USEC restructures

14 September 2005

Uranium enrichment company USEC has announced a major restructuring move, placing priority on the demonstration and deployment of its American Centrifuge. The move will resize head office operations, including the elimination of some senior positions in the management team.

“The restructuring includes all levels, including senior management, and involves the elimination of positions, retirements and the transfer of a number of functions and activities from Bethesda headquarters to the Paducah, Kentucky and Piketon, Ohio plants," said USEC chairman, president and CEO James Mellor. Mellor added: “After this headquarters realignment, we will take a closer look at the field organisations.”

On 15 September, the company announced that Mellor himself is stepping down from the roles of president and CEO, but remains as the company's chairman. John K Welch will take on the roles of president and CEO from 3 October. Welch will also join the board of directors.

The USEC headquarters staff of 132 is being reduced by one third, with the reduction expected to be substantially complete by the end of September. This reduction is expected to result in annual savings of $8 million in salary and related expenses. USEC will record a one-time charge in its third quarter of approximately $5 million for the cost of these reductions.

In addition, USEC recently announced a voluntary reduction of 50 people in the salaried workforce at the company’s Paducah production plant.

The news was followed with the announcement that USEC executive vice president and chief operating officer Lisa Gordon-Hagerty is to leave the company as part of the restructuring.

Meanwhile, in a blow to the company, the US Court of Appeals for the Federal Circuit has decided not to reconsider its decision on a key issue in a trade case involving low-enriched uranium imports (LEU) from France. USEC said it is disappointed by the court's decision to reaffirm its March 2005 ruling that enrichment contracts are exempt from antidumping duties on the grounds that the contracts are for the provision of services. Under US trade law, such duties can be applied to the provision of goods, not services.

USEC has also been forced to announce delays to its planned demonstration of the $1.7 billion American Centrifuge enrichment facility at Piketon. USEC had planned to show investors the technology for the development by the end of the year, but now says that won't happen until the first half of 2006. The company insists the project is not in jeopardy, but is instead being fine-tuned with some parts still being tested and the permitting process taking longer than expected.

USEC wants to begin operating the plant in 2008 and be in full production by 2010.




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