PROSPECTUS
156,986 Shares
GTS DURATEK, INC.
Common Stock
-----------
This Prospectus relates to up to 156,986 shares (the "Shares") of Common
Stock $0.01 par value (the "Common Stock"), of GTS Duratek, Inc. (the
"Company"), which may be offered by a certain shareholder of the Company (the
"Selling Stockholder") from time to time in transactions on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market"), in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholder may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions.) See "The Selling Stockholder" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares will be received by the
Company. All of the Shares offered hereby were received by the Selling
Stockholder in connection with the sale of a wholly-owned subsidiary of the
Selling Stockholder to the Company which was concluded on April 18, 1997. See
"The Selling Stockholder."
The Common Stock is listed on the Nasdaq National Market under the symbol
"DRTK." On July 7, 1997, the last reported sale price of the Common Stock on the
Nasdaq National Market was $9.75 per share.
See "Risk Factors" for a discussion of certain factors that should be
considered by prospective purchasers of the Common Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is July 9, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission or from the Commission's Internet
web site at http:\\www.sec.gov. The Common Stock of the Company is quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company can be inspected at the offices of the Nasdaq Stock
Market, 1735 K Street, Washington, D.C. 20006. This Prospectus does not contain
all the information set forth in the Registration Statement of which this
Prospectus is a part and exhibits relating thereto which the Company has filed
with the Commission. Copies of the information and exhibits are on file at the
offices of the Commission and may be obtained, upon payment of the fees
prescribed by the Commission, may be examined without charge at the offices of
the Commission or through the Commission's Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-14292) pursuant to the 1934 Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996;
2. The Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 1997;
3. The Company's Proxy Statement filed with the Commission under the 1934
Act on April 11, 1997;
4. The Company's Current Report of Form 8-K filed with the Commission under
the 1934 Act on April 29, 1997 and the amendment thereto on Form 8-K/A filed
with the Commission on July 2, 1997;
5. The description of Common Stock contained in the Company's Registration
Statement on Form 8-A, filed with the Commission under the 1934 Act; and
6. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of the
Registration Statement of which this Prospectus is a part and prior to the
termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
1
<PAGE>
incorporated by reference into such documents). Requests for such documents
should be directed to GTS Duratek, Inc., 10100 Old Columbia Road, Columbia,
Maryland 21046, Attention: Corporate Secretary, telephone: (410) 312-5100.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
THE COMPANY
The Company provides waste treatment solutions for radioactive, hazardous,
mixed and other wastes. The Company's strategy is (i) to provide the low cost
solution to process contaminated waste streams, (ii) to combine its proprietary
technologies and technical support services to provide full-service waste
treatment, and (iii) to team, where appropriate, with other companies with
complementary expertise to advance GTS Duratek's treatment solutions within its
target markets and into new markets. The Company's vitrification, thermal
desorption and ion exchange technologies convert waste to stable forms for
storage or disposal while achieving significant volume reduction. Accordingly,
the Company believes its customers benefit from significant cost savings as
compared to other commercially-available alternatives. To implement its waste
treatment technologies and provide related technical support services, the
Company has a staff of highly skilled personnel with significant environmental
services experience.
The Company's waste treatment technologies include vitrification, thermal
desorption and ion exchange and can be used independently or in tandem to solve
the waste disposal or storage problems of its customers. The Company's
vitrification technology converts waste to environmentally stable,
leach-resistant glass through a patented high-temperature melter system, known
as a DuraMelter(TM). The thermal desorption and ion exchange technologies are
used by the Company to treat petrochemical and liquid radioactive waste streams,
respectively, and can be used to separate the waste streams into components that
can either be safely stored, recycled or used as additives in the vitrification
of other waste streams. The Company's ability to integrate its waste treatment
technologies enables it to handle a diversity of waste streams in a
cost-effective manner.
The Company has over 480 engineers, consultants and technicians who support
and complement its waste treatment and stabilization services and also provides
highly specialized technical support services for the Company's customers. The
technical support services provide a consistent source of revenue and the
complementary expertise for the Company to expand and diversify its waste
treatment technologies. The services provided by the Company include staff
augmentation and outage support, principally to assist nuclear power plants
during regular maintenance shutdowns, environmental and computer consulting and
environmental safety training. Having these technical resources available has
enabled the Company to move its technologies from bench-scale laboratory testing
to field operations and commercial application more rapidly and to handle larger
scope waste cleanup projects.
The Company has developed several important joint venture and collaborative
arrangements in order to advance the commercialization of its waste treatment
technologies and increase the number of markets that it serves including: (1) a
research and development relationship with The Vitreous State Laboratory of The
Catholic University of America in Washington, D.C. (the "VSL"), one of the
leading research centers in the world for glass technology, including
3
<PAGE>
vitrification of waste; (2) a strategic alliance with BNFL Inc. ("BNFL"), the
U.S. subsidiary of British Nuclear Fuels plc, to jointly pursue up to five major
DOE waste treatment projects; and (3) a relationship with The Carlyle Group
("Carlyle"), a Washington, D.C.-based private merchant bank which made a
significant investment in the Company and provided the Company with strong
financial support and experience with companies that contract with the federal
government. The Company seeks to utilize the complementary technical expertise
or commercial experience of the other parties in these collaborative
arrangements and, where possible, to develop additional collaborative
arrangements, to pursue its primary markets and expand into new markets.
On April 18, 1997, the Company acquired 100% of the outstanding capital
stock of The Scientific Ecology Group, Inc. ("SEG") from Westinghouse Electric
Corporation, the Selling Stockholder ("Westinghouse" or the "Selling
Stockholder") for $28.0 million in cash, subject to certain post-closing
adjustments, and the Shares. SEG, which was a wholly-owned subsidiary of
Westinghouse, is based in Oak Ridge, Tennessee and is the largest commercial
radioactive waste processing company in the United States, offering an extensive
range of waste processing services and technologies. SEG completed the sale to a
third party of its interest in a joint venture for the processing of commercial
radioactive ion exchange resins and certain assets related to that business in
December 1996. SEG's revenues for the year ended December 31, 1996 were
approximately $113 million, excluding those revenues associated with the assets
previously sold.
SEG operates fixed-base processing facilities in Oak Ridge, Tennessee,
comprising over 142,000 square feet of facilities. At that site, SEG operates
three major commercial radioactive waste processing facilities: the Compaction
Facility, the Metal Processing Facility and the Incineration Facility. SEG,
through a wholly-owned subsidiary, also provides transportation services for
radioactive wastes, and maintains a fleet of tractors, trailers and shipping
containers for transporting the wastes. In addition, SEG provides radiological
decommissioning and field waste processing services to nuclear clients,
including government facilities, commercial facilities and
university/research/test facilities.
On March 31, 1997, the Company announced that its management had made the
decision to suspend temporarily the processing of radioactive waste and initiate
an unscheduled controlled cool down of its glass melter at its M-Area processing
plant located at the United States Department of Energy's ("DOE") Savannah River
site. This decision by the Company's management was the result of the Company's
operators observing over the previous few days increasing warning signs that
accelerated wear on certain melter box internal components could be occurring.
Based on these findings, the Company's management determined that it was prudent
to cool down the melter and conduct a detailed inspection and assessment of any
repairs or necessary refurbishment required to return to safe, full capacity
operations. The Company also indicated that if corrective action resulted in a
delay in completing the processing of radioactive wastes, the Company could
incur contract losses on its waste processing contract for the Savannah River
site. Under this contract, all radioactive waste processing is required to be
completed by October 1997.
4
<PAGE>
On April 16, 1997, the Company announced that its management had reached a
decision on the actions to be taken to resume radioactive waste processing at
its facility at the DOE's Savannah River site. Although inspections confirmed
that the melter could be restarted after only minimal repair, the Company's
management concluded that such action would result in considerable risk that the
melter might be unable to complete the $14 million fixed price contract for
processing the radioactive waste without additional unscheduled shutdowns and
repairs. Accordingly, the Company's management made the decision to undertake
more extensive repairs and modification of the facility, including melter box
replacement, before resumption of radioactive waste processing. The Company's
management estimated that the M-Area facility will resume radioactive waste
processing operations by the end of the fourth quarter of 1997. The schedule is
impacted by the time required to order specialized refractory bricks for the
melter and to complete assembly of the melter and because of the complexities of
working in a regulated environment. As a result of the necessary repairs and the
delay in completing the waste processing required by the contract, the Company
took a charge of $5.9 million in the first quarter of 1997 to cover the
estimated costs of the repair and for estimated losses on the fixed price
contract resulting from the delay. The Company is seeking to extend the date by
which it was required to complete the waste processing under the contract.
The Company also announced on April 16, 1997 that the Company's senior
management had established the priorities for the remainder of 1997 to be: (i)
restarting the M-Area melter; (ii) successfully and rapidly incorporating SEG's
business following the acquisition and (iii) meeting commitments to the DOE
privatization cleanups in Hanford, Washington and Idaho. Consequently, the
Company announced that its capital commitments will be directed to those
priorities and that the Company's management will reduce the priority of, and
capital commitments to, other projects which have higher levels of marketplace
uncertainty or have longer-term financial prospects. As a result, the Company
announced that the DuraChem facility, for processing commercial radioactive ion
exchange resin in the United States, located in Barnwell, South Carolina, will
not commence commercial operations in 1997 as previously reported.
The Company's principal executive offices are located at 10100 Old Columbia
Road, Columbia, Maryland 21046 and its telephone number is (410) 312-5100.
5
<PAGE>
RISK FACTORS
Prospective purchasers of the shares of Common Stock offered hereby should
consider carefully the specific factors set forth below as well as the other
information contained in this Prospectus in evaluating an investment in the
Common Stock.
Risks Associated with the Company's Waste Processing Operations at the
Savannah River Site
On March 31, 1997, the Company announced that its management had made the
decision to suspend temporarily the processing of radioactive waste and initiate
an unscheduled controlled cool down of its glass melter at its M-Area processing
plant located at the DOE's Savannah River Site. Management's decision to cool
down the melter was the result of the Company's operators observing increasing
warning signs that accelerated wear on certain melter box internal components
could be occurring. Subsequently, after the inspections had been completed, the
Company's management made the decision to undertake more extensive repairs and
modification of the facility, including melter box replacement, before
resumption of radioactive waste processing. The Company's management estimates
that the M-Area facility will resume radioactive waste processing operations by
the end of the fourth quarter of 1997. As a result of the necessary repairs and
the delay in completing the waste processing required by the contract
performance date of October 1997, the Company took a charge of $5.9 million in
the first quarter of 1997 to cover the estimated costs of the repair and for
estimated losses on the fixed price contract resulting from the delay. The
Company is seeking to extend the date by which it was required to complete the
waste processing under the contract.
There can be no assurance that the Company will be able to secure an
extension for the current Savannah River site waste processing contract or that,
even if such an extension is obtained, that the Company will not experience
further delays in completing the radioactive waste processing required by that
contract. If the Company is not able to obtain an extension of the current
contract or experiences further delays in completing the contract, the Company
may incur additional losses under that contract. Similarly, there can be no
assurance that the Company has established adequate reserves to cover the actual
costs of the repair of the Company's waste processing facility. In addition, as
of December 31, 1996, the Company had capitalized approximately $4.2 million of
equipment and installation costs related to the M-Area facility. It is the
Company's intention to recover these costs through additional waste stream
contracts at the M-Area facility or by dismantling the equipment and using it in
other waste treatment facilities the Company expects to construct throughout the
United States. There can be no assurance, however, that the Company will be able
to secure contracts to handle additional waste streams at its M-Area facility or
that the Company will be able to deploy the equipment on future waste treatment
projects. Any additional reserves or write-offs that the Company may be required
to take in connection with its waste processing operations at the Savannah River
site could have a material adverse effect on the Company's results of operations
and financial condition.
6
<PAGE>
Risks Associated with the SEG Acquisition
The Company acquired 100% of the outstanding capital stock of SEG from
Westinghouse on April 18, 1997. SEG's revenues for the year ended December 31,
1996 were approximately $113 million, as compared to the Company's revenues of
$44.2 million for the same period. The Company's efforts in integrating the SEG
acquisition are in the initial stages. Such integration will likely place
significant demands on the Company's management and infrastructure. The
acquisition of SEG will likely require significant management resources and may
require additional operational and financial resources. SEG has incurred
significant losses over the past two years. Accordingly, there can be no
assurance that SEG's business will be successfully integrated with that of the
Company, that the Company will be able to realize operating efficiencies or
eliminate redundant costs or that the business will be operated profitably.
Further, there can be no assurance that customers of the acquired business will
continue to do business with the Company or that the Company will be able to
retain key employees. In addition, the acquisition of SEG also involves a number
of additional specific risks including: adverse short-term effects on the
Company's operating results, environmental risks and potential liabilities
associated with operating a radioactive waste processing facility and
radioactive waste transportation business, risks associated with operating SEG's
business in a highly regulated environment and risks associated with
unanticipated problems, liabilities or contingencies following the acquisition
of a business. Also, to maintain compliance with operating licenses and permits,
the Company is required to provide letters of credit in the aggregate amount of
$15.3 million to the State of Tennessee to provide security for SEG's obligation
to clean and remediate SEG's facility upon its closure. Under the Company's
existing credit facility, the Company's bank has issued the letters of credit to
the State of Tennessee, however, there can be no assurance that the Company will
continue to have the borrowing capacity under its credit facility to maintain
the letters of credit and there can be no assurance that the State of Tennessee
will not significantly increase the financial assurance requirements and require
the Company to provide additional financial assurance as security for SEG's
obligation to clean and remediate the facility upon its closure. The inability
of the Company to meet the financial assurance requirements of the State of
Tennessee could cause the State of Tennessee to force the Company to commence
the closure of the facility; including the cleanup and remediation of such
facility, and such closure would have a material adverse effect on the Company's
results of operations and financial condition.
Risks Associated with the Company's DuraChem Joint Venture
On April 16, 1997, the Company announced that its senior management had
established the priorities for the remainder of 1997 to be: (i) restarting the
M-Area melter; (ii) successfully and rapidly incorporating SEG's business
following the acquisition and (iii) meeting commitments to the DOE privatization
cleanups in Hanford, Washington and Idaho. Consequently, the Company announced
that its capital commitments will be directed to those priorities and that the
Company's management will reduce the priority of, and capital commitments to,
other projects which have higher levels of marketplace uncertainty or have
longer-term financial prospects. As a result, the Company announced that the
DuraChem facility for processing commercial radioactive ion exchange resin in
the United States, located in Barnwell, South Carolina, will not commence
commercial operations in 1997 as previously reported. To date, the Company has
invested approximately $5.6 million in this joint venture with Chem-Nuclear
Systems, Inc., a subsidiary of WMX Technologies, Inc. There can be no assurance
as to when, if at all, the DuraChem facility will commence commercial operations
and, accordingly, the Company may be required at some future time to write-off
all or some portion of its investment in the DuraChem joint venture. Any
write-offs, if any, that the Company may be required to take in connection with
its investment in the DuraChem joint venture could have a material adverse
effect on the Company's results of operations and financial condition.
7
<PAGE>
No Assurance of Successful Development or Acceptance of Technologies
The Company is in the process of developing, refining and implementing its
technologies for the treatment of radioactive, hazardous, mixed (i.e.,
intermingled radioactive and hazardous) and other wastes. The Company's growth
prospects are significantly dependent upon the acceptance and implementation of
these technologies, particularly vitrification and thermal desorption. The
awarding of any future contracts to implement the Company's vitrification
technology is substantially dependent upon the continuing evaluation of the
Company's technology versus several other competing technologies as well as
conventional storage and disposal alternatives. There can be no assurance that
the Company's vitrification and related technologies will prove to be
commercially viable and cost-effective means of waste treatment or that, even if
effective, the Company's technologies will be selected for use in future waste
treatment projects. In addition, applications of the Company's waste treatment
technologies to hazardous and other wastes are in various stages of development.
Accordingly, there can be no assurance that development of these technologies
will be completed in the near future, or that even if developed, the Company
will be able to commercialize such technologies.
Dependence on Proprietary Technology and Intellectual Property
The Company's success is heavily dependent upon its proprietary
vitrification and other waste treatment technologies. The Company does not own
any of the patents to the vitrification and other waste treatment technologies
but exclusively licenses such rights from the inventors of the technologies. The
Company did acquire certain patent and other intellectual property rights in
connection with its acquisition of SEG. There can be no assurance concerning the
scope, validity or value of the patents or related intellectual property rights
owned or licensed by the Company. Further, there can be no assurance that the
steps taken by the Company and the inventors to protect these proprietary
technologies will be adequate to prevent misappropriation of these technologies
by third parties. Any such adverse circumstances could have a material adverse
effect on the Company. Many technology fields are characterized by the existence
of a large number of patents and frequent litigation for financial gain.
Although the Company does not believe any of its proprietary technologies
infringe the patent rights of third parties, there can be no assurance that
infringement claims will not be asserted against the Company in the future or
that any such claims will not require the Company to enter into royalty
arrangements or result in litigation. In the event that the Company pursues
overseas projects, there can be no assurance that steps taken by the Company and
the inventors to protect their proprietary technologies will be adequate under
the laws of certain foreign countries.
8
<PAGE>
Dependence on Key Customers
During 1996, the Company's revenues from waste treatment projects were
primarily derived from subcontracts with contractors and subcontractors and a
limited number of other customers. Revenues derived from the DOE contractors and
subcontractors constituted approximately 21.4% of the Company's total revenues
during 1996. The Company's revenues derived from providing technical support
services constituted approximately 75.2% of the Company's total revenues in
1996. Revenues from Duke Power Company and Fernald Environmental Restoration
Management Company, a subsidiary of Fluor Corporation, accounting for
approximately 28% and 12% of the Company's total revenues in 1996, respectively.
The Company has multiple contracts with Duke Power which expire between 1997 and
1998 and pursuant to which it provides technical support services and personnel.
The loss of business from any of its major customers could have a material
adverse effect on the Company.
Government Funding and Contracting
The Company believes that demand for its waste treatment technologies is
directly related to the response of governmental authorities to public concern
over the treatment and disposal of radioactive, hazardous, mixed and other
wastes. The lessening of public concern in this area or other changes in the
political environment could result in a corresponding reduction in demand for
the services offered by the Company. Additionally, efforts to reduce the federal
budget deficit and other government funding constraints could adversely affect
the availability and timing of government funding for the cleanup of DOE and
other sites at which radioactive and mixed wastes are present.
The Company's existing government subcontracts can generally be canceled,
delayed or modified at the sole option of the government. The Company believes
that any future government contracts and subcontracts will be structured
similarly. In addition, under the terms of future government contracts and
subcontracts, if any, the federal government may be in a position to obtain
greater rights with respect to the Company's intellectual property than the
Company would grant to other entities. As a result of engaging in the government
contracting business, the Company has been and will be subject to audits, and
may be subject to investigation, by government agencies. The failure by the
Company to comply with the terms of any of its government contracts and
subcontracts could result in substantial civil and criminal fines and penalties
or the Company's suspension or debarment from future government contracts and
subcontracts for a significant period of time. The fines and penalties that
could result from noncompliance with appropriate standards and regulations, or
the Company's suspension or debarment, could have a material adverse effect on
the Company.
9
<PAGE>
Dependence on Collaborative Relationships
In order to commercialize its vitrification and other waste treatment
technologies, the Company has developed several collaborative arrangements,
including arrangements with the VSL and BNFL, and in the future may seek other
collaborative arrangements. The Company's future success will likely depend, in
part, on the success of its existing collaborative relationships. Collaborative
arrangements involve risks that the participating parties may disagree on
business decisions and strategies resulting in potential delays, additional
costs and risks of litigation. The inability of the Company to successfully
maintain existing collaborative relationships or enter into new collaborative
arrangements could have a material adverse effect on the Company.
Accumulated Deficit
As of December 31, 1996, the Company had an accumulated deficit of $9.0
million resulting principally from losses generated by operations prior to 1994,
certain of which related to a line of business discontinued in 1990. There can
be no assurance that in the future the Company will be able to generate
sufficient revenues or control operating expenses in order to achieve and
sustain profitability.
Risks Associated with Rapid Growth
The Company is currently experiencing a period of rapid growth,
attributable in large part to the expansion of its waste treatment technology
operations. This growth has placed and could continue to place a significant
strain on the Company's management personnel and other resources. The Company's
recent growth, which might accelerate in the event the Company establishes
additional collaborative arrangements or joint ventures or undertakes another
significant acquisition, has resulted in an increased level of responsibility
for the Company's management personnel. The Company's ability to manage growth
effectively will require the Company to effectively manage its collaborative
arrangements and to continue to improve its operational, management and
financial systems and controls and to successfully train, motivate and manage
its employees. If the Company's management is unable to manage growth
effectively, the Company's results of operations could be materially adversely
affected.
The Company's business strategy includes the expansion of its technologies
and services, which may be effected through acquisitions. While there are
currently no commitments with respect to any future acquisitions, the Company
frequently reviews various acquisition prospects of businesses or technologies
complementary to the Company's business and periodically engages in discussions
regarding such possible acquisitions or affiliations. Acquisitions involve
numerous management, financial, operational and financial market risks. There
can be no assurance that any acquisition will result in long-term benefits to
the Company or that the Company's management will be able to manage effectively
the resulting businesses.
10
<PAGE>
Competition
The market for the Company's waste treatment technologies is characterized
by several large companies and numerous small companies. Any of such companies
may possess or develop technologies superior to those of the Company. In
addition, the Company competes with companies offering conventional storage and
disposal alternatives such as special landfills, deep-well injection, on-site
containment in tanks, pits or ponds and incineration and other thermal treatment
methods. In its technical support services business, the Company's competitors
range from major national and regional environmental service and consulting
firms with large environmental remediation staffs to small local firms. Many of
the Company's competitors have greater financial, management and marketing
resources than the Company. To the extent that these competitors offer more
cost-effective waste treatment and treatment alternatives or offer comparable
services at lower prices, the Company's ability to compete effectively could be
adversely affected.
Dependence on Key Personnel
The Company is highly dependent upon the technical expertise and management
experience of Robert E. Prince, President, Chief Executive Officer and a
director of the Company. The Company's operations are also dependent on the
continued efforts of certain technical personnel which include certain of the
Company's senior management as well as certain individuals at the VSL who have
developed and are continuing to refine the proprietary vitrification and ion
exchange technologies licensed by the Company. The loss of the services of any
of these individuals could have a material adverse effect on the Company. Mr.
Prince and certain other members of senior management are subject to employment
agreements which terminate in January 1998, unless extended; however, there are
no "key man" life insurance policies on Mr. Prince, any other members of senior
management or any other personnel.
Government Regulation
Federal, state and local environmental legislation and regulations require
substantial expenditures and impose liabilities for noncompliance. Environmental
laws and regulations are, and will continue to be, a principal factor affecting
demand for the services offered by the Company. The level of enforcement
activities by federal, state and local environmental protection agencies and
changes in regulations will also affect demand. In the event and to the extent
that the burden of complying with environmental laws and regulations may be
eased, particularly those relating to the transportation, treatment, storage or
disposal of radioactive, hazardous, mixed or other wastes, the demand for the
Company's services could be materially adversely affected.
The Company and its customers operate in a highly regulated environment.
The Company's waste facilities are required to have federal, state and local
governmental permits and approvals. Any of these permits or approvals may be
11
<PAGE>
subject to denial, revocation or modification under various circumstances.
Failure to obtain or comply with the conditions of permits or approvals may
adversely affect the operations of the Company and may subject the Company to
penalties. In addition, if new environmental legislation or regulations are
enacted or existing legislation or regulations are amended or are interpreted or
enforced differently, the Company or its customers may be required to obtain
additional operating permits or approvals. Any changes in these regulations
which increase compliance standards may require the Company to change or improve
its waste treatment technologies or make modifications to its waste processing
facilities to meet more stringent regulatory requirements. There can be no
assurance that the Company will meet all of the applicable regulatory
requirements.
Potential Environmental Liability and Insurance
Performance of the Company's services requires exposure of personnel and
equipment to radioactive and hazardous materials and conditions. Although the
Company is committed to a policy of operating safely and prudently, the Company
may be subject to liability claims by employees, customers and third parties. In
addition, the Company may be subject to fines, penalties or other liabilities
arising from its actions imposed under environmental or safety laws. To date,
the Company has been able to obtain liability insurance for the operation of its
business. However, there can be no assurance that the Company's existing
liability insurance is adequate or that it will be able to be maintained or that
all possible claims that may be asserted against the Company will be covered by
insurance. A partially or completely uninsured claim, if successful and of
sufficient magnitude, could have a material adverse effect on the Company.
Fluctuations in Quarterly Results
A large component of the Company's technical support services business is
outage support for nuclear power plants. As a result, the Company's revenues
have historically been subject to significant quarterly fluctuations, affected
primarily by the timing of outage support projects at its customers' facilities,
which typically occur in the spring and fall when electrical load demand is at
its lowest. In addition, the timing of new waste treatment projects, including
those pursued jointly with BNFL, the duration of these projects and the form in
which these projects are owned and operated will affect period-to-period
comparisons of the Company's operating results.
Control by Principal Stockholders
Carlyle owns 2,040,616 shares of the outstanding Common Stock and 150,692
shares of the outstanding shares of the Company's 8% Cumulative Convertible
Redeemable Preferred Stock (the "Convertible Preferred Stock"), or an aggregate
of 40.5% of the outstanding voting securities of the Company after this
offering. In addition, Carlyle has the option to purchase from the Company an
additional 1,177,278 shares of the Common Stock at any time prior to January 24,
1999 for $3.75 per share. The terms of the Convertible Preferred Stock provide
12
<PAGE>
that the holders thereof, voting as a separate class, have the right to elect a
majority of the Company's Board of Directors so long as Carlyle owns shares of
capital stock having 20% or more of the votes that may be cast at annual or
special meetings of stockholders. The remaining directors shall be elected by
the vote of the holders of the Common Stock and Convertible Preferred Stock,
voting together as a single class. Carlyle, through its beneficial ownership of
the Convertible Preferred Stock, has the unilateral voting power to elect a
majority of the Company's Board of Directors and has ultimate control over the
management and policies of the Company through its control of the Board of
Directors.
Effect of Certain Outstanding Securities
At March 14, 1997, the Company had reserved 8,581,041 shares of Common
Stock for issuance upon conversion or exercise of the Convertible Preferred
Stock and options issued to Carlyle in 1995, the convertible debenture issued to
BNFL in 1995, and options and warrants issued to employees and others. The
exercise or conversion prices of these securities are substantially below the
current market price for the Company's Common Stock. Investors may experience
dilution as a result of shares of Common Stock being issued upon conversion or
exercise of these derivative securities. In particular, the Company's earnings
(loss) per common share will be significantly affected by their future
conversion or exercise or at such time, if ever, as the level of the Company's
net income causes any or all of these securities to be included in earnings per
share computations.
Availability of Skilled Professionals
The Company's success in providing technical support services to its
customers is dependent upon its ability to staff customer projects with skilled
technical specialists and experts in a wide range of scientific, engineering,
health and safety, data processing and communications disciplines. The Company
does not retain all such skilled professionals on a full-time basis but
contracts with these individuals on an as-needed basis. The market for skilled
professionals in these disciplines is highly competitive and there can be no
assurance that the Company will be able to hire these professionals when needed
to staff customer projects or that the cost of such labor will not significantly
increase.
13
<PAGE>
Volatility of Stock Price
There has been a history of volatility in the market prices for
securities of technology and other emerging growth companies. In the case of the
Company, factors such as the announcements of new contracts or technological
developments, status of collaborative arrangements of the Company or its
competitors, status of the Company's waste treatment projects, announcement of
acquisitions, government regulatory action, patent or proprietary rights
developments, changes in recommendations and estimates by security analysts and
market conditions in general could have a significant impact on the future
market price of the Common Stock.
USE OF PROCEEDS
All of the proceeds from the sale of the Shares offered hereby will be
received by the Selling Stockholder. The Company will receive none of the
proceeds from the sale of the Shares.
THE SELLING STOCKHOLDER
All of the Shares being offered by the Selling Stockholder were acquired by
it in partial consideration of the sale by it to the Company of all of the
outstanding capital stock of SEG. Pursuant to the terms of the acquisition, the
Company agreed to prepare and file with the Commission a registration statement
with respect to the resale of the Shares from time to time on the Nasdaq
National Market, in privately negotiated transactions or otherwise.
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the Selling Stockholder prior to this
offering, the maximum number of shares of Common Stock to be sold by the Selling
Stockholder hereby, and the beneficial ownership of the Company's Common Stock
by the Selling Stockholder after this offering, assuming that all shares of
Common Stock offered hereby are sold.
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shares Beneficially Shares To Shares Beneficially
Owned Prior to Offering Be Sold In Owned After Offering
-------------------------- ---------------------------
Name and Address of Beneficial This
Owner Number Percent Offering Number Percent
- ----------------------------------------- ------------- ---------- ------------- ------------- -----------
Westinghouse Electric Corporation...... 156,986 1.3% 156,986 0 *
Gateway Center
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
- -------------
* Less than 1%.
</TABLE>
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "DRTK." The Company has been advised that the Selling Stockholder may
sell shares of Common Stock offered hereby from time to time in transactions on
the Nasdaq Stock Market, in privately-negotiated transactions or otherwise. The
Selling Stockholder may effect such transactions by selling the shares of Common
Stock offered hereby to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholder or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions).
The Selling Stockholder and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act, and any commissions received by them and profit
on any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
The Common Stock offered hereby will be sold by the Selling Stockholder
acting as principal for its own account, and the Company will receive no
proceeds from this offering. The Selling Stockholder will pay all applicable
stock transfer taxes, transfer fees and brokerage commissions or discounts. The
Company has agreed to bear the cost of preparing the Registration Statement of
which this Prospectus is a part and all filing fees and legal and accounting
expenses in connection with registration of the shares of Common Stock offered
by the Selling Stockholder hereby under federal and state securities laws.
15
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedule of the Company, included
in its Annual Report on Form 10-K, as of December 31, 1996 and 1995 and for each
of the years in the three-year period ended December 31, 1996 have been
incorporated by reference herein or in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated herein by reference, and upon the authority of such
firm as experts in accounting and auditing.
16
<PAGE>
========================================================= =====================
No dealer, salesperson or other person has
been authorized by the Company to give any information
or to make any representations not contained in this
Prospectus in connection with the offer covered by this 156,986 Shares
Prospectus. If given or made, such information or
representations must not be relied upon as having been
authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an
offer to buy the Common Stock in any jurisdiction
where, or to any Person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall, GTS DURATEK, INC.
under any circumstances, create an implication that
there has not been any change in the facts set forth in
this Prospectus or in the affairs of the Company since Common Stock
the date hereof.
-----------------------------
-------------
PROSPECTUS
-------------
TABLE OF CONTENTS
......... Page
----
Available Information.........................1
Incorporation of Certain
Documents by Reference.....................1
The Company...................................3
Risk Factors .................................6
Use of Proceeds...............................14 July 9, 1997
The Selling Stockholder.......................14
Plan of Distribution..........................15
Legal Matters.................................16
Experts.......................................16
===================================================== ======================
