<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
__X__Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
for the quarterly period ended June 30, 1995
or
_____Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
for the transition period from_____to_____
Commission File No. 0-8836
NUCLEAR METALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-2506761
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2229 MAIN STREET, CONCORD
CONCORD, MASSACHUSETTS 01742
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(508) 369-5410
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT)
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 twelve 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 X No
----- -----
As of August 2, 1995 there were issued and outstanding 2,383,264 shares of
the Registrant's Common Stock.
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
INDEX
PAGE
Part I. Financial Information 2
Item I. Financial Statements
Consolidated Balance Sheets,
June 30, 1995 and September 30, 1994 3
Consolidated Statements of Income:
Three Months Ended June 30, 1995 and June 30, 1994 4
Consolidated Statements of Income:
Nine Months Ended June 30, 1995 and June 30, 1994 5
Consolidated Statements of Cash Flow:
Nine Months Ended June 30, 1995 and June 30, 1994 6
Notes to Consolidated Financial Statements 7
Item II Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II Other Information
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
-1-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PREPARATION OF FINANCIAL STATEMENTS
The financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission and are subject to year-end audit by independent public
accountants. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. It is suggested that the financial statements
be read in conjunction with the financial statements and notes included in
the Company's most recent Annual Report on Form 10-K.
The information furnished reflects all adjustments which, in the
opinion of management, are necessary for a fair statement of results for the
interim periods. It should also be noted that results for the interim
periods are not necessarily indicative of the results expected for the full
year.
-2-
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, SEPTEMBER 30,
1995 1994
----------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 867,000 $ 1,213,000
Marketable Securities 168,000 497,000
Accounts receivable, net of allowances
for doubtful accounts of $483,000 at
June 30, 1995 and $1,290,000 at
September 30, 1994 4,758,000 5,455,000
Inventories 16,661,000 14,486,000
Deferred income tax benefit 675,000 675,000
Other current assets 438,000 371,000
----------- -----------
Total current assets 23,567,000 22,697,000
----------- -----------
Property, Plant and Equipment 45,600,000 45,867,000
Less accumulated depreciation 30,296,000 29,706,000
----------- -----------
Net property, plant and equipment 15,304,000 16,161,000
----------- -----------
Other assets 1,808,000 1,684,000
----------- -----------
$40,679,000 $40,542,000
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,605,000 $ 1,091,000
Accounts payable and accrued expenses 4,619,000 4,129,000
----------- -----------
Total current liabilities 7,224,000 5,220,000
----------- -----------
Deferred federal and state income taxes 676,000 676,000
----------- -----------
Long term obligations 1,057,000 3,768,000
----------- -----------
Other long-term liabilities 4,626,000 4,626,000
----------- -----------
Stockholders' equity:
Common stock, par value $.10; authorized-
6,000,000 shares; 2,373,764 issued and
outstanding for June 30, 1995 and
2,307,464 issued and outstanding
for September 30,1994 240,000 230,000
Additional paid-in capital 14,141,000 13,752,000
Retained earnings 12,715,000 12,270,000
----------- -----------
Total stockholders' equity 27,096,000 26,252,000
----------- -----------
$40,679,000 $40,542,000
----------- -----------
----------- -----------
</TABLE>
-3-
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED:
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
JUNE 30, JUNE 30,
1995 1994
---------- ----------
<S> <C> <C>
Net sales and contract revenues $3,753,000 $5,527,000
---------- ----------
Cost and expenses
Cost of sales 2,562,000 6,146,000
Selling, general and administrative 1,052,000 1,466,000
Research and development 94,000 98,000
---------- ----------
Total Cost and expenses 3,708,000 7,710,000
---------- ----------
Operating profit (loss) 45,000 (2,183,000)
Other income 8,000 16,000
Interest expense, net (56,000) (138,000)
---------- ----------
Loss before income taxes (3,000) (2,305,000)
Benefit for income taxes 42,000 274,000
Net Income (loss) $ 39,000 $(2,031,000)
---------- ----------
---------- ----------
Per Share Information
Net Income (loss) per common and common
equivalent share $ 0.02 $ (0.88)
---------- ----------
---------- ----------
Weighted average number of common and
common equivalent shares outstanding 2,369,364 2,303,031
</TABLE>
-4-
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED:
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
JUNE 30, JUNE 30,
1995 1994
----------- -----------
<S> <C> <C>
Net sales and contract revenues $13,592,000 $14,333,000
----------- -----------
Cost and expenses
Cost of sales 10,850,000 14,018,000
Selling, general and administrative 3,490,000 2,969,000
Research and development 342,000 505,000
----------- -----------
Total Cost and expenses 14,682,000 17,492,000
----------- -----------
Operating loss (1,090,000) (3,159,000)
Other income 243,000 93,000
Interest expense, net (271,000) (426,000)
----------- -----------
Loss before income taxes and
extraordinary item (1,118,000) (3,492,000)
Benefit for income taxes 978,000 677,000
Extinguishment of Debt, net of
taxes of $10,000 585,000 --
----------- -----------
Net Income (loss) $ 445,000 $(2,815,000)
----------- -----------
----------- -----------
Per Share Information
Income/(loss) before extraordinary item (0.06) (1.22)
Gain on Extinguishment of Debt,
net of taxes of $10,000 0.25 --
----------- -----------
Net Income (loss) per common and common
equivalent share $ 0.19 $ (1.22)
----------- -----------
----------- -----------
Weighted average number of common and
common equivalent shares outstanding 2,358,547 2,298,264
</TABLE>
-5-
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE PERIODS ENDED:
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
June 30, June 30,
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 445,000 $(2,815,000)
Adjustments to reconcile net income
to net cash provided (used) by operating
activities:
Depreciation and amortization 1,158,000 2,228,000
Changes in assets and liabilities, net
(Increase) decrease in accounts receivable 697,000 (1,886,000)
(Increase) decrease in income tax receivable -- 2,394,000
(Increase) decrease in deferred income tax benefit -- (674,000)
(Increase) decrease in inventories (2,174,000) 904,000
(Increase) decrease in other current assets (67,000) (143,000)
Increase (decrease) in accounts payable and
accrued expenses 489,000 (1,302,000)
Gain on sale of building (175,000) --
Other Assets (124,000) --
------------ -----------
Net cash provided (used) by operating activities 249,000 (1,294,000)
------------ -----------
Cash flows from investing activities:
Capital expenditures, net (611,000) (475,000)
Sale of Marketable Securities 325,000 --
Proceeds from sale of Property, Plant & Equipment 487,000 --
Other -- (11,000)
------------ -----------
Net cash provided (used) in investing activities 201,000 (486,000)
------------ -----------
Cash flows from financing activities:
Total payments of debt, gross (3,594,000) (3,374,000)
Proceeds from bank debt 2,400,000 --
(Purchases) issuances of common stock 398,000 57,000
------------ -----------
Net cash provided (used) in financing activities (796,000) (3,317,000)
------------ -----------
Net increase (decrease) in cash and equivalents (346,000) (5,097,000)
Cash and equivalents at beginning of the period 1,213,000 7,864,000
------------ -----------
Cash and equivalents at end of the period $ 867,000 $ 2,767,000
------------ -----------
------------ -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 65,000 $ 312,000
Income taxes $ -- $ 6,000
</TABLE>
-6-
<PAGE>
NOTES
1. The significant accounting policies followed by the Company in
preparing its consolidated financial statements are set forth in Note (2)
to such financial statements included in Form 10-K for the year ended
September 30, 1994.
2. Inventories are stated at the lower of cost (first-in, first-out)
or market, and include labor, materials, and overheads for manufacturing
and engineering. Inventories at June 30, 1995 and September 30, 1994
consist of:
<TABLE>
<CAPTION>
June 30, September 30,
1995 1994
------- -------------
<S> <C> <C>
Work-in process $14,399,000 $10,021,000
Raw materials 1,584,000 3,721,000
Spare parts 678,000 744,000
----------- ------------
$16,661,000 $14,486,000
----------- ------------
----------- ------------
</TABLE>
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER FISCAL 1995 COMPARED WITH THIRD QUARTER FISCAL 1994
Net sales decreased by $1,774,000 or 32.1% to $ 3,753,000 in the third
quarter of fiscal 1995. Sales in the Fabricated Specialty Metal Products
industry segment increased by $858,000 or 42%, primarily as a result of
increased sales of beryllium products and commercial depleted uranium.
Sales in the Metal Powders industry segment decreased by $238,000, or 23%
due to decreased sales of powders in all product areas. Sales in the
Depleted Uranium Penetrator industry segment decreased by $2,394,000 or
99%, due to the absence of large caliber penetrator sales.
Gross margin in the third quarter was $1,191,000. An improvement of
$1,810,000 from the prior year's ($619,000). As a percentage of sales, gross
margin was 32% as compared to (11)% for the third quarter of fiscal 1994.
The change in gross margin is primarily attributable to a reduction of
inventory reserves of $575,000 during the third quarter of fiscal 1995. As
well as third quarter of fiscal 1994 included establishment of a provision of
$1,000,000 for the estimated loss on two contracts and a $600,000 reserve
for contractual disputes.
Selling, general and administrative expenses decreased by $414,000 or
28% as compared to the third quarter of fiscal 1994. The decrease is
primarily due to reduced spending as a result of reduced sales. As a
percentage of sales, these expenses increased to 28% as compared to 27% for
the same period a year earlier.
Other income decreased by $8,000 to $8,000, compared to $16,000 for
the third quarter of fiscal 1994. The decrease is primarily from lower
levels of cash investments.
Interest expense decreased by $82,000 to $56,000, from $138,000 for
the same period a year earlier as a result of lower outstanding debt.
Income taxes benefited during the third quarter of fiscal 1994 was at an
effective rate of 12%. The income taxes benefitted for the third quarter
of fiscal 1995 includes a tax refund of $42,000.
-8-
<PAGE>
NINE MONTHS FISCAL 1995 COMPARED WITH NINE MONTHS FISCAL 1994
Net sales decreased by $741,000 or 5.2% to $13,592,000 in the first
nine months of fiscal 1994. Sales in the Fabricated Specialty Metal
Products industry segment increased by $3,316,000 or 53%, largely due to
increased sales of beryllium products. Sales in the Metal Powders industry
segment decreased by $853,000 or 25%. Sales in the Depleted Uranium
Penetrator segment decreased by $3,204,000 or 70% primarily resulting from
lower large caliber penetrator sales.
Gross margin increased by $2,427,000 or 770% to $2,742,000. As a
percentage of sales, gross margin was 20% as compared to 2% for the first
nine months of fiscal 1994. Gross margin for the nine months ended June
30, 1994 includes a provision of $1,000,000 for the estimated loss on two
contracts that were in production and a $600,000 reserve for contractual
disputes.
Selling, general and administrative expenses increased by
$521,000 or 18% as compared to the first nine months of fiscal 1994. This
increase was the result of higher legal and audit costs during the second
quarter of fiscal 1995. As a percentage of sales, these expenses increased
to 26%, as compared to 21% for the same period a year earlier.
Other income increased by $150,000 to $243,000, compared to $93,000
for the same period in fiscal 1994. This was primarily due to a gain
recognized during the second quarter of fiscal 1995 on the sale of an office
building in Acton, Massachusetts.
Interest expense decreased by $155,000 to $271,000, from $426,000 for
the same period a year earlier. This decrease was primarily a result of
lower levels of outstanding debt.
Income taxes benefited during the first nine months of fiscal
1994 was at an effective rate of 19%. The income tax benefit for the nine
months ended June 30, 1995 includes tax refunds received of $960,000.
-9-
<PAGE>
THIRD QUARTER FISCAL 1995 COMPARED WITH SECOND QUARTER FISCAL 1995
Net sales decreased by $459,000, or 11% in the third quarter of fiscal
1995 as compared to the second quarter. Sales in the Fabricated Specialty
Metal Products industry segment decreased by $389,000 or 12%, primarily due
to decreased sales of government depleted uranium and beryllium products
offset by an increase in sales of commercial depleted uranium. Sales in
the Metal Powders industry segment decreased by $81,000, or 9% due
primarily to reduced sales in all the metal powders products area. Sales
in the Depleted Uranium Penetrator industry segment increased by $11,000 or
44%. The sales increase in the Depleted Uranium Penetrator industry
segment was mainly due to higher large caliber development sales.
Gross profit increased by $951,000 or 396% to $1,191,000 for the third
quarter of fiscal 1995, compared to $240,000 for the second quarter. As a
percentage of sales, gross profit was 32%, as compared to 6% for the second
quarter of fiscal 1995.
Selling, general and administrative expenses decreased by $433,000
compared to the second quarter of fiscal 1995. This decrease was primarily
due to higher legal and audit costs during the second quarter which were
primarily associated with debt restructuring and a property sale. As a
percentage of sales, these expenses decreased to 28% for the third quarter
of fiscal 1995 as compared to 35% for the second quarter of fiscal 1995.
Income taxes provided for or benefited during the third quarter of
fiscal 1995 and the second quarter of fiscal 1995 were at an effective rate
of 2%. The income taxes benefited during the second and third quarter of
fiscal 1995 included the benefit of a tax refund of $918,000 and $42,000,
respectively.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital at the end of the first nine months of fiscal 1995 was
$16,343,000, a decrease of $1,134,000. Cash and investments at the end
of this nine month period were $1,035,000, a decrease of $675,000 from
September 30, 1994. This is primarily due to the repayment of debt and
losses incurred.
Capital spending will continue in support of facilities both in
Concord, Massachusetts and at Carolina Metals, Inc., the Company's
Barnwell, South Carolina subsidiary. The Company anticipates that this
will require $700,000 during fiscal 1995, which will be funded through
existing cash balances.
There has been a change regarding the status of the Company's credit
agreement. The revolving line of credit increased to $3,250,000 from the
original amount of $2,250,000. The Company was also granted a $1,000,000
override on its line of credit to accommodate the Company's cash needs due
to the temporary delay in program funding on a large production contract.
As of June 30, 1995 the Company had outstanding $600,000 of the line of credit.
-11-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has settled litigation with its customer in the case
styled OLIN CORPORATION/ORDNANCE DIVISION V. NUCLEAR METALS, INC., No.
94-1517-CIV-T-21C, in the United States District Court for the Middle
District of Florida in Tampa. Under the terms of the settlement agreement
between the parties, NMI's customer released its claim for a refund which
it had paid NMI for the manufacture of depleted uranium penetrators in
1993. NMI has, in turn, released its customer of NMI's counterclaims in
the litigation. NMI and its customer have also agreed to certain terms
affecting their future business.
ITEM 5. OTHER INFORMATION.
The Company was awarded a contract from Olin Ordnance Corporation for
approximately $14.5 million for production of M829A2 penetrators. This
contract will be performed over the next four years. A letter agreement
dated May 22, 1995 between the Company and Olin Ordinance Corporation
setting forth the terms of the contract is set forth in Exhibit 10.2 to
this Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10-1 Settlement Agreement dated June 29, 1995 between the Company
and Olin Corporation Division
10-2 Letter Agreement dated May 22, 1995 between the Company
and Olin Ordinance Corporation (Confidential Treatment
Requested as to certain portions)
-12-
<PAGE>
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.
Nuclear Metals, Inc.
By /s/ Robert E. Quinn
----------------------------
Robert E. Quinn, President and Treasurer
Chief Executive Officer
Date August 14, 1995
By /s/ James M. Spiezio
----------------------------
James M. Spiezio, Vice President, Finance & Controller
Chief Financial Officer
Date August 14, 1995
By /s/ Rebecca L. Perry
----------------------------
Rebecca L. Perry, Assistant Controller
Chief Accounting Officer
Date August 14, 1995
-13-
<PAGE>
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS FINAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE is made as of this
29th day of June 1995, by and between Olin Corporation Division (Olin)
and Nuclear Metals, Inc. (NMI) (hereafter collectively referred to as, the
Parties).
W I T N E S S E T H
WHEREAS, disputes arose between the Parties concerning agreements
entered into between them for the purchase of depleted uranium (DU)
penetrators for use in kinetic energy (KE) cartridges purchased by the United
States Army in FY 91/91S and FY 93, and the fact that the United States Army
purchased no KE cartridges in FY 94, and with respect to the current
multi-year procurement of M829A2 KE cartridges with DU penetrators and
specifically disputes concerning Olin Purchase Orders 02708 and 44661 and a
Negotiated Agreement between the Parties of 13 November 1991, and, with
respect to certain antitrust claims made by NMI against Olin including the
requirement of a letter of credit to secure NMI's performance on the
anticipated M829A2 penetrator requirement; and,
WHEREAS, there is presently pending in the United States District Court
for the Middle District of Florida, Tampa Division, an action styled OLIN
CORPORATION/ORDNANCE DIVISION V. NUCLEAR METALS, INC., Case No.
94-1517-CIV-T-21(c) (hereinafter, the Lawsuit), in which the Parties have
filed claims and counterclaims against each other; and,
WHEREAS, some of the claims and disputes between the Parties were
asserted by the Parties against each other in the Lawsuit and certain other
claims could have been asserted therein; and,
WHEREAS, the Parties entered into a mediation on May 8 and 9, 1995 at
which the Parties settled their above-stated differences and entered into a
Mediated Settlement
<PAGE>
Agreement attached hereto as Exhibit 1, and which is incorporated by
reference as though fully set forth herein; and,
WHEREAS, the Parties wish to resolve all disputes pending between them
concerning the purchase of DU penetrators for KE cartridges produced or to be
produced under government contracts in FY 91/91S and FY 93/94 and the current
multi-year M829A2 procurement, and any disputes related thereto and related
to or arising out of the acquisition of Aerojet Ordnance by Olin, including
all claims or disputes which were or could have been asserted in the Lawsuit.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in the Mediated Settlement Agreement and below, the sufficiency of
which is hereby mutually acknowledged by the Parties, the Parties agree as
follows:
1. The Parties do for themselves, any predecessors, successors or
affiliated companies, and the officers, directors, employees, servants,
agents, successors or assigns of those companies, jointly and severally, do
hereby and by these presents and for anyone claiming by, through or under
them, fully remise, release, acquit and forever discharge the other of and
from any and all rights, claims, demands, damages, actions, and causes of
action, of any nature whatsoever, whether arising at law or in equity, which
any or all of the Parties may have had, may now have or may hereafter have
against the other by reason of any matter concerning the purchase of DU
penetrators for KE cartridges produced or to be produced under government
contracts in FY 91/91S and FY 93/94 and the current multi-year M829A2
procurement, and any disputes related thereto and related to or arising out
of the acquisition of Aerojet Ordnance by Olin, occurring prior to and
including the date of this Agreement.
2
<PAGE>
And for the same consideration, without limiting in any way the
generality of the above and foregoing, the Parties fully acquit, release and
forever discharge each other of and from all claims, demand, damages, actions
or causes of action which the Parties may now have or may have had from the
beginning of time to the date of execution of this Agreement because or
arising out of any matter that was raised or which could have been raised in
the Lawsuit.
And, without limiting in any way the generality of the above and
foregoing release, the Parties do hereby and by these presents fully acquit,
remise, release and forever discharge the other of and from all rights,
claims, demands, damages, actions and causes of actions, whether arising at
law or in equity, which they may now have, may have had, or which might have
been made as a result of any and all goods purchased, services performed, or
property leased or conveyed, including, but not limited to any right, claim,
action, cause of action, suit, debt due, sum of money, account, reckoning,
covenant, contract, controversy, agreement, promise, representation,
restitution, damage and demand whatsoever, at law or in equity which they may
have, may have had, or may hereafter have each against the other, for any
beach of contract, or for breach of fiduciary duty, or for an accounting, or
for specific performance, or for restitution, or for rescission, or for
fraud, or for any other tort, or consequential damages, or for rights under
any state or federal statute, including statutes pertaining to Federal
Procurements (including false claims acts, QUI TAM actions, etc.) the
Securities Act or Antitrust Laws, or for any other matter, thing, or cause of
action concerning the purchase of DU penetrators for KE cartridges produced
or to be produced under government contracts in FY 91/91S and FY 93/94 and
the current multi-year M829A2
3
<PAGE>
procurement, and any disputes related thereto and related to or arising out
of the acquisition of Aerojet Ordnance by Olin.
It is intended by the Parties to this Agreement to forever remise,
acquit, waive, release and forever discharge each other of and from all
claims, demands for losses, injuries and damages, rights known or unknown,
direct or indirect, arising from the aforementioned matters and from any
other matter occurring prior to the date of this Agreement, it being
understood that all rights which the Parties or any person who claims by,
through or under them may have against the other as of the date of this
Agreement, shall be forever released, remised and acquitted and the Parties
to this Agreement and such persons shall be forever barred from bringing or
asserting the same in their own name or names, jointly with or through any
person, natural or corporate, for or upon or by reason of any act, matter,
transaction, cause or thing whatsoever from the beginning of the world to the
date of these presents.
HOWEVER, NOTHING HEREIN SHALL BE DEEMED TO RELEASE, AFFECT, MODIFY OR
OTHERWISE ALTER THE OBLIGATIONS OF THE PARTIES UNDER THAT CERTAIN MEDIATED
SETTLEMENT AGREEMENT ENTERED BETWEEN THEM ON MAY 9, 1995.
2. Within five (5) business days of execution of this Agreement, the
Parties will, by their respective counsel, execute a Stipulation and Joint
Motion for Dismissal with Prejudice of the Lawsuit and the claims and
counterclaims set forth in the Lawsuit, which Stipulation for dismissal and
Order is set forth in the form attached hereto as Exhibit 2 and is
incorporated by reference herein.
4
<PAGE>
3. The Parties agree that the form of the Letter of Credit for the
current multi-year M829A2 procurement will be substantially in the form
attached hereto as Exhibit 3.
4. This Settlement Agreement and Mutual Release and the exhibits
attached hereto and incorporated by reference herein may be executed in two
(2) or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.
5. The mutual consideration exchanged herein and this Settlement
Agreement and Mutual Release (and its exhibits) is not to be considered an
admission of liability on the part of any settling party, individually or
collectively, but is in full settlement of disputed claims as to which
liability has been and continues to be denied. This Settlement Agreement and
Mutual Release, and its exhibits, shall not be admissible in evidence in any
proceeding, judicial or otherwise, except as between the Parties herein and
then only for the limited purpose of proving settlement of the disputed
claims, and except as may be necessary to effectuate the purposes hereof.
6. This Agreement shall be construed in accordance with Florida law.
(Excluding Florida's choice of law rules). This Agreement, and all exhibits
hereto, with the exception of the Letter, Subcontract referenced in the
Mediated Settlement Agreement, constitute the full and complete agreement of
the Parties and all prior or contemporaneous negotiations, discussions or
understandings are considered fully integrated and merged herein.
5
<PAGE>
OLIN CORPORATION NUCLEAR METALS, INC.
By: /s/ Angelo A. Catani By: /s/ Robert E. Quinn
--------------------------------- ---------------------------------
Its Duly Authorized Officer Its Duly Authorized Officer
ATTEST: ATTEST:
By: /s/ Bradford C. Vassey By: /s/ Thomas A. Wooters
--------------------------------- ---------------------------------
Witness Clerk
6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
22 May 1995
Nuclear Metals, Inc.
2229 Main Street
Concord, MA 01742
Attn: Mr. Donald T. King
Reference: P.O. F45835, M829A2 Penetrator Award
Gentlemen:
This letter is issued to confirm the award of a requirements subcontract
(Purchase Order Number F45835) to Nuclear Metals, Inc. (NMI) for
approximately Penetrators for the U.S. Government Program Year 2 (PY2)
at a firm price of each. This award includes an option for PY3 of
approximately each; an option for PY4 of approximately each; an
option for PY5 of approximately each; and an extended option for PY3,
PY4 and PY5 of each, all at a firm price of each. The foregoing
quanitities will be adjusted to be equal to 40% of the actual quantities
in the M829A2 Government prime contract award.
Olin Flinchbaugh will confirm this letter subcontract with a formal
subcontract/purchase order within 90 days of NMI countersigning this letter
subcontract.
NMI will have in place and provide Olin Flinchbaugh an within 90 days of
NMI countersigning this letter subcontract.
This letter subcontract is not effective until above required letter of
credit has been approved by Olin Flinchbaugh. NMI agrees to not begin work
under this subcontract until the letter of credit is in place and has been
provided to Olin Flinchbaugh and has been approved by Olin. Olin will not
unreasonably withold approval.
Quality/SPC Audits: Prior to initiation of production under this
subcontract, NMI's PCDs must be reviewed and receive approval by Olin
Flinchbaugh, and possibly the Government, and both Mil-Q-9858A and
Statistical Process Control audits must be performed and approvals issued
by Olin Flinchbaugh, as previously noted in our letters of 2 December 1994
and 16 January 1995.
Technical Data: The technical data applicable to this subcontract is as
follows (this list is based on current revision levels, some of which are
advanced from the bid levels, and which are subject to change at the time
of Government contract award):
+ Purchase Specification A34124, Rev. none
+ Drawing 12944262, Rev. B
+ QAP 12944264, Rev. C
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Nuclear Metals, Inc. - page 2 -
+ SDRL #F45452, 6/16/94, Items A008, A010, A013, A015, A018, A019,
A022, A026, A030, B001, B002, B003, C005, C014 and associated Data
Item Descriptions (DIDs).
+ Technical Data Package List (TDPL) 12944257, Rev R05, dated 16 Feb
95, Projectile, 120 mm, APFSDS-T, M829A2.
Delivery Schedule: The quantities and dates shown are approximate and
subject to adjustment, based on time of approval of the letter of credit,
Government contract quantities and schedules, lot size definitions, and
other relevant factors. Delivery dates shall be interpreted to mean the
date the material is due on our dock in Red Lion, PA.
Government Furnished Materials: The Government will furnish
of Unalloyed Depleted Uranium Armor Scrap per penetrator ordered for use in
the performance of this subcontract. This material will be delivered
within 30 days of the Government award of the prime contract. This
material must be used on each production lot under this subcontract,
without change in blend of materials. No other materials are authorized
for use in production under this subcontract.
Source Inspection: Olin Flinchbaugh and Government source inspection will
be required prior to each shipment from your plant. Upon receipt of this
order promptly notify the Government representative who normally services
your plant so that appropriate planning for Government inspection can be
made.
Demilitarization: Demilitarization must result in complete destruction or
mutilation of the item. Disposition will be via scrap only.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Nuclear Metals, Inc. - page 3 -
Priority Rating: The award from the Government is expected to contain a
Defense Priorities and Allocations Systems (DPAS) rating of DX-A4.
Scheduling Controls: NMI will not perform work in advance of that required
to meet delivery schedule, unless specifically requested by Olin
Flinchbaugh in writing to do so. Materials will not be assigned to the
subcontract in advance of actual need in production based on a normal
production schedule. Accelerated or partial deliveries will not be
accepted, unless requested by Olin Flinchbaugh in writing. Accelerated
deliveries are any deliveries more than 15 days prior to the subcontract
delivery requirement. Source inspection will not be performed earlier than
needed to meet the required delivery schedule.
Reporting: NMI will provide a "line of balance" chart prior to initiation
of production and update it monthly to show planned production and material
acquisition as it relates to the required delivery schedule. NMI will
provide bi-weekly status reports to show actual status against this
planning chart.
Progress Billings: Progress billings are acceptable, but must be
consistent with the actual performance in accordance with the above
limitations. Progress billings will be at the rate of 80%. NMI will
undertake any reasonable steps to provide Olin Flinchbaugh assurances that
work is progressing appropriately and that funding is being requested only
for completed work or for work in process according to schedule.
Terms and Conditions: In addition to the above, the terms and conditions
in the following listed documents are applicable to this subcontract:
Olin Flinchbaugh Special Terms and Conditions Applicable to
Purchase Orders Under Government Contracts, Form FP-03, dated
11 January 1994;
Federal Acquisition Regulations (FAR) Clauses, Olin Flinchbaugh
Flysheet FAR-0043, Revision I, dated 04/07/95;
Standard Notes Applicable to Flinchbaugh Purchase Orders, Flysheet
#790-9, dated January 24, 1995:
OLIN ORDNANCE Accepted By
Flinchbaugh Operations NUCLEAR METALS, INC.
/s/ M. Edward Shue /s/ Donald T. King
---------------------- --------------------------
M. Edward Shue Donald T. King
Senior Buyer Manager, Sales & Contracts
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