News Release

BETHESDA, Md.--(BUSINESS WIRE)--May. 12, 2009-- USEC Inc. (NYSE: USU) and Babcock & Wilcox Technical Services Group, Inc., a major operating unit of The Babcock & Wilcox Company (B&W), announced today the companies have signed a memorandum of understanding to form a joint venture that will provide integrated manufacturing and assembly of AC100 centrifuge machines for USEC’s American Centrifuge Plant. The joint venture will also provide spare parts and other maintenance support services for centrifuge machines at the American Centrifuge Plant under a long-term service agreement. The total value of the joint venture’s activities is expected to exceed $1 billion.

“A multifaceted project such as this needs a formalized, single point of accountability for manufacturing,” said John K. Welch, USEC president and chief executive officer. “We will now have a single entity whose total focus is on delivering high-quality commercial centrifuges while minimizing the cost of precision manufacturing.

“Combining USEC’s technical expertise in centrifuge technology with Babcock & Wilcox’s decades of manufacturing expertise will result in a world-class organization that will be well positioned to integrate the activities of multiple suppliers and deliver finished machines to the American Centrifuge Plant on time and on budget,” Welch said.

Babcock & Wilcox Technical Services Clinch River, LLC, has been integral to the facilitization and startup of manufacturing activities at USEC’s American Centrifuge Technology & Manufacturing Center (ACTMC) in Oak Ridge, Tenn., since joining the project in 2007. Working side-by-side with USEC’s technical experts, B&W employees have manufactured prototype components for testing, assisted with preparing for high-volume manufacturing, demonstrated the ability of the facility to manufacture commercial components to specifications that have very tight tolerances, instituted quality assurance and quality control programs, and have brought their manufacturing expertise to the program to help produce a lower cost, value-engineered machine.

The Babcock & Wilcox Company has more than 50 years of nuclear manufacturing experience and has contracts with the U.S. Department of Energy (DOE) to manage and operate large manufacturing facilities and site closures, facilitate laboratory services and manage technical services.

“We believe that the American Centrifuge Plant is vital to supporting the long-term growth of nuclear power in the United States,” said S. Robert Cochran, president of Babcock & Wilcox Technical Services Group, Inc. “Our decision to partner with USEC in a manufacturing joint venture speaks to the long-term value we see in the project. Once the American Centrifuge Plant has been built, the precision manufacturing facility we have assembled in Oak Ridge could be utilized to support this and many other precision manufacturing projects in the future.”

American Centrifuge Manufacturing, LLC

Formation of American Centrifuge Manufacturing, LLC (ACM), is expected to occur over the next several months. USEC will own a majority of ACM, which will be headquartered in Oak Ridge at the ACTMC.

ACM will manage all aspects of manufacturing USEC’s AC100 series machines, including supply chain management through the integration of all suppliers and subcontractors and delivery and assembly of production unit centrifuges at the American Centrifuge Plant in Piketon, Ohio.

ACM will assume USEC’s existing contracts with suppliers for centrifuge machine components. In developing the U.S. manufacturing infrastructure necessary to build its AC100 machines, USEC has assembled a uniquely qualified group of strategic suppliers who will now work through ACM. Those strategic suppliers include ATK, which is manufacturing the centrifuge rotors; Major Tool & Machine, which is manufacturing the machine casings; and Curtiss-Wright, which is manufacturing the machine motors. These components, as well as the components ACM manufactures, will be combined into sub-assemblies in Oak Ridge. ACM, through USEC’s existing contract with Honeywell Technical Solutions, will ensure final assembly is completed on a high-quality basis at the American Centrifuge Plant in Piketon, Ohio. The formation of ACM will not affect USEC’s engineering, procurement, construction and construction management services contract with Fluor for the construction of the American Centrifuge Plant.

Babcock & Wilcox and USEC employees working at the facility will be seconded to the new company. Carl Durham, president of Babcock & Wilcox Technical Services Clinch River, will be appointed general manager of the new company.

Working together, USEC and Babcock & Wilcox teams have developed a unique manufacturing capacity with the renovation of a high-bay building and installation of precision machining equipment. In parallel, USEC scientists and engineers released designs of AC100 series machines that are production ready. “We have taken the steps necessary to prepare for high-volume manufacturing of the AC100 series production machines that will be installed in the ACP. This is the perfect time to join with Babcock & Wilcox to build the thousands of machines we will need to assure a reliable nuclear fuel supply to the world’s utilities,” Welch said.

Continued Research and Development

USEC will retain all intellectual property and licenses related to its improved U.S. gas centrifuge design. The Company plans to continue research and development on advanced gas centrifuge technologies at its research and development facility, also in Oak Ridge. This research will be conducted through American Centrifuge Technology, LLC, a wholly owned USEC subsidiary. Bob Eby, USEC’s director of technology and process engineering, will continue to lead this research and development work.

“Our U.S. centrifuge design has the potential for even better performance. We are looking to Bob Eby and his team of scientists and engineers to continue enhancing our AC100 machine for future design releases as we build out the initial capacity of the American Centrifuge Plant and for any future expansion of the plant,” said Welch.

USEC has state-of-the-art test facilities in Oak Ridge that provide the environment for testing future, improved machines. Future machine designs will be released to production only after a design review board has determined the new design provides sufficient cost and performance improvements to warrant implementation.

The American Centrifuge Program

USEC’s American Centrifuge Plant, under construction since 2007, has a planned initial capacity of 3.8 million separative work units from approximately 11,500 AC100 series centrifuge machines. USEC’s American Centrifuge technology is based on technology initially developed by DOE during the 1970s and ‘80s. USEC has modified and improved this technology through the use of modern materials, advanced computer-aided design, digital controls and state-of-the-art manufacturing processes.

USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.

The Babcock & Wilcox Company (B&W), a major operating group of McDermott International, Inc., is a leader in advanced energy technology innovation and service, primarily in nuclear and fossil power. Providing quality products and technical services to commercial and government customers, B&W is focused on issues such as energy efficiency, clean air, global market competitiveness, and safe and secure resolution for nuclear waste. B&W has locations worldwide and employs more than 20,000 people. The company is located on the Internet at www.babcock.com.

Forward-Looking Statements

This news release contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainty. For USEC, 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: risks related to the deployment of the American Centrifuge technology, including our ability to meet targets for performance, cost and schedule and to obtain financing; our success in obtaining a loan guarantee for the American Centrifuge Plant and the impact of delays in financing on project spending, cost and schedule; changes to, or termination of, our contracts with the U.S. government and changes in U.S. government priorities and the availability of government funding, including loan guarantees; the competitive environment for our products and services; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on our website www.usec.com. We do not undertake to update our forward-looking statements except as required by law.

Source: USEC Inc.

USEC Inc.
Press:
Elizabeth Stuckle, 301-564-3399
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Investors:
Steven Wingfield, 301-564-3354
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B&W
Jud Simmons, 434-522-6462
hjsimmons@babcock.com