Revenue	$	50.3	$	21.4		$	101.5		$	174.8
Total revenue											$	104.7	$	34.1		$	154.0	$	109.2

Segment Gross Profit (Loss)
LEU segment	$	11.1	$	(1.8	)	$	5.4		$	11.9	$	33.4	$	8.0		$	25.1	$	(15.5	)
Contract services segment	0.5		(0.3		)	(0.6		)	7.3		2.1		(0.2		)	0.6		7.3
Gross profit (loss)	$	11.6	$	(2.1	)	$	4.8		$	19.2	$	35.5	$	7.8		$	25.7	$	(8.2	)

Revenue from Major Customers (10% or More of Total Revenue)

In the three months ended September 30, 2019, three customers in the LEU segment represented $39.0 million, $23.4 million, and $10.7 million, respectively, of revenue and one customer in the contract services segment represented $15.2 million of revenue. In the nine months ended September 30, 2019, two customers in the LEU segment represented $74.0 million and $23.4 million, respectively, of revenue and one customer in the contract services segment represented $23.9 million of revenue.

In the three months ended September 30, 2018, two customers in the LEU segment represented $17.5 million and $6.5 million, respectively, of revenue and one customer in the contract services segment represented $4.3 million of revenue. In the nine months ended September 30, 2018, three customers in the LEU segment represented $17.6 million, $15.1 million, and $14.4 million, respectively, of revenue and one customer in the contract services segment represented $13.6 million.

Item 2. 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 unaudited condensed consolidated financial statements and related notes appearing elsewhere in this report.

Overview

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

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

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

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

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

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

With several decades of experience in enrichment, we continue to be a leader in the development of an advanced U.S. uranium enrichment technology, which we believe ~~that this technology~~ could play a critical role in supplying fuel for advanced reactors, meeting ~~our~~U.S. national and energy security needs, and achieving our nation’s ~~non-proliferation~~nonproliferation objectives.

On October 31, 2019, we signed a three-year $115 million contract with DOE (“the HALEU Agreement”) to deploy a cascade of centrifuges to demonstrate production of high-assay, low-enriched uranium (“HALEU”) fuel with existing United States origin enrichment technology and provide DOE with HALEU for near term use in its research and development for the advancement of civilian nuclear energy and security, and other programmatic missions. The program has been under way since May 31, 2019, when the Company and DOE signed a preliminary agreement (“the HALEU Letter Agreement”) that allowed work to begin while the full contract was being finalized.

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. Existing reactors typically operate on LEU with the uranium-235 isotope concentration just below 5%. HALEU has a uranium-235 concentration of up to 20%, giving it several potential technical and economic advantages. For example, the higher concentration of uranium means that fuel assemblies and reactors can be smaller and reactors will require less frequent refueling. Reactors can also achieve higher “burnup” rates, meaning a smaller volume of fuel will be required overall and less waste will be produced. HALEU may also be used in the future to fabricate next-generation fuel forms for the existing fleet of reactors in the United States and around the world; these new HALEU-based fuels could bring improved economics and inherent safety features while increasing the amount of electricity that can be generated at existing reactors.

Centrus believes its investment in the technology will position the Company to meet the needs of its customers as they deploy advanced reactors and next generation fuels. 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.

As described below under Revenue - Contract Services, the Company contributes toward the costs of the HALEU program. The Company continues to invest in advanced U.S. uranium enrichment technology to meet the anticipated needs of the commercial advanced reactor market and U.S. government national security requirements as they develop.

We lease gas centrifuge enrichment plant facilities and related personal property in Piketon, Ohio from DOE. In connection with the letter agreement, DOE and Centrus amended the lease agreement, which was scheduled to expire by its terms on June 30, 2019. The lease was renewed and extended until May 31, 2022, provided, however, that DOE has the right to terminate the lease if the parties do not enter into a definitive contract as contemplated by the letter agreement. Any facilities or equipment constructed or installed under contract with DOE will be owned by DOE, may be returned to DOE in an “as is” condition at the end of the lease term, and DOE would be responsible for its decontamination and decommissioning.

The nuclear industry in general, and the nuclear fuel industry in particular, is in a period of significant change, which ~~could significantly transform~~continues to affect the competitive ~~landscape Centrus faces. The~~landscape. In the seven years following the 2011 Fukushima accident, the published market prices for uranium enrichment declined more than 75 percent. While the monthly price indicators have gradually increased since August 2018, the uranium enrichment segment of the nuclear fuel ~~cycle industry~~market remains oversupplied ~~creating downward pressures on commodity pricing, with~~and faces uncertainty ~~regarding the timing of industry expansion globally. Nuclear generators in some parts of the world, including the U.S., are under pressure from changes in electricity~~about future demand ~~and the effects of new, lower cost sources of electricity generation in their markets.~~for nuclear power generation. Changes in the competitive landscape ~~may adversely~~ affect pricing trends, change customer spending patterns, ~~demand for fuel,~~ and ~~financial conditions, and otherwise~~ create uncertainty. ~~These changes may affect the company’s existing contracts and its ability to obtain new contracts.~~ To address these changes, we ~~may seek~~have taken steps to adjust our cost structure and may seek further adjustments to our cost structure and operations and to evaluate opportunities to grow our business organically or through acquisitions and other strategic transactions.

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

~~Business Segments~~

Competition and Foreign Trade

Russian Suspension Agreement

Imports into the United States of LEU and other uranium products produced in the Russian Federation, including LEU imported by Centrus ~~has~~under the long-term supply agreement we signed with the Russian government entity TENEX, Joint-Stock Company (“TENEX”) in 2011, as amended, are subject, through 2020, to quotas imposed under legislation enacted into law in September 2008 and under the 1992 Russian Suspension Agreement (“RSA”), as amended in 2008. These quotas limit the amount of Russian LEU that can be imported into the United States for U.S. consumption.

The U.S. Department of Commerce (“DOC”) is currently conducting an administrative review of the current status of, and compliance with, the RSA during the period October 2017 through September 2018 (the “Second Administrative Review”). In an earlier review, completed in December 2017, the DOC said that in the Second Administrative Review, the DOC would conduct an analysis of whether the RSA continues to meet the statutory requirements that the RSA (i) prevent the suppression or undercutting of price levels of domestic uranium products and (ii) continue to be in the public interest. If the Department found evidence either of non-compliance with the RSA, or that the statutory requirements are no longer being met, it could terminate the RSA, reinitiate the antidumping investigation that the RSA suspended, and begin collecting duties in excess of 100% ad valorem on imports of Russian uranium products, including the LEU that the Company imports under the Russian Supply Contract. A preliminary determination in the Second Administrative Review is expected to be issued in December 2019 and a final determination is expected to be issued in the second quarter of 2020.

In February 2019, the DOC formally opened consultations with the Russian Federation State Atomic Energy Corporation "Rosatom" with respect to a possible extension of the Agreement's term. In connection with these negotiations, it is possible that the RSA, including the quotas now imposed on imports of Russian uranium products, will be extended for a significant additional period of years.

Imposition of additional restrictions as a result of an adverse final determination in the Second Administrative Review, or through an extension of the RSA on terms that do not ensure that we can meet our purchase obligations under the Russian Supply Agreement and our existing and future supply commitments to customers, could adversely affect our financial condition and operations.

Other Trade Actions

In July 2019, in response to a finding of the Secretary of Commerce that uranium was being imported in such quantities and under such circumstances that it threatened to impair the national security of the United States, the President directed that a high-level U.S. government working group be formed to develop recommendations for reviving and expanding domestic nuclear fuel production. The working group’s report to the President, which was due in October 2019, but delayed at least until November 2019, cannot be predicted with certainty, but may include recommendations for direct and indirect U.S. government support to the domestic fuel cycle.

On October 29, 2019, the U.S. government’s waiver of sanctions against Russian and other foreign entities with respect to their support of certain Iranian nuclear products was extended for an additional ninety days. If, following a future expiration of the waiver, the U.S. government imposed sanctions that included designating Rosatom as a “Specially Designated National”, all U.S. persons, including the Company, would be precluded from engaging in transactions with any entity that is directly or indirectly owned 50 percent or more in the aggregate by Rosatom, including TENEX, except to the extent authorized by a license issued by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”). While the Company would expect to seek such a license, there is no assurance it would be granted. If it 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, and to the extent these sources were insufficient, it would adversely impact our business, results of operations, and prospects.

Revenue

We have two reportable segments: the LEU segment ~~with two components, separative work units (“SWU”) and uranium,~~ and the contract services segment.

~~LEU Segment~~

~~Revenue from Sales of SWU and Uranium~~

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

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

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

sales of natural uranium.

Our contract services segment reflects our technical, manufacturing, engineering and 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 our agreement with DOE to demonstrate HALEU production and a variety of other contracts with public and private sector customers.

SWU and Uranium Sales

Revenue ~~for~~from our LEU segment accounted for approximately ~~88%~~85% of our total revenue in ~~2016.~~2018. The majority of our customers are domestic and international utilities that operate nuclear power plants, with international sales constituting approximately ~~25-40%~~31% of revenue from our LEU segment in recent years. Our agreements with electric utilities are primarily long-term, fixed-commitment contracts under which our customers are obligated to purchase a specified quantity of the SWU component of LEU (or the SWU and uranium components of LEU) from us. Our agreements for natural uranium and enriched uranium product sales, where we sell both the SWU and uranium component of LEU, 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, some customers are building inventories and may choose to take deliveries under annual purchase obligations later in the year. Customer payments for the SWU component of LEU average roughly ~~$10-15~~$10 million per order. As a result, a relatively small change in the timing of customer orders for LEU may cause significant variability in operating results.

Utility customers in general have the option to defer ~~physical~~ receipt of LEU or uranium purchased from Centrus beyond the contractual sale period. In such cases, title to LEU or uranium is 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 balance sheet and the customer-titled product is classified as~~ ~~Deferred Costs Associated with Deferred Revenue~~. Risk of loss remains with Centrus until physical delivery occurs. The recognition of revenue and related cost of sales occurs at the time physical delivery occurs and risk of loss transfers to the customer. The timing of physical delivery, subject to notice period, ~~requirements, is at the option of the customer. Deferred revenue and deferred cost activity~~resulting in the ~~nine months ended September 30, 2017, follows:~~deferral of costs and revenue recognition. Refer to

(in millions) Deferred Revenue Deferred Cost Gross Profit Deferred or (Recognized) Margin

Balance at December 31, 2016 $ 123.6
$ 89.3
$ 34.3
28%
Deferred sales in the period 66.4
44.9
21.5
32%
Previously deferred sales recognized in the period (58.3 ) (39.7 ) (18.6 ) 32%
Balance at September 30, 2017 $ 131.7
$ 94.5
$ 37.2
28%
Note 2, Revenue and Contracts with Customers, in the condensed consolidated financial statements for further details.

Our financial performance over time can be significantly affected by changes in prices for SWU and uranium. Since 2011, market prices for SWU and uranium have significantly declined. Since our sales order book includes contracts awarded to us in previous years, the average SWU price billed to customers typically lags behind published price indicators by several years, which means that average prices under contract today exceed current market prices.

The long-term SWU price indicator, as published by TradeTech, LLC in Nuclear Market Review, is an indication of base-year prices under new long-term enrichment contracts in our primary markets. The following chart summarizes TradeTech’s long-term and spot SWU price indicators, ~~the long-term price for uranium hexafluoride (“UF6”), as calculated by Centrus using indicators published in~~ ~~Nuclear Market Review~~, and TradeTech’s spot price indicator for ~~UF6:~~natural uranium hexafluoride (“UF6”):

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

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

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

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

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

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

Contract Services ~~Segment~~

Our contract services segment reflects our technical, manufacturing, engineering and operations services offered to public and private sector customers, including the American Centrifuge engineering and testing activities we have performed as a contractor for UT-Battelle and the engineering, procurement, construction, manufacturing and operations services being performed under the HALEU Letter Agreement. With our 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.

Government Contracting

On October 31, 2019, we signed the three-year $115 million HALEU Agreement with DOE to deploy a cascade of centrifuges to demonstrate production of HALEU fuel for advanced reactors. The program has been under way since May 31, 2019, when the Company and DOE signed the HALEU Letter Agreement that allowed work to begin while the full contract was being finalized.

The HALEU Agreement is an incrementally funded, cost reimbursable contract ~~services segment includes revenue~~with DOE reimbursing up to 80% of costs and the Company incurring at least 20% of costs. The HALEU Agreement runs through June 1, 2022, and the total amount of DOE’s share is capped at $115 million. Based upon the cost share described above, and the total amount of ~~sales for American Centrifuge work we perform as a contractor to UT-Battelle. Direct~~DOE’s share of $115 million, our cost share would be approximately $29 million. Any costs incurred above these amounts would increase our cost share. Under the HALEU Agreement, DOE is currently obligated for costs up to $35 million of the $115 million and is authorized for payments to the Company up to $35 million. We received cash payments of $3.4 million through September 30, 2019.

Costs under the HALEU Agreement include program costs, including direct labor 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 provided over the three-year contract include constructing and assembling centrifuge machines and related infrastructure in ~~performing~~a cascade formation. When estimates of total program costs to be incurred for such an integrated, construction-type contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded to Cost of Sales in the period the loss is determined, and is reflected in Current Liabilities. Provisions for contract losses are reviewed regularly based on actual results and remaining cost projections. Allocated corporate costs supporting the program are recognized as expense as incurred over the duration of the contract term.

For the quarter ended June 30, 2019, we recorded a loss provision of $0.5 million which represented the anticipated gross loss for the remaining initial phase of contract work performed under the HALEU Letter Agreement as the parties worked to enter into a definitive contract. In the three months ended September 30, 2019, the loss provision was reduced by $0.3 million and the remaining accrued loss provision as of September 30, 2019 for the remaining initial phase of the contract work through October 31, 2019, is $0.2 million. With the signing of the HALEU Agreement on October 31, 2019, we expect to recognize a loss in the fourth quarter of 2019 in the approximate range of $17-22 million, for our projected share of program costs over the remaining contract term, based on cost projections that are ~~consistent~~currently under review.

Effective June 1, 2019 with the ~~funding levels. Centrus records an unbilled receivable and revenue based~~commencement of the HALEU work, ongoing costs of the Piketon facility that were included in Advanced Technology Costs on the ~~progress towards~~condensed consolidated statement of operations prior to June 1, 2019, are included in Cost of Sales of the achievement of monthly deliverables. Monthly reports and invoices affirming the achievement of monthly deliverables are submitted shortly following each month. The achievement of monthly deliverables has resulted in revenue consistent with the funding levels. The contract services ~~segment also includes limited services provided by Centrus to the U.S. Department of Energy (“DOE”) and its contractors at the Piketon facility.~~ segment.

~~American Centrifuge~~

The Company has 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 advancingOver the ~~next generation of uranium enrichment technology. We are exploring a number of options for returning to domestic production in the future.~~

In September 2015, Centrus completed a successful three-year demonstration of the existing American Centrifuge technology at its facility in Piketon, Ohio, with 120 machines linked together in a cascade to simulate industrial operating conditions. Since thenpast five years, our government contracts with UT-Battelle have provided for ~~continued~~ engineering and testing work on the American Centrifuge technology at ~~the Company’s~~our facilities in Oak Ridge, Tennessee. Our ~~recently~~ completed contract with UT-Battelle (the “2017 ORNL Contract”) was for the period from October 1, 2016, through September 30, 2017, and generated revenue of approximately $25 million. On October 26, 2017, the parties executed a new fixed priced contract for the period from October 1, 2017, through September 30, 2018, ~~that is expected to generate total~~generated revenue of approximately ~~$16~~$16.0 million upon completion of defined milestones. ~~The ORNL contracts have been funded incrementally. Funding~~Although the contract expired September 30, 2018, we continued to perform work towards the expected milestones as the parties worked toward a successor agreement. Costs for work performed in the ~~program is provided to UT-Battelle by~~first quarter of 2019 were classified as Cost of Sales. As the ~~U.S. government which is currently operating under a continuing resolution.~~

~~American Centrifuge expenses that are outside~~scope of ~~our contracts with UT-Battelle are included~~work became viewed as more limited than originally anticipated, costs for work performed in the second quarter and most of the third quarter of 2019 were classified as Advanced Technology ~~License and Decommissioning Costs~~Costs. ~~, including ongoing costs to maintain the demobilized Piketon facility and our NRC licenses at that location.~~ In ~~the second quarter of 2016, the Company commenced~~September 2019, we entered into an agreement with ~~the decontamination and decommissioning (“D&D”)~~UT-Battelle for one of the ~~Piketon facility in accordance~~defined milestones with expected revenue of approximately $1.2 million through the ~~requirements~~end of ~~the NRC and DOE. For additional details on costs, schedule and accrued liabilities related to the D&D of the Piketon facility, refer to~~ ~~Results of Operations~~ ~~below and~~ ~~American Centrifuge - Piketon Facility Costs and D&D Obligations~~ in ~~Note 12, Commitments and Contingencies,~~ ~~of the condensed consolidated financial statements.~~2019.

~~Site Services Work and Related Receivables~~While the Company still anticipates entering into additional agreements for the expected remaining milestones, we have no assurance that a successor agreement will be executed for any of the remaining milestones.

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 the Technology and Manufacturing Center in Oak Ridge, Tennessee.

On September 27, 2018, we leveraged our D&D experience and entered into an agreement with DOE to decontaminate and decommission the K-1600 facility located at the East Tennessee Technology Park. Under the terms of the agreement, pursuant to a work authorization under our lease with DOE, we were required to remove and dispose of government owned materials and equipment in order to render the facility radiologically uncontaminated and unclassified. The contract was a cost-plus fixed fee contract totaling approximately $15 million. The Company announced that it had successfully completed decontamination and decommissioning of the facility on October 9, 2019. In connection with the substantial completion of the work, we terminated our lease with DOE for the K-1600 facility on September 30, 2019.

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

Commercial Contracting

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

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

approximately $4.2 million. In addition, we have agreed to provide non-cash in-kind contributions with a value of approximately $2.4 million.

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

Prior Site Services Work

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

The Company and DOE have yet to fully settle the Company’s claims for reimbursements for certain pension and postretirement benefits costs related to past contract work performed at the Portsmouth and Paducah plant sites. There is the potential for additional revenue to be recognized ~~based on~~for this work pending the outcome of ~~DOE reviews~~legal proceedings related to the Company’s claims for payment and ~~audits, as~~ the ~~result of the~~potential release of previously established ~~receivable related reserves. However, uncertainty exists because contract billing periods since June 2002 have not been finalized with DOE, and we have not yet recognized this~~valuation allowances on receivables. Refer to Part II, Item 1, Legal Proceedings, for additional ~~revenue. Certain receivables from DOE are included in other long-term assets based on the extended timeframe expected to resolve claims for payment. Additional details are provided in~~ information.~~Note 4, Receivables~~ ~~to the condensed consolidated financial statements.~~

~~2017~~2019 Outlook

We ~~anticipate~~reiterate our annual guidance for 2019, including SWU and uranium revenue in ~~2017~~the range of $155 million to $180 million and total revenue to be in a range of ~~$175~~$205 million to ~~$200 million, reflecting an expected decline in SWU and uranium volumes delivered compared to 2016. We anticipate total~~$230 million. Consistent with prior years, revenue ~~in a range of $200 million to $225 million. Our revenues continue~~continues to be most heavily weighted to the ~~fourth quarter, and we expect more than one-half~~second half of ~~our annual revenue in~~ the ~~fourth quarter of 2017, compared~~year. We continue to ~~44% in the fourth quarter of 2016. We~~ expect to end ~~2017~~2019 with a cash and cash equivalents balance in a range of ~~$150~~$105 million to ~~$175~~$125 million.

Based on cost estimates that are currently under review for the three-year HALEU program, we expect to recognize a contract loss in the fourth quarter of 2019 in the approximate range of $17-22 million.

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

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

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

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

Contracts for any additional scope of work with UT-Battelle;

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 ~~our~~ customers, including actions that might affect ~~our~~ existing ~~contracts, as a result of market~~contracts; and,

Market, international trade and other conditions impacting ~~our~~Centrus’ customers and the ~~industry; and~~industry.

~~Additional costs~~

See also “Forward Looking Statements” earlier in this report for ~~decontamination and decommissioning of the Company’s facility in Ohio.~~additional information.

Results of Operations

Segment Information

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


	Three Months Ended September 30,										Three Months Ended September 30,
	2017		2016			$ Change			% Change		2019		2018			$ Change			% Change
LEU segment
Revenue:
SWU revenue	$	43.5	$	14.1		$	29.4		209	%	$	75.0	$	17.6		$	57.4		326	%
Uranium revenue	—		—			—			–		12.8		11.3			1.5			13	%
Total	43.5		14.1			29.4			209	%	87.8		28.9			58.9			204	%
Cost of sales	32.4		15.9			(16.5		)	(104	)%	54.4		20.9			(33.5		)	(160	)%
Gross profit (loss)	$	11.1	$	(1.8	)	$	12.9		717	%
Gross profit											$	33.4	$	8.0		$	25.4

Contract services segment
Revenue	$	6.8	$	7.3		$	(0.5	)	(7	)%	$	16.9	$	5.2		$	11.7		225	%
Cost of sales	6.3		7.6			1.3			17	%	14.8		5.4			(9.4		)	(174	)%
Gross profit (loss)	$	0.5	$	(0.3	)	$	0.8		267	%	$	2.1	$	(0.2	)	$	2.3

Total
Revenue	$	50.3	$	21.4		$	28.9		135	%	$	104.7	$	34.1		$	70.6		207	%
Cost of sales	38.7		23.5			(15.2		)	(65	)%	69.2		26.3			(42.9		)	(163	)%
Gross profit (loss)	$	11.6	$	(2.1	)	$	13.7		652	%
Gross profit											$	35.5	$	7.8		$	27.7


	Nine Months Ended September 30,										Nine Months Ended September 30,
	2017			2016		$ Change			% Change		2019		2018			$ Change			% Change
LEU segment
Revenue:
SWU revenue	$	82.2		$	128.3	$	(46.1	)	(36	)%	$	87.4	$	68.2		$	19.2		28	%
Uranium revenue	—			14.3		(14.3		)	(100	)%	38.1		14.9			23.2			156	%
Total	82.2			142.6		(60.4		)	(42	)%	125.5		83.1			42.4			51	%
Cost of sales	76.8			130.7		53.9			41	%	100.4		98.6			(1.8		)	(2	)%
Gross profit	$	5.4		$	11.9	$	(6.5	)	(55	)%
Gross profit (loss)											$	25.1	$	(15.5	)	$	40.6

Contract services segment
Revenue	$	19.3		$	32.2	$	(12.9	)	(40	)%	$	28.5	$	26.1		$	2.4		9	%
Cost of sales	19.9			24.9		5.0			20	%	27.9		18.8			(9.1		)	(48	)%
Gross profit (loss)	$	(0.6	)	$	7.3	$	(7.9	)	(108	)%
Gross profit											$	0.6	$	7.3		$	(6.7	)

Total
Revenue	$	101.5		$	174.8	$	(73.3	)	(42	)%	$	154.0	$	109.2		$	44.8		41	%
Cost of sales	96.7			155.6		58.9			38	%	128.3		117.4			(10.9		)	(9	)%
Gross profit	$	4.8		$	19.2	$	(14.4	)	(75	)%
Gross profit (loss)											$	25.7	$	(8.2	)	$	33.9

Revenue

Revenue from the LEU segment increased ~~$29.4~~$58.9 million (or ~~209%~~204%) in the three months and ~~declined $60.4~~$42.4 million (or ~~42%~~51%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in ~~2016.~~2018, reflecting the variability in timing of utility customer orders. As noted in the 2019 Outlook above and consistent with prior years, revenue is anticipated to be heavily weighted to the second half of the year. The volume of SWU sales increased ~~178%~~752% in the three-month period and ~~declined 30%~~41% in the nine-month period. ~~We expect more than one-half of our annual revenue in the fourth quarter of 2017. We expect SWU volumes delivered will decline in 2017 compared to 2016. Refer to~~ ~~2017 Outlook~~ ~~above.~~ The average price billed to customers for sales of SWU ~~increased 11%~~declined 50% in the three-month period and ~~declined 8%~~9% in the nine-month period ended September 30, 2019, compared to the corresponding period in 2018, reflecting the trend of lower SWU market prices in recent years and the particular contracts under which SWU were sold during the periods. ~~We expect~~The volume of uranium sales increased 15% in the three-month period and 137% in the nine-month period ended September 30, 2019, compared to the corresponding period in 2018. The average ~~SWU~~ price billed to customers for uranium sales ~~during~~declined 2% in the ~~full year 2017 will be approximately 3% lower than~~three-month period and increased 8% in ~~2016.~~the nine-month period.

Revenue from the contract services segment ~~declined $0.5~~increased $11.7 million (or 7%225%) in the three months ended September 30, 2017, compared to the corresponding period in 2016, reflecting the reduced scope of contract work for American Centrifuge technology services in the current period. Revenue from the contract services segment declined $12.9and increased $2.4 million (or ~~40%~~9%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in 2018. The increase in the three and nine-month periods was primarily the result of work performed under the HALEU contract and the K-1600 D&D, partially offset by a decrease in work performed for the Battelle contract. The nine-month period in ~~2016, due~~2018 included $9.5 million of revenue related to the ~~reduced scope of~~January 2018 settlement with DOE related to past work and the timing of revenue recognition in the prior period. As a result of the contract signed with UT-Battelle in March 2016, revenue in the nine months ended September 30, 2016, included $24.2 million for work in the nine months ended September 30, 2016, as well as $8.1 million for March 2016 reports on work performed in the fourth quarter of 2015.performed.

Cost of Sales

Cost of sales for the LEU segment increased ~~$16.5~~$33.5 million (or ~~104%~~160%) in the three months and ~~declined $53.9~~$1.8 million (or ~~41%~~2%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in ~~2016, primarily due to~~2018, reflecting the ~~changes~~increases in SWU and uranium sales volumes ~~noted above and~~partially offset by declines in the average cost of sales per SWU.

The average cost of sales per SWU declined approximately 48% in the nine months ended September 30, 2019, compared to the corresponding period in 2018, primarily due to lower pricing in supply contracts. Cost of sales ~~is affected by sales volumes, unit costs of inventory, and direct charges to cost of sales such as inventory valuation adjustments and~~includes legacy costs related to former ~~GDP~~ employees of the Portsmouth and ~~other residual costs related to~~Paducah Gaseous Diffusion Plants of $2.8 million in the ~~Paducah GDP. Refer to~~ ~~Impact of Legacy Costs~~ ~~below~~.

nine months ended September 30, 2019 and $2.9 million in the nine months ended September 30, 2018. Our inventories are valued at the lower of cost or net realizable value. Valuation adjustments for our uranium inventory to reflect declines in uranium market price indicators totaled ~~$3.0~~$2.3 million in the nine months ended September 30, ~~2016, including $2.3 million in third quarter of 2016.~~2019.

Cost of sales for the contract services segment ~~declined $1.3~~increased $9.4 million (or ~~17%~~174%) in the three months and ~~$5.0~~$9.1 million (or ~~20%~~48%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in ~~2016, due to~~2018, reflecting the ~~reduced scope~~mix of contract ~~work.~~services work performed in each of the periods.

Gross Profit (Loss)

We realized a gross profit of ~~$11.6~~$35.5 million in the three months ended September 30, ~~2017, an increase of $13.7 million~~2019, compared to ~~the~~a gross ~~loss~~profit of ~~$2.1~~$7.8 million in the corresponding period in 2016. We realized an increase in gross profit of $12.9 million for the LEU segment primarily due to increases in the average SWU sales price and SWU sales volume, and a decline in the average SWU cost.

~~We realized a gross profit of $4.8 million in~~2018. In the nine months ended September 30, ~~2017,~~2019, we realized a ~~decline~~gross profit of ~~$14.4~~$25.7 million, compared to ~~the~~a gross ~~profit~~loss of ~~$19.2~~$8.2 million in the corresponding period in ~~2016. We realized a decline in~~2018.

The gross profit ~~of $6.5 million~~ for the LEU segment ~~primarily due to the decline~~was $33.4 million in the ~~average SWU sales price and the decline in SWU sales volume for the nine~~three months ended September 30, 2019, compared to ~~the prior period, partially offset by a decline~~$8.0 million in the ~~average SWU cost.~~

~~We realized a decline~~corresponding period in ~~gross profit of $7.9 million for the contract services segment in~~2018. In the nine months ended September 30, ~~2017,~~2019, we realized a gross profit of $25.1 million, compared to a gross loss of $15.5 million in the corresponding period in ~~2016. Revenue~~2018. The improvement for the LEU segment in the three- and nine-month periods was primarily due to the increase in SWU and uranium volumes sold and the decline in the average cost of sales per SWU, partially offset by declines in the average price billed to customers for sales of SWU. The average price billed to customers for the sale of uranium increased during the three-month period and declined in the nine-month period.

For the contract services segment, we realized a gross profit of $2.1 million for the three months ended September 30, 2019, compared to a gross loss of $0.2 million in the corresponding period in 2018. In the nine months ended September 30, ~~2016, included a billing for March 2016 reports on work performed in the fourth quarter of 2015. Related expenses were included in~~ ~~Advanced Technology License and Decommissioning Costs~~ ~~in 2015 as they were incurred before a contract was in place. We~~2019, we realized a gross ~~loss~~profit of $0.6 million ~~for the contract services segment~~compared to a gross profit of $7.3 million in the ~~nine months ended September 30, 2017, due to costs incurred which are not fully recoverable~~corresponding period in 2018 that included $9.5 million of revenue from the ~~revenue under the contract~~January 2018 settlement with ~~UT-Battelle.~~

~~Impact of Legacy Costs~~

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

Nine Months Ended
September 30,
2017 2016
LEU segment (GAAP)
Gross profit $ 5.4
$ 11.9
Gross margin 6.6 % 8.3 %

Legacy costs included in cost of sales:
Pension and postretirement health and life benefits $ 2.2
$ 3.2
Disability obligations and other 0.4
3.9
Legacy costs $ 2.6
$ 7.1

LEU segment excluding legacy costs (non-GAAP)
Gross profit excluding legacy costs $ 8.0
$ 19.0
Gross margin excluding legacy costs 9.7 % 13.3 %

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

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

DOE.

Non-Segment Information

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


	Three Months Ended September 30,											Three Months Ended September 30,
	2017			2016			$ Change			% Change		2019			2018			$ Change			% Change
Gross profit (loss)	$	11.6		$	(2.1	)	$	13.7		652	%	$	35.5		7.8			$	27.7		355	%
Advanced technology license and decommissioning costs	4.5			21.9			17.4			79	%
Advanced technology costs												1.3			5.8			4.5			78	%
Selling, general and administrative	11.0			10.7			(0.3		)	(3	)%	8.7			8.8			0.1			1	%
Amortization of intangible assets	2.5			1.7			(0.8		)	(47	)%	1.8			1.7			(0.1		)	(6	)%
Special charges for workforce reductions and advisory costs	2.4			0.6			(1.8		)	(300	)%
Gains on sales of assets	(0.6		)	(0.3		)	0.3			100	%
Operating loss	(8.2		)	(36.7		)	28.5			78	%
Special charges (credits) for workforce reductions and advisory costs												0.8			0.6			(0.2		)	(33	)%
Gain on sales of assets												(0.2		)	—			0.2
Operating income (loss)												23.1			(9.1		)	32.2			354	%
Nonoperating components of net periodic benefit expense (income)												(0.1		)	(1.6		)	(1.5		)	(94	)%
Interest expense	0.7			4.7			4.0			85	%	0.9			1.0			0.1			10	%
Investment income	(0.4		)	(0.1		)	0.3			300	%	(0.5		)	(0.7		)	(0.2		)	(29	)%
Loss before income taxes	(8.5		)	(41.3		)	32.8			79	%
Income (Loss) before income taxes												22.8			(7.8		)	30.6			392	%
Income tax benefit	—			—			—			–		—			—			—			—	%
Net loss	(8.5		)	(41.3		)	32.8			79	%
Net income (loss)												22.8			(7.8		)	30.6			392	%
Preferred stock dividends - undeclared and cumulative	2.0			—			2.0			–		1.9			1.9			—			—	%
Net loss allocable to common stockholders	$	(10.5	)	$	(41.3	)	$	30.8		75	%
Net income (loss) allocable to common stockholders												$	20.9		$	(9.7	)	$	30.6		315	%

Nine Months Ended
September 30,
2017 2016 $ Change % Change
Gross profit $ 4.8
$ 19.2
$ (14.4 ) (75 )%
Advanced technology license and decommissioning costs 15.0
38.6
23.6
61 %
Selling, general and administrative 33.1
34.6
1.5
4 %
Amortization of intangible assets 5.7
7.6
1.9
25 %
Special charges for workforce reductions and advisory costs 7.1
1.2
(5.9 ) (492 )%
Gains on sales of assets (2.3 ) (1.0 ) 1.3
130 %
Operating loss (53.8 ) (61.8 ) 8.0
13 %
Gain on early extinguishment of debt (33.6 ) (16.7 ) 16.9
101 %
Interest expense 4.3
14.8
10.5
71 %
Investment income (1.0 ) (0.5 ) 0.5
100 %
Loss before income taxes (23.5 ) (59.4 ) 35.9
60 %
Income tax benefit (0.2 ) (0.6 ) (0.4 ) (67 )%
Net loss (23.3 ) (58.8 ) 35.5
60 %
Preferred stock dividends - undeclared and cumulative 5.0
—
5.0
–
Net loss allocable to common stockholders $ (28.3 ) $ (58.8 ) $ 30.5
52 %



	Nine Months Ended September 30,
	2019			2018			$ Change			% Change
Gross income (loss)	$	25.7		(8.2		)	$	33.9		413	%
Advanced technology costs	13.0			19.2			6.2			32	%
Selling, general and administrative	24.5			29.7			5.2			18	%
Amortization of intangible assets	4.1			4.5			0.4			9	%
Special charges (credits) for workforce reductions and advisory costs	(2.2		)	1.5			3.7			247	%
Gain on sales of assets	(0.7		)	(0.3		)	0.4			133	%
Operating loss	(13.0		)	(62.8		)	49.8			79	%
Nonoperating components of net periodic benefit expense (income)	(0.2		)	(4.9		)	(4.7		)	(96	)%
Interest expense	2.9			3.0			0.1			3	%
Investment income	(1.9		)	(1.9		)	—			—	%
Loss before income taxes	(13.8		)	(59.0		)	45.2			77	%
Income tax benefit	(0.1		)	(0.1		)	—			—	%
Net loss	(13.7		)	(58.9		)	45.2			77	%
Preferred stock dividends - undeclared and cumulative	5.9			5.9			—			—	%
Net loss allocable to common stockholders	$	(19.6	)	$	(64.8	)	$	45.2		70	%

Advanced Technology ~~License and Decommissioning~~ Costs

Advanced technology ~~license and decommissioning~~ costs consist of American Centrifuge expenses that are outside of our customer contracts ~~with UT-Battelle,~~in the contract services segment, including ~~ongoing~~ costs ~~to maintain~~for work at the ~~demobilized~~ Piketon facility ~~and our NRC licenses at that location.~~prior to the commencement of the HALEU work in June 2019. Costs ~~declined $17.4~~decreased $4.5 million (or ~~79%~~78%) from $5.8 million to $1.3 million in the three months ended September 30, 2017, compared to the corresponding period in 2016. The prior period included a $15.0 million charge to increase the accrued D&D liability for the Piketon demonstration facility based on updated cost estimates. Costs declined $23.6and decreased $6.2 million (or ~~61%~~32%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding ~~period~~periods in 2016, due to the $15.0 million increase in the D&D liability in the prior period and demobilization costs incurred in early 2016 in preparation for the D&D of the Piketon facility. D&D costs commenced in the second quarter of 2016 and are charged against the D&D liability. For additional details on the D&D of the Piketon facility, refer to ~~American Centrifuge - Piketon Facility Costs and D&D Obligations~~ in ~~Note 12, Commitments and Contingencies,~~ ~~of the condensed consolidated financial statements.~~2018.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses ~~increased $0.3~~declined $0.1 million (or 3%1%) in the three months and ~~declined $1.5~~$5.2 million (or 4%18%) in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in 2016. Consulting costs declined $0.3 million in the three-month period and $1.4 million in the nine-month period. Compensation and benefit costs were flat in the three-month period and declined $0.3 million in2018. In the nine-month period, ~~ended September 30, 2017, including the effect of an $0.8~~compensation and benefits declined $2.7 million, ~~loss in the prior period related to the remeasurement of pension obligations.~~consulting costs declined $1.2 million and information technology costs declined $0.4 million.

Amortization of Intangible Assets

Amortization expense for the intangible asset related to the September 2014 sales order book is a function of SWU sales volume under that order book, which increased to $1.8 million in the ~~three-month period~~three months and declined to $4.1 million in the nine months ended September 30, ~~2017,~~2019, compared to the corresponding periods in ~~2016.~~2018. Amortization expense for the intangible asset related to customer relationships is amortized on a straight-line basis.

Special Charges (Credits) for Workforce Reductions and Advisory Costs

Special charges increased $0.2 million in the three months and declined $3.7 million in the nine months ended September 30, 2017, included estimated employee termination benefits of $2.3 million, including $0.7 million in the third quarter, less $0.2 million for unvested employee departures. Advisory costs related to the Company’s project to align its corporate structure to the scale of its ongoing business operations and to update related information technology were $1.7 million and $5.0 million in the three and nine months ended September 30, 2017, respectively,2019, compared to ~~$0.3 million and $0.8 million in~~ the corresponding periods ~~of 2016.~~

~~Gain on Early Extinguishment of Debt~~

In the first quarter of 2017, the Company 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 8, Debt~~ ~~of the condensed consolidated financial statements.~~

In June 2016, we repurchased 8% PIK Toggle Notes having an aggregate principal and accrued interest balance of $26.6 million for cash payments of $9.8 million. The gain on the early extinguishment of the notes was $16.7 million, net of commissions and unamortized deferred issuance costs totaling $0.1 million.

~~Interest Expense~~

~~Interest expense declined $4.0 million (or 85%)~~ in ~~the three months and $10.5 million (or 71%) in~~2018. In the nine months ended September 30, ~~2017,~~2019, special charges included a credit of $2.9 million for the reversal of accrued termination benefits for employees who were retained with the May 31, 2019 signing of the HALEU Letter Agreement. In the corresponding period in 2018, special charges consisted of estimated employee termination benefits related to corporate functions of $1.4 million and advisory costs related to updating the Company’s information technology systems of $0.1 million.

Nonoperating Components of Net Periodic Benefit Expense (Income)

Nonoperating components of net periodic benefit expense (income) netted to income of $0.1 million for the three months ended September 30, 2019, compared to income of $1.6 million in the corresponding ~~periods~~period in ~~2016, due~~2018. In the nine months ended September 30, 2019, nonoperating components of net periodic benefit expense (income) netted to $0.2 million income, compared to $4.9 million income in the ~~early extinguishment~~corresponding period in 2018. Nonoperating components of ~~87%~~net periodic benefit expense (income) consist primarily of the ~~outstanding principal amount~~expected return on plan assets, offset by interest cost as the discounted present value of ~~the 8% PIK Toggle Notes on February 14, 2017. No interest expense is recognized on the new 8.25% Notes as described in~~ ~~Note 8, Debt, of the condensed consolidated financial statements.~~benefit obligations nears payment.

Income Tax Benefit

The income tax benefit was $0 million in the three months ended September 30, 2019 and ~~$0.2~~2018. The income tax benefit was $0.1 million in the nine months ended September 30, ~~2017. The income tax benefit was $0 in the three months~~2019 and ~~$0.6 million in the nine months ended September 30, 2016.~~2018. The income tax benefit in both nine-month periods resulted from discrete items for reversals of previously accrued amounts associated with liabilities for unrecognized benefits.

Net ~~Loss~~Income (Loss)

Our net ~~loss~~income was ~~$8.5~~$22.8 million in the three months ended September 30, ~~2017,~~2019, compared to a net loss of ~~$41.3~~$7.8 million in the three months ended September 30, ~~2016.~~2018. The favorable variance of ~~$32.8~~$30.6 million was primarily ~~the~~a result of ~~the $13.7 million improvement in gross profit, $15.0 million of accrued D&D costs in the prior period, and the $4.0~~a $27.7 million decline in ~~interest expense.~~gross loss and a $4.5 million decline in advanced technology costs, partially offset by a $1.5 million decline in nonoperating components of net periodic benefit income.

Our net loss was ~~$23.3~~$13.7 million in the nine months ended September 30, ~~2017,~~2019, compared to a net loss of ~~$58.8~~$58.9 million in the nine months ended September 30, ~~2016.~~2018. The favorable variance of ~~$35.5~~$45.2 million was primarily ~~the~~a result of ~~the $23.6~~a decline in gross loss of $33.9 million, a $5.2 million decline in SG&A expenses, $6.2 million decline in advanced technology ~~license~~costs, and ~~decommissioning costs, including D&D cost accruals, the $16.9 million increase in gains on the early extinguishment of debt, and the $10.5~~a $3.7 million decline in ~~interest expense,~~special charges, partially offset by ~~the $14.4~~$4.7 million decline in ~~gross profit and the $5.9 million increase in special charges.~~nonoperating components of net periodic benefit income.

Preferred Stock Dividends - Undeclared and Cumulative

Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the aggregate liquidation preference at origination of $104.6 million. We did not meet the criteria for a dividend payment obligation for the ~~quarter~~three and nine months ended September 30, ~~2017,~~2019 and the corresponding periods in 2018, and we have not declared, accrued or paid dividends on the Series B Preferred Stock since issuance on February 14, 2017. Dividends on the Series B Preferred Stock are cumulative to the 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.

Liquidity and Capital Resources

We ended the third quarter of ~~2017~~2019 with a consolidated cash balance of ~~$135.9~~$77.2 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, our operations and the level of expenditures and government funding for our services contracts and the ~~American Centrifuge program.~~timing of customer payments. Liquidity requirements for our existing operations are affected primarily by the timing and amount of customer sales and our inventory purchases.

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

Substantially all revenue-generating operations of the Company are conducted at the subsidiary level. Centrus’ principal source of funding for American Centrifuge activities ishas been provided: (i) under the contract with UT-Battelle for the period October 1, 2017 through September 30, 2018, the operator of ORNL; and (ii) from Centrus’ ~~wholly owned~~wholly-owned subsidiary, ~~United States Enrichment Corporation (“~~Enrichment Corp.”) to Centrus and its 100% indirectly owned subsidiary American Centrifuge Operating, LLC pursuant to two secured intercompany financing notes.

The financing obtained from Enrichment Corp. funds American Centrifuge ~~activities pending receipt of payments related to work performed under the contract with UT-Battelle, American Centrifuge~~ costs that are outside ~~the scope~~ of ~~work under~~our customer contracts in the contract ~~with UT-Battelle, including D&D costs and ongoing costs to maintain the Piketon facility and our NRC licenses at that location,~~services segment and general corporate expenses, including cash interest payments on our debt. Although the most recent contract with UT-Battelle 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.

~~Capital expenditures are expected~~On October 31, 2019, we signed the three-year $115 million HALEU Agreement with DOE to deploy a cascade of centrifuges to demonstrate production of HALEU fuel for advanced reactors. 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. The HALEU Agreement is an incrementally funded, cost reimbursable contract with DOE reimbursing up to 80% of total program costs up to a maximum amount of $115 million. The corresponding 20 percent cost share for us would be ~~insignificant for at least the next 12 months.~~

~~In September 2015, Centrus completed~~$29 million. Any costs incurred above these amounts would increase our cost share. Based on current program cost estimates under review, we expect to recognize a ~~successful three-year demonstration~~portion of ~~the American Centrifuge technology at its facility in Piketon, Ohio. U.S. government funding for American Centrifuge is now limited to research and development work at~~ our ~~facilities in Oak Ridge, Tennessee. As~~anticipated total cost share as a ~~result of reduced program funding, workforce reductions commenced~~loss in the fourth quarter of ~~2015~~2019 in the approximate range of $17-22 million. The total cost share is expected to exceed $29 million, including certain operating costs in support of the program that will be recognized as expense as incurred over the three-year contract term. Under the HALEU Agreement, DOE is currently obligated for costs up to $35 million of the $115 million and ~~we expect~~is authorized for payments to ~~make~~us up to $35 million. We received cash payments of ~~$4.9~~$3.4 million ~~for remaining workforce reductions~~ through September 30, 2019.

~~Centrus began~~We lease gas centrifuge enrichment plant facilities and related personal property in Piketon, Ohio from DOE. We previously provided financial assurance to ~~incur expenditures~~DOE for lease turnover obligations in the ~~second quarter~~form of ~~2016 associated with the D&D of the Piketon facility in accordance with the requirements of the NRC and DOE.~~surety bonds that were fully cash collateralized. In the ~~nine~~three months ended ~~September~~June 30, ~~2017, D&D costs~~2019, we completed our lease turnover obligations, DOE released the bonds and we received the cash collateral of ~~$22.1 million were charged against the accrued D&D liability. The D&D work is expected to be substantially completed by year-end. As of September 30, 2017,~~$13.5 million. In addition, we have ~~accrued $16.6 million for the estimated fair value of the remaining costs to complete the D&D work.~~

~~Centrus has~~ previously provided financial assurance to the NRC ~~and DOE~~ for the D&D ~~and lease turnover costs~~of the facility in the form of surety bonds ~~of approximately $16 million and $13 million, respectively, which~~that are fully cash collateralized by ~~Centrus. Centrus expects to receive cash when surety bonds are reduced and/or~~us for $16.9 million. We completed the D&D work required for elimination of financial assurance under NRC license requirements. On September 23, 2019, the NRC cancelled asthe financial assurance instruments, which permitted the Company ~~fulfills~~to request a return of its ~~D&D~~cash collateral. On October 4, 2019, we received $17.0 million, which included $1.0 million of accrued interest, from the cancellation of the surety bonds.

In connection with the HALEU program, DOE and Centrus renewed the lease ~~obligations.~~agreement and extended the lease term through May 31, 2022 provided, however, that the lease may be terminated early upon completion of the work under the HALEU Agreement. Any facilities or equipment constructed or installed under contract with DOE will be owned by DOE, may be returned to DOE in an “as is” condition at the end of the lease term, and DOE would be responsible for its decontamination and decommissioning.

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

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

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


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
Cash used in operating activities	$	(95.6	)	$	(51.9	)	$	(26.5	)	$	(77.7	)
Cash provided by (used in) investing activities	1.8			(1.5		)
Cash provided by investing activities							0.7			0.3
Cash used in financing activities	(31.0		)	(9.8		)	(33.8		)	(6.1		)
Decrease in cash and cash equivalents	$	(124.8	)	$	(63.2	)
Decrease in cash, cash equivalents and restricted cash							$	(59.6	)	$	(83.5	)

Operating Activities

In the nine months ended September 30, 2019, net cash used in operating activities was $26.5 million. The net reduction of ~~$42.3~~$33 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash in the period. Uses of cash also included a $9.3 million increase in net inventories and the net loss of $13.7 million in the nine months, net of non-cash expenses. Sources of cash included the net reduction in receivables of $31.3 million in the nine-month period.

In the corresponding period in 2018, net cash used in operating activities was $77.7 million. The net reduction of $64.8 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash in the nine months ended September 30, ~~2017. Other major uses~~2018. The operating loss of cash were corporate costs including benefits funding and costs for D&D of the American Centrifuge demonstration cascade. Sources of cash included the monetization of inventory as inventories declined $17.9 million in the nine-month period and receivables from utility customers declined $6.2 million.

In the corresponding period in 2016, the net reduction of $68.9 million in the SWU purchase payables balance, due to the timing of purchase deliveries, was a significant use of cash. Other major uses of cash were corporate costs including benefits funding and costs for D&D of the American Centrifuge demonstration cascade. Sources of cash included the monetization of inventory as inventories declined $45.8 million in the nine-month period and receivables from utility customers declined $18.4 million.

~~Investing Activities~~

~~Capital expenditures were $0.3~~$62.8 million in the nine months ended September 30, ~~2017,~~2018, net of non-cash expenses, was a use of cash. Sources of cash included the net reduction in receivables from utility customers of $42.1 million.

Investing Activities

There were no significant capital expenditures in the nine months ended September 30, 2019 and ~~$3.0~~2018. Sales of unneeded assets and property yielded net proceeds of $0.7 million and $0.4 million in the nine months ended September 30, 2019 and the corresponding period ~~of 2016.~~in 2018, respectively.

Financing Activities

In ~~February 2017, Centrus exchanged $204.9~~the nine months ended September 30, 2019, net cash used for financing included the repayment of $27.5 million of principal ~~amount~~due on maturity of the ~~Company’s 8% paid-in-kind (“PIK”) toggle notes (“~~8% PIK ~~Toggle Notes”) for $74.3 million principal amount~~Notes. In the nine months ended September 30, 2019 and the corresponding period in 2018, payments of ~~8.25% notes maturing in February 2027 (the “8.25% Notes”), 104,574 shares of Series B Preferred Stock and $27.6~~$6.1 million of ~~cash.~~interest classified as debt related to the 8.25% Notes were classified as a financing activity. Refer to Note 8,7, Debt, of the condensed consolidated financial ~~statements.~~statements regarding the accounting for the 8.25% Notes.

~~In June 2016, Centrus repurchased 8% PIK Toggle Notes having an aggregate principal balance of $26.1 million and accrued interest payable balance of $0.5 million for cash payments of $9.8 million.~~

Working Capital

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


	September 30, 2017			December 31, 2016
	(in millions)						September 30, 2019			December 31, 2018
Cash and cash equivalents	$	135.9		$	260.7		$	77.2		$	123.1
Accounts receivable	14.2			19.9			19.1			60.2
Inventories, net	102.0			119.9			68.3			26.7
Deposits for financial assurance							17.2			30.3
Current debt							(6.1		)	(32.8		)
Other current assets and liabilities, net	(106.2		)	(165.6		)	(143.7		)	(161.7		)
Working capital	$	145.9		$	234.9		$	32.0		$	45.8

Capital Structure and Financial Resources

On ~~February 14, 2017, pursuant to an exchange offer and consent solicitation, we exchanged $204.9 million principal amount of our~~September 30, 2019, the Company repaid the outstanding 8% ~~PIK~~paid-in-kind (“PIK”) Toggle Notes ~~for $74.3~~that matured on September 30, 2019. The Company paid a total of $28.5 million, ~~principal amount~~including $1.0 million in accrued interest. The payment was made in accordance with the terms of the ~~8.25% Notes, 104,574 shares of Series B Preferred Stock with liquidation preference of $1,000 per share, and $27.6 million of cash. Following~~Indenture dated September 30, 2014 (as amended, supplanted, or otherwise modified from time to time) among the ~~exchange offer, $29.6 million principal amount of 8% PIK Toggle Notes remained outstanding. The~~ Company, ~~recognized a gain related to~~the Company’s subsidiary, United States Enrichment Corp., as the note ~~exchange~~guarantor, and Delaware Trust Company, as trustee and collateral agent. The payment constituted full satisfaction and discharge of ~~$33.6 million in~~ the ~~first quarter of 2017, which is net of transaction costs of $9.0 million~~Indenture and ~~previously deferred issuance costs related to~~ the ~~8% PIK Toggle Notes of $0.4 million.~~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 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 and the ~~Enrichment Corp. guarantee~~8% PIK Toggle Notes are described in Note 8,7, Debt,of the condensed consolidated financial ~~statements.~~

The principal amount of the 8% PIK Toggle Notes 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 ended March 31, 2017,statements and September 30, 2017, the Company elected to pay interest in the form of cash payments at 2.5% per annum and PIK payments at 5.5% per annum. The principal amount of the 8% PIK Toggle Notes was $31.3 million as of September 30, 2017. 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). Additional terms and conditions of the 8% PIK Toggle Notes and the Enrichment Corp. guarantee are described in Note 8,9, Debt, of the ~~condensed~~ consolidated financial ~~statements.~~statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Holders of the Series B Preferred Stock are entitled to cumulative dividends of 7.5% per annum of the ~~Liquidation Preference.~~liquidation preference. We are obligated to pay cash dividends on our Series B Preferred Stock to the extent ~~that: our pension plans~~dividends are declared by the Board of Directors and ~~Enrichment Corp.’s pension plans~~certain criteria are at least 90% funded on a variable rate premium calculation in the current plan year; our net income calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) (excluding the effect of pension remeasurement) for the immediately preceding fiscal quarter exceeds $7.5 million; our free cash flow (defined as the sum of cash provided by (used in) operating activities and cash provided by (used in) investing activities) for the immediately preceding four fiscal quarters exceeds $35 million; 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 dividends may be legally paid under Delaware law. Centrus hasmet. We have not met these criteria for the periods from issuance through September 30, ~~2017,~~2019, and ~~has~~have not declared, accrued or paid dividends on the Series B Preferred Stock as of September 30, ~~2017.~~2019. 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 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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 with respect to a number of potential acquisitions.~~negotiation. If we pursue opportunities that require capital, we believe we would seek to satisfy these needs through a combination of working capital, cash generated from operations or additional debt or equity financing.

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

Commitments under Long-Term SWU Purchase Agreements

The Company purchases SWU contained in LEU from Russia supplied to us under a long-term agreement, as amended, signed in 2011 with the Russian government owned entity TENEX. Under a 2018 agreement, the Company will purchase SWU contained in LEU from Orano with deliveries starting as early as 2021. Refer to Note 12,Commitments and Contingencies, of the condensed 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 using DOE centrifuge technology. There is a minimum annual royalty payment of $100,000 and the maximum cumulative royalty over the life of the license is $100 million. There is currently no commercial enrichment facility producing LEU using DOE centrifuge technology. We are continuing to advance our U.S. centrifuge technology that has evolved from DOE inventions at specialized facilities in Oak Ridge, Tennessee, with a view to deploying a commercial enrichment facility over the long term once market conditions recover.

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, ~~disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016,~~ there were no material off-balance sheet arrangements at September 30, ~~2017,~~2019, or December 31, ~~2016.~~2018.

New Accounting Standards ~~Not Yet Implemented~~

Reference is made to New Accounting Standards in Note 1, Basis of Presentation, of the unaudited condensed consolidated financial statements for information on new accounting standards.

Item 4. 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 Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported on a timely basis 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 previously disclosed in Part II, Item 9A, Controls and Procedures of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2018, management identified a material weakness in the Company’s internal control over financial reporting. Specifically, we did not maintain effective controls over the determination and assessment of accounting impacts for arrangements with customers that could result in modification accounting or other impacts when executed. Because of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, ~~2016.~~2018.

As of September 30, ~~2017,~~2019, 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). 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 the previously identified material weakness in internal control over financial reporting, which continued to exist as of September 30, ~~2017.~~2019.

Notwithstanding the material weakness described below, our management concluded that the condensed consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in accordance with GAAP.

Efforts to Address Material Weakness

The Company has ~~made,~~ and expects to continue to make progress in improving internal control over the evaluation of arrangements with customers that could result in modification accounting or other impacts for ~~our D&D obligation.~~a sales contract. Management has enhanced its ~~review~~evaluation process of ~~D&D costs incurred and projected costs remaining to complete the D&D work and has formalized applicable procedures as remedial controls and has begun related controls testing.~~these arrangements. The material weakness will not be considered remediated until the remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed by the end of ~~2017.~~2019.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2017, the Company implemented a new enterprise resource planning (ERP) system in which a significant portion of our business transactions originate and are processed and recorded. The implementation included the outsourcing of payroll functions. As a result of the ERP system implementation, we modified certain existing controls as well as implemented new controls to adapt to changes in our processes. We concluded, as part of our evaluation described in the above paragraphs, that the implementation of the ERP system has not materially affected our internal control over financial reporting. Other than the ~~ERP system implementation and~~ steps taken to work towards the remediation of the material weakness identified above, there were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017,~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

~~There have been no material changes~~On August 30, 2013, the Company submitted a claim to DOE under the Contract Disputes Act for payment of $42.8 million, representing DOE’s share of pension and postretirement benefits costs related to the ~~Legal Proceedings set forth~~transition of Portsmouth site employees 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. Centrus believes that DOE is responsible for a significant portion of any pension and postretirement benefit costs associated with the transition of employees at Portsmouth. The receivable for DOE’s share of pension and postretirement benefits costs has a full valuation allowance due to the lack of a resolution with DOE and uncertainty regarding the amounts owed and the timing of collection. The parties filed cross motions for partial summary judgment to seek a judicial determination of two issues related to the calculation of the pension liability and the entitlement of Centrus to reimbursement for postretirement benefit costs. The Court ruled on the pension calculation methodology and ruled Centrus was entitled to recover costs associated with postretirement benefits for employees afforded protection under ~~Part I, Item 3,~~ ~~Legal Proceedings,~~ ~~in our Annual Report~~the USEC Privatization Act. At the Parties’ request, the Court has issued a revised scheduling order providing for expert opinions to be disclosed by November 8, 2019, exchange of expert response reports on ~~Form 10-K for the year ended~~ December ~~31, 2016.~~9, 2019, and expert discovery to close on January 9, 2020. A status report is due by January 15, 2020. The Company is still pursuing settlement.

~~Centrus is~~On May 26, 2019, the Company, its subsidiary United States Enrichment Corp. (“Enrichment Corp.”), and five other Department of Energy (“DOE”) contractors who have operated facilities at the Portsmouth, Ohio, Gaseous Diffusion Plant site (including, in the case of the Company, the American Centrifuge Plant site located on the premises (the “Portsmouth GDP” site) 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 “Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division. The complaint seeks damages for alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The Plaintiffs are seeking to represent a class of (i) all current or former residents within a 7-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 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 covered by our indemnification 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 June 28, 2019, the Company, its subsidiary Enrichment Corp. and four other DOE contractors who have operated facilities at the Portsmouth GDP site were named as defendants in a class action complaint filed by Ray Pritchard and Sharon Melick (collectively, the “Plaintiffs”) in the U.S. District Court in the Southern District of Ohio, Eastern Division. The complaint seeks damages for alleged off-site contamination allegedly resulting from activities on the Portsmouth GDP site. The Plaintiffs are seeking to represent a class of all current or former residents within a 7-mile radius of the Portsmouth GDP site. 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 covered by our indemnification 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.

We are 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, we do not believe that the outcome of any of these legal matters, individually ~~and~~or in the aggregate, will have a material adverse effect on our cash flows, results of operations or consolidated financial condition.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors described in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Item 6. Exhibits



Exhibit No.	Description

10.1	Letter Agreement, dated September 23, 2019, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (a)(b)

10.2	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 (a)(b)

10.3	Letter Agreement, dated June 12, 2018, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (a)(b)

10.4	Letter Agreement, dated September 28, 2019, by and between Joint Stock Company “TENEX” and United States Enrichment Corporation (a)(b)

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) ~~under the Securities Exchange Act of 1934, as amended.~~. (a)

31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) ~~under the Securities Exchange Act of 1934, as amended~~. (a).

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

101	~~Condensed~~Unaudited condensed consolidated financial statements from the Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2017,~~2019, filed in interactive data file (XBRL) format.


(a)	Filed herewith.


(b)	Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

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.


~~Date:~~	November ~~14, 2017~~	~~By:~~8, 2019	/s/ ~~Stephen S. Greene~~	Philip O. Strawbridge
			~~Stephen S. Greene~~	Philip O. Strawbridge
		Senior Vice President, Chief Financial Officer,
	Chief Administrative Officer and Treasurer
		(Duly Authorized Officer and Principal Financial Officer)

4145



	Liability December 31, 2016		Nine Months Ended September 30, 2017					Liability September 30, 2017
	Liability December 31, 2016		Charges for Termination Benefits		Paid/ Settled			Liability September 30, 2017
Workforce reductions:
Evolving business needs	$	0.1	$	2.2	$	(0.9	)	$	1.4
Piketon demonstration facility	5.4		0.1		(0.6		)	4.9
	$	5.5	$	2.3	$	(1.5	)	$	6.3



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

Balance at December 31, 2015	—	7,563,600	1,436,400
Balance at September 30, 2016	—	7,563,600	1,436,400

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 September 30, 2017	104,574	7,632,669	1,406,082



(in millions)	Deferred Revenue			Deferred Cost			Gross Profit Deferred or (Recognized)			Margin

Balance at December 31, 2016	$	123.6		$	89.3		$	34.3		28%
Deferred sales in the period	66.4			44.9			21.5			32%
Previously deferred sales recognized in the period	(58.3		)	(39.7		)	(18.6		)	32%
Balance at September 30, 2017	$	131.7		$	94.5		$	37.2		28%