Greetings and welcome to the USEC second quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steven Wingfield, Director of Investor Relations for USEC Inc. Thank you sir. You may begin.

Good morning. And thank you for joining us for USEC’s conference call regarding the second quarter of 2012 which ended June 30. With me today are John Welch, President and Chief Executive Officer; John Barpoulis, Senior Vice President and Chief Financial Officer; Phil Sewell, Senior Vice President; Tracy Mey, Vice President and Chief Accounting Officer, and Bob Van Namen, Senior Vice President is joining us by phone. Before turning the call over to John Welch, I’d like to welcome all of our callers as well as those listening to our webcast. This conference call follows our earnings news release issued yesterday afternoon. That news release is available on many financial websites and our corporate website, usec.com. All of our news releases and SEC filings, including our 10-K, 10-Qs and 8-Ks are available on our website. We intend to file our quarterly report on Form 10-Q later today. A replay of this call also will be available later this morning on the USEC website. I’d like to remind everyone that certain of the information that we may discuss on this call today may be considered forward-looking information that involves risks and uncertainties, including assumptions about the future performance of USEC. Our actual results may differ materially from those in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Finally, the forward-looking information provided today is time sensitive and is accurate only as of today, August the 1st, 2012. This call is the property of USEC. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of USEC is strictly prohibited. Thank you for your participation and now I’d like to turn the call over to John Welch.

Good morning. And thank you for joining us today. Yesterday afternoon we reported our second-quarter results. The management team was very active during the second quarter as we reached two important agreements. First, in May, we entered into an innovative multiparty agreement that will allow us to continue to economically enrich uranium at the Paducah gaseous diffusion plant for another year. It is a positive agreement for everyone involved. Second, in June, we secured near-term funding for the research, development and demonstration program for the American centrifuge technology, which we call the RD&D program. We were off to a great start on that program and we have attracted a very strong board of managers to provide oversight to the program as provided under our agreement with the Department of Energy. This board includes leaders in the nuclear industry, Babcock & Wilcox, Exelon and Toshiba, as well as two independent members with strong industry credentials. Allow me to provide a few details why these two agreements were important accomplishments. Starting first with the extension of enrichment operations at Paducah, this agreement is somewhat complex but works well because it’s a win for everyone involved. Under the agreement, USEC is feeding depleted uranium tails into the Paducah plant rather than using a natural uranium feedstock. These tails are from DOE operations during the 1980s and this by-product material contains higher amounts of the valuable U235 isotope than the depleted uranium by-product we’ve generated in recent years. The government consider this tails material to be a liability to be disposed of sometime in the future. These leaded uranium tails have been transferred from DOE to Energy Northwest and much of the material has already been provided to USEC. Over the next 10 months, USEC will deliver low enriched uranium to Energy Northwest which…

Thanks John and good morning everyone. Starting at revenue for the second quarter, total revenue was $365 million with SWU revenue making up $347 million or 95% of the total. You can see the continued trend of revenues for contract services and natural uranium declining as a percentage of our total revenue. Revenue for the second quarter was 20% below the same quarter in 2011. We focus on the longer-term in our planning and most of my comments will be related to the six-month period ended June 30, 2012. During the first half of 2012, revenue was $926 million, an increase of $91 million or 11%. SWU volume increased 35% compared to the same period last year, and the average price billed to customers increased 3% year-over-year reflecting the variability of utility orders and refilling cycles. Uranium sales accounted for $3.6 million, which was down significantly from $82 million in the first half of 2000. Most of our inventories of uranium available-for-sale have been sold in prior years, and we expect this trend to continue. Our contract services segment underwent a transition in 2011 as we completed our work on the former Portsmouth plant. Revenue from contract services in the six-month period of 2012 was $38 million compared to $114 million in the same period last year. The lower revenue was due primarily to the completion of a coal cold shutdown contract in September 2011. This segment includes revenue from our subsidiary NAC International which will dominate revenue in the segment going forward. Switching to the cost side of the ledger, our two largest cost components are electric power and the price we pay Russia to purchase SWU. We have a power contract with the Tennessee Valley Authority or TVA. Our contract provides moderate annual increases to the base price…

(Operator Instructions) Our first question comes from Laurence Alexander of Jefferies & Co. Laurence Alexander - Jefferies & Co.: Just a couple of things. For the cash flow discussion how much variability do you think there is in terms of potential working capital swings for your cash flow generation in the back half of the year?

Laurence, it’s John Barpoulis. I think our working capital needs are typically driven by Paducah operations and the timing of Russian deliveries and payments. And so as we take a look at the remainder of 2012, I think that those are relatively certain. So at this point I don't see a lot of variability in the overall liquidity or working capital needs. Obviously there are things that may pop up that could affect that. Timing of reimbursement or release of the cash collateral for tails under the RD&D program could affect some aspect of the timing. But on the whole I think we are in pretty good shape. Laurence Alexander - Jefferies & Co.: And then in your comments, you mentioned obviously the declining of SWU volumes in 2013, how -- what's your longer-term view on the SWU market and what gives you the confidence on continuing to pursue the ACT given the competitive dynamics there and the inventory overhang in the market?

Hi Laurence, a couple of comments on that. First off, clearly the near-term market is dominated by the events at Fukushima and the impact that, that has had both on supply and demand in the near term. The market is going through a number of transitions, including the shutdown of two large gaseous diffusion plants and the end of the HEU deal with the Russian at the end of 2013. So what we see is really we expect a surplus supply that is pushing market pricings down now. They will work themselves out over the next several years. Then longer term market fundamentals really remain very solid from when we began the project. The plan is to restart the restart reactor as John Welch said and we do expect them to recover a number of those although it will take them years to do so. We continue to see a lot of interesting new builds around the world. We see China and India going off on very large new build program and we’re seeing the success here in the U.S. with both South Carolina Electric and Gas and Southern Company starting projects as well. Our customers really see a good solid long-term position for American centrifuge. What they look at is competition, they want diversity of supply and they want diversity of acknowledge. They look at USEC as with their track record as a long and reliable supplier is really being a piece of that overall long term competitive supply mix. We have a number of contracts currently in place for ACP output going forward and our customers have been sticking with it as we’ve gone through the last several years. And we are keeping them very well-informed about the long-term developments with the project. So we see all of the fundamentals is really pointing to the direction that we saw when we first started the project. Laurence Alexander - Jefferies & Co: And then lastly, if Congress and the DOE have any delays in the funding proposals, what happens next? I mean do you drop back to ACP spending being curtailed to $1 million a month until they implement the appropriations or how should we think about -- what happens if there is a delay?

Probably the first thing, Laurence, this is John, is to address what's going on in the Congress. The calendar for acting on fiscal year ‘13 legislation before after November election, it’s uncertain. But we've been encouraged by even some of the most recent discussion in the last 24 to 48 hours about a long-term continuing resolution that would fund the government through March. That would -- the fact that that’s being discussed now and will likely be a major points be addressed in September when Congress comes back in session, that's good because I don't think that they’re going to have to do something from a continuing resolution standpoint in September. And it's good that they're talking about a longer one. We will be fully engaged both with Congress and the Department of Energy on our funding needs to ensure that there is no gap. Our position is that if there is not funding, we are very constrained for what we can spend ourselves and so we would likely have to go through a some sort of demobilization. But there are options and actions that DOE has that can take the funding into the new year. So again that's why we will be fully engaged with both the Congress on legislative activities and DOE for other funding options. But it is in no one's best interest to have any sort of interruption that test program and the milestones that I talked about that we're all agreed to and everybody's marching to quite aggressively, any sort of interruption in funding and then all of that would have to be redone and no one wants that to happen.

Our next question comes from George Caffrey of JMP Securities.

Just a follow up little bit on that, as far as the continuing resolution for let’s say an additional six months worth of for the budget, how does that specifically affect USEC? Would funding be contained in that continuing resolution?

Department of energy would basically in a continuing resolution programs that are underway, they would be earmarking money to be able to continue to spend at the same level. And so that’s being looked at by them right now. The fact that we have the program off and running is very good point as we enter into those kinds of discussions.

Sure and would you be able – would they be in a position and I don’t know if you can answer this – to fund in a manner other than, let's say, allowing you to reduce your restricted cash by taking on some liabilities -- restricted cash towards the surety bonds?

George, it’s John Barpoulis. With this first element or leg of funding the $87.7 million that take us through the end of November, that will affectively take all of our tails that we have and release the cash collateral related to those tails. So that would not be one of the options that DOE would have post-November 30. But as John indicated, there were other options that DOE could exercise.

And could you talk a little bit about your contracted volume – in terms of looking at your guidance that would appear that – due to contracts I assume you are getting a little bit better than spot pricing for SWU this year. Could you talk a little bit about your contracts and where those contracts are priced relative to the current price of SWU or current spot price of SWU?

Sure, Bob Van Namen here. We don’t give again guidance specifically on SWU pricing trends for 2013. We would be including that in our guidance that we give next February but just as a few general comments, as we go forward from here, we are going to have a mix of supply sources than we have entered into a number long-term contracts for that output which really have us in a very good position with our backlog. You can see from the numbers that we reported so far, we are seeing the benefit of the increased prices over the last several years. We do not expect to be very active in the very near term market for placing SWU as we said demand is very limited in that timeframe. And as we sell out the transitional supply material from the Russians, we do see the opportunity to continue to book good margins on that. So longer-term pricing is mainly going to be the key but align with the PSA material at least for the intermediate term and then stepping into long-term with ACP. But we do see again that the benefit of the turnover and the portfolio and selling out the contracts at higher prices that we’ve seen over the last several years.

And then just a couple of very quick data points that may be in the Q, which I haven't seen. One would be, it seems that the interest expense in the first half was a little on the high side. Was there a charge relative to some early capitalize -- earlier capitalized interest expense that occurred in the first half?

We do have deferred financing costs in there related to the renewal of our credit facility. And George, there will be additional detail in the Q that may be able to help with that and we would be happy to follow up any questions that you may have as you take a look at that.

And then if I can one last thing, could you – LC’s outstanding at quarter end if you happen to have it?

We did have LCs outstanding at quarter end, again they typically will relate to the financial assurance provided to TVA in various credit support aspects for NAC. And there is a table in the Q that will provide that breakout for you.

Our next question comes from Richard Howard of Prospector Partners.

Yes, obviously a lot has been accomplished. I was wondering if you could give us a feel for what top management’s next priority is and I'm thinking specifically, do we need to add partners? Do we need to add customer partner? Do we need an outside partner? Do we need to shrink overhead? Just give us some color on that.

All the above. But the answer is all of the above, is that we’ve talked about what we have done from an infrastructure standpoint, we know we are going to be a smaller company. We took some actions. We have taken actions because of the Portsmouth closure. We’ve taken actions to get ahead of the downturn. And we've seen some of the benefit with that already albeit there have been some restructuring charges. But we'll see the benefit of that going forward. The big change in structure will occur in 2013 as we transition the Paducah gaseous diffusion plant. That has an impact clearly on the direct labor workforce that is associated with Paducah. That also impacts the overhead structure that we have both people, costs etc. So all of that is being looked, which are alluding to on the other side is okay, what’s your plan relative to being able to come back at the loan guarantee, and we certainly know that we will go back at the loan guarantee with as stronger consortia as we can. We would fully expect Toshiba and B&W to be part of that process. They've been with us every step of the way, but we will also be reaching out to other folks at the timeframe when we come back to the loan guarantee. It clearly would be our desires that when we complete the RD&D program we’re able to transition to the deployment of the plant, which means that there will be major activities in 2013 that are focused on putting us in the best position to go back for the loan guarantee so that we could go from one activity to the other.

Do you think that new partner – is a new partner something that would help you get DOE funding or is it critical, is it just be good and why haven't more customer stepped up than just Exelon?

Rich, John Barpoulis, I will take one aspect of that. I think from a credit standpoint the credit strength of sponsors for any project financing is an important factor as one takes a look at the overall picture for a loan guarantee or for any project financing. So I do think that again the strength of the sponsors and diversity in the sponsors I think will be an important factor as we update our application. Again with respect to the involvement of Exelon in the RD&D program, I think we’re very pleased to have the leading nuclear operator like Exelon involved in the board of managers. They are bringing that extensive operating expertise. They are providing that customer perspective and all of that will position us well for going back in. I don't want to speculate on who could be additional sponsors going back in, I don’t want to speak necessarily for utility customers. But again we’re seeing their support in through long-term contracts for ACP output as they’ve supported us in the past and the nature of their support going forward is something that we will certainly be discussing with them.

Our next question comes from Evan Babavete of Berry Investment Management

Do you guys see a possibility of a DOE loan guarantee coming before the completion of the test program at the end of 2013? And if so, what would be the earliest in terms of – do you think there is a calendar date or an event that would accelerate that?

Evan, it’s John Barpoulis. I think from an ideal timing standpoint and John Welch touched on this, ideal timing would be to close out on permanent financing for commercial employment on the day that we complete execution of the RD&D program. Obviously that will require engagement prior to that but again I wouldn’t want to speculate on a specific date of closing. But that would be an ideal target for us to shoot for.

Okay and as far as the convertible B&W and Toshiba, will the next phase to only occur – do you not expect that occurring for sometime in December 2013 before the completion of the test program?

Just to clarify, we have our eye on our convertible note maturity in October of 2014 is one aspect but the preferred equity for B&W, Toshiba that you mentioned, you may recall we closed on phase one, the initial phase of their three phase investment. The second phase under the documents would come at a conditional commitment and the third phase at financial closing, I would say that we’re very pleased with B&W and Toshiba's continued participation and support in the project. I think it’s fair to say that our -- the deployment plan was outlined at the time of the investment is not quite how we have ended up. So I am sure that there'll be further discussions with our preferred equity investors as we come back at the loan guarantee, and I think we would work with them and any additional sponsors to structure the best permanent financing we can for American centrifuge as it moves forward.

Our next question comes from Bob Clutterbuck of Clutterbuck Capital Management.

In the spirit of fairness I would like to congratulate you guys on the recent quarter, you got the big three on in the quarter, the Paducah, the RD&D and the oversight. That being said, a follow up I think on the two previous questions. You put together at least on the service pretty impressive board of managers, three big time firms, can you drill down on their involvement and particularly comment if you could, on Exelon, Toshiba and B&W being equity partners, what’s the timing and possibility of that – are they ceremonially involved or are they rolled up their sleeves, big time involvement, can you talk about that?

I think first and foremost RD&D is a program that we’re very much focused on performing and performing at – well, it's absolutely critical and as I said earlier towards derisking major aspects of the project. The board of managers is there to ensure that the project meets its objectives. So first and foremost, they're going to be involved, they are going to receive regular reports on cost, schedule performance. Are we meeting everything we do and they have responsibility that if we are not performing properly that it will get highlighted and then ultimately they have the ability to make changes if changes are required. So the first to answer your question is they are going to be very involved. So when you look at the members that are there you will note that they're very much supporting the technical aspects. The Toshiba and B&W are not just involved in the board of managers. They are directly involved throughout the project and execution and so you'll see the best athletes that we can get from BMW and Toshiba interspersed throughout the project. There is deputy program manager Bob Warburg (ph) is very strong. And you would see he is coming from B&W, and we have them in construction and we will have them in operations as well, deputy program manager. So their involvement is very much focused at the performance level. The individual assigned by Exelon runs their nuclear projects group, so he's very much a down in the dirt, evaluate the project to make sure it's staying and performing according to plan. So we chose the board of members that way and if you look at the two outside independents, they are both very experienced people that understand the regulatory environment, understand projects and major program management. Now again, back to what John was talking about relative to involvement of Toshiba, B&W and others relative to the deployment of the plant, that would be a separate activity. That's discussed outside of RD&D. The RD&D program is focused specifically at the aspects of building 120 machines running the cascade showing the reliability, maintaining the infrastructure to build machines going forward etc. But we would be working outside of that framework for putting together the team to go back at the loan guarantee and have adequate financing. I hope that answered your question.

One other question on that, just a second question, who is – I didn’t see in the announcement about who is chairing the board of managers?

The board of managers will determine that at their first meeting. It will not be a USEC person.

I assume one of the other three then. The second question and I think this is just trying to pin down I think from the two earlier questions. With these three things accomplished, clearly you guys stated, I believe, on your last call, you’d want to accomplish these things and you want to clean up the balance sheet and focus on equity raise. Can you talk about the MO of that and the timing of that, and the scope of that because obviously I think it was Rich that mentioned, I think many of us feel that’s extraordinarily important to be able to get Japanese export and import and the DOE – can you talk about the scope of it, the MO and the timing to begin?

Sure Bob, it’s John Barpoulis. So maybe I will work my way backwards and reinforce as I believe we summarized a bit in the last answer, ideal finding from our standpoint again is to close on permanent financing for American centrifuge commercial deployment, the day that we complete execution of the RD&D program. And based on our current estimate of RD&D schedule, that will be the end of calendar year 2013 or early 2014. So that would be our timing objective, then I would work our way backwards. As part of our application update with the loan guarantee office we would certainly expect to complete a revised estimate of cost and schedule. Until that’s done, I don’t think it’s possible to provide call it a specific estimate of total sources and needs. We are seeking the loan guarantee of $2 billion from DOE. We have been in discussions with the Japanese export credit agencies regarding a loan for up to $1 billion. The Japanese organizations have remained engaged on the project and last month, in fact, their representatives toured the American centrifuge plant site as part of that continuing dialogue. So again throughout that process we would expect to remain engaged and informing and keeping people in the loan guarantee office and Japanese export credit agencies up to speed on our progress during the RD&D program. And as the RD&D program approaches completion we would certainly expect to be in a better position to determine the amount of and to raise the capital needed to complete the plant.

And finally, I asked earlier, Exelon, and I assume you guys prefer not to answer but are you hopeful they are going to be joining Toshiba and B&W as equity investor?

Again Bob, I wouldn’t want to speculate on the nature of sponsors down the road but just reinforce that we’re very pleased with their participation in the program.

Yeah the only thing I would add to that Bob is that we had our customer outreach to provide an update this week on USEC and where we are going on RD&D as well as the details of the Paducah plant. And as you would expect those are some of our largest customers. They're all people that have -- that are participating in American centrifuge and the thing that comes clear out of those discussions as they are very supportive of deployment of ACP. They want it in their mix of from a competitive standpoint the reliability of having a supplier but they certainly are looking for diversity of supply and this is still in their quiver of wanting us to be successful. And so I would expect we'll have theirs support continuing for output of the plant and if it goes beyond that time will tell.

Our next question is a follow up from Richard Howard of Prospector Partners.

Yeah I didn’t want to ask this question while we were dealing with the important issues. But could you give us some thoughts on Russian supply over the next several years and sort of tie into all of that what kind of profit margins and – don’t answer anything you don’t want said in the public. But how much bomb material is left? Are they still running their centrifuges? What kind of profit margins is that material providing USEC? Just whatever you think you can tell us, I’d like to know about this because it seems to me that we are making an awful lot of electricity out of enriched uranium that we’re not going to have five years down?

Rich, it’s John Barpoulis. Maybe I will comment on the financial aspect of it. And then turn it over to others. To pick up on that last, I think your question, obviously we would not be able to comment on that level of detail. It is not something that we do provide publicly. But just recall from a timing standpoint and megatons to megawatts program ending in 2013, the new commercial agreement with the Russians ramping up over that time period, shortly thereafter as well, and those are elements of our supply mix. And so we certainly look at those elements that the commercial supply from Russia becoming an increasingly important element of that supply mix in the following period. And so when one takes a look at the economic support or financial support ultimately our sales are over the multiple sources of supply. With respect to megatons to megawatts and the Russian commercial supply, just note again that we do have the option to workout with the Russians to expand the amount of volume under that contract down the road as well.

And are they meeting that – if they meet the commercial supply aspect of what you're talking about, are they going to have to run centrifuges to do that or are they done with the bomb materials, is what I am really trying to ask – it sounded like you said yes, but I am not sure.

This is Phil Sewell. Yes they are done with the bomb material at the end of 2013. After that time period material they would supply to us under the transitional supply arrangement would be from commercial operations using dodgy uranium that is enriched. The excess bomb material they have is not suitable after 2013 for use in a commercial reactor and that's why they've chosen to curtail that program. And they have no interest and they have expressed no interest in continuing to try to provide megatons to megawatts or bomb material after 2013. And as John said, our transitional supply arrangement provides a ramp into another part of our supply mix and we will be purchasing material through 2022 under that agreement. And we do have the option to increase the quantity we buy under that to the levels equivalent to megatons to megawatt contract.

And they will get that material by running centrifuges?

Yes, they will. That will come from their commercial plant.

But I think this is a big huge positive out in the future, we would make it.

It appears we have no further questions at this time. I would now like to turn the floor back to management for closing comments.

Thank you for your questions this morning and it certainly is an important channel for two-way communications between us. The management team recognizes that we still have a great deal to do in the months ahead and I’d like to make bombs a requirement having reports like this every quarter and we will work on it. We must crisply execute RD&D program and believe me that’s where our focus is and then we have a lot of deliveries of low enriched uranium that are required for Energy Northwest. We will be closely working with DOE on the transition of Paducah plant after May 2013. That would dictate a lot of how the 2013 financials will look and we will continue to work to align our organization with our evolving business environment. And we are mindful of our financial structural issues that must be addressed and we’re going to address. We appreciate the support of our investors as we transition to a more competitive technology platform, and we thank you for your continued support. Thank you and good day.

This concludes today’s teleconference. You may now disconnect your lines at this time. And thank you for your participation.