-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V85aPRv7ey70c+pi6jy+zMeIFC0mJNN8L6G/82O7k3kTARDedGawGT6uZsaPQxlg BDltiTJp4bI9CEmznJ+xYw== 0000950169-01-500008.txt : 20010425 0000950169-01-500008.hdr.sgml : 20010425 ACCESSION NUMBER: 0000950169-01-500008 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20010424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DURATEK INC CENTRAL INDEX KEY: 0000785186 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 222476180 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-14292 FILM NUMBER: 1609876 BUSINESS ADDRESS: STREET 1: 10100 OLD COLUMBIA ROAD CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 4103125100 MAIL ADDRESS: STREET 1: 10100 OLD COLUMBIA ROAD CITY: COLUMBIA STATE: MD ZIP: 21046 FORMER COMPANY: FORMER CONFORMED NAME: GTS DURATEK INC DATE OF NAME CHANGE: 19930805 FORMER COMPANY: FORMER CONFORMED NAME: DURATEK CORP DATE OF NAME CHANGE: 19920703 10-Q/A 1 d10qa.txt GTS DURATEK, INC UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________ FORM 10-Q/A [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 GTS DURATEK, INC. AND SUBSIDIARIES TABLE OF CONTENTS -----------------
PAGE ---- Part I Financial Information - ------ 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.................................. 9 Item 3. Quantitative and Qualitative Information About Market Risk................................................ 10 Qualification Relating to Financial Information.................. 10 Part II Other Information - ------- Item 1. Legal Proceedings................................................ 11 Item 5. Other Information................................................ 11 Item 6. Exhibits and Reports on Form 8-K................................. 12 Signatures ...................................................... 13
The results of operations for the three months ended March 31, 2000 and March 31, 1999 have been restated. See Note 6 to the Notes to Condensed Consolidated Financial Statements. Part I Financial Information - ------ Item 1. Financial Statements GTS DURATEK, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31, 2000 1999 ------------- ------------ ASSETS (unaudited * and restated) Current assets: Cash and cash equivalents.............................................................. $ 101,552 $ 59,525 Receivables, net....................................................................... 35,669,189 33,309,141 Other accounts receivable.............................................................. 5,224,233 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................................................................. 63,641,424 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................................................ 22,693,772 23,122,192 Note receivable.......................................................................... 335,693 - Other Assets............................................................................. 1,587,896 1,231,506 ------------- ------------ $ 157,654,768 $157,319,363 ============= ============ 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......................................... 9,419,916 4,878,875 Unearned revenues...................................................................... 8,820,951 7,460,699 Waste processing and disposal liabilities.............................................. 2,671,302 3,910,155 ------------- ------------ Total current liabilities............................................................ 45,313,772 44,778,777 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.................................................................... 80,181,654 81,081,215 ------------- ------------ Redeemable preferred stock (Liquidation value $16,320,000)........................................................ 15,320,021 15,509,438 ------------- ------------ Stockholders' equity: Common stock........................................................................... 149,071 148,238 Capital in excess of par value......................................................... 75,460,415 75,207,177 Accumulated Deficit.................................................................... (4,268,667) (5,438,979) Treasury stock, at cost................................................................ (9,187,726) (9,187,726) ------------- ------------ Total stockholders' equity........................................................... 62,153,093 60,728,710 ------------- ------------ $ 157,654,768 $157,319,363 ============= ============
* The Consolidated Condensed Balance Sheet as of December 31, 1999 has been derived from the Company's audited restated 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. 1 GTS DURATEK, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited and restated)
Three Months Ended March 31, -------------- 2000 1999 ------ ------ (restated) Revenues................................................................................. $41,013,451 $38,696,254 Cost of revenues......................................................................... 31,852,188 29,075,839 ----------- ----------- Gross profit............................................................................. 9,161,263 9,620,415 Selling, general and administrative expenses................................................................ 6,948,816 6,516,025 ----------- ----------- Income from operations................................................................... 2,212,447 3,104,390 Gain on sale of DuraTherm, Inc........................................................... 1,166,000 - Interest expense, net.................................................................... (801,481) (284,822) ----------- ----------- Income before income taxes and proportionate share of loss of joint venture............................................................... 2,576,966 2,819,568 Income taxes............................................................................. 1,004,730 1,085,609 ----------- ----------- Income before gain on sale of assets and proportionate share of loss of joint venture........................................... 1,572,236 1,733,959 Proportionate share of loss of joint venture................................................................................ (25,000) (50,000) ----------- ----------- Net income............................................................................... 1,547,236 1,683,959 Preferred stock dividends and charges for accretion.................................................................. 376,924 377,220 ----------- ----------- Net income attributable to common shareholders.................................................................... $ 1,170,312 $ 1,306,739 =========== =========== Basic net income per share............................................................... $ 0.09 $ 0.10 =========== =========== Diluted net income per share............................................................. $ 0.08 $ 0.08 =========== =========== Basic weighted average common stock outstanding............................................................... 13,426,927 13,710,235 =========== =========== Diluted weighted average common stock and dilutive securities outstanding................................................................. 20,162,752 20,776,416 =========== ===========
See notes to condensed consolidated financial statements 2 GTS DURATEK, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Three Months Ended March 31, 2000 (Unaudited and restated)
Common Stock Capital in Total ----------- Excess of Treasury Stockholders' Shares Amount Par Value Deficit Stock Equity ------ ------ --------- ------- ----- ------ Balance, December 31, 1999 14,823,850 $148,238 $75,207,177 $(5,438,979) $(9,187,726) $60,728,710 Net income - - - 1,547,236 - 1,547,236 Conversion of preferred stock 82,500 825 246,675 - - 247,500 Other issuances of common stock 759 8 6,563 - - 6,571 Preferred dividends - - - (320,000) - (320,000) Accretion of redeemable preferred stock - - - (56,924) - (56,924) ---------- -------- ----------- ----------- ----------- ----------- Balance, March 31, 2000 14,907,109 $149,071 $75,460,415 $(4,268,667) $(9,187,726) $62,153,093 ========== ======== =========== =========== ============ ===========
See notes to condensed consolidated financial statements 3 GTS DURATEK, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited and restated)
Three months ended March 31, ---------------------------- 2000 1999 --------- -------- Cash flows from operating activities: Net income......................................................................... $ 1,547,236 $ 1,683,959 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.................................................................. (1,291,679) (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.................................................. 1,793,596 12,118 Unearned revenues............................................................ 1,360,252 (1,227,027) Waste processing and disposal liabilities.................................... (1,238,853) 1,275,304 Facility and equipment decontamination and decommissioning liabilities................................................ 203,568 180,074 Other........................................................................ (490,021) 132,580 ------------ ------------ Net cash used in operations.................................................. (1,329,920) (1,193,834) ------------ ------------ 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) (620,554) ------------ ------------ Net cash provided by (used in)investing activities.................................................................. 3,785,427 (1,593,913) ------------ ------------ 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 ============ ============
See notes to condensed consolidated financial statements 4 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 13,426,927 and 13,710,235 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 20,162,752 and 20,776,416 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 GTS DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements 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:
As of and for the Three Months Ended March 31, 2000 (restated) ------------------------------------------------------------------------------------------------ Unallocated CWP GWP TS Items Consolidated -------------- --------------- ------------ --------------- ----------------- Revenues from external customers $ 20,117,251 $ 8,662,617 $12,233,583 $ - $ 41,013,451 Income from operations 1,260,055 753,043 199,349 - 2,212,447 Gain on sale of DuraTherm, Inc. - - - 1,166,000 1,166,000 Interest expense - - - (801,481) (801,481) Depreciation and amortization expense 1,214,616 71,858 113,146 100,850 1,500,470 Proportionate share of losses of joint ventures - - - (25,000) (25,000) Income tax expense - - - 1,004,730 1,004,730 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 103,990,272 15,312,098 24,774,091 13,578,307 157,654,768
6 GTS DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements
As of and for the Three Months Ended March 31, 1999 (restated) ---------------------------------------------------------------------------------------------- Unallocated CWP GWP TS Items Consolidated ------------ ----------- ------------ ------------ -------------- Revenues from external customers $ 17,379,395 $ 9,476,689 $ 11,840,170 $ - $ 38,696,254 Income from operations 1,832,560 887,402 384,428 - 3,104,390 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 - - - 1,085,609 1,085,609 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 16,259,485 129,177,913
5. Purchase of Waste Management Nuclear Services On March 29, 2000, the Company 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. 6. Restatement The Company incurred a substantial operating loss in 2000 principally as the result of operating problems experienced at the Company's Bear Creek and Memphis facilities during the fourth quarter of 2000. The operational issues that resulted in the operating loss 7 GTS DURATEK, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements for 2000 caused the Company to undertake further review and analysis of its commercial waste processing operations. One element of determining revenue recognition and the related burial costs is the reconciliation of quarterly inventories of unprocessed waste to the deferred revenue and burial accrual amounts reported at each quarter end. The Company determined, in the course of its review, that full reconciliations of the quarterly inventories of unprocessed waste were not performed at each quarter end in 2000. The appropriate recording of revenues was further complicated by the high volumes of wastes and newly-implemented waste processing strategies. As a result of a review of adjustments made by the Company to its results in fourth quarter of 2000, the Company is restating its previously reported results for the three months ended March 31, 2000 to more appropriately reflect such adjustments in the period in which they relate. As a result of the above, adjustments were made to the results for the three months ended March 31, 2000 reducing revenues by $89,000 and increasing cost of revenues by $380,000. In addition, adjustments were made to the results for the three months ended March 31, 2000 increasing selling, general and administrative expenses by $324,000 primarily related to compensation and benefit costs and decreasing income tax expense by $309,000 for the income tax benefit of the above items. The Company also adjusted the results for the three months ended March 31, 1999 by reducing revenues by $189,000 for the same reasons noted above. In addition, adjustments were made to the results for the three months ended March 31, 1999 increasing selling, general and administrative expenses by $6,000 for legal expenses related to the successful defense of a contract and decreasing income tax expense by $75,000 for the income tax benefit of the above items. 8 GTS DURATEK, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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. The results of operations for the three months ended March 31, 2000 and March 31, 1999 have been restated. See Note 6 to the Notes to Condensed Consolidated Financial Statements. Results of Operations Three Months Ended March 31, 1999 as compared to Three Months Ended March 21, 2000. Revenues increased by $2.3 million, or 6.0%, from $38.7 million in 1999 as compared to $41.0 million in 2000. The increase was primarily attributable to a $5.2 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 $400,000 from $9.6 million in 1999 to $9.2 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 profit was partially offset by increases in the Bear Creek facility of $1.5 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 24.9% in 1999 to 22.3% in 2000. Selling, general and administrative expenses increased by $400,000 or 6.6% from $6.5 million in 1999 to $6.9 million in 2000. As a percentage of revenues, selling general and administrative expenses increased from 16.8% in 1999 to 16.9% in 2000. 9 GTS DURATEK, INC. AND SUBSIDIARIES Interest expense, net increased by $517,000 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 decreased from $1.1 million in 1999 to $1.0 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. 10 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. 11 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. 12 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: April 24,2001 BY: /s/ Robert F. Shawver ---------------------------- Robert F. Shawver Executive Vice President and Chief Financial Officer Dated: April 24,2001 BY: /s/ Charles L. Standley ---------------------------- Charles L. Standley Controller 13 Exhibit Index 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 From 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 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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. and 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). 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). E-1 10.4 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). 10.5 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). 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 10.20 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 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 2 of the Registrant's Current Report on Form 8-K dated February 1, 1999 (File No. 0-14292). 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 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). E-2 -----END PRIVACY-ENHANCED MESSAGE-----