x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
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)
|
Class
|
Outstanding at May 3,
2010
|
|
Common
Stock, $.001 Par Value
|
54,993,907
shares
of registrant’s
Common
Stock
|
Page No.
|
|||
PART
I
|
FINANCIAL
INFORMATION
|
|
|
Item
1.
|
Condensed
Financial Statements
|
||
Consolidated
Balance Sheets -
March 31, 2010 (unaudited) and December 31, 2009 |
1
|
||
Consolidated
Statements of Operations -
Three Months Ended March 31, 2010 and 2009 (unaudited) |
3
|
||
Consolidated
Statements of Cash Flows -
Three Months Ended March 31, 2010 and 2009 (unaudited) |
4
|
||
Consolidated
Statement of Stockholders' Equity -
Three Months Ended March 31, 2010 (unaudited) |
5
|
||
Notes
to Consolidated Financial Statements
|
6
|
||
Item
2.
|
Management's
Discussion and Analysis of
Financial Condition and Results of Operations |
21
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures
About Market Risk |
41
|
|
Item
4.
|
Controls
and Procedures
|
41
|
|
PART II
|
OTHER
INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
41
|
|
Item
1A.
|
Risk
Factors
|
41
|
|
Item
6.
|
Exhibits
|
42
|
March 31,
|
||||||||
2010
|
December 31,
|
|||||||
(Amount in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2009
|
||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 97 | $ | 141 | ||||
Restricted
cash
|
55 | 55 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $306 and $296,
respectively
|
13,333 | 13,141 | ||||||
Unbilled
receivables - current
|
10,886 | 9,858 | ||||||
Inventories
|
464 | 351 | ||||||
Prepaid
and other assets
|
3,192 | 3,447 | ||||||
Deferred
tax assets - current
|
1,576 | 1,856 | ||||||
Current
assets related to discontinued operations
|
168 | 174 | ||||||
Total
current assets
|
29,771 | 29,023 | ||||||
Property
and equipment:
|
||||||||
Buildings
and land
|
27,098 | 27,098 | ||||||
Equipment
|
31,937 | 31,757 | ||||||
Vehicles
|
650 | 650 | ||||||
Leasehold
improvements
|
11,506 | 11,455 | ||||||
Office
furniture and equipment
|
1,892 | 1,933 | ||||||
Construction-in-progress
|
1,059 | 925 | ||||||
74,142 | 73,818 | |||||||
Less
accumulated depreciation and amortization
|
(29,517 | ) | (28,441 | ) | ||||
Net
property and equipment
|
44,625 | 45,377 | ||||||
Property
and equipment related to discontinued operations
|
637 | 651 | ||||||
Intangibles
and other long term assets:
|
||||||||
Permits
|
18,079 | 18,079 | ||||||
Goodwill
|
12,893 | 12,352 | ||||||
Unbilled
receivables – non-current
|
2,737 | 2,502 | ||||||
Finite
Risk Sinking Fund
|
17,379 | 15,480 | ||||||
Deferred
tax asset, net of liabilities
|
243 | 272 | ||||||
Other
assets
|
2,401 | 2,339 | ||||||
Total
assets
|
$ | 128,765 | $ | 126,075 |
March 31,
|
||||||||
2010
|
December 31,
|
|||||||
(Amount in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2009
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 4,252 | $ | 4,927 | ||||
Current
environmental accrual
|
125 | 25 | ||||||
Accrued
expenses
|
7,184 | 6,478 | ||||||
Disposal/transportation
accrual
|
2,746 | 2,761 | ||||||
Unearned
revenue
|
7,630 | 8,949 | ||||||
Current
liabilities related to discontinued operations
|
916 | 993 | ||||||
Current
portion of long-term debt
|
3,037 | 3,050 | ||||||
Total
current liabilities
|
25,890 | 27,183 | ||||||
Environmental
accruals
|
664 | 785 | ||||||
Accrued
closure costs
|
12,073 | 12,031 | ||||||
Other
long-term liabilities
|
531 | 508 | ||||||
Long-term
liabilities related to discontinued operations
|
1,337 | 1,433 | ||||||
Long-term
debt, less current portion
|
12,192 | 9,331 | ||||||
Total
long-term liabilities
|
26,797 | 24,088 | ||||||
Total
liabilities
|
52,687 | 51,271 | ||||||
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
|
— | — | ||||||
Common
Stock, $.001 par value; 75,000,000 shares authorized, 54,994,410 and
54,628,904 shares issued, respectively; 54,956,200
and 54,628,904 outstanding, respectively
|
55 | 55 | ||||||
Additional
paid-in capital
|
100,365 | 99,641 | ||||||
Accumulated
deficit
|
(25,539 | ) | (26,177 | ) | ||||
74,881 | 73,519 | |||||||
Less
Common Stock in treaury at cost: 38,210 and 0 shares,
respectively
|
(88 | ) | — | |||||
Total
stockholders' equity
|
74,793 | 73,519 | ||||||
Total
liabilities and stockholders' equity
|
$ | 128,765 | $ | 126,075 |
Three
Months Ended
March
31,
|
||||||||
(Amounts
in Thousands, Except for Per Share Amounts)
|
2010
|
2009
|
||||||
Net
revenues
|
$ | 25,859 | $ | 22,002 | ||||
Cost
of goods sold
|
20,467 | 17,389 | ||||||
Gross
profit
|
5,392 | 4,613 | ||||||
Selling,
general and administrative expenses
|
3,878 | 3,859 | ||||||
Loss
(gain) on disposal of property and equipment
|
2 | (12 | ) | |||||
Income
from operations
|
1,512 | 766 | ||||||
Other
income (expense):
|
||||||||
Interest
income
|
21 | 51 | ||||||
Interest
expense
|
(220 | ) | (547 | ) | ||||
Interest
expense-financing fees
|
(102 | ) | (13 | ) | ||||
Other
|
5 | 1 | ||||||
Income
from continuing operations before taxes
|
1,216 | 258 | ||||||
Income
tax expense
|
436 | 9 | ||||||
Income
from continuing operations, net of taxes
|
780 | 249 | ||||||
(Loss)
income from discontinued operations, net of taxes
|
(142 | ) | 299 | |||||
Net
income applicable to Common Stockholders
|
$ | 638 | $ | 548 | ||||
Net
income (loss) per common share – basic
|
||||||||
Continuing
operations
|
$ | .01 | $ | ― | ||||
Discontinued
operations
|
― | .01 | ||||||
Net
income per common share
|
$ | .01 | $ | .01 | ||||
Net
income (loss) per common share – diluted
|
||||||||
Continuing
operations
|
$ | .01 | $ | ― | ||||
Discontinued
operations
|
― | .01 | ||||||
Net
income per common share
|
$ | .01 | $ | .01 | ||||
Number
of common shares used in computing net income (loss) per
share:
|
||||||||
Basic
|
54,693 | 53,982 | ||||||
Diluted
|
54,901 | 54,005 |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
(Amounts
in Thousands)
|
2010
|
2009
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 638 | $ | 548 | ||||
Less:
(loss) income from discontinued operations
|
(142 | ) | 299 | |||||
Income
from continuing operations
|
780 | 249 | ||||||
Adjustments
to reconcile net income to cash provided by operations:
|
||||||||
Depreciation
and amortization
|
1,136 | 1,180 | ||||||
Non-cash
financing costs
|
83 | ― | ||||||
Deferred
taxes
|
30 | ― | ||||||
Provision
for bad debt and other reserves
|
16 | 59 | ||||||
Loss
(gain) on disposal of plant, property and equipment
|
2 | (12 | ) | |||||
Issuance
of common stock for services
|
59 | 64 | ||||||
Stock-based
compensation
|
86 | 136 | ||||||
Changes
in operating assets and liabilities of continuing operations, net of
effect from business acquisitions:
|
||||||||
Accounts
receivable
|
(208 | ) | 200 | |||||
Unbilled
receivables
|
(1,263 | ) | 2,079 | |||||
Prepaid
expenses, inventories and other assets
|
(12 | ) | (176 | ) | ||||
Accounts
payable, accrued expenses and unearned revenue
|
(2,101 | ) | (3,816 | ) | ||||
Cash
used in continuing operations
|
(1,392 | ) | (37 | ) | ||||
Cash
(used in) provided by discontinued operations
|
(332 | ) | 253 | |||||
Cash
(used in) provided by operating activities
|
(1,724 | ) | 216 | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(367 | ) | (304 | ) | ||||
Proceeds
from sale of plant, property and equipment
|
― | 12 | ||||||
Payment
to finite risk sinking fund
|
(1,899 | ) | (2,697 | ) | ||||
Cash
used in investing activities of continuing operations
|
(2,266 | ) | (2,989 | ) | ||||
Cash
provided by discontinued operations
|
37 | 11 | ||||||
Net
cash used in investing activities
|
(2,229 | ) | (2,978 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
borrowing of revolving credit
|
3,329 | 3,001 | ||||||
Principal
repayments of long term debt
|
(564 | ) | (298 | ) | ||||
Proceeds
from finite risk financing
|
653 | ― | ||||||
Proceeds
from issuance of stock
|
491 | ― | ||||||
Cash
provided by financing activities of continuing operations
|
3,909 | 2,703 | ||||||
Decrease
in cash
|
(44 | ) | (59 | ) | ||||
Cash
at beginning of period
|
141 | 129 | ||||||
Cash
at end of period
|
$ | 97 | $ | 70 | ||||
Supplemental
disclosure:
|
||||||||
Interest
paid
|
$ | 186 | $ | 739 | ||||
Income
taxes paid
|
231 | 3 | ||||||
Non-cash
investing and financing activities:
|
||||||||
Long-term
debt incurred for purchase of property and equipment
|
― | ― |
(Amounts in thousands,
|
Common
Stock
|
Additional
Paid-In
|
Common
Stock Held In
|
Accumulated
|
Total
Stockholders'
|
|||||||||||||||||||
except for share amounts)
|
Shares
|
Amount
|
Capital
|
Treasury
|
Deficit
|
Equity
|
||||||||||||||||||
Balance
at December 31, 2009
|
54,628,904 | $ | 55 | $ | 99,641 | $ | — | $ | (26,177 | ) | $ | 73,519 | ||||||||||||
Net
income
|
— | — | — | — | 638 | 638 | ||||||||||||||||||
Issuance
of Common Stock upon exercise of Options
|
340,000 | — | 579 | — | — | 579 | ||||||||||||||||||
Payment
of Option exercise by Common Stock shares
|
(88 | ) | (88 | ) | ||||||||||||||||||||
Issuance
of Common Stock for services
|
25,506 | — | 59 | — | — | 59 | ||||||||||||||||||
Stock-Based
Compensation
|
— | — | 86 | — | — | 86 | ||||||||||||||||||
Balance
at March 31, 2010
|
54,994,410 | $ | 55 | $ | 100,365 | $ | (88 | ) | $ | (25,539 | ) | $ | 74,793 |
Employee Stock Options Granted
|
||||
March
31, 2009
|
||||
Weighted-average
fair value per share
|
$ |
1.42
|
||
Risk -free interest
rate (1)
|
2.07%
- 2.40%
|
|||
Expected volatility
of stock (2)
|
59.16%
- 60.38%
|
|||
Dividend
yield
|
None
|
|||
Expected option life
(3)
|
4.6
years - 5.8 years
|
Three Months Ended
|
||||||||
Stock Options
|
March 31,
|
|||||||
2010
|
2009
|
|||||||
Employee
Stock Options
|
$ | 59,000 | $ | 106,000 | ||||
Director
Stock Options
|
27,000 | 30,000 | ||||||
Total
|
$ | 86,000 | $ | 136,000 |
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Options
outstanding Janury 1, 2010
|
3,109,525 | $ | 2.05 | |||||||||||||
Granted
|
–
|
–
|
||||||||||||||
Exercised
|
(340,000 | ) | 1.70 | $ | 217,700 | |||||||||||
Forfeited
|
–
|
–
|
||||||||||||||
Options outstanding
End of Period (1)
|
2,769,525 | 2.10 | 3.9 | $ | 574,909 | |||||||||||
Options Exercisable
at March 31, 2010 (1)
|
2,104,192 | $ | 2.08 | 3.7 | $ | 492,809 | ||||||||||
Options
Vested and expected to be vested at March 31, 2010
|
2,731,742 | $ | 2.09 | 3.9 | $ | 574,909 |
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Options
outstanding Janury 1, 2009
|
3,417,347 | $ | 2.03 | |||||||||||||
Granted
|
145,000 | 1.42 | ||||||||||||||
Exercised
|
–
|
–
|
$ | – | ||||||||||||
Forfeited
|
(4,000 | ) | 1.97 | |||||||||||||
Options outstanding
End of Period (2)
|
3,558,347 | 2.01 | 4.2 | $ | 413,175 | |||||||||||
Options Exercisable
at March 31, 2009 (2)
|
2,422,847 | $ | 1.94 | 3.6 | $ | 336,325 | ||||||||||
Options
Vested and expected to be vested at March 31, 2009
|
3,516,989 | $ | 1.94 | 4.2 | $ | 413,175 |
Three Months Ended
March 31,
|
||||||||
(Amounts
in Thousands, Except for Per Share Amounts)
|
2010
|
2009
|
||||||
Income
per share from continuing
operations
|
||||||||
Income
from continuing operations
|
$ | 780 | $ | 249 | ||||
Basic
income per share
|
$ | .01 | $ | — | ||||
Diluted
income per share
|
$ | .01 | $ | — | ||||
(Loss)
income per share from discontinued
operations
|
||||||||
(Loss)
income from discontinued operations
|
$ | (142 | ) | $ | 299 | |||
Basic
income per share
|
$ | — | $ | .01 | ||||
Diluted
income per share
|
$ | — | $ | .01 | ||||
Weighted
average common shares outstanding – basic
|
54,693 | 53,982 | ||||||
Potential
shares exercisable under stock option plans
|
166 | 23 | ||||||
Potential
shares upon exercise of Warrants
|
42 | — | ||||||
Weighted
average shares outstanding – diluted
|
54,901 | 54,005 | ||||||
Potential
shares excluded from above weighted average share calculations due to
their anti-dilutive effect include:
|
||||||||
Upon
exercise of options
|
1,660 | 3,361 | ||||||
Upon
exercise of Warrants
|
— | — |
(Amounts in Thousands)
|
March 31,
2010
|
December 31,
2009
|
||||||
Revolving
Credit facility dated December 22, 2000, borrowings based upon
eligible accounts receivable, subject to monthly borrowing base
calculation, variable interest paid monthly at option of prime rate (3.25%
at March 31, 2010) plus 2.0% or minimum floor base London InterBank Offer
Rate ("LIBOR") of 1.0% plus 3.0%, balance due in July 2012. Effective
interest rate for the first quarter of 2010 was 4.32% (1) (2)
(3)
|
$ | 5,988 | $ | 2,659 | ||||
Term
Loan dated December 22, 2000, payable in equal monthly
installments of
principal of $83, balance due in July 2012, variable interest paid monthly
at option of prime rate plus 2.5% or minimum floor base LIBOR of 1.0% plus
3.5%. Effective interest rate for the first quarter of 2010 was 5.08%(1) (2)
(3)
|
5,417 | 5,667 | ||||||
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
|
1,667 | 1,667 | ||||||
Promissory Note dated
May 8, 2009, payable in monthly installments of principal of $87 starting
June 8, 2009, balance due May 8, 2011, variable interest paid monthly at
LIBOR plus 4.5%, with LIBOR at least 1.5%.(4)
|
1,759 | 1,938 | ||||||
Various
capital lease and promissory note obligations, payable 2010 to 2013,
interest at rates ranging from 5.0% to
12.6%.
|
398 | 450 | ||||||
15,229 | 12,381 | |||||||
Less
current portion of long-term debt
|
3,037 | 3,050 | ||||||
$ | 12,192 | $ | 9,331 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Amounts
in Thousands)
|
2010
|
2009
|
||||||
Net
revenues
|
$ | — | $ | — | ||||
Interest
expense
|
(16 | ) | (20 | ) | ||||
(Loss) income from
discontinued operations (1)
|
(142 | ) | 299 |
March 31,
|
December 31,
|
|||||||
(Amounts
in Thousands)
|
2010
|
2009
|
||||||
Property,
plant and equipment, net (1)
|
637 | 651 | ||||||
Total
assets held for sale
|
$ | 637 | $ | 651 |
March
31,
|
December 31,
|
|||||||
(Amounts
in Thousands)
|
2010
|
2009
|
||||||
Other
assets
|
$ | 168 | $ | 174 | ||||
Total
assets of discontinued operations
|
$ | 168 | $ | 174 | ||||
Account
payable
|
$ | 21 | $ | 1 | ||||
Accrued
expenses and other liabilities
|
1,449 | 1,508 | ||||||
Deferred
revenue
|
— | — | ||||||
Environmental
liabilities
|
783 | 917 | ||||||
Total
liabilities of discontinued operations
|
$ | 2,253 | $ | 2,426 |
|
·
|
from
which we may earn revenue and incur
expenses;
|
|
·
|
whose
operating results are regularly reviewed by the Chief Executive Officer 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
|
Industrial
|
Segments
Total
|
Corporate (2)
|
Consolidated
Total
|
|||||||||||||||||||
Revenue
from external customers
|
$ | 22,892 |
(3)
|
$ | 675 | $ | 2,292 | $ | 25,859 | $ | — | $ | 25,859 | |||||||||||
Intercompany
revenues
|
790 | 216 | 152 | 1,158 | — | 1,158 | ||||||||||||||||||
Gross
profit
|
4,637 | 160 | 595 | 5,392 | — | 5,392 | ||||||||||||||||||
Interest
income
|
— | — | — | — | 21 | 21 | ||||||||||||||||||
Interest
expense
|
42 | 1 | 1 | 44 | 176 | 220 | ||||||||||||||||||
Interest
expense-financing fees
|
— | — | — | — | 102 | 102 | ||||||||||||||||||
Depreciation
and amortization
|
1,052 | 8 | 71 | 1,131 | 5 | 1,136 | ||||||||||||||||||
Segment
profit (loss)
|
2,407 | 38 | 190 | 2,635 | (1,855 | ) | 780 | |||||||||||||||||
Segment assets (1)
|
96,525 | 2,008 | 5,888 | 104,421 | 24,344 |
(4)
|
128,765 | |||||||||||||||||
Expenditures
for segment assets
|
139 | — | 210 | 349 | 18 | 367 | ||||||||||||||||||
Total
long-term debt
|
1,956 | 21 | 88 | 2,065 | 13,164 |
(5)
|
15,229 |
Nuclear
|
Engineering
|
Industrial
|
Segments
Total
|
Corporate (2)
|
Consolidated
Total
|
|||||||||||||||||||
Revenue
from external customers
|
$ | 19,114 |
(3)
|
$ | 779 | $ | 2,109 | $ | 22,002 | $ | — | $ | 22,002 | |||||||||||
Intercompany
revenues
|
751 | 170 | 188 | 1,109 | — | 1,109 | ||||||||||||||||||
Gross
profit
|
3,946 | 211 | 456 | 4,613 | — | 4,613 | ||||||||||||||||||
Interest
income
|
— | — | — | — | 51 | 51 | ||||||||||||||||||
Interest
expense
|
360 | 1 | 5 | 366 | 181 | 547 | ||||||||||||||||||
Interest
expense-financing fees
|
— | — | — | — | 13 | 13 | ||||||||||||||||||
Depreciation
and amortization
|
1,056 | 10 | 103 | 1,169 | 11 | 1,180 | ||||||||||||||||||
Segment
profit (loss)
|
1,754 | 86 | 54 | 1,894 | (1,645 | ) | 249 | |||||||||||||||||
Segment assets (1)
|
98,377 | 2,152 | 5,431 | 105,960 | 19,481 |
(4)
|
125,441 | |||||||||||||||||
Expenditures
for segment assets
|
252 | — | 49 | 301 | 3 | 304 | ||||||||||||||||||
Total
long-term debt
|
2,802 | 27 | 144 | 2,973 | 15,934 | 18,907 |
(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 CH Plateau
Remediation Company (“CHPRC”) revenue of $11,725,000 or 45.4% and
$10,748,000 or 48.8% of our total consolidated revenue for the quarter
ended March 31, 2010 and March 31, 2009, respectively. Our
M&EC facility was awarded a subcontract by CH Plateau Remediation
Company (“CHPRC”), a general contractor to the Department of Energy
(“DOE”), in the second quarter of 2008. See “Known Trends and
Uncertainties – Significant Customers” in “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” for a
discussion of CHPRC.
|
(4)
|
Amount
includes assets from discontinued operations of $805,000 and $711,000 as
of March 31, 2010 and 2009,
respectively.
|
(5)
|
Net
of debt discount recorded ($666,000) and amortized ($299,000) based on the
estimated fair value of two Warrants and 200,000 shares of the Company’s
Common Stock issued on May 8, 2009 in connection with a $3,000,000
promissory note entered into by the Company and Mr. William Lampson and
Mr. Diehl Rettig. See “Note 6 – Long Term Debt – Promissory
Note and Installment Agreement” for additional
information.
|
·
|
cash
flow from operations and our available liquidity from our line of credit
are sufficient to service our current
obligations;
|
·
|
we
expect to meet our financial covenants in
2010;
|
·
|
we
believe government funding made available for DOE project under the
government economic stimulus plan in February 2009 should continue to
positively impact our existing government contracts within our Nuclear
Segment;
|
·
|
higher
government funding made available through the economic stimulus package
(American Recovery and Reinvestment Act) enacted by Congress in 2009,
could result in larger fluctuations in
2010;
|
·
|
demand
for our service will continue to be subject to fluctuations due to a
variety of factors beyond our control, including the current economic
conditions, and the manner in which the government will be required to
spend funding to remediate federal
sites;
|
·
|
significant
reductions in the level of governmental funding or specifically mandated
levels for different programs that are important to our business could
have a material adverse impact on our business, financial position,
results of operations and cash
flow;
|
·
|
with
much of our Nuclear Segment customer base being government or prime
contractors treating government waste, we do not believe economic upturns
or downturns have a significant impact on the demand for our
services;
|
·
|
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;
|
·
|
no
immediate plans or current commitments to issue shares under the
registration statement;
|
·
|
ability
to remediate certain contaminated sites for projected
amounts;
|
·
|
no
further impairment of intangible or tangible
assets;
|
·
|
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;
|
·
|
we
make every reasonable attempt to maintain complete compliance with these
regulations; however, even with a diligent commitment, we, along with many
of our competitors, may be required to pay fines for violations or
investigate and potentially remediate our waste management
facilities;
|
·
|
ability
to generate funds internally to remediate
sites;
|
·
|
ability
to fund budgeted capital expenditures of $2,000,000 during 2010 through
our operations or lease financing or a combination of
both;
|
·
|
we
believe full operations under the CHPRC subcontract will result in
revenues for on-site and off-site work of approximately $200,000,000 to
$250,000,000 over the five year base
period;
|
·
|
in
the event of failure of AIG, this could significantly impact our
operations and our permits;
|
·
|
although
we have seen smaller fluctuation in government receipts between quarters
in recent years, nevertheless, 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;
|
·
|
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;
|
·
|
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;
|
·
|
due
to the continued uncertainty in the economy, changes within the
environmental insurance market, and the financial difficulties of AIG,
whose subsidiary Chartis, is the provider of our financial assurance
policies, we have no guarantees as to continued coverage by Chartis, that
we will be able to obtain similar insurance in future years, or that the
cost of such insurance will not increase
materially;
|
·
|
as
there are limited disposal sites available to us, a change in the number
of available sites or an increase or decrease in demand for the existing
disposal areas could significantly affect the actual disposal costs either
positively or negatively;
|
·
|
pending
legislative and regulatory proposals which address greenhouse gas
emissions, if and when enacted, could increase costs associated with our
operations;
|
·
|
expect
treatment/processing unit will be back on-line in mid-May;
and
|
·
|
We
do not expect ASU 2010-6 to have a material impact on our consolidated
financial statements;
|
·
|
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 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;
|
·
|
renegotiation
of contracts involving the federal
government;
|
·
|
disposal
expense accrual could prove to be inadequate in the event the waste
requires re-treatment;
|
·
|
Risk
Factors contained in Item 1A of our 2009 Form 10-K;
and
|
·
|
factors
set forth in “Special Note Regarding Forward-Looking Statements” contained
in our 2009 Form 10-K.
|
Three Months Ended
March 31,
|
||||||||||||||||
Consolidated
(amounts in thousands)
|
2010
|
%
|
2009
|
%
|
||||||||||||
Net
revenues
|
$ | 25,859 | 100.0 | $ | 22,002 | 100.0 | ||||||||||
Cost
of good sold
|
20,467 | 79.1 | 17,389 | 79.0 | ||||||||||||
Gross
profit
|
5,392 | 20.9 | 4,613 | 21.0 | ||||||||||||
Selling,
general and administrative
|
3,878 | 15.0 | 3,859 | 17.5 | ||||||||||||
Loss
(gain) on disposal of property and equipment
|
2 | ¾ | (12 | ) | ¾ | |||||||||||
Income
from operations
|
$ | 1,512 | 5.9 | $ | 766 | 3.5 | ||||||||||
Interest
income
|
21 | ¾ | 51 | .2 | ||||||||||||
Interest
expense
|
(220 | ) | (.8 | ) | (547 | ) | (2.5 | ) | ||||||||
Interest
expense-financing fees
|
(102 | ) | (.4 | ) | (13 | ) | ¾ | |||||||||
Other
|
5 | ¾ | 1 | ¾ | ||||||||||||
Income
from continuing operations before taxes
|
1,216 | 4.7 | 258 | 1.2 | ||||||||||||
Income
tax expense
|
436 | 1.7 | 9 | ¾ | ||||||||||||
Income
from continuing operations
|
780 | 3.0 | 249 | 1.2 |
(In
thousands)
|
2010
|
%
Revenue
|
2009
|
%
Revenue
|
Change
|
%
Change
|
||||||||||||||||||
Nuclear
|
||||||||||||||||||||||||
Government
waste
|
$ | 7,733 | 29.9 | $ | 4,678 | 21.3 | $ | 3,055 | 65.3 | |||||||||||||||
Hazardous/Non-hazardous
|
891 | 3.4 | 958 | 4.4 | (67 | ) | (7.0 | ) | ||||||||||||||||
Other
nuclear waste
|
2,543 | 9.8 | 2,730 | 12.4 | (187 | ) | (6.8 | ) | ||||||||||||||||
CHPRC
|
11,725 | 45.4 | 10,748 | 48.8 | 977 | 9.1 | ||||||||||||||||||
Total
|
22,892 | 88.5 | 19,114 | 86.9 | 3,778 | 19.8 | ||||||||||||||||||
Industrial
|
||||||||||||||||||||||||
Commercial
|
$ | 1,552 | 6.0 | $ | 1,228 | 5.6 | $ | 324 | 26.4 | |||||||||||||||
Government
services
|
169 | 0.7 | 127 | 0.6 | 42 | 33.1 | ||||||||||||||||||
Oil
Sales
|
571 | 2.2 | 754 | 3.4 | (183 | ) | (24.3 | ) | ||||||||||||||||
Total
|
2,292 | 8.9 | 2,109 | 9.6 | 183 | 8.7 | ||||||||||||||||||
Engineering
|
675 | 2.6 | 779 | 3.5 | (104 | ) | (13.4 | ) | ||||||||||||||||
Total
|
$ | 25,859 | 100.0 | $ | 22,002 | 100.0 | $ | 3,857 | 17.5 |
(In
thousands)
|
2010
|
%
Revenue
|
2009
|
%
Revenue
|
Change
|
|||||||||||||||
Nuclear
|
$ | 18,255 | 79.7 | $ | 15,168 | 79.4 | $ | 3,087 | ||||||||||||
Industrial
|
1,697 | 74.0 | 1,653 | 78.4 | 44 | |||||||||||||||
Engineering
|
515 | 76.3 | 568 | 72.9 | (53 | ) | ||||||||||||||
Total
|
$ | 20,467 | 79.1 | $ | 17,389 | 79.0 | 3,078 |
(In
thousands)
|
2010
|
%
Revenue
|
2009
|
%
Revenue
|
Change
|
|||||||||||||||
Nuclear
|
$ | 4,637 | 20.3 | $ | 3,946 | 20.6 | $ | 691 | ||||||||||||
Industrial
|
595 | 26.0 | 456 | 21.6 | 139 | |||||||||||||||
Engineering
|
160 | 23.7 | 211 | 27.1 | (51 | ) | ||||||||||||||
Total
|
$ | 5,392 | 20.9 | $ | 4,613 | 21.0 | 779 |
(In
thousands)
|
2010
|
%
Revenue
|
2009
|
%
Revenue
|
Change
|
|||||||||||||||
Administrative
|
$ | 1,598 | ¾ | $ | 1,503 | ¾ | $ | 95 | ||||||||||||
Nuclear
|
1,787 | 7.8 | 1,827 | 9.6 | (40 | ) | ||||||||||||||
Industrial
|
373 | 16.3 | 406 | 19.3 | (33 | ) | ||||||||||||||
Engineering
|
120 | 17.8 | 123 | 15.8 | (3 | ) | ||||||||||||||
Total
|
$ | 3,878 | 15.0 | $ | 3,859 | 17.5 | $ | 19 |
(In
thousands)
|
2010
|
2009
|
Change
|
|||||||||
PNC
interest
|
$ | 127 | $ | 162 | $ | (35 | ) | |||||
Other
|
93 | 385 | (292 | ) | ||||||||
Total
|
$ | 220 | $ | 547 | $ | (327 | ) |
(In
thousands)
|
2010
|
|||
Cash
used in continuing operations
|
$ | (1,392 | ) | |
Cash
used in discontinued operations
|
(332 | ) | ||
Cash
used in investing activities of continuing operations
|
(2,266 | ) | ||
Cash
provided by investing activities of discontinued
operations
|
37 | |||
Cash
provided by financing activities of continuing operations
|
3,909 | |||
Decrease
in cash
|
$ | (44 | ) |