x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the quarterly period ended March 31,
2008
|
Or
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the transition period from _______________________ to
_______________________
|
PERMA-FIX
ENVIRONMENTAL SERVICES, INC.
(Exact
name of registrant as specified in its
charter)
|
Delaware
(State
or other jurisdiction
of incorporation or organization) |
58-1954497
(IRS
Employer Identification Number)
|
8302
Dunwoody Place, Suite 250, Atlanta, GA
(Address
of principal executive offices)
|
30350
(Zip
Code)
|
(770)
587-9898
(Registrant's
telephone number)
|
N/A
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
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
o
|
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of "large accelerated filer,” “accelerated filer"
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer £ Accelerated
Filer x Non-accelerated
Filer £ Smaller
reporting company £
|
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule 12b-2 of the Exchange Act).
Yes £ No x |
Indicate
the number of shares outstanding of each of the issuer's classes
of Common
Stock, as of the close of the latest practical
date.
|
Class
|
Outstanding
at May 8, 2008
|
Common
Stock, $.001 Par Value
|
53,704,516
|
shares
of registrant’s
Common
Stock
|
|
|
Page No.
|
|
PART
I
FINANCIAL
INFORMATION
|
|||
Item
1.
|
Condensed
Financial Statements
|
||
Consolidated
Balance Sheets -
|
|||
March
31, 2008 (unaudited) and December 31, 2007
|
1
|
||
Consolidated
Statements of Operations -
|
|||
Three
Months Ended March 31, 2008 and 2007 (unaudited)
|
3
|
||
Consolidated
Statements of Cash Flows -
|
|||
Three
Months Ended March 31, 2008 and 2007 (unaudited)
|
4
|
||
Consolidated
Statement of Stockholders' Equity -
|
|||
Three
Months Ended March 31, 2008 (unaudited)
|
5
|
||
Notes
to Consolidated Financial Statements
|
6
|
||
Item
2.
|
Management's
Discussion and Analysis of
Financial Condition and Results of Operations |
24
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures
|
||
About
Market Risk
|
47
|
||
Item
4.
|
Controls
and Procedures
|
48
|
|
PART
II
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
49
|
|
Item
1A.
|
Risk
Factors
|
49
|
|
Item
6.
|
Exhibits
|
50
|
March 31,
|
|||||||
2008
|
December 31,
|
||||||
(Amount in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2007
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
|
$
|
63
|
$
|
102
|
|||
Restricted
cash
|
35
|
35
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of $79 and $138,
respectively
|
13,284
|
13,536
|
|||||
Unbilled
receivables - current
|
8,738
|
10,321
|
|||||
Inventories
|
206
|
233
|
|||||
Prepaid
and other assets
|
3,136
|
3,170
|
|||||
Current
assets related to discontinued operations
|
2,804
|
5,197
|
|||||
Total
current assets
|
28,266
|
32,594
|
|||||
Property
and equipment:
|
|||||||
Buildings
and land
|
21,207
|
20,748
|
|||||
Equipment
|
31,735
|
31,140
|
|||||
Vehicles
|
141
|
141
|
|||||
Leasehold
improvements
|
11,458
|
11,457
|
|||||
Office
furniture and equipment
|
2,281
|
2,268
|
|||||
Construction-in-progress
|
1,091
|
1,639
|
|||||
67,913
|
67,393
|
||||||
Less
accumulated depreciation and amortization
|
(21,204
|
)
|
(20,084
|
)
|
|||
Net
property and equipment
|
46,709
|
47,309
|
|||||
Property
and equipment related to discontinued operations
|
4,232
|
6,775
|
|||||
Intangibles
and other assets:
|
|||||||
Permits
|
15,697
|
15,636
|
|||||
Goodwill
|
9,058
|
9,046
|
|||||
Unbilled
receivables – non-current
|
3,454
|
3,772
|
|||||
Finite
Risk Sinking Fund
|
8,192
|
6,034
|
|||||
Other
assets
|
2,363
|
2,496
|
|||||
Intangible
and other assets related to discontinued operations
|
1,598
|
2,369
|
|||||
Total
assets
|
$
|
119,569
|
$
|
126,031
|
March 31,
|
|||||||
2008
|
December 31,
|
||||||
(Amount in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2007
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
6,519
|
$
|
5,010
|
|||
Current
environmental accrual
|
209
|
225
|
|||||
Accrued
expenses
|
8,562
|
9,207
|
|||||
Disposal/transportation
accrual
|
6,611
|
6,677
|
|||||
Unearned
revenue
|
5,131
|
4,978
|
|||||
Current
liabilities related to discontinued operations
|
4,834
|
8,359
|
|||||
Current
portion of long-term debt
|
3,478
|
15,292
|
|||||
Total
current liabilities
|
35,344
|
49,748
|
|||||
Environmental
accruals
|
225
|
251
|
|||||
Accrued
closure costs
|
8,773
|
8,739
|
|||||
Other
long-term liabilities
|
940
|
966
|
|||||
Long-term
liabilities related to discontinued operations
|
3,093
|
3,590
|
|||||
Long-term
debt, less current portion
|
9,957
|
2,724
|
|||||
Total
long-term liabilities
|
22,988
|
16,270
|
|||||
Total
liabilities
|
58,332
|
66,018
|
|||||
Commitments
and Contingencies
|
|||||||
Preferred
Stock of subsidiary, $1.00 par value; 1,467,396 shares authorized,
1,284,730 shares issued and outstanding, liquidation value $1.00
per
share
|
1,285
|
1,285
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
Stock, $.001 par value; 2,000,000 shares authorized, no shares issued
and
outstanding
|
¾
|
¾
|
|||||
Common
Stock, $.001 par value; 75,000,000 shares authorized, 53,704,516
and
53,704,516 shares issued and outstanding, respectively
|
54
|
54
|
|||||
Additional
paid-in capital
|
96,549
|
96,409
|
|||||
Stock
subscription receivable
|
(10
|
)
|
(25
|
)
|
|||
Accumulated
deficit
|
(36,641
|
)
|
(37,710
|
)
|
|||
Total
stockholders' equity
|
59,952
|
58,728
|
|||||
Total
liabilities and stockholders' equity
|
$
|
119,569
|
$
|
126,031
|
Three Months Ended
March 31,
|
|||||||
(Amounts in Thousands, Except for Per Share Amounts)
|
2008
|
2007
|
|||||
Net
revenues
|
$
|
14,883
|
$
|
12,921
|
|||
Cost
of goods sold
|
11,074
|
8,321
|
|||||
Gross
profit
|
3,809
|
4,600
|
|||||
Selling,
general and administrative expenses
|
3,807
|
3,715
|
|||||
Income
from operations
|
2
|
885
|
|||||
Other
income (expense):
|
|||||||
Interest
income
|
68
|
88
|
|||||
Interest
expense
|
(352
|
)
|
(200
|
)
|
|||
Interest
expense-financing fees
|
(52
|
)
|
(48
|
)
|
|||
Other
|
6
|
(16
|
)
|
||||
(Loss)
income from continuing operations before taxes
|
(328
|
)
|
709
|
||||
Income
tax expense
|
―
|
126
|
|||||
(Loss)
income from continuing operations
|
(328
|
)
|
583
|
||||
Loss
from discontinued operations, net of taxes
|
(710
|
)
|
(1,667
|
)
|
|||
Gain
on disposal of discontinued operations, net of taxes
|
2,107
|
―
|
|||||
Net
income (loss)
|
1,069
|
(1,084
|
)
|
||||
Preferred
Stock dividends
|
¾
|
¾
|
|||||
Net
income (loss) applicable to Common Stockholders
|
$
|
1,069
|
$
|
(1,084
|
)
|
||
Net
income (loss) per common share – basic
|
|||||||
Continuing
operations
|
$
|
(.01
|
)
|
$
|
.01
|
||
Discontinued
operations
|
(.01
|
)
|
(.03
|
)
|
|||
Disposal
of discontinued operations
|
.04
|
¾
|
|||||
Net
income (loss) per common share
|
$
|
.02
|
$
|
(.02
|
)
|
||
Net
income (loss) per common share – diluted
|
|||||||
Continuing
operations
|
$
|
(.01
|
)
|
$
|
.01
|
||
Discontinued
operations
|
(.01
|
)
|
(.03
|
)
|
|||
Disposal
of discontinued operations
|
.04
|
¾
|
|||||
Net
income (loss) per common share
|
$
|
.02
|
$
|
(.02
|
)
|
||
Number
of common shares used in computing net income (loss) per
share:
|
|||||||
Basic
|
53,704
|
52,063
|
|||||
Diluted
|
53,704
|
53,067
|
Three Months Ended
|
|||||||
March 31,
|
|||||||
(Amounts in Thousands)
|
2008
|
2007
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
1,069
|
$
|
(1,084
|
)
|
||
Less:
Income (loss) on discontinued operations (Note 8)
|
1,397
|
(1,667
|
)
|
||||
(Loss)
income from continuing operations
|
(328
|
)
|
583
|
||||
Adjustments
to reconcile net income (loss) to cash provided by
operations:
|
|||||||
Depreciation
and amortization
|
1,121
|
771
|
|||||
Benefit
for bad debt and other reserves
|
(40
|
)
|
(13
|
)
|
|||
Issuance
of common stock for services
|
14
|
12
|
|||||
Share
based compensation
|
126
|
111
|
|||||
Changes
in operating assets and liabilities of continuing operations, net
of
effect from business acquisitions:
|
|||||||
Accounts
receivable
|
292
|
(1,763
|
)
|
||||
Unbilled
receivables
|
1,901
|
(60
|
)
|
||||
Prepaid
expenses, inventories and other assets
|
331
|
2,166
|
|||||
Accounts
payable, accrued expenses and unearned revenue
|
717
|
(125
|
)
|
||||
Cash
provided by continuing operations
|
4,134
|
1,682
|
|||||
Gain
on disposal of discontinued operations (Note 8)
|
(2,107
|
)
|
―
|
||||
Cash
used in discontinued operations
|
(641
|
)
|
(32
|
)
|
|||
Cash
provided by operating activities
|
1,386
|
1,650
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment
|
(519
|
)
|
(1,118
|
)
|
|||
Change
in finite risk sinking fund
|
(2,158
|
)
|
(1,048
|
)
|
|||
Cash
used for acquisition consideration, net of cash acquired
|
(12
|
)
|
―
|
||||
Cash
used in investing activities of continuing operations
|
(2,689
|
)
|
(2,166
|
)
|
|||
Proceeds
from sale of discontinued operations (Note 8)
|
5,950
|
―
|
|||||
Cash
used in discontinued operations
|
(74
|
)
|
(350
|
)
|
|||
Net
cash provided by (used in) investing activities
|
3,187
|
(2,516
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Net
repayments of revolving credit
|
(124
|
)
|
―
|
||||
Principal
repayments of long term debt
|
(4,457
|
)
|
(283
|
)
|
|||
Proceeds
from issuance of stock
|
―
|
25
|
|||||
Repayment
of stock subscription receivable
|
15
|
13
|
|||||
Cash
used in financing activities of continuing operations
|
(4,566
|
)
|
(245
|
)
|
|||
Principal
repayment of long-term debt for discontinued operations
|
(46
|
)
|
(105
|
)
|
|||
Cash
used in financing activities
|
(4,612
|
)
|
(350
|
)
|
|||
Decrease
in cash
|
(39
|
)
|
(1,216
|
)
|
|||
Cash
at beginning of period
|
102
|
2,528
|
|||||
Cash
at end of period
|
$
|
63
|
$
|
1,312
|
|||
Supplemental
disclosure:
|
|||||||
Interest
paid
|
$
|
297
|
$
|
191
|
|||
Income
taxes paid
|
―
|
99
|
|||||
Non-cash
investing and financing activities:
|
|||||||
Long-term
debt incurred for purchase of property and equipment
|
614
|
428
|
(Amounts in thousands,
|
Common Stock
|
Additional Paid-
|
Stock
Subscription
|
Accumulated
|
Total
Stockholders'
|
||||||||||||||
except for share amounts)
|
Shares
|
Amount
|
In Capital
|
Receivable
|
Deficit
|
Equity
|
|||||||||||||
Balance
at December 31, 2007
|
53,704,516
|
$
|
54
|
$
|
96,409
|
$
|
(25
|
)
|
$
|
(37,710
|
)
|
$
|
58,728
|
||||||
Net
income
|
—
|
—
|
—
|
—
|
1,069
|
1,069
|
|||||||||||||
Issuance
of Common Stock for services
|
—
|
—
|
14
|
—
|
—
|
14
|
|||||||||||||
Issuance
of Common Stock upon exercise of Warrants & Options
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Share
based compensation
|
—
|
—
|
126
|
—
|
—
|
126
|
|||||||||||||
Repayment
of stock subscription receivable
|
—
|
—
|
—
|
15
|
—
|
15
|
|||||||||||||
Balance
at March 31, 2008
|
53,704,516
|
$
|
54
|
$
|
96,549
|
$
|
(10
|
)
|
$
|
(36,641
|
)
|
$
|
59,952
|
4.
|
Earnings
(Loss) Per Share
|
Three Months Ended
March 31,
|
|||||||
(Amounts
in Thousands, Except for Per Share Amounts)
|
2008
|
2007
|
|||||
Earnings
(loss) per share from continuing operations
|
|||||||
(Loss)
income from continuing operations applicable to Common
Stockholders
|
$
|
(328
|
)
|
$
|
583
|
||
Basic
(loss) income per share
|
$
|
(.01
|
)
|
$
|
.01
|
||
Diluted
(loss) income per share
|
$
|
(.01
|
)
|
$
|
.01
|
||
(Loss)
per share from discontinued operations
|
|||||||
Loss
from discontinued operations
|
$
|
(710
|
)
|
$
|
(1,667
|
)
|
|
Basic
loss per share
|
$
|
(.01
|
)
|
$
|
(.03
|
)
|
|
Diluted
loss per share
|
$
|
(.01
|
)
|
$
|
(.03
|
)
|
|
Income
per share from disposal of discontinued operations
|
|||||||
Gain
on disposal of discontinued operations
|
$
|
2,107
|
$
|
¾
|
|||
Basic
income per share
|
$
|
.04
|
$
|
¾
|
|||
Diluted
income per share
|
$
|
.04
|
$
|
¾
|
|||
Weighted
average common shares outstanding – basic
|
53,704
|
52,063
|
|||||
Potential
shares exercisable under stock option plans
|
¾
|
554
|
|||||
Potential
shares upon exercise of Warrants
|
¾
|
450
|
|||||
Weighted
average shares outstanding – diluted
|
53,704
|
53,067
|
|||||
Potential
shares excluded from above weighted average share calculations due
to
their anti-dilutive effect include:
|
|||||||
Upon
exercise of options
|
845
|
270
|
5.
|
Long
Term Debt
|
(Amounts in Thousands)
|
March 31,
2008
|
December
31, 2007
|
|||||
Revolving
Credit
facility dated December 22, 2000, borrowings based upon eligible
accounts
receivable, subject to monthly borrowing base calculation, variable
interest paid monthly at prime rate plus ½% (6.50% at March 31, 2008),
balance due in September 2009.
|
$
|
6,727
|
$
|
6,851
|
|||
Term
Loan
dated December 22, 2000, payable in equal monthly installments of
principal of $83, balance due in September 2009, variable interest
paid
monthly at prime rate plus 1% (7.00% at March 31, 2008).
|
553
|
4,500
|
|||||
Promissory
Note dated
June 25, 2001, payable in semiannual installments on June 30 and
December
31 through December 31, 2008, variable interest accrues at the applicable
law rate determined under the IRS Code Section (9.0% on March 31, 2008)
and is payable in one lump sum at the end of installment
period.
|
635
|
635
|
|||||
Promissory Note
dated June 25, 2007, payable in monthly installments of principal
of $160
starting July 2007 and $173 starting July 2008, variable interest
paid
monthly at prime rate plus 1.125% (7.125% at March 31,
2008)
|
2,559
|
3,039
|
|||||
Installment
Agreement in
the Agreement and Plan of Merger with Nuvotec and PEcoS, dated April
27,
2007, payable in three equal yearly installment of principal of $833
beginning June 2009. Interest accrues at annual rate of 8.25% on
outstanding principal balance starting June 2007 and payable yearly
starting June 2008
|
2,500
|
2,500
|
|||||
Installment
Agreement
dated June 25, 2001, payable in semiannual installments on June 30
and
December 31 through December 31, 2008, variable interest accrues
at the
applicable law rate determined under the Internal Revenue Code Section
(9.0% on March 31, 2008) and is payable in one lump sum at the end
of
installment period.
|
153
|
153
|
|||||
Various
capital lease and promissory note obligations, payable 2008 to 2012,
interest at rates ranging from 5.0% to 12.6%.
|
717
|
1,158
|
|||||
13,844
|
18,836
|
||||||
Less
current portion of long-term debt
|
3,478
|
15,292
|
|||||
Less
long-term debt related to assets held for sale
|
409
|
820
|
|||||
$
|
9,957
|
$
|
2,724
|
6.
|
Commitments
and Contingencies
|
7.
|
Business
Acquisition
|
(a)
|
$2.3
million in cash at closing of the merger, with $1.5 million payable
to
unaccredited shareholders and $0.8 million payable to shareholders
of
Nuvotec that qualified as accredited investors pursuant to Rule 501
of
Regulation D promulgated under the Securities Act of 1933, as amended
(the
“Act”).
|
(b)
|
Also
payable only to the shareholders of Nuvotec that qualified as accredited
investors:
|
·
|
$2.5
million, payable over a four year period, unsecured and nonnegotiable
and
bearing an annual rate of interest of 8.25%, with (i) accrued interest
only payable on June 30, 2008, (ii) $833,333.33, plus accrued and
unpaid
interest, payable on June 30, 2009, (iii) $833,333.33, plus accrued
and
unpaid interest, payable on June 30, 2010, and (iv) the remaining
unpaid
principal balance, plus accrued and unpaid interest, payable on June
30,
2011 (collectively, the “Installment Payments”). The Installment Payments
may be prepaid at any time by Perma-Fix without penalty; and
|
·
|
709,207
shares of Perma-Fix common stock, which were issued on July 23, 2007,
with
such number of shares determined by dividing $2.0 million by 95%
of
average of the closing price of the common stock as quoted on the
NASDAQ
during the 20 trading days period ending five business days prior
to the
closing of the merger. The value of these shares on June 13, 2007
was $2.2
million, which was determined by the average closing price of the
common
stock as quoted on the NASDAQ four days prior to and following the
completion date of the acquisition, which was June 13, 2007.
|
(c) |
The
assumption of $9.4 million of debt, $8.9 million of which was payable
to
KeyBank National Association which represents debt owed by PFNW under
a
credit facility. As part of the closing, the Company paid down $5.4
million of this debt resulting in debt remaining of $4.0
million.
|
(d) |
Transaction
costs totaling $0.9 million.
|
(Amounts
in thousands)
|
||||
Cash
|
$
|
2,300
|
||
Assumed
debt
|
9,412
|
|||
Installment
payments
|
2,500
|
|||
Common
Stock of the Company
|
2,165
|
|||
Transaction
costs
|
920
|
|||
Total
consideration
|
$
|
17,297
|
(Amounts
in thousands)
|
||||
Current
assets (including cash acquired of $249)
|
$
|
2,837
|
||
Property,
plant and equipment
|
14,978
|
|||
Permits
|
4,500
|
|||
Goodwill
|
7,728
|
|||
Total
assets acquired
|
30,043
|
|||
Current
liabilities
|
(8,978
|
)
|
||
Non-current
liabilties
|
(3,768
|
)
|
||
Total
liabilities assumed
|
(12,746
|
)
|
||
Net
assets acquired
|
$
|
17,297
|
|
Three Months Ended
|
|||
(Amounts in Thousands, Except per Share Data) |
March 31, 2007
|
|||
(Unaudited)
|
||||
Net
revenues
|
$
|
15,816
|
||
Net
income
|
$
|
639
|
||
Net
income per share from continuing operations- basic
|
$
|
.01
|
||
Net
income per share from continuing operations- diluted
|
$
|
.01
|
||
Weighted
average common shares outstanding - basic
|
52,063
|
|||
Weighted
average common shares outstanding - diluted
|
53,067
|
8.
|
Discontinued
Operations and
Divestitures
|
Three Months Ended March 31,
|
|||||||
(Amounts in Thousands)
|
2008
|
2007
|
|||||
Net
revenues
|
$
|
4,974
|
$
|
7,234
|
|||
Interest
expense
|
$
|
(40
|
)
|
$
|
(53
|
)
|
|
Operating
loss from discontinued operations
|
$
|
(710
|
)
|
$
|
(1,667
|
)
|
|
Income
tax provision
|
—
|
$
|
—
|
||||
Gain
on disposal of discontinued operations, net of taxes of $43 and
$0
|
$
|
2,107
|
—
|
||||
Income
(loss) from discontinued operations
|
$
|
1,397
|
$
|
(1,667
|
)
|
March 31,
|
December
31,
|
||||||
(Amounts in Thousands)
|
2008
|
2007
|
|||||
Account
receivable, net (1)
|
$
|
2,407
|
$
|
4,253
|
|||
Inventories
|
134
|
411
|
|||||
Other
assets
|
1,851
|
2,902
|
|||||
Property,
plant and equipment, net (2)
|
4,232
|
6,775
|
|||||
Total
assets held for sale
|
$
|
8,624
|
$
|
14,341
|
|||
Account
payable
|
$
|
1,606
|
$
|
2,403
|
|||
Accrued
expenses and other liabilities
|
2,285
|
4,713
|
|||||
Note
payable
|
409
|
820
|
|||||
Environmental
liabilities
|
675
|
1,132
|
|||||
Total
liabilities held for sale
|
$
|
4,975
|
$
|
9,068
|
March 31,
|
December 31,
|
||||||
(Amounts in Thousands)
|
2008
|
2007
|
|||||
Other
assets
|
$
|
10
|
$
|
—
|
|||
Total
assets of discontinued operations
|
$
|
10
|
$
|
—
|
|||
Account
payable
|
$
|
351
|
$
|
329
|
|||
Accrued
expenses and other liabilities
|
1,336
|
1,287
|
|||||
Environmental
liabilities
|
1,265
|
1,265
|
|||||
Total
liabilities of discontinued operations
|
$
|
2,952
|
$
|
2,881
|
9.
|
Operating
Segments
|
·
|
from
which we may earn revenue and incur expenses;
|
|
·
|
whose
operating results are regularly reviewed by the segment president
to make
decisions about resources to be allocated to the segment and assess
its
performance; and
|
|
·
|
for
which discrete financial information is
available.
|
Nuclear
|
Engineering
|
Segments
Total
|
Corporate (2)
|
Consolidated
Total
|
||||||||||||
Revenue
from external customers
|
$
|
13,981
|
(3)
|
$
|
902
|
$
|
14,883
|
$
|
¾
|
$
|
14,883
|
|||||
Intercompany
revenues
|
611
|
98
|
709
|
¾
|
709
|
|||||||||||
Gross
profit
|
3,554
|
255
|
3,809
|
¾
|
3,809
|
|||||||||||
Interest
income
|
2
|
¾
|
2
|
66
|
68
|
|||||||||||
Interest
expense
|
195
|
1
|
196
|
156
|
352
|
|||||||||||
Interest
expense-financing fees
|
¾
|
¾
|
¾
|
52
|
52
|
|||||||||||
Depreciation
and amortization
|
1,103
|
7
|
1,110
|
11
|
1,121
|
|||||||||||
Segment
profit (loss)
|
976
|
128
|
1,104
|
(1,432
|
)
|
(328
|
)
|
|||||||||
Segment
assets(1)
|
95,578
|
2,196
|
97,774
|
21,795
|
(4)
|
119,569
|
||||||||||
Expenditures
for segment assets
|
512
|
¾
|
512
|
7
|
519
|
|||||||||||
Total
long-term debt
|
6,152
|
3
|
6,155
|
7,280
|
13,435
|
Nuclear
|
Engineering
|
Segments
Total
|
Corporate (2)
|
Consolidated
Total
|
||||||||||||
Revenue
from external customers
|
$
|
12,344
|
(3)
|
$
|
577
|
$
|
12,921
|
$
|
¾
|
$
|
12,921
|
|||||
Intercompany
revenues
|
555
|
235
|
790
|
¾
|
790
|
|||||||||||
Gross
profit
|
4,431
|
169
|
4,600
|
¾
|
4,600
|
|||||||||||
Interest
income
|
¾
|
¾
|
¾
|
88
|
88
|
|||||||||||
Interest
expense
|
91
|
¾
|
91
|
109
|
200
|
|||||||||||
Interest
expense-financing fees
|
¾
|
¾
|
¾
|
48
|
48
|
|||||||||||
Depreciation
and amortization
|
743
|
9
|
752
|
19
|
771
|
|||||||||||
Segment
profit (loss)
|
2,011
|
49
|
2,060
|
(1,477
|
)
|
583
|
||||||||||
Segment
assets(1)
|
70,596
|
2,063
|
72,659
|
33,794
|
(4)
|
106,453
|
||||||||||
Expenditures
for segment assets
|
1,353
|
10
|
1,363
|
3
|
1,366
|
|||||||||||
Total
long-term debt
|
2,200
|
13
|
2,213
|
5,250
|
7,463
|
(1) |
Segment
assets have been adjusted for intercompany accounts to reflect actual
assets for each segment.
|
(2) |
Amounts
reflect the activity for corporate headquarters not included in the
segment information.
|
(3)
|
The
consolidated revenues within the Nuclear Segment include the LATA/Parallax
revenues of $1,552,000 (or 10.4%) and $1,954,000 (or 15.1%) for the
quarter ended March 31, 2008 and 2007, respectively. In addition,
the
consolidated revenues within the Nuclear Segment include the Fluor
Hanford
revenues of $1,766,000 (or 11.9%) and $1,511,000 (or 11.7%) for the
quarter ended March 31, 2008 and 2007, respectively.
|
(4)
|
Amount
includes assets from discontinued operations of $ 8,634,000 and
$22,301,000 as of March 31, 2008 and 2007,
respectively.
|
10.
|
Income
Taxes
|
11.
|
Capital
Stock And Employee Stock
Plan
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Options
outstanding Janury 1, 2008
|
2,590,026
|
$
|
1.91
|
||||||||||
Granted
|
¾
|
¾
|
|||||||||||
Exercised
|
¾
|
¾
|
¾
|
||||||||||
Forfeited
|
(47,334
|
)
|
¾
|
||||||||||
Options
outstanding End of Period (1)
|
2,542,692
|
1.91
|
4.3
|
$
|
96,673
|
||||||||
Options
Exercisable at March 31, 2008 (1)
|
2,244,692
|
$
|
1.92
|
4.4
|
$
|
96,673
|
|||||||
Options
Vested and expected to be vested at March 31, 2008
|
2,524,879
|
$
|
1.91
|
4.3
|
$
|
96,673
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Options
outstanding Janury 1, 2007
|
2,816,750
|
$
|
1.86
|
||||||||||
Granted
|
¾
|
¾
|
|||||||||||
Exercised
|
(17,500
|
)
|
1.41
|
$
|
16,938
|
||||||||
Forfeited
|
¾
|
¾
|
|||||||||||
Options
outstanding End of Period (1)
|
2,799,250
|
1.86
|
5.1
|
$
|
1,465,613
|
||||||||
Options
Exercisable at March 31, 2007 (1)
|
2,143,917
|
$
|
1.87
|
5.2
|
$
|
1,123,840
|
|||||||
Options
Vested and expected to be vested at March 31, 2007
|
2,752,047
|
$
|
1.86
|
5.1
|
$
|
1,441,000
|
·
|
ability
or inability to continue and improve operations and achieve profitability
on an annualized basis;
|
·
|
ability
to retain or receive certain permits, licenses, or
patents;
|
·
|
ability
to comply with the Company's general working capital requirements;
|
·
|
anticipate
a full repayment of our Term Loan by September 2008 and our Revolver
by
September 2009;
|
·
|
ability
to continue to meet our fixed charge coverage ratio in
2008;
|
·
|
ability
to be able to continue to borrow under the Company's revolving
line of
credit;
|
·
|
we
plan to fund any repurchases under the common stock repurchase
plan
through our internal cash flow and/or borrowing under our line
of
credit;
|
·
|
ability
to generate sufficient cash flow from operations to fund all costs
of
operations;
|
·
|
ability
to remediate certain contaminated sites for projected
amounts;
|
·
|
despite
our aggressive compliance and auditing procedures for disposal
of wastes,
we could, in the future, be notified that we are a Partially Responsible
Party (“PRP”) at a remedial action site, which could have a material
adverse effect;
|
·
|
ability
to fund budgeted capital expenditures of $3,100,000 during 2008
through
our operations or lease financing or a combination of both;
|
·
|
growth
of our Nuclear Segment;
|
·
|
we
believe that our cash flows from operations are sufficient to service
the
Company’s current obligations;
|
·
|
we
expect backlog levels to continue to fluctuate in 2008, depending
on the
complexity of waste streams and the timing of receipts and processing
of
materials;
|
·
|
the
high levels of backlog material continue to position the segment
well for
increases in future processing material prospective;
|
·
|
our
contract with LATA/Parallax and Fluor Hanford is expected to be
completed
in 2008;
|
·
|
Our
inability to continue under existing contracts that we have with
the
federal government (directly or indirectly as a subcontractor)
could have
a material adverse effect on our operations and financial
condition;
|
·
|
as
the DOE is currently in the process of re-bidding its contracts
with
current prime contractors, our future revenue beyond 2008 from
Fluor
Hanford is uncertain at this time;
|
·
|
as
with most contracts relating to the federal government, LATA/Parallax
and/or Fluor Hanford can terminate the contract with us at any
time for
convenience, which could have a material adverse effect on our
operations;
|
·
|
although
we have seen smaller fluctuation in government receipts between
quarters
in recent years, as government spending is contingent upon its
annual
budget and allocation of funding, we cannot provide assurance that
we will
not have larger fluctuations in the quarters in the near
future;
|
·
|
we
anticipate spending $187,000 in the remaining nine months of 2008
to
remediate the PFMI site, with the remainder over the next five
years;
|
·
|
under
our insurance contracts, we usually accept self-insured retentions,
which
we believe is appropriate for our specific business
risks;
|
·
|
we
believe we maintain insurance coverage adequate for our needs and
which is
similar to, or greater than the coverage maintained by other companies
of
our size in the industry;
|
·
|
the
purchase price allocation of PFNWR will be completed by the end
of the
second quarter of 2008;
|
·
|
we
are negotiating the sale of PFTS and PFSG and we anticipate the
sale of
the facilities to be completed during the second and during the
third
quarter of 2008, respectively;
|
·
|
we
believe the divestiture of certain facilities within our Industrial
Segment has not occurred within the anticipated time period due
to the
current state of our economy which has impacted potential buyers’ ability
to obtain financing;
|
·
|
although
the process of divesting certain facilities within our Industrial
Segment
has taken more time than anticipated for numerous reasons, we continue
to
market the facilities within our Industrial Segment for eventual
sale;
|
·
|
cash
to be received subject from the sale of any remaining
facilities/operations within our Industrial Segment (net of the
collateralized portion held by our credit facility) will be used
to reduce
our term note, with any remaining cash used to reduce our
revolver;
|
·
|
with
the impending divestitures of our remaining facilities/operations,
we
anticipate the remaining environmental liabilities will be part
of the
divestitures with the exception of PFM and PFMI, along with PFD,
which
will remain the financial obligations of the Company;
|
·
|
despite
our aggressive compliance and auditing procedures for disposal
of wastes,
we could, in the future, be notified that we are a PRP at a remedial
action site, which could have a material adverse
effect;
|
·
|
we
believe the material weakness at certain of our Industrial Segment
will
inherently be remediated once the remaining facilities/operations
within
our Industrial Segment are sold;
|
·
|
the
Company expects SFAS No. 141R will have an impact on its consolidated
financial statements when effective, but the nature and magnitude
of the
specific effects will depend upon the nature, terms and size of
acquisitions it consummates after the effect date;
|
·
|
the
Company does not expect the adoption of SAB No. 110 to have material
effect on its operations or financial position;
|
·
|
we
do not expect standard in SFAS 160 to have a material impact on
the
Company’s future consolidated financial statements; and
|
·
|
we
currently have interested parties and are negotiating to sell certain
facilities within our Industrial
Segment.
|
·
|
general
economic conditions;
|
·
|
material
reduction in revenues;
|
·
|
ability
to meet PNC covenant requirements;
|
·
|
inability
to collect in a timely manner a material amount of receivables;
|
·
|
increased
competitive pressures;
|
·
|
the
ability to maintain and obtain required permits and approvals to
conduct
operations;
|
·
|
the
ability to develop new and existing technologies in the conduct
of
operations;
|
·
|
ability
to retain or renew certain required permits;
|
·
|
discovery
of additional contamination or expanded contamination at any of
the sites
or facilities leased or owned by us or our subsidiaries which would
result
in a material increase in remediation expenditures;
|
·
|
changes
in federal, state and local laws and regulations, especially environmental
laws and regulations, or in interpretation of such;
|
·
|
potential
increases in equipment, maintenance, operating or labor
costs;
|
·
|
management
retention and development;
|
·
|
financial
valuation of intangible assets is substantially more/less than
expected;
|
·
|
the
requirement to use internally generated funds for purposes not
presently
anticipated;
|
·
|
inability
to divest the remaining facilities/operations within our Industrial
Segment;
|
·
|
inability
to continue to be profitable on an annualized basis;
|
·
|
the
inability of the Company to maintain the listing of its Common
Stock on
the NASDAQ;
|
·
|
terminations
of contracts with federal agencies or subcontracts involving federal
agencies, or reduction in amount of waste delivered to the Company
under
the contracts or subcontracts; and
|
·
|
disposal
expense accrual could prove to be inadequate in the event the waste
requires re-treatment.
|
Three Months Ended
March 31,
|
|||||||||||||
Consolidated (amounts in thousands)
|
2008
|
%
|
2007
|
%
|
|||||||||
Net
revenues
|
$
|
14,883
|
100.0
|
$
|
12,921
|
100.0
|
|||||||
Cost
of good sold
|
11,074
|
74.4
|
8,321
|
64.4
|
|||||||||
Gross
profit
|
3,809
|
25.6
|
4,600
|
35.6
|
|||||||||
Selling,
general and administrative
|
3,807
|
25.6
|
3,715
|
28.8
|
|||||||||
Income
from operations
|
$
|
2
|
¾
|
$
|
885
|
6.8
|
|||||||
Interest
income
|
68
|
.5
|
88
|
.7
|
|||||||||
Interest
expense
|
(352
|
)
|
(2.4
|
)
|
(200
|
)
|
(1.5
|
)
|
|||||
Interest
expense-financing fees
|
(52
|
)
|
(.3
|
)
|
(48
|
)
|
(.4
|
)
|
|||||
Other
|
6
|
¾
|
(16
|
)
|
(.1
|
)
|
|||||||
(Loss)
income from continuing operations before taxes
|
(328
|
)
|
(2.2
|
)
|
709
|
5.5
|
|||||||
Income
tax expense
|
¾
|
¾
|
126
|
1.0
|
|||||||||
(Loss)
income from continuing operations
|
(328
|
)
|
(2.2
|
)
|
583
|
4.5
|
|||||||
Preferred
Stock dividends
|
¾
|
¾
|
¾
|
¾
|
(In
thousands)
|
2008
|
%
Revenue
|
2007
|
%
Revenue
|
Change
|
%
Change
|
|||||||||||||
Nuclear
|
|||||||||||||||||||
Government
waste
|
$
|
2,726
|
18.3
|
$
|
3,420
|
26.5
|
$
|
(694
|
)
|
(20.3
|
)
|
||||||||
Hazardous/Non-hazardous
|
855
|
5.7
|
1,486
|
11.5
|
(631
|
)
|
(42.5
|
)
|
|||||||||||
Other
nuclear waste
|
4,314
|
29.0
|
3,973
|
30.7
|
341
|
8.6
|
|||||||||||||
LATA/Parallax
|
1,552
|
10.4
|
1,954
|
15.1
|
(402
|
)
|
(20.6
|
)
|
|||||||||||
Fluor
Hanford
|
768
|
(1)
|
5.2
|
1,511
|
11.7
|
(743
|
)
|
(49.2
|
)
|
||||||||||
Acquisition
- 6/07 (PFNWR)
|
3,766
|
(1)
|
25.3
|
—
|
—
|
3,766
|
100.0
|
||||||||||||
Total
|
13,981
|
93.9
|
12,344
|
95.5
|
1,637
|
13.3
|
|||||||||||||
Engineering
|
902
|
6.1
|
577
|
4.5
|
325
|
56.3
|
|||||||||||||
Total
|
$
|
14,883
|
100.0
|
$
|
12,921
|
100.0
|
$
|
1,962
|
15.2
|
(In
thousands)
|
2008
|
%
Revenue
|
2007
|
%
Revenue
|
Change
|
|||||||||||
Nuclear
|
$
|
7,753
|
75.9
|
$
|
7,913
|
64.1
|
$
|
(160
|
)
|
|||||||
Engineering
|
647
|
71.7
|
408
|
70.7
|
239
|
|||||||||||
Acquisition
- 6/07 (PFNWR)
|
2,674
|
71.0
|
—
|
—
|
2,674
|
|||||||||||
Total
|
$
|
11,074
|
74.4
|
$
|
8,321
|
64.4
|
2,753
|
(In
thousands)
|
2008
|
%
Revenue
|
2007
|
%
Revenue
|
Change
|
|||||||||||
Nuclear
|
$
|
2,462
|
24.1
|
$
|
4,431
|
35.9
|
$
|
(1,969
|
)
|
|||||||
Engineering
|
255
|
28.3
|
169
|
29.3
|
86
|
|||||||||||
Acquisition
- 6/07 (PFNWR)
|
1,092
|
29.0
|
—
|
—
|
1,092
|
|||||||||||
Total
|
$
|
3,809
|
25.6
|
$
|
4,600
|
35.6
|
(791
|
)
|
(In
thousands)
|
2008
|
%
Revenue
|
2007
|
%
Revenue
|
Change
|
|||||||||||
Administrative
|
$
|
1,289
|
¾
|
$
|
1,346
|
¾
|
$
|
(57
|
)
|
|||||||
Nuclear
|
1,729
|
16.9
|
2,250
|
18.2
|
(521
|
)
|
||||||||||
Engineering
|
127
|
14.1
|
119
|
20.6
|
8
|
|||||||||||
Acquisition
- 6/07 (PFNWR)
|
662
|
17.6
|
—
|
—
|
662
|
|||||||||||
Total
|
$
|
3,807
|
25.6
|
$
|
3,715
|
28.8
|
$
|
92
|
(In thousands)
|
2008
|
2007
|
Change
|
|||||||
PNC
interest
|
$
|
122
|
$
|
108
|
$
|
14
|
||||
Other
|
230
|
92
|
138
|
|||||||
Total
|
$
|
352
|
$
|
200
|
$
|
152
|
(In
thousands)
|
2008
|
|||
Cash
provided by continuing operations
|
$
|
4,134
|
||
Gain
on disposal of discontinued operations
|
$
|
(2,107
|
)
|
|
Cash
used in discontinued operations
|
(641
|
)
|
||
Cash
used in investing activities of continuing operations
|
(2,689
|
)
|
||
Proceeds
from sale of discontinued operations
|
5,950
|
|||
Cash
used in investing activities of discontinued operations
|
(74
|
)
|
||
Cash
used in financing activities of continuing operations
|