leu-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2021


☐			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

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

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

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. ☐

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

Yes ☐ No ☒

As of May 1, 2021, there were 13,133,035 shares of the registrant’s Class A Common Stock, par value $0.10 per share, and 719,200 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 March 31, 2021 and December 31, 2020	4
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2 021 and 2020	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 1 and 2020	6
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three Months Ended March 31, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 4.	Controls and Procedures	38

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	41
Item 6.	Exhibits	41
Signatures		42

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. In this context, forward-looking statements mean statements related to future events, 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 but are not limited to the following which are, and will be, exacerbated by the novel coronavirus (COVID-19) pandemic and any worsening of the global business and economic environment as a result: risks related to natural and other disasters, including 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; risks related to financial difficulties experienced by customers, including possible bankruptcies, insolvencies or any other inability to pay for our products or services or delays in making timely payment; risks related to pandemics and other health crises, such as the global COVID-19 pandemic; the impact and potential extended duration of the current supply/demand imbalance in the market for low-enriched uranium (“LEU”); risks related to our ability to sell the LEU we procure pursuant to our purchase obligations under our supply agreements; risks related to the imposition of sanctions, restrictions or other requirements, including those imposed under the 1992 Russian Suspension Agreement, as amended, international trade legislation and other international trade restrictions; risks related to existing or new trade barriers and contract terms that limit our ability to deliver LEU to customers; pricing trends and demand in the uranium and enrichment markets and their impact on our profitability; movement and timing of customer orders; our dependence on others for deliveries of LEU including deliveries from the Russian government-owned entity TENEX, Joint-Stock Company (“TENEX”), under a commercial supply agreement with TENEX and deliveries under a long-term supply agreement with Orano Cycle (“Orano”); risks associated with our reliance on third-party suppliers to provide essential products and services to us; the fact that we face significant competition from major producers who may be less cost sensitive or are wholly or partially government owned; limitations on our ability to compete in foreign markets; our revenue is largely dependent on our largest customers; risks related to our sales order book, including uncertainty concerning customer

actions under current contracts and in future contracting due to market conditions and our lack of current production capability; risks related to whether or when government funding or demand for high-assay low-enriched uranium (“HALEU”) for government or commercial uses will materialize; risks and uncertainties regarding funding for continuation and deployment of the American Centrifuge technology and our ability to perform and absorb costs under our agreement with DOE to demonstrate the capability to produce HALEU and our ability to obtain and/or perform under other agreements; uncertainty regarding our ability to commercially deploy competitive enrichment technology; the potential for further demobilization or termination of our American Centrifuge work; risks that we will not be able to timely complete the work that we are obligated to perform; risks related to our ability to perform fixed-price and cost-share contracts, including the risk that costs could be higher than expected; 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 8.25% notes (the “8.25% Notes”) maturing in February 2027 and our Series B Senior Preferred Stock; the risks of revenue and operating results fluctuating significantly from quarter to quarter, and in some cases, year to year; the impact of financial market conditions on our business, liquidity, prospects, pension assets and insurance facilities; risks related to the Company’s capital concentration; risks related to the value of our intangible assets related to the sales order book and customer relationships; risks related to the limited trading markets in our securities; risks related to decisions made by our Class B stockholders and our Series B Senior Preferred stockholders regarding their investment in the Company based upon factors that are unrelated to the Company’s performance; risks that a small number of Class A stockholders, whose interests may not be aligned with other Class A stockholders, may exert significant influence over the direction of the Company ; risks related to the use of our net operating 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; failures or security breaches of our information technology systems; our ability to attract and retain key personnel; the potential for the U.S. Department of Energy (“DOE”) to seek to terminate or exercise its remedies under its agreements with the Company; risks related to actions, including government reviews, that may be taken by the United States 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; risks related to our ability to perform and receive timely payment under agreements with DOE or other government agencies, including risks and uncertainties related to the ongoing funding by the government and potential audits; any changes or termination of agreements with the U.S. government; the competitive environment for our products and services; changes in the nuclear energy industry; the competitive bidding process associated with obtaining contracts, including government contracts; risks that we will be unable to obtain new business opportunities or achieve market acceptance of our products and services or that products or services provided by others will render our products or services obsolete or noncompetitive; potential strategic transactions that 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); the impact of government regulation and policies including by the DOE and the U.S. Nuclear Regulatory Commission; risks of accidents during the transportation, handling or processing of hazardous or radioactive material that may pose a health risk to humans or animals, cause property or environmental damage, or result in precautionary evacuations; risks associated with claims and litigation arising from past activities at sites that we no longer operate, including the Paducah, Kentucky, and Portsmouth, Ohio, gaseous diffusion plants; and other risks and uncertainties discussed in this and our other filings with the Securities and Exchange Commission, including under Part I, Item1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

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 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; in millions, except share and per share data)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	163.3	$	152.0
Accounts receivable	15.5		29.6
Inventories	83.5		64.8
Deferred costs associated with deferred revenue	136.0		151.9
Other current assets	7.8		7.8
Total current assets	406.1		406.1
Property, plant and equipment, net of accumulated depreciation of $2.8 as of March 31, 2021 and $2.7 as of December 31, 2020	5.0		4.9
Deposits for financial assurance	5.7		5.7
Intangible assets, net	60.7		62.8
Other long-term assets	6.2		6.8
Total assets	$	483.7	$	486.3

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	47.1	$	50.6
Payables under SWU purchase agreements	16.9		21.3
Inventories owed to customers and suppliers	13.3		4.9
Deferred revenue and advances from customers	255.5		283.2
Current debt	6.1		6.1
Total current liabilities	338.9		366.1
Long-term debt	104.9		108.0
Postretirement health and life benefit obligations	128.9		130.8
Pension benefit liabilities	119.0		124.4
Advances from customers	44.4		45.2
Other long-term liabilities	32.4		32.4
Total liabilities	768.5		806.9
Commitments and contingencies (Note 11)
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, 37,847 and 41,720 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $49.6 as of March 31, 2021 and $53.9 as of December 31, 2020	0.1		0.1
Class A Common Stock, par value $0.10 per share, 70,000,000 shares authorized, 12,764,578 and 11,390,189 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	1.2		1.1
Class B Common Stock, par value $0.10 per share, 30,000,000 shares authorized, 719,200 shares issued and outstanding as of March 31, 2021 and December 31, 2020	0.1		0.1
Excess of capital over par value	123.3		85.0
Accumulated deficit	(410.2)		(407.7)
Accumulated other comprehensive income, net of tax	0.7		0.8
Total stockholders’ deficit	(284.8)		(320.6)
Total liabilities and stockholders’ deficit	$	483.7	$	486.3

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

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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


	Three Months Ended March 31,
	2021		2020
Revenue:
Separative work units	$	38.1	$	30.7
Uranium	—		—
Technical solutions	17.5		14.3
Total revenue	55.6		45.0
Cost of Sales:
Separative work units and uranium	25.4		13.3
Technical solutions	18.5		12.1
Total cost of sales	43.9		25.4
Gross profit	11.7		19.6
Advanced technology costs	0.5		0.9
Selling, general and administrative	8.2		8.5
Amortization of intangible assets	2.1		1.4
Other (income) expense, net	—		(0.1)
Operating income	0.9		8.9
Nonoperating components of net periodic benefit expense (income)	(4.3)		(2.2)
Interest expense	—		0.1
Investment income	—		(0.4)
Income before income taxes	5.2		11.4
Income tax expense	0.1		0.1
Net income and comprehensive income	5.1		11.3
Preferred stock dividends - undeclared and cumulative	0.7		2.0
Distributed earnings allocable to retired preferred shares	6.6		—
Net income (loss) allocable to common stockholders	$	(2.2)	$	9.3

Net income (loss) per share:
Basic	$	(0.17)	$	0.97
Diluted	$	(0.17)	$	0.95
Average number of common shares outstanding (in thousands):
Basic	12,818		9,619
Diluted	12,818		9,839

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

CENTRUS ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Three Months Ended March 31,
	2021		2020
OPERATING
Net income	$	5.1	$	11.3
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization	2.2		1.5
Changes in operating assets and liabilities:
Accounts receivable	14.2		3.6
Inventories, net	(10.3)		0.1
Accounts payable and other liabilities	6.6		1.3
Payables under SWU purchase agreements	(4.4)		(1.9)
Deferred revenue and advances from customers, net of deferred costs	(12.5)		(23.3)
Accrued loss on long-term contract	(2.0)		(3.5)
Pension and postretirement benefit liabilities	(7.4)		(8.6)
Other, net	—		1.0
Cash (used in) operating activities	(8.5)		(18.5)

INVESTING
Capital expenditures	(0.4)		—
Cash (used in) investing activities	(0.4)		—

FINANCING
Proceeds from the sale of common stock, net	23.2		—
Exercise of stock options	0.2		0.2
Payment of deferred issuance costs	—		(0.1)
Payment of equity issuance costs	(0.1)		—
Payment of interest classified as debt	(3.1)		(3.1)
Cash provided by (used) in financing activities	20.2		(3.0)

Increase (decrease) in cash, cash equivalents and restricted cash	11.3		(21.5)
Cash, cash equivalents and restricted cash, beginning of period (Note 3)	157.9		136.6
Cash, cash equivalents and restricted cash, end of period (Note 3)	$	169.2	$	115.1

Non-cash activities:
Common stock and warrant issued in exchange for preferred stock	$	7.5	$	—
Reclassification of stock-based compensation liability to equity	$	7.5	$	—
Equity issuance costs included in accounts payable and accrued liabilities	$	0.4	$	—
Property, plant and equipment included in accounts payable and accrued liabilities	$	0.1	$	—
Deferred financing costs included in accounts payable and accrued liabilities	$	—	$	(0.5)

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, 2019	$	4.6	$	0.8	$	0.1	$	61.5	$	(405.0)	$	1.1	$	(336.9)
Net income for the three months ended March 31, 2020	—		—		—		—		11.3		—		11.3
Issuance and amortization of restricted stock units and stock options	—		—		—		0.3		—		0.1		0.4
Balance at March 31, 2020	$	4.6	$	0.8	$	0.1	$	61.8	$	(393.7)	$	1.2	$	(325.2)


	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, 2020	$	0.1	$	1.1	$	0.1	$	85.0	$	(407.7)	$	0.8	$	(320.6)
Net income for the three months ended March 31, 2021	—		—		—		—		5.1		—		5.1
Issuance of common stock	—		0.1		—		23.7		—		—		23.8
Receivable from issuance of stock	—		—		—		(0.7)		—		—		(0.7)
Exchange of preferred stock for common stock and common stock warrant	—		—		—		7.5		(7.6)		—		(0.1)
Reclassification of stock-based compensation liability to equity (Note 10)	—		—		—		7.5		—		—		7.5
Issuance and amortization of restricted stock units and stock options							0.3				(0.1)		0.2
Balance at March 31, 2021	$	0.1	$	1.2	$	0.1	$	123.3	$	(410.2)	$	0.7	$	(284.8)

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

CENTRUS ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, and its other subsidiaries, as of March 31, 2021, and for the three months ended March 31, 2021 and 2020, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated balance sheet as of December 31, 2020, was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, 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 months ended March 31, 2021 and 2020, are insignificant.

Operating results for the three months ended March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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, 2020.

New Accounting Standards

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which amends the annual disclosure requirements for employers that sponsor defined benefit pension plans and other postretirement plans. The standard is effective for fiscal years beginning after December 15, 2020. Adoption of this new standard is not expected to have a significant impact to the Company’s annual disclosures.

Significant Accounting Policies

The accounting policies of the Company are set forth in Note 1 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. There has not been a material change to the Company’s accounting policies since that report.

2. REVENUE AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

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 March 31,
	2021		2020
United States	$	9.6	$	7.3
Foreign	28.5		23.4
Revenue - SWU and uranium	$	38.1	$	30.7

Refer to Note 12, Segment Information, for disaggregation of revenue by segment. Disaggregation by end-market is provided in Note 12 and the unaudited condensed consolidated statements of operations. SWU sales are made primarily to electric utility customers and uranium sales are primarily made to other nuclear fuel related companies. Technical solutions revenue resulted primarily from services provided to the government and its contractors. SWU and uranium revenue is recognized at point of sale and technical solutions revenue is generally recognized over time.

Accounts Receivable


	March 31, 2021		December 31, 2020
	($ millions)
Accounts receivable:
Billed	$	6.8	$	23.0
Unbilled *	8.7		6.6
Accounts receivable	$	15.5	$	29.6

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

Contract Liabilities

The following table presents changes in contract liability balances (in millions):


	March 31, 2021		December 31, 2020		Year-To-Date Change
Accrued loss on HALEU Contract:
Current - Accounts payable and accrued liabilities	$	5.7	$	7.0	$	(1.3)
Noncurrent - Other long-term liabilities	$	—	$	0.7	$	(0.7)
Deferred revenue - current	$	253.5	$	281.7	$	(28.2)
Advances from customers - current	$	2.0	$	1.5	$	0.5
Advances from customers - noncurrent	$	44.4	$	45.2	$	(0.8)

Previously deferred sales recognized in revenue totaled $28.5 million and $0 million in the three months ended March 31, 2021 and 2020, respectively.

LEU Segment

The SWU component of LEU is typically bought and sold under contracts with deliveries over several years. The Company’s agreements for natural uranium sales are generally shorter-term, fixed-commitment contracts. The Company’s order book of sales under contract in the low-enriched uranium (“LEU”) segment (“order book”) extends to 2030. As of March 31, 2021, the order book was approximately $989 million. The order book represents the estimated aggregate dollar amount of revenue for future SWU and uranium deliveries under contract and includes approximately $300 million of Deferred Revenue and Advances from Customers. Refer to Contract Liabilities table above. As of December 31, 2020, the order book was approximately $960 million.

Most of the Company’s enrichment contracts provide for fixed purchases of SWU during a given year. The Company’s order book is partially based on customers’ estimates of the timing and size of their fuel requirements and other assumptions that are subject to change. For example, depending on the terms of specific contracts, the customer may be able to increase or decrease the quantity delivered within an agreed range. The Company’s order book estimate is also based on the Company’s estimates of selling prices, which 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.

Technical Solutions Segment

Revenue for the technical solutions segment, representing the Company’s technical, manufacturing, engineering, procurement, construction, and operations services offered to public and private sector customers, is recognized over the contractual period as services are rendered.

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

Under the HALEU Contract, DOE agreed to reimburse the Company for 80% of its costs incurred in performing the contract, up to a maximum of $115 million. The Company’s cost share is the corresponding 20% and any costs incurred above these amounts. Costs under the HALEU Contract 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 a cascade formation and production of a small quantity of HALEU. When estimates of remaining program costs to be incurred for such an integrated, construction-type contract exceed estimates of total revenue to be earned, a provision for the remaining loss on the contract is recorded to Cost of Sales in the period the loss is determined. The Company’s corporate costs supporting the program are recognized as expense as incurred over the duration of the contract term. In 2019, the portion of the Company’s anticipated cost share under the HALEU Contract representing the Company’s share of remaining projected program costs was recognized in Cost of Sales as an accrued loss of $18.3 million. The accrued loss on the contract is being adjusted over the remaining contract term based on actual results and remaining program cost projections. As of March 31, 2021, the accrued contract loss balance included in Accounts Payable and Accrued Liabilities was $5.7 million. Cost of sales in the three months ended March 31, 2021 and 2020 benefited by $2.0 million and $3.0 million, respectively, for previously accrued contract losses attributable to work performed in the periods.

The HALEU Contract is incrementally funded and DOE is currently obligated for costs up to approximately $102.8 million of the $115 million. The Company has received aggregate cash payments of $69.6 million through March 31, 2021.

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

3. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

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


	March 31, 2021		March 31, 2020

Cash and cash equivalents	$	163.3	$	109.2
Deposits for financial assurance - current	0.2		0.2
Deposits for financial assurance - noncurrent	5.7		5.7
Total cash, cash equivalents and restricted cash	$	169.2	$	115.1

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 form of a surety bond or deposit that is 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 deposit is subject to reduction and/or cancellation and the Company would receive the excess cash collateral.

4. INVENTORIES

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


	March 31, 2021						December 31, 2020
	Current Assets		Current Liabilities (a)		Inventories, Net		Current Assets		Current Liabilities (a)		Inventories, Net
Separative work units	$	14.8	$	0.1	$	14.7	$	17.0	$	4.6	$	12.4
Uranium	68.7		13.2		55.5		47.8		0.3		47.5
Total	$	83.5	$	13.3	$	70.2	$	64.8	$	4.9	$	59.9

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

5. 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 unaudited condensed consolidated statements of operations and comprehensive income. Intangible asset balances are as follows (in millions):


	March 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Sales order book	$	54.6	$	33.0	$	21.6	$	54.6	$	32.0	$	22.6
Customer relationships	68.9		29.8		39.1		68.9		28.7		40.2
Total	$	123.5	$	62.8	$	60.7	$	123.5	$	60.7	$	62.8

6. DEBT

A summary of debt is as follows (in millions):


		March 31, 2021				December 31, 2020
	Maturity	Current		Long-Term		Current		Long-Term
8.25% Notes:	Feb. 2027
Principal		$	—	$	74.3	$	—	$	74.3
Interest		6.1		30.6		6.1		33.7
Total		$	6.1	$	104.9	$	6.1	$	108.0

Interest on the 8.25% notes (the “8.25% Notes”) maturing in February 2027 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 shown in the table above, all future interest payment obligations on the 8.25% Notes are included in the carrying value of the 8.25% Notes. As a result, the Company’s reported interest expense will be less than its contractual interest payments throughout the term of the 8.25% Notes. As of March 31, 2021, and December 31, 2020, $6.1 million of interest was recorded as current and classified as Current Debt in the unaudited condensed consolidated balance sheet. Additional terms and conditions of the 8.25% Notes are described in Note 9, Debt, of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

7. 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):


	March 31, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	163.3	$	—	$	—	$	163.3	$	152.0	$	—	$	—	$	152.0
Deferred compensation asset (a)	2.5		—		—		2.5		2.4		—		—		2.4

Liabilities:

SEC Form 10-Q filed by Centrus Energy Corp.