<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 18, 1997
GTS DURATEK, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-14292 22-2476180
(State or Other (Commission File Number) ( IRS Employer
Jurisdiction of Identification No.)
Incorporation)
10100 Old Columbia Road, Columbia, Maryland 21046
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 312-5100
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On April 18, 1997, GTS Duratek, Inc. (the "Company") acquired 100% of the
issued and outstanding capital stock of The Scientific Ecology Group, Inc.
("SEG") from Westinghouse Electric Corporation ("Westinghouse") for $28.0
million in cash, subject to certain adjustments, and 156,986 shares of the
Company's Common Stock. 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 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. The Company
generally intends to continue the businesses of SEG and to use its assets
and facilities for the same purposes as they were used prior to the
acquisition.
The Company paid the cash portion of the purchase price out of available
cash, principally from the proceeds of its public offering in April 1996.
However, in connection with the acquisition of SEG, the Company entered
into a new credit facility with its bank. Under this new facility, the
Company has a revolving line of credit providing for borrowings up to $8.8
million based upon eligible amounts of accounts receivable, as defined in
the credit agreement. Borrowings under the revolving line of credit bear
interest at the LIBOR rate plus 2%. Under this facility, the Company's
bank has also issued letters of credit in the aggregate amount of $15.3
million to the State of Tennessee to provide security for the Company's
obligation to clean and remediate SEG's facility upon its closure.
Item 5. Other Events
On March 31, 1997, the Company publicly announced that its management had
made the decision to temporarily suspend the processing of radioactive
waste and initiate an unscheduled controlled cool down of its glass melter
at its M-Area processing plant located on 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.
1
<PAGE>
On April 16, 1997, the Company publicly 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 announced that it will take 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 market place uncertainty or have long-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.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired:
------------------------------------------
(i) Balance sheets of Scientific Ecology Group, Inc. as of
December 31, 1995 and 1996 and March 31, 1997 (unaudited) and
the related statements of operations, changes in parent's
investment and cash flows for the three year period ended
December 31, 1996 and for the three months ended March 31,
1997 (unaudited).
(b) Pro Forma Financial Information:
--------------------------------
(i) Pro Forma Consolidated Balance Sheet as of March 31, 1997 and
related notes.
(ii) Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1996 and related notes.
(iii) Pro Forma Consolidated Statement of Operations for the three
months ended March 31, 1997 and related notes.
2
<PAGE>
(c) Exhibits. The following exhibits are filed with this report, and
--------
the foregoing description is modified by reference to such
exhibits:
(1) GTS Duratek, Inc. Press Release dated April 21, 1997.*
(2) Stock Purchase Agreement by and between Westinghouse Electric
Corporation and GTS Duratek, Inc. dated as of April 8, 1997.*
(3) Credit Agreement as of April 18, 1997 between GTS Duratek,
Inc., The Scientific Ecology Group, Inc., SEG Colorado, Inc.,
Hittman Transport Services, Inc., GTS Instrument Services,
Incorporated, General Technical Services, Inc., Analytical
Resources, Inc. and First Union National Bank of Maryland and
First Union National Bank of North Carolina.*
(4) Security Agreement dated as of April 18, 1997 between GTS
Duratek, Inc., General Technical Services, Inc., GTS Instrument
Services, Incorporated, Analytical Resources, Inc. and First
Union National Bank of Maryland.*
(5) Security Agreement dated as of April 18, 1997 between The
Scientific Ecology Group, Inc., SEG Colorado, Inc., Hittman
Transport Services, Inc. and First Union National Bank of
Maryland.*
(6) GTS Duratek, Inc. Press Release dated March 31, 1997.*
(7) GTS Duratek, Inc. Press Release dated April 16, 1997.*
(8) Consent of KPMG Peat Marwick LLP.
* Previously filed with the Company's Current Report on Form 8-K
which was filed with the Securities and Exchange Commission on May
1, 1997.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GTS Duratek, Inc.
/s/ Robert F. Shawver
-------------------------------
Robert F. Shawver
Executive Vice President
and Chief Financial Officer
Date: July 1, 1997
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
GTS Duratek, Inc.:
We have audited the accompanying consolidated balance sheets of Scientific
Ecology Group, Inc. and subsidiaries as of December 31, 1995 and 1996 and the
related consolidated statements of operations, changes in parent's investment
and cash flows for each of the years in the three-year period ended December 31,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Scientific Ecology
Group, Inc. and subsidiaries as of December 31, 1995 and 1996 and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
Scientific Ecology Group, Inc. was a wholly-owned subsidiary of Westinghouse
Electric Corporation and, as discussed in note 3 to the accompanying financial
statements, has engaged in various transactions and relationships with other
Westinghouse Electric Corporation entities.
KPMG Peat Marwick LLP
June 13, 1997
4
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, March 31,
------------------------
1995 1996 1997
---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 147 318 60
Accounts receivable 27,549 17,983 12,665
Costs in excess of billings on service contracts 6,554 6,229 1,928
Prepaid expenses and other current assets 2,585 758 1,842
---------- ---------- ----------
Total current assets 36,835 25,288 16,495
Property, plant and equipment, net 80,948 53,700 52,909
Goodwill and other intangible assets, net 27,318 16,452 16,075
Other noncurrent assets 885 436 303
---------- ---------- ----------
Total assets $ 145,986 95,876 85,782
========== ========== ==========
LIABILITIES AND PARENT'S INVESTMENT
Current liabilities:
Accounts payable $ 1,204 2,831 3,855
Accrued liabilities 10,120 13,618 3,045
Unearned revenues 4,285 10,780 15,123
SEG waste processing and disposal accrual 17,307 8,884 3,186
Accrued payroll and employee benefits 4,932 4,897 2,759
Other current liabilities 5,869 5,922 8,475
---------- ---------- ----------
Total current liabilities 43,717 46,932 36,443
Decontamination and decommissioning accrual 1,612 4,796 5,501
Other noncurrent liabilities 234 696 657
---------- ---------- ----------
Total liabilities 45,563 52,424 42,601
Parent's investment 100,423 43,452 43,181
Commitments and contingencies
---------- ---------- ----------
Total liabilities and parent's investment $ 145,986 95,876 85,782
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months
Years ended December 31, ended
-------------------------------- March 31,
1994 1995 1996 1997
----------- --------- --------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
Customer revenues $ 95,817 123,511 98,810 22,109
Related party revenues 24,276 14,672 14,158 4,059
--------- ------- ------- --------
Total revenues 120,093 138,183 112,968 26,168
Cost of revenues 104,632 155,805 146,493 33,273
--------- ------- ------- --------
Gross profit (loss) 15,461 (17,622) (33,525) (7,105)
Selling, general and
administrative expenses 11,062 12,652 16,234 2,928
Corporate expense allocations 4,515 4,537 2,731 815
Write-off of property, plant
and equipment -- -- 2,400 --
--------- ------- ------- --------
Loss from operations (116) (34,811) (54,890) (10,848)
Other income (expenses), net (202) (715) 414 (3)
--------- ------- ------- --------
Net loss $ (318) (35,526) (54,476) (10,851)
========= ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Parent's Investment
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Balance at December 31, 1993 $ 85,646
Net loss (318)
Net transactions with parent 11,099
---------
Balance at December 31, 1994 96,427
Net loss (35,526)
Net transactions with parent 39,522
---------
Balance at December 31, 1995 100,423
Net loss (54,476)
Net transactions with parent (2,495)
---------
Balance at December 31, 1996 43,452
Net loss (unaudited) (10,851)
Net transactions with parent (unaudited) 10,580
---------
Balance at March 31, 1997 (unaudited) $ 43,181
=========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION> Three
months
December 31, ended
------------------------------- March 31,
1994 1995 1996 1997
----------- -------- -------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (318) (35,526) (54,476) (10,851)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 4,085 7,434 7,705 1,431
Write-off of property, plant and equipment - - 2,400 -
Provisions for decontamination and
decommissions accrual 385 806 3,184 705
Change in operating assets and liabilities:
Accounts receivable (5,299) (3,266) 9,566 5,318
Costs in excess of billings on
service contracts 1,227 924 325 4,301
Prepaid expenses and other current
assets (104) (332) 975 (1,084)
Accounts payable and accrued
liabilities 359 7,154 5,125 (9,549)
Unearned revenues 688 (6,601) 6,495 4,343
SEG waste processing and disposal
accrual 12,038 5,269 (8,423) (5,698)
Accrued payroll and employee
benefits 1,209 2,709 (35) (2,138)
Other current liabilities (6,521) 4,661 53 2,553
--------- ------- ------- -------
Net cash provided by (used in) operating activities 7,749 (16,768) (27,106) (10,669)
--------- ------- ------- -------
Cash flows from investing activities:
Capital expenditures (16,472) (22,819) (6,970) (415)
Other, net (2,038) (574) 1,482 246
--------- ------- ------- -------
Net cash used in investing activities (18,510) (23,393) (5,488) (169)
Cash flows from financing activities -
Net transactions with parent company 11,099 39,522 32,765 10,580
--------- ------- ------- -------
Net increase (decrease) in cash 338 (639) 171 (258)
Cash at beginning of year 448 786 147 318
--------- ------- ------- -------
Cash at end of year $ 786 147 318 60
========= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995 and 1996 and March 31, 1997
(Information as of and for the three months ended March 31, 1997 is unaudited)
- --------------------------------------------------------------------------------
(1) BUSINESS
Scientific Ecology Group, Inc. (SEG or the Company) was a wholly-owned
subsidiary of Westinghouse Electric Corporation (Westinghouse or parent).
The Company's principal business is processing, primarily through volume
reduction and burial, low level radioactive waste produced by nuclear power
plants, various government facilities, and numerous small waste generators.
In addition, the Company provides related transportation and field
services. Its headquarters and major waste processing facility are located
in Oak Ridge, Tennessee, where the Company is licensed by the state to
perform designated waste treatment services.
On April 18, 1997, GTS Duratek, Inc. (GTS) acquired 100% of the Company's
issued and outstanding common stock from Westinghouse for $28 million in
cash and 156,986 shares of GTS Duratek, Inc. common stock.
During the three year period ended December 31, 1996 and for the three
month period ended March 31, 1997, SEG has incurred significant operating
losses which have been funded by Westinghouse. Management has taken a
number of actions during the past year which it believes will improve SEG's
operation results, including shrinking its workforce, limiting the range of
waste it will accept for processing and processing of virtually all waste
older than 90 days. GTS does not have the financial resources of
Westinghouse. Accordingly, should SEG continue to incur losses at
historical levels it could effect its ability to continue. While GTS does
not have the financial resources of Westinghouse, management believes GTS
has sufficient resources to support the operation of SEG for at least the
next twelve months.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, excluding its Advanced System Division
(ASD) located in Carlsbad, New Mexico. The Company distributed the stock of
ASD to Westinghouse in 1996. Activities of ASD have been eliminated from
all years presented. All intercompany balances and transactions have been
eliminated.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated
generally using the straight-line method over their estimated useful lives.
Expenditures for specific and identifiable items over $1,500 and with
useful lives over one year are capitalized, and costs for repairs and
maintenance are charged to operations as incurred.
9
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(2) CONTINUED
GOODWILL AND OTHER INTANGIBLES
Goodwill is attributable to Westinghouse's acquisition of SEG in 1989, and
is amortized on a straight-line basis over a forty year period. Other
acquired intangible assets, primarily licenses, are amortized on a
straight-line basis over their estimated useful lives between four to ten
years.
The Company periodically assesses whether operating and intangible assets
have been impaired. The majority of the Company's operating assets are
integrated and are dedicated to the volume reduction of low level
radioactive waste. Management considers estimated future undiscounted cash
flows in assessing impairment. Given the integration of the Company's
operating assets and the difficulties of assessing cash flows relative to
individual assets, management makes this assessment based upon the
estimated future cash flows of the operations in the aggregate. Based upon
this assessment, management has determined that no impairment existed as of
December 31, 1996.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, on January 1, 1996.
This Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of assets exceed the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell. Adoption of this Statement did not have
a material impact on the Company's financial position, results of
operations, or liquidity.
FACILITY AND EQUIPMENT DECONTAMINATION AND DECOMMISSIONING
The Company accrues decontamination and decommissioning (D&D) costs for
facilities and equipment over the estimated average lives of the assets
(see note 7).
REVENUE RECOGNITION
Revenue is recognized when waste is processed, except for revenue related
to the costs of future disposal which are recognized when the related
disposal costs are incurred. Revenues on field service contracts are
recognized when services are performed and billed. Generally, billings are
made on a monthly basis.
10
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(3) CONTINUED
INCOME TAXES
The Company incurred losses for all periods presented and as a result has
not provided an income tax provision or benefit for any of the periods
presented.
In connection with the acquisition of SEG, Westinghouse and GTS have agreed
jointly to make a 338(H)10 election for income tax reporting purposes.
Accordingly, any tax attributes of SEG with respect to the periods prior to
the acquisition will not accrue to any post acquisition periods and a new
tax basis will be established for each of SEG's assets and liabilities
based upon an allocation of the GTS purchase price.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments, including accounts
receivable and accounts payable, approximate carrying values.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses
during the reporting period to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ significantly from those estimates.
RECLASSIFICATIONS AND RESTATEMENT
Certain reclassifications and restatements have been made to the previously
issued audited financial statements as of and for the year ended December
31, 1995, to conform the presentation and accounting methods used for all
the periods presented. The restatement resulted in increasing the net loss
for the year ended December 31, 1995 by $6,209,000.
(3) RELATED PARTY TRANSACTIONS
The Company purchases from and performs services for other Westinghouse
operations. The Company also purchases certain services from Westinghouse,
including liability, property and workers' compensation insurance. These
transactions are discussed in further detail below:
11
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(3) CONTINUED
CASH
The Company utilizes the Westinghouse centralized cash management services
in North America. Under such service arrangements, accounts receivable are
collected and cash is invested centrally. Additionally, disbursements are
funded centrally on demand. As a result, the Company maintains a low cash
balance on its books, and receives charges and credits against parent's
investment for cash used and collected through a central clearinghouse
arrangement.
INTERCOMPANY PURCHASES AND PAYABLES
The Company purchases products and services from and provides services to
other Westinghouse operations. Management believes such transactions are
generally made on an arm's length basis. These transactions are settled
immediately through the central clearinghouse or the internal customer is
invoiced and an intercompany receivable is established. Purchases from
Westinghouse affiliates were $547,000, $620,000 and $239,000 for the years
ended December 31, 1995 and 1996 and for the three months ended March 31,
1997, respectively.
CORPORATION SERVICES
The Company uses, and is charged directly for, certain services that
Westinghouse provides to its business units. These services generally
include information systems support, certain accounting functions such as
transaction processing, legal matters, environmental affairs and human
resources consulting and compliance support.
Westinghouse centrally develops, negotiates and administers certain of the
Company's insurance programs. The insurance includes real and personal
property and third-party liability coverage, employer's liability coverage,
automobile liability, general product liability and other standard
liability coverage. Westinghouse also maintains a program of self-
insurance for workers' compensation in the United States. Westinghouse
charges its business units for all of the centrally administered insurance
programs based in part on claims history. Specific liabilities for general
and product liability, automobile, and workers' compensation claims are not
presented in the accompanying consolidated financial statements.
Liabilities for claims prior to the GTS acquisition remain the obligation
of Westinghouse.
The Company also purchases other Westinghouse internally provided services,
as necessary, including telecommunications, printing and other services.
12
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(3) CONTINUED
ALLOCATED CORPORATE EXPENSES
Westinghouse allocates a certain portion of its corporate expenses to its
business units. It is not practical for management to estimate the level
of expenses that might have been incurred had the Company operated as a
separate stand-alone entity.
DISTRIBUTION OF ASSETS
In December 1996, the Company transferred approximately $35 million of
property, plant and equipment, related goodwill and other assets to
Westinghouse which were not sold to GTS. These assets were generally under
construction during the three years ended December 31, 1996.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------ March 31,
1995 1996 1997
-------- ------- ----------
<S> <C> <C> <C>
Land and land improvements $ 4,205 5,119 4,475
Buildings 21,243 22,667 23,313
Equipment and fixtures 53,389 43,449 43,398
Construction work in progress 23,238 198 640
-------- ------ ------
103,075 71,433 71,826
Less accumulated depreciation 22,127 17,733 18,917
-------- ------ ------
$ 80,948 53,700 52,909
======== ====== ======
</TABLE>
(5) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consist of the following
(in thousands)
<TABLE>
<CAPTION>
December 31,
------------------ March 31,
1995 1996 1997
-------- ------- ---------
<S> <C> <C> <C>
Goodwill $ 29,019 16,812 16,812
Licenses and other intangible assets 6,926 5,250 4,621
-------- ------ ------
35,945 22,062 21,433
Less accumulated amortization 8,627 5,610 5,358
-------- ------ ------
$ 27,318 16,452 16,075
======== ====== ======
</TABLE>
13
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(6) WASTE PROCESSING AND DISPOSAL
CUSTOMER WASTE
Generally, the Company processes customer wastes under fixed-unit-price
contracts which allow for additional billings for burial price increases
occurring within a set period of time following the Company's receipt of
the waste, or if the wastes differ from contract specifications. The
Company is responsible for placing processed waste in containers and in a
form that meets disposal site criteria. The Company delivers reports to
customers confirming that their waste has been processed and buried in
accordance with terms of its contracts.
As of December 31, 1995 and 1996 and March 31, 1997, the Company recorded
progress billings of $2,183,000, $7,303,000 and $8,271,000 as unearned
revenues, and estimates that future billings will amount to $15,530,000,
$6,670,000 and $6,736,000, respectively. Estimated processing revenues
related to this waste were $4,285,000, $10,780,000 and $15,123,000 at
December 31, 1995 and 1996 and March 31, 1997, respectively. Amounts for
March 31, 1997 include a provision for estimated loss on future processing.
Burial costs related to the disposal of the customer waste of $2,795,000,
$1,251,000 and $285,000 as of December 31, 1995 and 1996 and March 31, 1997
were included in accounts payable and accrued liabilities, respectively.
SEG WASTE
During customer waste processing, the Company creates by-products which
lose customer identity and become the Company's responsibility to process
further and send to permanent burial storage. Management has evaluated the
content of this waste and has accrued the estimated costs of processing and
disposal based on anticipated processing methods and current disposal sites
and rates for the various types of waste. At December 31, 1995 and 1996
and March 31, 1997, the accrued liabilities related to such waste were
$17,307,000, $8,884,000 and $3,186,000, respectively. The ultimate cost of
processing and disposal, however, will depend on the actual contamination
of the waste, the amount of processing, volume reduction and disposal
density.
SPECIFIC SITE CLEAN-UP AND DISPOSAL ACTIVITIES
The Company records, as a component of operating expense, estimated costs
for specific site clean-up and disposal activities relating to existing
conditions caused by past operations. As of December 31, 1996, SEG
recorded a liability of $1,798,000 for the estimated costs of clean-up and
disposal of known contamination and hazardous waste related to specific
current projects. The ultimate cost will depend on, among other factors,
the extent of contamination and hazardous waste found as the projects
progress. The clean-up and disposal activities were virtually complete at
March 31, 1997.
14
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(7) FACILITY AND EQUIPMENT DECONTAMINATION AND DECOMMISSIONING (D&D)
The Company revised its estimate of D&D costs for facilities and fixed
equipment to $18.3 million at December 31, 1996, based on a specific study
of projected labor and equipment requirements and other costs necessary to
perform D&D of the Company's facilities. For 1996, management also
estimated a cost of $4.5 million to decontaminate and decommission moveable
equipment.
The D&D estimate is stated in 1996 dollars and assumes the use of existing
technologies and compliance with existing regulatory requirements.
Management does not consider it practicable to estimate the effects of
future inflation, changes in technology, future increases in burial rates
and the timing of D&D activities on the estimated D&D costs. Uncertainties
related to any of these factors could have a significant impact on the
Company's estimated D&D costs. Management updates the D&D estimates on an
annual basis.
The Company accrues D&D costs for facilities and equipment over the
estimated average lives of the assets. At December 31, 1996, the remaining
estimated average life of the facilities and fixed equipment was nine years
and the remaining estimated average life of the moveable equipment was two
years. The Company accrued a D&D liability of $1,612,000, $4,796,000 and
$5,501,000 as of December 31, 1995 and 1996 and March 31, 1997,
respectively.
Westinghouse had issued letters of credit to the State of Tennessee (State)
to provide security for the Company's obligation to clean and remediate
SEG's facilities upon closure. In connection with the acquisition GTS has
issued $15.3 million in letters of credit to the State and the Westinghouse
letters of credit have been released.
(8) PARENT'S INVESTMENT
There are no customary equity and capital accounts recorded on the
accompanying financial statements. Instead, a parent's investment account
is maintained by the Company and Westinghouse to account for inter-unit
transactions as described in note 3. The parent's investment account
consists of accumulated net income or loss, net advances for capital
expenditures and other transactions.
15
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(9) LEASES
The Company leases certain facilities and equipment under various operating
leases expiring through the year 2002. At March 31, 1997, future minimum
lease payments are as follows (in thousands):
<TABLE>
<S> <C>
1998 $803
1999 276
2000 15
2001 11
2002 4
---------------------------------
$1,109
=================================
</TABLE>
(10) SIGNIFICANT CUSTOMERS
Accounts receivable from sales to various U.S.. Government agencies
represented approximately 14% of SEG's accounts receivable at December 31,
1996. Management performs ongoing credit evaluations of its customers and
generally does not require collateral.
(11) COMMITMENTS AND CONTINGENCIES
The Company began shipping a significant portion of waste to Envirocare of
Utah, Inc. (Envirocare) late in 1996, at a cost significantly lower than
waste shipped to a burial site in Barnwell, South Carolina. Envirocare's
operating license from the Utah Bureau of Radiation Control is up for
renewal in 1997. The accompanying consolidated financial statements
reflect various accruals and estimates assuming Envirocare continues to be
a viable disposal site at rates presently in effect. If Envirocare's
license would not be renewed or if Envirocare's rate structure were to
change significantly, the Company's costs to dispose of waste would likely
increase. Management has not determined what impact, if any, either of
these scenarios would have on the Company's liabilities or future operating
costs.
Included in the accompanying consolidated financial statements are
liabilities for the Company's employee benefits which include self-insured
health claims, a non-qualified deferred compensation plan covering certain
employees and compensated absences. Additionally, the Company sponsors a
401(k) plan covering substantially all employees whereby the Company
matches 50% of the first 6% contributed by the employee. The Company's
matching contributions were $784,000, $953,000 and $160,000 for the years
ended December 31, 1995 and 1996 and the three months ended March 31, 1997,
respectively.
16
<PAGE>
SCIENTIFIC ECOLOGY GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(11) CONTINUED
SEG is a party to various litigation and claims in the ordinary course of
business. Management believes that the ultimate resolution of these
matters will not have a material adverse impact on its consolidated balance
sheet.
- --------------------------------------------------------------------------------
17
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The pro forma financial information should be read in conjunction with the
consolidated financial statements and related notes of GTS Duratek, Inc. and
subsidiaries (the "Company"), not included herein, and the consolidated
financial statements of The Scientific Ecology Group, Inc. ("SEG"), included
elsewhere herein.
PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma consolidated balance sheet reflects the accounts of the
Company giving effect to the acquisition of SEG as if it occurred on March 31,
1997 and was prepared using the Company's and SEG's balance sheets as of March
31, 1997. The acquisition occurred on April 18, 1997 but was based on amounts
as of March 31, 1997.
On April 18, 1997, the Company acquired 100% of the issued and outstanding
capital stock of SEG from Westinghouse Electric Corporation ("Westinghouse") for
$28.0 million in cash, subject to certain post-closing adjustments, and 156,986
shares of the Company's common stock. The Company paid the cash portion of the
purchase price out of available cash, principally from proceeds of its public
offering in April 1996. The acquisition of SEG will be accounted using the
purchase method of accounting.
In connection with the acquisition of SEG, the Company entered into a new
credit facility with its bank. Under this new credit facility the Company has a
revolving line of credit providing for borrowings up to $8.8 million based upon
eligible amounts of accounts receivable, as defined in the credit agreement.
Borrowings under the revolving line of credit bear interest at the LIBOR rate
plus 2%. Under this facility, the Company's bank has issued letters of credit in
the aggregate amount of $15.3 million to the State of Tennessee to provide
security for the Company's obligation to clean and remediate SEG's facilities
upon closure.
The aggregate estimated purchase price for SEG was as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Cash purchase price $23,802
Fair value of 156,986 shares of common stock
at estimated fair value of $7.60 per share 1,194
Liabilities assumed, including restructuring
costs of $2.0 million 44,426
Transaction costs 2,300
-------
Aggregate estimated purchase price $71,722
=======
</TABLE>
18
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The aggregate purchase is expected to be allocated to the assets acquired
based on their fair values as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Cash $ 60
Accounts receivable 12,665
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,928
Prepaid expenses and other assets 1,842
Property, plant and equipment 42,000
Goodwill and other intangible assets 12,924
Other assets 303
-------
$71,722
=======
</TABLE>
The Company is still in the process of evaluating the fair value of the
tangible and identifiable intangible assets acquired and liabilities assumed.
The final purchase price allocation will be affected by this and the actual
amount of transaction costs. Such amounts could differ materially from the pro
forma presentation.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma consolidated statements of operations for the year ended
December 31, 1996 and the three months ended March 31, 1997 give effect to the
Company's acquisition of SEG as if the transaction had occurred on January 1,
1996 and January 1, 1997, respectively. The pro forma consolidated statements
of operations may not be indicative of the actual results that would have
occurred with SEG under management and control of the Company's personnel.
During 1995, 1996 and the first quarter of 1997, SEG incurred a significant
amount of costs and losses in the processing and disposal of waste which had
accumulated over a number of years. Virtually all waste older than six months
old at March 31, 1997 had been processed and disposed of.
The pro forma consolidated statement of operations have been prepared to
comply with the required Securities and Exchange Commission rules and
regulations. Management of the Company does not believe them to be reflective of
the consolidated results of operations of the Company after the acquisition. In
order to achieve profitability, the Company and SEG have taken a number of steps
to, among others, narrow the range of waste they will accept and process, limit
the maximum holding period for waste on site to 90 days, increase processing
pricing, adjust processing schedules to increase throughput and reduce overhead
costs. The Company believes these factors should enable SEG to significantly
reduce processing losses in the future. However, there can be no assurance that
such steps will be sufficient to make SEG profitable.
19
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The pro forma adjustments include the following:
(1) In December 1996, SEG undertook a restructuring plan which eliminated
approximately 165 positions. SEG estimated that the payroll and benefit
costs related to these employees was approximately $6.5 million. Such
amount has been eliminated from the pro forma consolidated statement of
operations for the year ended December 31, 1996.
(2) In connection with a restructuring plan undertaken during 1996, SEG
incurred $1.7 million of severance and related costs in connection with
a reduction in workforce. Such amount has been eliminated from the pro
forma consolidated statement of operations for the year ended December
31, 1996.
(3) During 1996 SEG incurred significant costs related to the disposal and
clean-up of the containers used to store waste during the past several
years. SEG estimated that such costs were approximately $4.9 million.
Such amount has been eliminated from the pro forma consolidated
statements of operations for the year ended December 31, 1996.
(4) During 1996 SEG completed an inventory of all items of property and
equipment for the purpose of determining existence. Based on results of
the inventory, SEG incurred a $2.4 million charge. Such amount has been
eliminated from the pro forma consolidated statement of operations for
the year ended December 31, 1996.
(5) During 1996 and the three months ended March 31, 1997, SEG incurred
charges for depreciation and amortization of $7,705,000 and $1,431,000,
respectively. As the acquisition is being accounted for under the
purchase method of accounting such amounts have been eliminated and
replaced by depreciation and amortization amounts based on estimated
assets basis and useful lives. In estimating the pro forma amount of
depreciation and amortizations expense the Company has assumed a
weighted average life of 12 years for property and equipment and 30
years for goodwill. Such amounts are estimated to be $3,884,000 and
$971,000 for 1996 and the three months ended March 31, 1997.
(6) During 1996 and the three months ended March 31, 1997, SEG was charged
corporate allocations of $2,731,000 and $815,000 related to certain
insurance, legal and administrative services supplied by Westinghouse.
The Company has estimated the incremental costs of replacing those
items (taking into consideration the advantages of synergies created by
eliminating duplicate services) to be $1.7 million and $425,000 for
1996 and the three months ended March 31, 1997, respectively.
Accordingly, the Company has eliminated the corporate charge from
Westinghouse and increased selling, general and administrative expenses
by the incremental expenses.
(7) During 1996 and the three months ended March 31, 1997, the Company
invested substantially all of the proceeds from its April 1996 offering
of common stock in overnight investments. For purposes of the pro forma
statement of operations the Company has assumed that offering was
completed on January 1, 1996 and has adjusted interest income and
interest expense based on the Company's and SEG's cash flow activity on
a combined basis. Based upon the level of SEG losses, on a
20
<PAGE>
pro forma basis, during 1996 and the three months ended March 31, 1997,
the Company would not have had sufficient cash resources to fund such
losses. Accordingly, the pro forma consolidated statements of
operations reflect the elimination of interest income in 1996 and the
three months ended March 31, 1997 of $1.9 million and $580,000,
respectively, and a charge for interest expense of $800,000 and
$200,000 for such periods assuming maximum borrowing of the Company's
$8.8 million line of credit facility at a rate of 9%.
(8) Based on the pro forma losses before income tax benefit for the year
ended December 31, 1996 and the three months ended March 31, 1997 the
Company has eliminated the income tax charges and benefits included in
its results for the year ended December 31, 1996 and the three months
ended March 31, 1997.
(9) For the year ended December 31, 1996, the Company has eliminated the
effect of common stock equivalents from the per share calculation since
their impact would be anti-dilutive.
During 1996, SEG incurred losses of approximately $2.3 million related to
the costs in excess of expected revenues on two long-term fixed price field
service contracts, one of which is still in process as of the date of the
acquisition. Such amounts have not been eliminated in the pro forma consolidated
statement of operations.
21
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet (Unaudited)
March 31, 1997
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Purchase Pro Forma
GTS SEG Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 41,858 60 (23,802) (1) 18,116
Receivables 9,642 12,665 - 22,307
Other accounts receivable 2,126 - - 2,126
Cost and estimated earnings in excess of
billings on uncompleted contracts 8,290 1,928 - 10,218
Inventories 632 - - 632
Prepaid expenses and other current assets 1,609 1,842 - 3,451
----------- ----------- ----------- -----------
Total current assets 64,157 16,495 (23,802) 56,850
Property, plant and equipment, net 11,289 52,909 (10,909) (2) 53,289
Investments in and advances to joint ventures, net 6,678 - - 6,678
Intangibles 451 16,075 (3,151) (2) 13,375
Deferred charges and other assets 2,371 303 - 2,674
----------- ----------- ----------- -----------
$ 84,946 85,782 (37,862) 132,866
=========== =========== =========== ===========
</TABLE>
22
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet (Unaudited), Continued
March 31, 1997
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Purchase Pro Forma
GTS SEG Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 51 - - 51
Accounts payable and accrued expenses 8,306 9,659 - 17,965
Unearned revenues - 15,123 - 15,123
SEG waste processing and disposal accrual - 3,186 - 3,186
Other current liabilities - 8,475 1,825 (2) -
2,300 (1) 12,600
----------- ----------- ----------- -----------
Total current liabilities 8,357 36,443 4,125 48,925
Long-term debt and capital lease obligations 195 - - 195
Convertible debentures 10,839 - - 10,839
Decontamination and decommissioning accrual - 5,501 - 5,501
Other non-current liabilities 299 657 - 956
----------- ----------- ----------- -----------
Total liabilities 19,690 42,601 4,125 66,416
----------- ----------- ----------- -----------
8% Cumulative Convertible Redeemable Preferred Stock,
$.01 par value; 160,000 shares authorized, issued and
outstanding (liquidation value $16,320,000) 14,884 - - 14,884
----------- ----------- ----------- -----------
Stockholders' equity:
Net stockholders' equity of SEG - 43,181 (43,181)(2) -
Common stock $.01 par value; authorized
35,000,000 shares; issued 9,475,878 in 1995
and 12,419,231 in 1996 125 - 2 (1) 127
Capital in excess of par value 64,519 - 1,192 (1) 65,711
Deficit (14,100) - - (14,100)
Treasury stock at cost, 70,458 shares (172) - - (172)
----------- ----------- ----------- -----------
Total stockholders' equity 50,372 43,181 (41,987) 51,566
----------- ----------- ----------- -----------
Commitments and contingencies
----------- ----------- ----------- -----------
$ 84,946 85,782 (37,862) 132,866
=========== =========== =========== ===========
</TABLE>
Notes to Pro Forma Consolidated Balance Sheet:
(1) To record costs of acquisition.
(2) To record purchase accounting adjustments with respect to
the acquisition of SEG.
23
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations (Unaudited)
Year ended December 31, 1996
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Pro Forma
GTS SEG Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 44,285 112,968 - 157,253
Cost of Revenues 35,198 146,493 (6,500)(1) 167,978
(4,900)(3)
(2,313)(5)
----------- ----------- ----------- -----------
Gross Profit (loss) 9,087 (33,525) 13,713 (10,725)
Selling, general and administrative expenses 7,455 16,234 (1,700)(2) 22,181
(1,508)(5)
1,700 (6)
Corporate expense allocations - 2,731 (2,731)(6) -
Write-off of property, plant and equipment - 2,400 (2,400)(4) -
----------- ----------- ----------- -----------
Income (loss) from operations 1,632 (54,890) 20,352 (32,906)
Interest income (expense), net 1,239 - (2,700)(7) (1,461)
Other income (expense), net - 414 - 414
----------- ----------- ----------- -----------
Income (loss) before income taxes and proportionate
share of loss of joint venture 2,871 (54,476) 17,652 (33,953)
Income taxes (benefit) 649 - (649)(8) -
----------- ----------- ----------- -----------
Income (loss) before proportionate share of loss
of joint venture 2,222 (54,476) 18,301 (33,953)
Proportionate share of loss of joint venture (165) - - (165)
----------- ----------- ----------- -----------
Net income (loss) 2,057 (54,476) 18,301 (34,118)
Preferred stock dividends and charges for accretion (1,500) - - (1,500)
----------- ----------- ----------- -----------
Net income (loss) attributable to common stockholders $ 557 (54,476) 18,301 (35,618)
=========== =========== =========== ===========
Net income (loss) per share $ 0.04 $ (3.07)
=========== =========== =========== ===========
Weighted average common shares and common (2,493,810)(9)
stock equivalents outstanding 13,922,375 156,986 (9) 11,585,551
=========== =========== =========== ===========
</TABLE>
Notes to Pro Forma Consolidated Statement of Operations:
(1) To reflect effects of SEG restructuring plan undertaken in December 1996.
(2) To eliminate severance and other costs in connection with December 1996
restructuring plan.
(3) To eliminate non-recurring site clean-up and remediation costs.
(4) To eliminate non-recurring charge for asset write-off.
(5) To adjust depreciation and amortization to reflect purchase accounting
adjustments.
(6) To adjust/eliminate corporate charge and record estimated costs of
replacing Westinghouse services.
(7) To adjust interest income (expense) to reflect effects of the acquisition
on cash resources.
(8) To eliminate income tax expense.
(9) To adjust weighted average shares to eliminate effect of common stock
equivalents and to reflect shares issued in acquisition.
24
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations (Unaudited)
Three months ended March 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Pro Forma
GTS SEG Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 11,951 26,168 - 38,119
Cost of revenues 15,960 33,273 (429)(5) 48,804
----------- ----------- ----------- -----------
Gross profit (4,009) (7,105) 429 (10,685)
Selling, general and administrative expenses 1,820 2,928 (31)(5) 5,142
425 (6)
Corporate expense allocations - 815 (815)(6) -
----------- ----------- ----------- -----------
Income (loss) from operations (5,829) (10,848) 850 (15,827)
Interest income (expense), net 422 - (780)(7) (358)
Other expenses - (3) - (3)
----------- ----------- ----------- -----------
Income (loss) before income taxes and proportionate share
of loss of joint venture (5,407) (10,851) 70 (16,188)
Income taxes (benefit) (750) - 750(8) -
----------- ----------- ----------- -----------
Income before proportionate share of loss
of joint venture (4,657) (10,851) (680) (16,188)
Proportionate share of loss of joint venture (45) - - (45)
----------- ----------- ----------- -----------
Net income (loss) (4,702) (10,851) (680) (16,233)
Preferred stock dividends and charges for accretion (376) - - (376)
----------- ----------- ----------- -----------
Net income (loss) attributable to common stockholders $ (4,326) (10,851) (680) (16,609)
=========== =========== =========== ===========
Net income (loss) per share $ (.41) $ (1.32)
=========== =========== =========== ===========
Weighted average common shares and common
stock equivalents outstanding 12,383,987 156,986(9) 12,540,973
=========== =========== =========== ===========
</TABLE>
Notes to Pro Forma Consolidated Statement of Operations:
(5) To adjust depreciation and amortization to reflect purchase accounting
adjustments.
(6) To adjust/eliminate corporate charge and record estimated costs of
replacing Westinghouse services.
(7) To adjust interest income (expense) to reflect effects of the
acquisition on cash resources.
(8) To eliminate income tax benefit.
(9) To reflect shares issued in acquisition.
25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
(c)(1) GTS Duratek, Inc. Press Release dated April 21, 1997. *
(c)(2) Stock Purchase Agreement by and between Westinghouse Electric
Corporation and GTS Duratek, Inc. dated as of April 8, 1997. *
(c)(3) Credit Agreement as of April 18, 1997 between GTS Duratek, Inc.,
The Scientific Ecology Group, Inc., SEG Colorado, Inc., Hittman
Transport Services, Inc., GTS Instrument Services, Incorporated,
General Technical Services, Inc., Analytical Resources, Inc.
and First Union National Bank of Maryland and First Union
National Bank of North Carolina. *
(c)(4) Security Agreement dated as of April 18, 1997 between GTS Duratek,
Inc. General Technical Services, Inc., GTS Instrument Services,
Incorporated, Analytical Resources, Inc. and First Union National
Bank of Maryland. *
(c)(5) Security Agreement dated as of April 18, 1997 between The Scientific
Ecology Group, Inc., SEG Colorado, Inc., Hittman Transport
Services, Inc. and First Union National Bank of Maryland. *
(c)(6) GTS Duratek, Inc. Press Release dated March 31, 1997. *
(c)(7) GTS Duratek, Inc. Press Release dated April 16, 1997. *
(c)(8) Consent of KPMG Peat Marwick LLP. 27
</TABLE>
*Previously filed.
26
<PAGE>
Exhibit (c)(8)
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Scientific Ecology Group, Inc.:
We consent to the inclusion of our report dated June 13, 1997, with respect to
the consolidated balance sheets of Scientific Ecology Group, Inc. as of December
31, 1995 and 1996, and the related consolidated statements of operations,
changes in parent's investment and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the
Form 8-K/A of GTS Duratek, Inc. dated April 18, 1997.
KPMG Peat Marwick LLP
Baltimore, Maryland
June 30, 1997
27