UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
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/X / Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
-- Exchange Act of 1934
For the Quarter Ended March 31, 2000
OR
/__/ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to _____________
Commission File Number 0-14292
GTS DURATEK, INC.
(Exact name of Registrant as specified in its charter)
Delaware 22-2476180
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10100 Old Columbia Road, Columbia, Maryland 21046
- ------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 312-5100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Number of shares outstanding of each of the issuer's classes of common stock as
of May 9, 2000:
Common Stock, par value $0.01 per share 13,419,337 shares
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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Part I FINANCIAL INFORMATION
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<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
as of March 31, 2000 and December 31, 1999............................................ 1
Consolidated Condensed Statements of Operations for the Three
Months Ended March 31, 2000 and 1999.................................................. 2
Consolidated Condensed Statement of Changes in Stockholders'
Equity for Three Months Ended March 31, 2000.......................................... 3
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999............................................ 4
Notes to Condensed Consolidated Financial Statements........................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 8
Item 3. Quantitative and Qualitative Information About
Market Risk........................................................................... 9
Qualification Relating to Financial Information................................................ 9
Part II OTHER INFORMATION
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Item 1. Legal Proceedings............................................................................. 10
Item 5. Other Information............................................................................. 10
Item 6. Exhibits and Reports on Form 8-K.............................................................. 11
Signatures ................................................................................... 12
</TABLE>
<PAGE>
Part I Financial Information
- ------
Item 1. Financial Statements
GTS DURATEK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ----------
ASSETS (unaudited) *
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 101,552 $ 59,525
Receivables, net............................................................. 35,669,189 33,309,141
Other accounts receivable.................................................... 5,383,233 6,292,606
Costs and estimated earnings in excess of
billings on uncompleted contracts.......................................... 16,670,176 15,924,413
Prepaid expenses and other current assets.................................... 5,616,908 2,800,698
Net assets held for sale..................................................... - 6,618,836
Deferred income taxes ....................................................... 359,366 359,366
----------- -----------
Total current assets....................................................... 63,800,424 65,364,585
Property, plant and equipment, net............................................. 65,237,210 63,417,307
Investments in and advances to joint ventures, net............................. 4,158,773 4,183,773
Goodwill and other intangible assets, net...................................... 23,120,772 23,391,192
Note receivable................................................................ 335,693 -
Other Assets................................................................... 1,587,896 1,231,506
----------- -----------
$158,240,768 $157,588,363
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings........................................................ $ 8,000,000 $ 9,000,000
Current portion of long term debt............................................ 4,000,000 4,000,000
Accounts payable ............................................................ 12,401,603 15,529,048
Accrued expenses and other current liabilities............................... 10,120,916 5,269,875
Unearned revenues............................................................ 7,943,951 6,672,699
Waste processing and disposal liabilities.................................... 2,291,302 3,910,155
----------- -----------
Total current liabilities................................................. 44,757,772 44,381,777
Long-term debt................................................................. 12,200,000 13,200,000
Convertible debenture.......................................................... 12,497,812 12,334,813
Facility and equipment decontamination
and decommissioning liabilities............................................... 8,711,209 8,507,641
Other noncurrent liabilities................................................... 1,156,674 1,957,797
Deferred income taxes.......................................................... 302,187 302,187
----------- -----------
Total liabilities......................................................... 79,625,654 80,684,215
----------- -----------
Redeemable preferred stock
(Liquidation value $16,320,000).............................................. 15,567,521 15,509,438
----------- -----------
Stockholders' equity:
Common stock................................................................. 148,238 148,238
Capital in excess of par value............................................... 75,207,177 75,207,177
Deficit...................................................................... (3,120,096) (4,772,979)
Treasury stock, at cost...................................................... (9,187,726) (9,187,726)
------------ ------------
Total stockholders' equity................................................. 63,047,593 61,394,710
------------ ------------
$158,240,768 $157,588,363
=========== ===========
</TABLE>
* The Consolidated Condensed Balance Sheet as of December 31, 1999 has been
derived from the Company's audited Consolidated Balance Sheet as of that date.
See notes to condensed consolidated financial statements.
1
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
2000 1999
---- ----
<S> <C> <C>
Revenues......................................................... $41,102,451 $38,885,254
Cost of revenues................................................. 31,472,188 29,075,839
---------- ----------
Gross profit..................................................... 9,630,263 9,809,415
Selling, general and
administrative expenses........................................ 6,684,816 6,510,025
---------- ----------
Income from operations........................................... 2,945,447 3,299,390
Gain on sale of DuraTherm, Inc................................... 1,166,000 -
Interest expense, net............................................ (741,481) (284,822)
---------- ----------
Income before income taxes
and proportionate share
of loss of joint venture....................................... 3,369,966 3,014,568
Income taxes..................................................... 1,314,000 1,160,609
---------- ----------
Income before gain on sale of assets and
proportionate share of loss of joint venture................... 2,055,966 1,853,959
Proportionate share of loss of joint
venture........................................................ (25,000) (50,000)
---------- ---------
Net income....................................................... 2,030,966 1,803,959
Preferred stock dividends and
charges for accretion........................................... 378,083 377,220
---------- ----------
Net income attributable to
common shareholders............................................. $ 1,652,883 $ 1,426,739
========== ==========
Basic net income per share....................................... $ 0.12 $ 0.10
========== =========
Diluted net income per share..................................... $ 0.11 $ 0.09
========== =========
Basic weighted average
common stock outstanding........................................ 13,301,892 13,773,860
========== ==========
Diluted weighted average common
stock and dilutive
securities outstanding......................................... 20,418,791 20,840,081
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Capital in Total
---------------------- Excess of Treasury Stockholders'
Shares Amount Par Value Deficit Stock Equity
------ ------ --------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 14,823,850 $148,238 $75,207,177 $(4,772,979) $(9,187,726) $61,394,710
Net income - - - 2,030,966 - 2,030,966
Preferred dividends - - - (320,000) - (320,000)
Accretion of redeemable
preferred stock - - - (58,083) - (58,083)
---------- --------- ---------- ----------- ----------- ----------
Balance, March 31, 2000 14,823,850 $ 148,238 $75,207,177 $(3,120,096) $(9,187,726) $63,047,593
========== ========= ========== =========== =========== ==========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................................ $ 2,030,966 $1,803,959
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization..................................................... 1,500,470 840,489
Loss on sale of equipment......................................................... - 110,979
Accrued interest on convertible debenture ........................................ 162,999 118,252
Proportionate share of loss of joint venture...................................... 25,000 50,000
Gain on sale of DuraTherm, Inc.................................................... (1,166,000) -
Changes in operating items, net of effects from
business disposed of in 2000:
Receivables..................................................................... (1,450,675) (2,002,312)
Cost in excess of billings...................................................... (745,763) (1,486,903)
Prepaid expenses and other current assets....................................... (2,816,210) (881,347)
Net assets held for sale........................................................ (174,515) -
Accounts payables, accrued expenses and
other current liabilities..................................................... 1,804,231 87,118
Unearned revenues............................................................... (1,271,252) (1,416,027)
Waste processing and disposal liabilities....................................... (1,618,853) 1,275,304
Facility and equipment decontamination and
decommissioning liabilities................................................... 203,568 180,074
Other........................................................................... (356,390) 132,580
----------- ----------
Net cash used in operations............................................................. (1,329,920) (1,187,834)
----------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment, net ...................................... (3,049,953) (953,360)
Proceeds from sale of DuraTherm, Inc., net of
transaction costs................................................................... 7,623,664 -
Advances to joint ventures............................................................ - (19,999)
Other................................................................................. (788,284) (626,554)
----------- ----------
Net cash provided by (used in)investing activities................................ 3,785,427 (1,599,913)
----------- ----------
Cash flows from financing activities:
Short-term repayments, net............................................................ (1,000,000) (8,947,148)
Borrowings under long-term debt....................................................... - 8,000,000
Repayments of long-term debt.......................................................... (1,000,000) -
Repayment of capital lease obligations................................................ (93,480) -
Preferred stock dividends............................................................. (320,000) (320,000)
Proceeds from issuance of common stock................................................ - 7,000
Repurchase of treasury shares......................................................... - (269,844)
Deferred financing costs.............................................................. - (644,298)
------------ ----------
Net cash used in financing activities............................................... (2,413,480) (2,174,290)
------------ ----------
Net change in cash and cash equivalents................................................. 42,027 (4,962,037)
Cash and cash equivalents at beginning of period........................................ 59,525 5,944,274
----------- ----------
Cash and cash equivalents at end of period.............................................. $ 101,552 $ 982,237
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated in consolidation.
Investments in subsidiaries and joint ventures in which the Company does not
have control or majority ownership are accounted for under the equity method.
2. NET INCOME PER SHARE
Basic earnings per share (EPS) excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Weighted average shares
used in computing basic EPS were 13,301,892 and 13,773,860 for the three
months ended March 31, 2000 and 1999, respectively. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
Weighted average shares used in computing diluted EPS were 20,418,791 and
20,840,081 for the three months ended March 31, 2000 and 1999, respectively.
The difference between basic and diluted weighted average shares relates to
the dilutive effect of stock options and warrants where the exercise price is
less than the average market value of the Company's common stock for the year
of calculation.
3. SALE OF DURATHERM, INC.
In February 2000, the Company completed the sale of its 80% interest in
DuraTherm, Inc. to DuraTherm Group, Inc. for $8.0 million in cash and a
subordinated note for $336,000. Proceeds to the Company of $8.0 million were
used by the Company to pay down borrowings under its bank credit facility.
The note receivable bears interest at 14%, payable semi-annually during the
first year following the sale, and 18% during the second year following the
sale with the principal due in February 2002. The Company recognized a
pre-tax gain of $1.2 million on the sale.
4. SEGMENT REPORTING
The Company has three primary segments (i) commercial waste processing,
(ii) government waste processing and (iii) technical services. Below is a
brief description of each of the segments:
1. COMMERCIAL WASTE PROCESSING (CWP) The Company conducts its commercial
waste processing operations principally at its Bear Creek Operations
Facility located in Oak Ridge, Tennessee. The Company's waste treatment
technologies include: incineration; compaction; metal decontamination
and recycling; vitrification; steam reforming; and thermal desorption.
Commercial waste processing customers primarily include commercial
nuclear utilities and petrochemical companies.
2. GOVERNMENT WASTE PROCESSING (GWP) The Company provides on-site waste
processing services on large government projects for the DOE. The on-site
waste processing services provided by the Company on DOE projects include
program development, waste characterization, on-site waste treatment,
facility operation, packaging and shipping of residual waste, profiling and
manifesting the processed waste and selected technical support services.
5
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
3. TECHNICAL SERVICES (TS) The Company's technical support services encompass
approximately 600 engineers, consultants and technicians, some of whom are
full-time employees and the balance of whom are contract employees, who
support and complement the Company's commercial and government waste
processing operations and also provide highly specialized technical support
services for the Company's customers.
The Company's segment information is as follows:
<TABLE>
<CAPTION>
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
CWP GWP TS UNALLOCATED ITEMS CONSOLIDATED
- --------------------------------------------------- ------------------- ------------------ ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Revenues from
external customers $ 20,206,251 $ 8,662,617 $ 12,233,583 $ - $ 41,102,451
Income from operations 1,938,571 774,652 232,224 - 2,945,447
Gain on Sale of - - - 1,166,000 1,166,000
DuraTherm, Inc.
Interest expense - - - (741,481) (741,481)
Depreciation and
amortization
expense 1,214,616 71,858 113,146 143,124 1,542,744
Proportionate share
of losses of joint - - - (25,000) (25,000)
ventures
Income tax expense - - - 1,314,000 1,314,000
Investments in and
advances to joint
ventures - - - 4,158,773 4,158,773
Capital expenditure
for additions to
long-lived assets 2,728,597 - 24,848 296,508 3,049,953
Total assets 104,148,272 15,312,098 24,774,091 14,006,307 158,240,768
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
GTS DURATEK, INC. AND SUBSIDIARIES
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
UNALLOCATED ITEMS
CWP GWP TS CONSOLIDATED
- --------------------------------------------------- ------------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Revenues from
external customers $ 17,568,395 $ 9,476,689 $11,840,170 $ - $38,885,254
Income from
operations 2,027,560 887,402 384,428 - 3,299,390
Interest expense - - - (284,822) (284,822)
Depreciation and
amortization
expense 690,189 50,095 100,205 - 840,489
Proportionate share
of losses of joint - - - (50,000) (50,000)
ventures
Income tax expense - - - 1,160,609 1,160,609
Investments in and
advances to joint - - - 4,101,405 4,101,405
ventures
Capital expenditure
for additions to 807,468 35,864 35,387 74,641 953,360
long-lived assets
Total assets 60,644,004 31,712,363 20,562,061 16,285,485 129,183,913
</TABLE>
4. PURCHASE OF WASTE MANAGEMENT NUCLEAR SERVICES
On March 29, 2000, the Company announced that it entered
into a definitive agreement to acquire the nuclear services business of
Waste Management, Inc. for up to $65 million in cash, consisting of $55
million in cash at closing and up to $10 million additional cash
consideration upon the satisfaction of certain post-closing conditions.
Waste Management Nuclear Services ("WMNS") is a leader in providing
low-level radioactive waste management services for the commercial
industry and the federal government. WMNS consists primarily of three
operating segments: (i) the Federal Services Division which provides
radioactive waste handling, transportation, treatment packaging,
storage, disposal, site cleanup, and project management services
primarily for the DOE and other federal agencies; (ii) the Commercial
Services Division which provides radioactive waste handling,
transportation, licensing, packing, disposal, and decontamination and
decommissioning services primarily to nuclear utilities; and (iii) the
Commercial Disposal Division which operates a commercial low-level
radioactive waste disposal facility at Barnwell, South Carolina. The
proposed acquisition is subject to certain regulatory approvals and
other customary conditions. Closing of the transaction is targeted for
the second quarter of 2000.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GTS DURATEK, INC. AND SUBSIDIARIES
OVERVIEW
GTS Duratek, Inc. (the "Company") derives substantially all of its
revenues from commercial and government waste processing operations, and from
technical support services to electric utilities, industrial facilities,
commercial businesses and government agencies. Commercial waste processing
operations are provided primarily at the Company's Bear Creek low-level
radioactive waste processing facility located in Oak Ridge, Tennessee. The
Company also provides on-site waste processing services on large government
projects for the United States Department of Energy ("DOE"). Technical support
services are generally provided pursuant to multi-year time and materials
contracts. Revenues are recognized as costs are incurred according to
predetermined rates. The contract costs primarily include direct labor,
materials and the indirect costs related to contract performance.
The Company's future operating results will be affected by, among
other things, the duration of commercial waste processing contracts and amount
of waste to be processed by the Company's commercial waste processing operations
pursuant to these contracts; the timing of new DOE waste treatment projects,
including those pursued jointly with BNFL and the duration of the Hanford and
Idaho Falls DOE projects.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AS COMPARED TO THREE MONTHS ENDED MARCH 21,
2000.
Revenues increased by $2.2 million, or 5.7%, from $38.9 million in
1999 as compared to $41.1 million in 2000. The increase was primarily
attributable to a $5.1 million increase in commercial waste processing services
at the Company's Bear Creek low-level radioactive waste processing facility
located in Oak Ridge, Tennessee and a $400,000 increase in technical support
services revenues. The increase was partially offset by an $800,000 decrease in
revenues in government waste processing services. The increase was also
partially offset by the $2.5 million decrease in revenues at the Company's
DuraTherm petrochemical waste treatment facility located in San Leon, Texas due
to its sale in February, 2000. The increase in revenues at the Bear Creek
facility was the result of higher waste processing volumes from several
decommissioning projects as compared to the same period in 1999. The increase in
revenues from technical support services was the result of increased consulting
services over the same period in the prior year partially offset by lower
transportation revenues. The decrease in government waste processing services
was primarily the result of decreased activity at the Rocky Flats Colorado
project.
Gross profit decreased by $200,000 from $9.8 million in 1999 to $9.6
million in 2000. The DuraTherm facility, transportation, other technical
services, and Rocky Flats accounted for a decrease in gross profit of $1.0
million, $300,000, $200,000 and $400,000, respectively. The decrease in gross
margin was partially offset by increases in the Bear Creek facility of $1.7
million as a result of higher processing volumes and a change in product mix.
The decrease in gross profit at the DuraTherm facility was the result of the
sale of that facility. The decrease in gross profit from transportation, other
technical support services, and Rocky Flats was the result of volume decreases.
As a percentage of revenues, gross profit decreased from 25.2% in 1999 to 23.4%
in 2000.
Selling, general and administrative expenses increased by $200,000 or
2.7% from $6.5 million in 1999 to $6.7 million in 2000. As a percentage of
revenues, selling general and administrative expenses decreased from 16.7% in
1999 to 16.3% in 2000.
8
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Interest expense, net increased by $457,000 from 1999 to 2000. The
increase was the result of increased borrowings required to fund working capital
needs and the acquisition of Frank W. Hake Associates, LLC in June, 1999.
Income taxes increased from $1.2 million in 1999 to $1.3 million in
2000. The Company is accruing income taxes at full statutory rates.
LIQUIDITY AND CAPITAL RESOURCES
In February 1999, the Company obtained a $60 million five-year bank
credit facility which includes (i) a $35 million revolving line of credit, based
on eligible accounts receivable as defined in the credit agreement, to fund
working capital requirements, (ii) a $20 million line of credit to finance
acquisitions or stock repurchases, and (iii) a $5 million line of credit to
finance up to 75% of new equipment purchases. Borrowings under the old credit
facility were repaid from this credit facility. Borrowings outstanding under the
revolving line of credit bear interest at either the bank's base rate, as
defined, or at the LIBOR rate plus 2.25%. At March 31, 2000, the Company had
$8.0 million outstanding under the revolving line of credit and $16.2 million
outstanding under the acquisition line of credit. At March 31, 2000, $19.9
million of additional borrowings were available under the revolving credit
portion of the bank credit facility.
The Company believes cash flows from operations and, if necessary,
borrowings available under its credit facility will be sufficient to meet its
operating needs, including the quarterly preferred dividend requirement of
$320,000 for at least the next twelve months. The Company is in the process of
expanding its existing credit facility and intends to use borrowings under it to
purchase WMNS.
ITEM 3. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK
The Company's major market risk is to changing interest rates. As of
March 31, 2000, the Company had floating rate long-term debt of $16.2 million
and floating short-term rate debt of $8.0 million. The long-term debt bears
interest at LIBOR plus 2.25%. The short-term debt bears interest at the bank's
base rate, as defined.
The Company has not purchased any interest rate derivative instruments
but may do so in the future. In addition, the Company does not have any foreign
currency or commodity risk.
QUALIFICATION RELATING TO FINANCIAL INFORMATION
The consolidated financial information included herein is unaudited,
and does not include all disclosures required under generally accepted
accounting principles because certain note information included in the Company's
Annual Report, filed on Form 10-K, has been omitted; however, such information
reflects all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim
periods presented. The results of the 2000 interim period are not necessarily
indicative of results to be expected for the entire year.
9
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
- -------
Item 1. Legal Proceedings
See the Company's annual report on Form 10-K for the year
ended December 31, 1999 for a discussion of legal
proceedings.
Item 5. Other Information
IN RESPONSE TO THE "SAFE HARBOR" PROVISIONS CONTAINED IN THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY IS INCLUDING IN THIS
QUARTERLY REPORT ON FORM 10-Q THE FOLLOWING CAUTIONARY STATEMENTS WHICH ARE
INTENDED TO IDENTIFY CERTAIN IMPORTANT FACTORS THAT COULD CAUSE THE COMPANY'S
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN FORWARD-LOOKING
STATEMENTS OF THE COMPANY MADE BY OR ON BEHALF OF THE COMPANY. MANY OF THESE
FACTORS HAVE BEEN DISCUSSED IN PRIOR FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
The Company's future operating results are largely dependent upon the
Company's ability to manage its commercial waste processing operations,
including obtaining commercial waste processing contracts and processing waste
under such contracts in a timely and cost effective manner. In addition, the
Company's future operating results are dependent upon the timing and awarding of
contracts by the DOE for the cleanup of other waste sites administered by it.
The timing and award of such contracts by the DOE is directly related to the
response of governmental authorities to public concerns 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
adversely affect the availability and timing of government funding for the
cleanup of DOE and other sites containing radioactive and mixed wastes.
Additionally, revenues from technical support services have in the past and
continue to account for a substantial portion of the Company's revenues and the
loss of one or more technical support service contracts could adversely affect
the Company's future operating results.
The Company's future operating results may fluctuate due to factors
such as: the timing of new commercial waste processing contracts and duration of
and amount of waste to be processed pursuant to those contracts; the Company's
ability to integrate acquired businesses, including the Company's most resent
acquisition of Hake and the proposed acquisition of WMNS; the acceptance and
implementation of its waste treatment technologies in the government and
commercial sectors; the evaluation by the DOE and other customers of the
Company's technologies versus other competing technologies as well as
conventional storage and disposal alternatives; the timing of new waste
treatment projects, including those pursued jointly with BNFL, and the duration
of such projects; and the timing of outage support projects and other large
technical support services projects at its customers' facilities.
10
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
See accompanying Index to Exhibits.
b. Reports
Current Report on Form 8-K filed on February 22, 2000.
11
<PAGE>
GTS DURATEK, INC. AND SUBSIDIARIES
MARCH 31, 2000
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 thereunto duly authorized.
GTS DURATEK, INC.
Dated: May 15, 2000 BY: /s/ Robert F. Shawver
---------------------
Robert F. Shawver
Executive Vice President and
Chief Financial Officer
Dated: May 15, 2000 BY: /s/ Charles L. Standley
-----------------------
Charles L. Standley
Controller
12
<PAGE>
EXHIBITS INDEX
Exhibit
No.
- ---
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
Incorporated herein by reference to Exhibit 3.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
(File No. 0-14292).
3.2 By-Laws of the Registrant. Incorporated herein by reference to
Exhibit 3.3 of the Registrant's Registration Statement on Form S-1
(File No. 33-2062).
4.1 Certificate of Designations of the 8% Cumulative Convertible
Redeemable Preferred Stock dated January 23, 1995. Incorporated
herein by reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K filed on February 1, 1995 (File No. 0-14292).
4.2 Stock Purchase Agreement among Carlyle Partners II, L.P., Carlyle
International Partners II, L.P., Carlyle International Partners III,
L.P., C/S International Partners, Carlyle-GTSD Partners, L.P.,
Carlyle-GTSD Partners II, L.P. and GTS Duratek, Inc. and National
Patent Development Corporation dated as of January 24, 1995.
Incorporated herein by reference to Exhibit 4.2 of the Registrant's
Current Report on Form 8-K filed on February 1, 1995 (File No.
0-14292).
4.3 Stockholders Agreement by and among GTS Duratek, Inc., Carlyle
Partners II, L.P., Carlyle International Partners II, L.P., Carlyle
International Partners III, L.P., C/S International Partners,
Carlyle-GTSD Partners, L.P., Carlyle-GTSD Partners II, L.P. and GTS
Duratek, Inc. and National Patent Development Corporation dated as
of January 24, 1995. Incorporated herein by reference to Exhibit 4.3
of the Registrant's Current Report on Form 8-K filed on February 1,
1995 (File No. 0-14292).
4.4 Registration Rights Agreement by and among GTS Duratek, Inc.,
Carlyle Partners II, L.P., Carlyle International Partners II, L.P.,
Carlyle-International Partners III, L.P., C/S International
Partners, Carlyle-GTSD Partners, L.P., Carlyle-GTSD Partners II,
L.P. and GTS Duratek, Inc. and National Patent Development
Corporation dated as of January 24, 1995. Incorporated herein by
reference to Exhibit 4.4 of the Registrant's Current Report on Form
8-K filed on February 1, 1995 (File No. 0-14292).
4.5 Convertible Debenture issued by GTS Duratek, Inc., General Technical
Services, Inc., GTS Instrument Services Incorporated to BNFL Inc.
dated November 7, 1995. Incorporated herein by reference to Exhibit
10.20 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 (File No. 0-14292).
10.1 1984 Duratek Corporation Stock Option Plan, as amended. Incorporated
herein by reference to Exhibit 10.9 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990 (File No.
0-14292).
13
<PAGE>
10.2 Asset Purchase Agreement dated August 20, 1990 between Chem-Nuclear
Systems, Inc. and Duratek Corporation. Incorporated herein by
reference to Exhibit 1 to the Registrant's Current Report on Form
8-K filed on August 20, 1990 (File No. 0-14292).
10.3 License Agreement dated as of August 17, 1992 between GTS Duratek,
Inc. and Dr. Theodore Aaron Litovitz and Dr. Pedro Buarque de
Macedo. Incorporated herein by reference to Exhibit 10.9 of the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1992. (File No. 0-14292).
10.4 Stockholders' Agreement dated December 28, 1993 between GTS Duratek,
Inc. and Vitritek Holdings, L.L.C. Incorporated herein by reference
to Exhibit 3 of the Registrant's Current Report on Form 8-K dated
December 22, 1993. (File No. 0-14292).
10.5 Agreement dated January 14, 1994 between GTS Duratek, Inc. and
Westinghouse Savannah River Company. Incorporated herein by
reference to Exhibit 10.17 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993. (File No. 0-14292).
10.6 Teaming Agreement by and between GTS Duratek, Inc. and BNFL Inc.
dated November 7, 1995. Incorporated herein by reference to Exhibit
10.20 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995. (File No. 0-14292).
10.7 Sublicense Agreement by and between GTS Duratek, Inc. and BNFL Inc.
dated November 7, 1995. Incorporated herein by reference to Exhibit
10.21 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995. (File No. 0-14292).
10.8 GTS Duratek, Inc. Executive Compensation Plan. Incorporated herein
by reference to Exhibit 10.19 of the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997. (File No.
0-14292).
10.9 Amended and Restated Credit Agreement as of February 1, 1999 between
GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek
Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument
Services, Incorporated, General Technical Services, Inc., Analytical
Resources, Inc., GTSD Sub III, Inc. and First Union National Bank,
First Union Commercial Corporation, Wachovia Bank, N.A. and National
Bank of Canada. Incorporated herein by reference to Exhibit 2 of the
Registrant's Current Report on Form 8-K dated February 1, 1999.
(File No. 0-14292).
14
<PAGE>
10.10 Amended and Restated Security Agreement dated as of February 1, 1999
between GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek
Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument
Services, Incorporated, General Technical Services, Inc., Analytical
Resources, Inc., GTSD Sub III, Inc. and First Union National Bank,
First Union Commercial Corporation, Wachovia Bank, N.A. and National
Bank of Canada. Incorporated herein by reference to Exhibit 3 of the
Registrant's Current Report on Form 8-K dated February 1, 1999.
(File No. 0-14292).
10.11 Stock Purchase Agreement between HakeTenn, Inc., George T. Hamilton
and Richard Wilson and GTS Duratek, Inc. dated as of June 30, 1999.
Incorporated herein by reference to Exhibit (c)(2) of the
Registrant's Current Report on Form 8-K filed on July 13, 1999.
(File No. 0-14292).
10.12 Stock Purchase Agreement between DuraTherm Group, Inc. and GTSD Sub
III, Inc. dated February 7, 2000. Incorporated herein by reference
to Exhibit 99.2 of the Registrant's Current Report on Form 8-K filed
on February 22, 2000. (File No. 0-14292).
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheet as of March 31, 2000 (unaudited) and the
Consolidated Condensed Statement of Operations for the three months ended March
31, 2000 (unaudited), of GTS Duratek, Inc. and Subsidiaries, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 101,552 982,237
<SECURITIES> 0 0
<RECEIVABLES> 36,403,551 38,272,128
<ALLOWANCES> (734,362) (596,727)
<INVENTORY> 594,548 2,403,749
<CURRENT-ASSETS> 63,800,424 52,494,567
<PP&E> 81,162,699 66,935,766
<DEPRECIATION> (15,925,489) (12,532,473)
<TOTAL-ASSETS> 158,240,768 129,183,913
<CURRENT-LIABILITIES> 44,757,772 28,223,356
<BONDS> 0 0
15,567,521 15,336,329
0 0
<COMMON> 148,238 142,277
<OTHER-SE> 63,047,593 56,043,205
<TOTAL-LIABILITY-AND-EQUITY> 158,240,768 129,183,913
<SALES> 0 0
<TOTAL-REVENUES> 41,102,451 38,885,254
<CGS> 0 0
<TOTAL-COSTS> 31,472,188 29,075,839
<OTHER-EXPENSES> 0 6,510,025
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 741,481 284,822
<INCOME-PRETAX> 3,369,966 3,014,568
<INCOME-TAX> 1,314,000 1,160,609
<INCOME-CONTINUING> 2,030,966 1,803,959
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,030,966 1,803,959
<EPS-BASIC> 0.12 0.10
<EPS-DILUTED> 0.11 0.09
</TABLE>
