10-Q 1 a2055805z10-q.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 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 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 July 24, 2001: CLASS OF STOCK NUMBER OF SHARES -------------------------------------------------------------------------------- Common stock, par value $0.01 per share 13,467,252 DURATEK, INC. AND SUBSIDIARIES TABLE OF CONTENTS -----------------
PAGE ---- PART I FINANCIAL INFORMATION ------ Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000......................... 2 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2001 and 2000......................................................................... 3 Condensed Consolidated Statement of Changes in Stockholders' Equity for the Six Months Ended June 30, 2001.................................................................................. 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000......................................................................... 5 Notes to Condensed Consolidated Financial Statements.................................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 11 Item 3. Quantitative and Qualitative Information about Market Risk.............................................. 14 PART II OTHER INFORMATION ------- Item 1. Legal Proceedings...................................................................................... 15 Item 4. Submission of Matters to a Vote of Securities Holders.................................................. 15 Item 5. Other Information...................................................................................... 16 Item 6. Exhibits and Reports on Form 8-K....................................................................... 17 Signatures............................................................................................. 18
1 PART I FINANCIAL INFORMATION ------ Item 1. Financial Statements
DURATEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of dollars) June 30, December 31, 2001 2000 ------------- ------------ ASSETS (unaudited) * Current assets: Cash and cash equivalents ................................................................ $ 3,777 $ 431 Receivables, net ......................................................................... 73,338 57,365 Other accounts receivable ................................................................ 3,102 5,043 Income tax recoverable ................................................................... -- 6,516 Costs and estimated earnings in excess of billings on uncompleted contracts............... 22,476 24,436 Prepaid expenses and other current assets ................................................ 7,942 7,687 Deferred income taxes .................................................................... 736 736 --------- --------- Total current assets ................................................................... 111,371 102,214 Property, plant and equipment, net .......................................................... 81,592 82,598 Goodwill and other intangible assets, net ................................................... 80,614 83,139 Decontamination and decommissioning trust fund .............................................. 18,074 18,037 Other assets ................................................................................ 10,272 8,855 Deferred income taxes ....................................................................... 3,900 3,857 --------- --------- $ 305,823 $ 298,700 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ........................................................ $ 11,400 $ 11,400 Accounts payable ......................................................................... 17,976 23,915 Accrued expenses and other current liabilities ........................................... 79,532 41,115 Unearned revenues ........................................................................ 10,974 12,742 Waste processing and disposal liabilities ................................................ 8,532 8,797 --------- --------- Total current liabilities .............................................................. 128,414 97,969 Long-term debt .............................................................................. 78,968 102,265 Facility and equipment decontamination and decommissioning liabilities....................... 29,235 29,294 Other noncurrent liabilities ................................................................ 2,392 2,588 --------- --------- Total liabilities ........................................................................ 239,009 232,116 --------- --------- Redeemable preferred stock (Liquidation value $15,726) ...................................... 15,617 15,499 --------- --------- Stockholders' equity: Preferred stock - $.01 par value; authorized 4,840,000 shares; none issued ............... -- -- Common stock - $.01 par value; authorized 35,000,000 shares; issued 15,042,944 in 2001 and 14,992,705 shares in 2000 .............................................................. 150 150 Capital in excess of par value ........................................................... 77,087 77,134 Accumulated deficit ...................................................................... (15,969) (15,993) Treasury stock, at cost, 1,566,358 shares in 2001 and 1,562,158 shares in 2000............ (9,275) (9,251) Deferred stock compensation .............................................................. (796) (955) --------- --------- Total stockholders' equity ............................................................. 51,197 51,085 --------- --------- $ 305,823 $ 298,700 ========= =========
* The Condensed Consolidated Balance Sheet as of December 31, 2000 has been derived from the Company's audited Consolidated Balance Sheet reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. See Notes to Condensed Consolidated Financial Statements. 2
DURATEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars, except per share amounts) Three months ended Six months ended June 30, June 30, -------------------------------- ------------------------------- 2001 2000 2001 2000 -------------- -------------- -------------- ------------ (unaudited) (unaudited) Revenues ................................................. $ 74,647 $ 50,909 $ 141,102 $ 91,922 Cost of revenues ......................................... 55,661 39,037 110,186 70,889 --------- --------- --------- --------- Gross profit ............................................. 18,986 11,872 30,916 21,033 Selling, general and administrative expenses ............. 11,867 8,390 23,427 15,339 --------- --------- --------- --------- Income from operations ................................... 7,119 3,482 7,489 5,694 Other income ............................................. 169 -- 170 1,166 Interest expense, net .................................... (3,291) (1,339) (6,206) (2,140) --------- --------- --------- --------- Income before income taxes and proportionate share of loss of joint venture................................... 3,997 2,143 1,453 4,720 Income taxes ............................................. 1,599 849 581 1,854 --------- --------- --------- --------- Income before proportionate share of loss of joint venture........................................... 2,398 1,294 872 2,866 Proportionate share of loss of joint venture ............. (50) (25) (100) (50) --------- --------- --------- --------- Net income ............................................... 2,348 1,269 772 2,816 Preferred stock dividends and charges for accretion ...... (374) (378) (748) (755) --------- --------- --------- --------- Net income attributable to common shareholders ........... $ 1,974 $ 891 $ 24 $ 2,061 ========= ========= ========= ========= Basic earnings per share ................................. $ 0.15 $ 0.07 $ 0.00 $ 0.15 ========= ========= ========= ========= Diluted earnings per share ............................... $ 0.13 $ 0.07 $ 0.00 $ 0.15 ========= ========= ========= ========= Basic weighted average common stock outstanding........... 13,423 13,429 13,420 13,428 ========= ========= ========= ========= Diluted weighted average common stock and dilutive securities outstanding ................................. 18,746 13,579 13,506 13,555 ========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements. 3
DURATEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AS OF JUNE 30, 2001 (in thousands of dollars, except share amounts) Common Stock Capital Deferred Total --------------------- in Excess of Accumulated Treasury Stock Stockholders' Shares Amount Par Value Deficit Stock Compensation Equity ------------- ------- ---------------- -------------- ----------- ----------------- ------------- (Unaudited) Balance, December 31, 2000........... 14,992,705 $150 $77,134 $(15,993) $(9,251) $(955) $51,085 Net income..................... -- -- -- 772 -- -- 772 Amortization of deferred stock compensation................ -- -- -- -- -- 159 159 Other issuances of common stock....................... 50,239 -- 239 -- -- -- 239 Adjustment related to stock option exercises............ -- -- (286) -- -- -- (286) Treasury stock purchases....... -- -- -- -- (24) -- (24) Preferred dividends and charges for accretion....... -- -- -- (748) -- -- (748) ------------------------------------------------------------------------------------------------- Balance, June 30, 2001............... 15,042,944 $150 $77,087 $(15,969) $(9,275) $(796) $51,197 =================================================================================================
See Notes to Condensed Consolidated Financial Statements. 4
DURATEK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) Six months ended June 30, ------------------------------ 2001 2000 -------------- ------------ (unaudited) Cash flows from operating activities: Net income ................................................................................ $ 772 $ 2,816 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ......................................................... 6,532 3,258 Stock compensation expense ............................................................ 159 91 Proportionate share of loss of joint venture .......................................... 100 50 Accrued interest on convertible debenture ............................................. -- 356 Gain on sale of DuraTherm, Inc. ....................................................... -- (1,166) Changes in operating assets and liabilities, net of effects from businesses disposed of in 2000: Receivables, net ................................................................ (13,940) 58 Cost and estimated earnings in excess of billings ............................... 1,961 (5,378) Prepaid expenses and other current assets ....................................... 6,618 (4,156) Retention ....................................................................... (1,802) -- Net assets held for sale ........................................................ -- (175) Accounts payables, accrued expenses and other current liabilities................ 33,335 9,764 Unearned revenues ............................................................... (1,768) 911 Waste processing and disposal liabilities ....................................... (265) (2,021) Facility and equipment decontamination and decommissioning liabilities.......... (60) 382 Other ........................................................................... (211) 1,129 -------- -------- Net cash provided by operations ......................................................... 31,431 5,919 -------- -------- Cash flows from investing activities: Additions to property, plant and equipment, net ........................................... (2,853) (7,057) Proceeds from sale of DuraTherm, Inc., net of transaction cost............................. -- 7,624 Acquisition of Waste Management Nuclear Services, net of cash acquired .................... -- (66,989) Other ..................................................................................... (133) (1,098) -------- -------- Net cash used in investing activities ................................................... (2,986) (67,520) -------- -------- Cash flows from financing activities: Short-term borrowings, net ................................................................ -- 2,000 Proceeds from borrowings under long-term debt ............................................. 29,500 73,800 Repayments of long-term debt .............................................................. (53,200) (3,600) Deferred financing costs .................................................................. (648) (3,013) Repayments of capital lease obligations ................................................... (459) -- Preferred stock dividends ................................................................. (268) (640) Treasury stock purchases .................................................................. (24) -- -------- -------- Net cash provided by (used in) financing activities ..................................... (25,099) 68,547 -------- -------- Net increase in cash and cash equivalents ...................................................... 3,346 6,946 Cash and cash equivalents at beginning of period ............................................. 431 60 -------- -------- Cash and cash equivalents at end of period ................................................... $ 3,777 $ 7,006 ======== ========
See Notes to Condensed Consolidated Financial Statements. 5 DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements 1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Duratek, Inc. and its wholly owned subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. 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. All adjustments (consisting of normal recurring accruals) that, in the opinion of management, are necessary for the fair presentation of this interim financial information have been included. Results of interim periods are not necessarily indicative of results to be expected for the year as a whole. The effect of seasonal business fluctuations and the occurrence of many costs and expenses in annual cycles require certain estimations in the determination of interim results. The information contained in the interim financial statements should be read in conjunction with the Company's latest Annual Report on Form 10-K filed with the Securities and Exchange Commission. 2. ACQUISITION On June 8, 2000, the Company acquired the nuclear services business of Waste Management, Inc. ("WMI"). The acquisition was effected as the purchase of all of the outstanding capital stock of Waste Management Federal Services, Inc. ("WMFS") from Rust International, Inc. ("Rust") and all of the outstanding membership interests of Chem-Nuclear Systems, LLC ("Chem-Nuclear") from Chemical Waste Management, Inc. ("CWM") and CNS Holdings, Inc. ("CNS"). Each of Rust, CWM, and CNS are indirect subsidiaries of WMI. The purchase price was $68.7 million in cash including $1.9 million of transaction costs. The acquisition was financed with borrowings under the Company's amended and restated bank credit facility. The acquired companies are referred to as Waste Management Nuclear Services ("WMNS"). WMNS was a leader in providing low-level radioactive waste management services for the commercial industry and the federal government. WMNS consisted primarily of three operating segments: (i) the Federal Services Division which provided radioactive waste handling, transportation, treatment packaging, storage, disposal, site cleanup, and project management services primarily for the United States Department of Energy ("DOE") and other federal agencies; (ii) the Commercial Services Division which provided radioactive waste handling, transportation, licensing, packing, disposal, and decontamination and decommissioning services primarily to nuclear utilities; and (iii) the Commercial Processing and Disposal Division which operated a commercial low-level radioactive waste disposal facility at Barnwell, South Carolina. The acquisition was accounted for under the purchase method of accounting. The aggregate purchase price in excess of the estimated fair value of tangible assets and identifiable intangible assets was allocated to goodwill and will be amortized over 30 years. Results of WMNS from the date of the acquisition are included in the Company's consolidated results of operations. 3. SALE OF DURATHERM, INC. In February 2000, the Company completed the sale of its 80% interest in DuraTherm, Inc. ("DTI") to DuraTherm Group, Inc. for $8.3 million in cash which was used by the Company to pay down borrowings under its bank credit facility. The Company recognized a pre-tax gain of $1.2 million on the sale. 6 DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements 4. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of stock options, convertible redeemable preferred stock, and convertible debentures that could share in the earnings of the Company. The reconciliation of amounts used in the computation of basic and diluted earnings per share for the three and six months ended June 30, 2001 and 2000 consists of the following (in thousands of dollars, except per share amounts):
Three months Six months ended June 30, ended June 30, ---------------------------- --------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ----------- NUMERATOR: Net income attributable to common shareholders................... $ 1,974 $ 891 $ 24 $ 2,061 Plus: Income impact of assumed conversions - Preferred stock dividends and charges for accretion........... 374 - - - ----------- ----------- ----------- ----------- Net income attributable to common shareholders assuming conversion............................................ $ 2,348 $ 891 $ 24 $ 2,061 =========== =========== =========== =========== DENOMINATOR: Weighted-average shares outstanding............................... 13,423 13,429 13,420 13,428 Effect of dilutive securities: Incremental shares from assumed conversion of: Employee stock options...................................... 13 128 19 115 Restricted stock ........................................... 59 22 67 12 Convertible redeemable preferred stock...................... 5,251 - - - ----------- ----------- ----------- ----------- 5,323 150 86 127 ----------- ----------- ----------- ----------- Adjusted weighted average shares outstanding and assumed conversions............................................ 18,746 13,579 13,506 13,555 =========== =========== =========== =========== Basic earnings per share ............................................ $ 0.15 $ 0.07 $ 0.00 $ 0.15 =========== =========== =========== =========== Diluted earnings per share .......................................... $ 0.13 $ 0.07 $ 0.00 $ 0.15 =========== =========== =========== ===========
Options to purchase common stock and other potentially dilutive securities of the Company that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive were 1,303 and 7,186 for the three and six months ended June 30, 2001 and 2000, respectively. 7 DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements 5. SEGMENT REPORTING The Company has three primary segments:(i) Commercial Processing and Disposal, (ii) Federal Services, and (iii) Commercial Services. During the second quarter of 2001, the Company realigned some of its operating units within each reporting segment. The impact of these changes are not significant and all figures represented have been revised to be consistent with all periods presented. Below is a brief description of each of the segments, including the WMNS businesses acquired from WMI: 1. COMMERCIAL PROCESSING AND DISPOSAL (CPD) - The Company conducts its commercial processing and disposal operations principally at its Bear Creek Operations Facility located in Oak Ridge, Tennessee and its facility in Memphis, Tennessee. The disposal site is operated in Barnwell, South Carolina. The Company's waste treatment technologies include: incineration; compaction; metal decontamination and recycling; vitrification; and steam reforming. Commercial waste processing customers primarily include commercial nuclear utilities and governmental entities. Material is received and disposed of at the Barnwell facility primarily from commercial nuclear utilities. 2. FEDERAL SERVICES (FS) - The Company provides on-site waste processing services on large government projects for the DOE and other governmental entities. The on-site waste processing services provided by the Company on DOE projects include program development, project management, waste characterization, on-site waste treatment, facility operation, packaging and shipping of residual waste, profiling and manifesting the processed waste, selected technical support services, and site clean up. 3. COMMERCIAL SERVICES (CS) - The Company's technical support services encompass 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 (in thousands of dollars):
For the three months ended June 30, 2001 Unallocated CPD FS CS items Consolidated ------------- -------------- -------------- ------------------ ----------------- Revenues from external customers $ 24,684 $ 28,818 $ 21,145 $ -- $ 74,647 Income (loss) from operations (971) 5,593 2,497 -- 7,119 Interest expense, net -- -- -- (3,291) (3,291) Proportionate share of losses of joint venture -- -- -- (50) (50) Income taxes -- -- -- 1,599 1,599
8 DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements
For the three months ended June 30, 2000 Unallocated CPD FS CS items Consolidated ------------- ------------- ------------- ---------------- ------------------- Revenues from external customers $ 22,261 $ 13,789 $ 14,859 $ -- $ 50,909 Income from operations 1,153 1,828 501 -- 3,482 Interest expense, net -- -- -- (1,339) (1,339) Proportionate share of losses of joint venture -- -- -- (25) (25) Income taxes -- -- -- 849 849 As of and for the six months ended June 30, 2001 Unallocated CPD FS CS items Consolidated ------------- ------------- ------------ -------------- -------------- Revenues from external customers $ 44,892 $ 55,029 $ 41,181 $ -- $ 141,102 Income (loss) from operations (6,623) 8,563 5,549 -- 7,489 Interest expense, net -- -- -- (6,206) (6,206) Depreciation and amortization expense 3,386 971 841 1,334 6,532 Proportionate share of losses of joint venture -- -- -- (100) (100) Income taxes -- -- -- 581 581 Capital expenditure for additions to long-lived assets 1,713 136 343 661 2,853 Total assets 153,697 78,320 46,725 27,081 305,823
9 DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements
As of and for the six months ended June 30, 2000 Unallocated CPD FS CS items Consolidated ---------------- ---------------- ---------------- ------------------ -------------- Revenues from external customers $ 42,378 $22,122 $27,422 $ - $91,922 Income from operations 2,413 2,507 774 - 5,694 Gain on sale of DuraTherm - - - 1,166 1,166 Interest expense, net - - - (2,140) (2,140) Depreciation and amortization expense 2,505 165 289 299 3,258 Proportionate share of losses of joint venture - - - (50) (50) Income taxes - - - 1,854 1,854 Capital expenditure for additions to long-lived assets 6,555 24 60 418 7,057 Total assets 152,012 75,750 29,540 24,813 282,115
6. NEW ACCOUNTING PRONOUNCEMENTS Statements of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activity, (as amended by SFAS No. 138 with respect to certain interpretations) was effective for the Company on January 1, 2001. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities and requires an entity to recognize all derivatives either as an asset or a liability in the balance sheet and measure those instruments at fair value. These fair value adjustments are to be included either in the determination of net income or as a component of other comprehensive income, depending on the nature of the transaction. As the Company had no derivatives at the date of adoption or during the six months ended June 30, 2001, SFAS No. 133, as amended, did not have a material impact on the Company's consolidated financial statements. SFAS No. 141, Business Combinations, became effective for the Company on July 1, 2001. SFAS No. 141 prohibits the use of the pooling-of-interests method for business combinations occurring after June 30, 2001, and establishes accounting and reporting standards for business combinations accounted for under the purchase accounting method. SFAS No. 141 provides criteria for the measurement and recognition of goodwill and other acquired intangible assets. The Company is currently evaluating the impact that SFAS No. 141 will have on its consolidated financial statements. SFAS No. 142, Goodwill and Other Intangible Assets, will become effective for the Company on January 1, 2002. Under SFAS No. 142, the Company's goodwill will no longer be amortized to expense. Instead, goodwill will be measured for impairment on an annual basis. SFAS No. 142 further requires additional disclosures including pro forma net income and earnings per share for all periods presented. The Company is currently evaluating the impact that SFAS No. 142 will have on its consolidated financial statements. 10 DURATEK, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW 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. The Company's operations are organized into three primary segments: (i) Commercial Processing and Disposal; (ii) Federal Services; and (iii) Commercial Services. Commercial waste processing operations are provided primarily at the Company's Bear Creek low-level radioactive waste processing facility located in Oak Ridge, Tennessee ("Bear Creek facility") and the Disposal site is operated in Barnwell, South Carolina. The Company's Federal Services segment provides on-site waste processing services on large government projects for the United States Department of Energy ("DOE") and other government entities. Government waste processing projects and certain commercial waste processing projects are performed pursuant to long-term fixed unit rate and fixed fee contracts that are accounted for using the percentage-of-completion method of accounting. The Company's Commercial Services segment provides technical support services, that are generally provided pursuant to multi-year cost plus fixed fee or time and materials contracts that are also accounted for using the percentage-of-completion method of accounting. 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. Revenue under commercial waste processing agreements is recognized as waste is processed. The Company incurred a substantial operating loss in 2000 primarily as a result of operational problems experienced at the Company's Bear Creek and Memphis facilities during the fourth quarter. The operational problems at these facilities also adversely affected the Company's results for the first two quarters of 2001. The Company's management has been aggressively working to address these operational issues. Among other things, the Company has strengthened management resources and reporting, implemented personnel changes, modified waste processing, storage, transportation and burial methods and improved cost accounting systems utilized at its commercial waste processing locations. While management believes that these efforts will prevent reoccurrence of the events that led to losses in its commercial waste processing operations, no assurance can be given that some or all of the factors that led to these losses might not have a material adverse effect on future results of operations. 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 and scope of DOE waste treatment projects; and the Company's waste receipts at its South Carolina disposal facility. On June 8, 2000, the Company acquired the nuclear services business of Waste Management, Inc. The acquired business is referred to as Waste Management Nuclear Services ("WMNS"). The acquisition has been accounted for under the purchase method of accounting. The aggregate purchase price in excess of the estimated fair value of tangible assets and identifiable intangible assets has been allocated to goodwill and is being amortized over 30 years. Results of WMNS from the date of the acquisition are included in the Company's consolidated results. 11 DURATEK, INC. AND SUBSIDIARIES Results of Operations Three Months Ended June 30, 2000 As Compared To Three Months Ended June 30, 2001 Revenues for the Company increased by $23.7 million, or 46.6%, from $50.9 million in 2000 to $74.6 million in 2001. Excluding the impact of the WMNS businesses, revenue for the period decreased by $1.4 million, or 3.2%. Federal Services revenue increased by $15.0 million, or 109.0%, from $13.8 million in the second quarter of 2000 to $28.8 million in the second quarter of 2001. This increase is primarily the result of a $12.0 million increase in revenues from the federal services business of WMNS and $4.0 million in revenue recognized from the sale of limited rights to the Company's vitrification technology for use at the DOE Hanford Washington site. Commercial Services revenue increased by $6.3 million, or 42.3%, from $14.8 million in the second quarter of 2000 to $21.1 million in the second quarter of 2001. This increase is primarily the result of a $7.9 million increase in revenues from the Commercial Services business of WMNS and an increase in revenues of $1.3 million from decontamination and decommissioning services, partially offset by a $2.2 million decrease in revenues from the technical support services business which was sold in April 2001 and a $1.1 million decrease in revenues from the computer consulting services business which was sold in November 2000. Commercial Processing and Disposal revenue increased by $2.4 million, or 10.9%, from $22.3 million in the second quarter of 2000 to $24.7 million in the second quarter of 2001. This increase is primarily the result of a $3.8 million increase in revenues from the Barnwell low-level radioactive waste disposal facility, to which the Company acquired the operating rights as part of the WMNS acquisition, and a $1.4 million increase in revenues from the waste processing business of WMNS, partially offset by a $2.7 million decrease in revenues from commercial processing services at the Company's processing facilities located in Tennessee (which includes the Bear Creek and Memphis facilities). Gross profit for the Company increased by $7.1 million, or 59.9%, from $11.9 million in 2000 to $19.0 million in 2001. As a percentage of revenues, gross profit increased to 25.4% in 2001 from 23.3% in 2000. Gross profit generated from the WMNS businesses during the period increased gross profit by $5.8 million in the second quarter of 2001 from the same period in 2000. Gross profit from Federal Services increased by $6.2 million, or 167.7%, from $3.7 million in the second quarter of 2000 to $9.9 million in 2001. This increase is primarily the result of increases in gross profit from the federal services business of WMNS and a gain of $3.7 million on the sale of limited rights to the Company's vitrification technology for use at the DOE Hanford Washington site. Gross profit from Commercial Services increased by $2.2 million, or 61.8%, from $3.6 million in the second quarter of 2000 to $5.8 million in 2001. This increase is primarily the result of increases in gross profit from the commercial services business of WMNS. Gross profit from Commercial Processing and Disposal decreased by $1.3 million, or 28.1%, from $4.6 million in the second quarter of 2000 to $3.3 million in 2001. This decrease is primarily related to a series of operational issues, including delays in implementing new waste processing strategies and increased labor, transportation and burial costs at the Company's two commercial processing facilities. The decrease in gross profit from Commercial Processing and Disposal was partially offset by a $0.4 million increase in gross profit from the waste processing business of WMNS. Selling, general and administrative expenses increased by $3.5 million, or 41.4%, from $8.4 million in 2000 to $11.9 million in 2001. As a percentage of revenues, selling, general and administrative expenses decreased from 16.5% in 2000 to 15.9% in 2001. Selling, general and administrative expenses attributable to the WMNS businesses accounted for $3.4 million of this increase. Interest expense, net of interest income, increased by $2.0 million from $1.3 million in the second quarter of 2000 to $3.3 million in 2001. The increase was the result of the acquisition of WMNS and increased borrowings to fund working capital needs. Income taxes increased from $0.8 million in 2000 to $1.6 million in 2001. The Company's effective tax rate was 39.6% and 40.0% in 2000 and 2001, respectively. 12 DURATEK, INC. AND SUBSIDIARIES Six Months Ended June 30, 2000 As Compared To Six Months Ended June 30, 2001 Revenues for the Company increased by $49.2 million, or 53.5%, from $91.9 million in 2000 to $141.1 million in 2001. Excluding the impact of the WMNS businesses, revenue for the period decreased by $5.4 million, or 6.3%. Federal Services revenue increased by $32.9 million, or 148.8%, from $22.1 million in 2000 to $55.0 million in 2001. This increase is primarily the result of a $28.9 million increase in revenues from the federal services business of WMNS and $4.0 million in revenue recognized for the sale of limited rights to the Company's vitrification technology for use at the DOE Hanford Washington site. Commercial Services revenue increased by $13.8 million, or 50.2%, from $27.4 million in 2000 to $41.2 million in 2001. This increase is primarily the result of a $16.5 million increase in revenues from the Commercial Services business of WMNS, an increase in revenues of $2.0 million from decontamination and decommissioning services, and an increase of $1.5 million from transportation services, partially offset by a $3.6 million decrease in revenues from the technical support services business which was sold in April 2001 and a $2.5 million decrease in revenues from the computer consulting services business which was sold in November 2000. Commercial Processing and Disposal revenue increased by $2.5 million, or 5.9%, from $42.4 million in 2000 to $44.9 million in 2001. This increase is primarily the result of a $7.1 million increase in revenues from the Barnwell low-level radioactive waste disposal facility, to which the Company acquired the operating rights as part of the WMNS acquisition and a $2.0 million increase in revenues from the waste processing business of WMNS, partially offset by a $5.4 million decrease in revenues from commercial processing services at the Company's processing facilities located in Tennessee (which includes the Bear Creek and Memphis facilities) and a $1.2 million decrease in revenue from the Company's DuraTherm business which was sold in February 2000. Gross profit for the Company increased by $9.9 million, or 47.1%, from $21.0 million in 2000 to $30.9 million in 2001. As a percentage of revenues, gross profit decreased to 21.9% in 2001 from 22.9% in 2000. Gross profit generated from the acquisition of the WMNS businesses during the period increased gross profit by $14.0 million in 2001 from the same period in 2000. Gross profit from Federal Services increased by $10.0 million, or 170.7%, from $5.8 million in 2000 to $15.8 million in 2001. This increase is primarily the result of increases in gross profit from the federal services business of WMNS and a gain of $3.7 million on the sale of limited rights to the Company's vitrification technology for use at the DOE Hanford Washington site. Gross profit from Commercial Services increased by $6.4 million, or 99.9% from $6.4 million in 2000 to $12.8 million in 2001. This increase is primarily the result of increases in gross profit from the commercial services business of WMNS, partially offset by a small decrease in gross profit from the computer consulting services business that was sold in November 2000. Gross profit from Commercial Processing and Disposal decreased by $6.5 million, or 73.4%, from $8.8 million in 2000 to $2.3 million in 2001. This decrease is primarily related to a series of operational issues, including delays in implementing new waste processing strategies and increased labor, transportation and burial costs at the two commercial processing facilities. The decrease in gross profit from Commercial Processing and Disposal was partially offset by a $1.2 million increase in gross profit from the waste processing business of WMNS. Selling, general and administrative expenses increased by $8.1 million, or 52.7%, from $15.3 million in 2000 to $23.4 million in 2001. As a percentage of revenues, selling, general and administrative expenses decreased from 16.7% in 2000 to 16.5% in 2001. Selling, general and administrative expenses attributable to the acquisition of the WMNS business accounted for $6.5 million of this increase, with the additional increases attributable to higher costs incurred for professional services, marketing costs, and insurance expense. Interest expense, net of interest income, increased by $4.1 million from $2.1 million in 2000 to $6.2 million in 2001. The increase was the result of the acquisition of WMNS and increased borrowings to fund working capital needs. Income taxes decreased from $1.9 million in 2000 to $0.6 million in 2001. The Company's effective tax rate was 39.3% and 40.0% in 2000 and 2001, respectively. 13 DURATEK, INC. AND SUBSIDIARIES Liquidity and Capital Resources The Company generated $31.4 million in cash flows from operating activities. The cash flow from operating activities was generated primarily from cash flow generated from operations of the Barnwell low-level radioactive waste disposal facility in South Carolina. Under South Carolina law, the Company is required to bill customers based on the amounts agreed with the State. On an annual basis, following the State's fiscal year-end on June 30, the Company will remit amounts billed to customers of the waste disposal site less its fee for operating the site during such fiscal year. During the fiscal twelve months ended June 30, 2001, the Company had collected approximately $45.0 million net from customers of the waste disposal facility that was remitted to the State in July 2001. The Company's cash flows generated from the operations of the Barnwell facility were partially offset by approximately $13.6 million used in its other operations. The Company used approximately $3.0 million in cash flows for investing activities, including approximately $2.9 million for purchases of property and equipment. The Company has a bank credit facility (the credit facility) which provides for borrowings of up to $130.0 million. The credit facility, as amended, consists of a five-year $40.0 million revolving line of credit, including $15.0 million for standby letters of credit, a five-year $50.0 million term loan and a six and one-half year $40.0 million term loan. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin, or at the Company's option, the prime rate plus an applicable margin. The applicable margin is determined based upon the Company's performance and can range from 4.0% to 4.5% for LIBOR based borrowings and 2.5% for prime based borrowings. Borrowings under the $40.0 million term loan bear an additional 0.5% interest. As of June 30, 2001, outstanding borrowings of $37.5 million were bearing interest at LIBOR plus 4.0% (7.71%) and outstanding borrowings of $39.5 million were bearing interest at LIBOR plus 4.5% (8.21%). The credit facility requires the Company to maintain certain financial ratios and restricts the payment of dividends on the Company's common stock. At June 30, 2001, the Company had no borrowings outstanding under the revolving line of credit, $77.0 million outstanding under the term loans and $2.1 million in outstanding letters of credit. As of December 31, 2000, the Company was not in compliance with certain financial and technical covenants included in the credit agreement. On April 16, 2001, the credit agreement was amended to waive all existing non-compliance as well as to adjust certain covenants either permanently or for 2001. Under the amendment, until such time as the Company is in compliance with the original covenants of the credit agreement, there will be a 0.5% increase in the applicable margin on all borrowings, a reduction in the amount available under the revolving line of credit portion of the credit facility to $35.0 million through December 31, 2001 and $27.5 million thereafter and prohibitions against acquisitions and payments of preferred stock dividends. At June 30, 2001, after effect of the amendment, $32.9 million of additional borrowings were available under the revolving credit portion of the credit facility. As of June 30, 2001, the Company was in compliance with all applicable financial and technical covenants included in the credit agreement, as amended. The Company believes cash flows from operations and, if necessary, borrowings available under the credit facility will be sufficient to meet its operating needs, for at least the next twelve months. Item 3. Quantitative and Qualitative Information about Market Risk The Company's major market risk relates to changing interest rates. At June 30, 2001 the Company had floating rate long-term debt of $90.4 million and no outstanding floating rate short-term debt. Average outstanding borrowings under the bank credit facility were $9.0 million during the six months ended June 30, 2001. 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. 14 DURATEK, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings On June 22, 2001, the Company and two of its executive officers were sued in federal district court in Baltimore, Maryland by an individual stockholder on behalf of himself and other similarly situated stockholders of the Company. The class action suit alleges that certain statements and information included in the Company's press releases and in the periodic reports filed by it with the Securities and Exchange Commission contained materially false and misleading information in violation of the federal securities laws. The Company's response to the complaint is not yet due. Although the Company believes that it has meritorious defenses to the claims alleged against it in this action, it is too early in the litigation to provide an accurate assessment of the likelihood or the extent of any liability arising from this matter. On June 22, 2001, the Company filed suit against BNFL, Inc. ("BNFL") in the Circuit Court for Fairfax County, Virginia. The Company alleges that BNFL breached a Settlement Agreement dated April 20, 2001, under which BNFL was to make a $3.0 million payment to the Company on or before May 28, 2001. The suit asks for actual and punitive damages resulting from BNFL's failure to make the required payment, plus attorney's fees. BNFL has not yet answered the Company's allegations although the Company expects that it will oppose the suit. On July 11, 2001, BNFL sued the Company in the Circuit Court for Howard County, Maryland. BNFL's suit alleges that "acts of default" have occurred under a Debenture issued by the Company to BNFL on November 7, 1995, therefore accelerating the Company's obligation to repay a $10.0 million loan from BNFL. BNFL's suit seeks repayment of the $10.0 million loan plus accrued interest and attorneys' fees. The Company believes BNFL's claims are without merit and intends to vigorously defend itself in this litigation. The Company also intends to assert counterclaims against BNFL in the amount of approximately $3.8 million, unrelated to the Company's claims in its lawsuit against BNFL. Refer to the Company's annual report on Form 10-K for the year ended December 31, 2000 for a discussion on other legal proceedings. Item 4. Submission of Matters to a Vote of Securities Holders At the Company's Annual Meeting of Stockholders held on June 8, 2001, the following matters were voted upon: a. Daniel A. D'Aniello, Earle C. Williams, and Dr. Francis J. Harvey were elected to serve as directors of the Company by the convertible preferred stockholders for a one-year term. Admiral James D. Watkins, George V. McGowan, and Robert E. Prince were elected to serve as directors for a one-year term by the common stockholders and convertible preferred stockholders, voting together as a single class. For the directors elected by the preferred and common stockholders, voting together as a single class, the votes are shown below:
For Against ---------- ------------ Admiral James D. Watkins 17,392,626 - George V. McGowan 17,332,831 - Robert E. Prince 17,117,067 -
b. The proposal to approve the Duratek, Inc. 2000 Employee Stock Purchase Plan was approved by the common stockholders and convertible preferred stockholders, voting together as a single class, by a vote of 12,858,230 for and 758,512 against this proposal. c. The proposal to reappoint KPMG LLP as the Company's independent auditors for the year ending December 31, 2001 was approved by the common stockholders and convertible preferred stockholders, voting together as a single class, by a vote of 17,532,174 for and 32,912 against this proposal. 15 DURATEK, INC. AND SUBSIDIARIES 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 implement new waste processing strategies in a timely and cost effective manner; the Company's ability to control its commercial waste processing operating costs; the Company's ability to integrate acquired businesses, including the Company's most recent 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 and the duration of such projects; and the timing of outage support projects and other large technical support services projects at its customers' facilities. 16 DURATEK, INC. AND SUBSIDIARIES Item 6. Exhibits and Reports on Form 8-K a. EXHIBITS See accompanying Index to Exhibits. b. REPORTS None 17 DURATEK, INC. AND SUBSIDIARIES 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. DURATEK, INC. Dated: August 6, 2001 BY: /s/ ROBERT F. SHAWVER ---------------------------- Robert F. Shawver Executive Vice President and Chief Financial Officer Dated: August 6, 2001 BY: /s/ WILLIAM M. BAMBARGER ----------------------------- William M. Bambarger Controller 18 DURATEK, INC. AND SUBSIDIARIES 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 Form S-1 Registration Statement 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 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 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 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 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. and GTS Instrument Services Incorporated to BNFL Inc. dated November 7, 1995. Incorporated herein by reference to Exhibit 4.5 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. 10.2 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) 10.3 Stockholders' Agreement dated December 28, 1993 between GTS Duratek, Inc. and Vitritek Holdings, L.L.C. Incorporated by reference to Exhibit 3 of the Registrant's Form 8-K Current Report dated December 22, 1993. (File No. 0-14292) 10.4 Agreement dated January 14, 1994 between GTS Duratek, Inc. and Westinghouse Savannah River Company. Incorporated 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)
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EXHIBIT NO. ----------- 10.5 Sublicense 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) 10.6 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) 10.7 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) 10.8 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) 10.9 Amended and Restated Credit Agreement dated as of June 8, 2000 by and among GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates LLC, Chem-Nuclear Systems L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., the Lenders party thereto, First Union National Bank, as Administrative Agent, Credit Lyonnais New York Branch, as Documentation Agent, Fleet National Bank, as Syndication Agent, and First Union Securities, Inc., as Lead Arranger and Book Manager. Incorporated herein by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed on June 22, 2000. (File No. 0-14292) 10.10 Second Amended and Restated Security Agreement dated as of June 8, 2000 made by GTS Duratek, Inc., GTS Duratek Bear Creek, Inc., GTS Duratek Colorado, Inc., Hittman Transport Services, Inc., GTS Instrument Services, Incorporated, General Technical Services, Inc., GTSD Sub III, Inc., GTSD Sub IV, Inc., Frank W. Hake Associates, L.L.C., Chem-Nuclear Systems, L.L.C., Waste Management Federal Services, Inc., Waste Management Federal Services of Idaho, Inc., Waste Management Federal Services of Hanford, Inc., Waste Management Technical Services, Inc., Waste Management Geotech, Inc., and First Union National Bank, as Collateral Agent. Incorporated herein by reference to Exhibit 99.5 of the Registrant's Current Report of Form 8-K filed on June 22, 2000. (File No. 0-14292) 10.11 Purchase Agreement by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated March 29, 2000. Incorporated herein by reference to Exhibit 99.2 of the Registrant's Current Report of Form 8-K filed on June 22, 2000. (File No. 0-14292) 10.12 Amendment No. 1 to Purchase Agreement and Disclosure Letter by and among Chemical Waste Management Inc., Rust International, Inc., CNS Holdings, Inc. and GTS Duratek, Inc. dated June 8, 2000. Incorporated herein by reference to Exhibit 99.3 of the Registrant's Current Report of Form 8-K filed on June 22, 2000. (File No. 0- 14292) 10.13 1999 GTS Duratek, Inc. Stock Option and Incentive Plan. Incorporated herein by reference to Exhibit A of the Registrant's 2000 Proxy Statement. (File No. 0-14292)
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EXHIBIT NO. ----------- 10.14 First Amendment and Waiver to Credit Agreement dated as of April 16, 2001 made by Duratek, Inc., as borrower and as agent for the Subsidiary Borrowers, the Lenders party to the Credit Agreement, and First Union National Bank, as Administrative Agent. Incorporated herein by reference to Exhibit 10.14 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed on April 18, 2001. (File No. 0-14292)
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