Quarterly report pursuant to sections 13 or 15(d)

Operating Segments

Operating Segments

6 Months Ended

Jun. 30, 2011

In accordance to ASC 280, “Segment Reporting”, we define an operating segment as a business activity:

·	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.

We currently have two operating segments, which are defined as each business line that we operate. This however, excludes corporate headquarters, which does not generate revenue, and our discontinued operations, which includes all facilities within our Industrial Segment (See Note 8 – “Discontinued Operations”).

Our operating segments are defined as follows:

The Nuclear Segment provides treatment, storage, processing and disposal of nuclear, low-level radioactive, mixed (waste containing both hazardous and non-hazardous constituents), hazardous and non-hazardous waste and on-site waste management services through our four facilities: Perma-Fix of Florida, Inc. (“PFF”), Diversified Scientific Services, Inc. (“DSSI”), East Tennessee Materials and Energy Corporation (“M&EC”), and Perma-Fix of Northwest Richland, Inc. (“PFNWR”).

The Engineering Segment provides environmental engineering and regulatory compliance services through Schreiber, Yonley & Associates, Inc. (“SYA”) which includes oversight management of environmental restoration projects, air, soil, and water sampling, water and hazardous waste permitting, compliance reporting, emission reduction strategies, compliance auditing, and various compliance and training activities to industrial, education, healthcare, and service organizations, as well as, engineering and compliance support needed by our other facilities.

The table below presents certain financial information of our operating segment as of and for the three and six months ended June 30, 2011 and 2010 (in thousands).

Segment Reporting for the Quarter Ended June 30, 2011
	Nuclear			Engineering			Segments Total		Corporate (2)				Consolidated Total
Revenue from external customers	$	28,276	(3)	$	637		$	28,913	$	¾			$	28,913
Intercompany revenues		376			87			463		¾				¾
Gross profit		7,887			162			8,049		¾				8,049
Interest income		¾			¾			¾		13				13
Interest expense		31			1			32		151				183
Interest expense-financing fees		¾			¾			¾		54				54
Depreciation and amortization		1,140			7			1,147		29				1,176
Segment profit (loss)		4,427			11			4,438		(1,886	)			2,552
Segment assets(1)		99,189			2,024			101,213		31,069		(4)		132,282
Expenditures for segment assets		947			5			952		20				972
Total long-term debt		205			15			220		9,037		(5)		9,257

Segment Reporting for the Quarter Ended June 30, 2010
	Nuclear			Engineering			Segments Total		Corporate (2)				Consolidated Total
Revenue from external customers	$	25,181	(3)	$	666		$	25,847	$	¾			$	25,847
Intercompany revenues		778			132			910		¾				¾
Gross profit		7,127			55			7,182		¾				7,182
Interest income		¾			¾			¾		16				16
Interest expense		47			1			48		158				206
Interest expense-financing fees		¾			¾			¾		102				102
Depreciation and amortization		1,143			7			1,150		5				1,155
Segment profit (loss)		4,052			(49	)		4,003		(1,887	)			2,116
Segment assets(1)		92,392			2,004			94,396		28,794		(4)		123,190
Expenditures for segment assets		706			1			707		2				709
Total long-term debt		1,092			21			1,113		9,408		(5)		10,521

Segment Reporting for the Six Months Ended June 30, 2011
	Nuclear			Engineering			Segments Total		Corporate (2)				Consolidated Total
Revenue from external customers	$	51,305	(3)	$	1,223		$	52,528	$	¾			$	52,528
Intercompany revenues		794			156			950		¾				¾
Gross profit		10,951			128			11,079		¾				11,079
Interest income		¾			¾			¾		26				26
Interest expense		64			1			65		294				359
Interest expense-financing fees		¾			¾			¾		156				156
Depreciation and amortization		2,284			14			2,298		34				2,332
Segment profit (loss)		5,742			(58	)		5,684		(3,665	)			2,019
Segment assets(1)		99,189			2,024			101,213		31,069		(4)		132,282
Expenditures for segment assets		1,659			6			1,665		24				1,689
Total long-term debt		205			15			220		9,037		(5)		9,257

Segment Reporting for the Six Months Ended June 30, 2010
	Nuclear			Engineering			Segments Total		Corporate (2)				Consolidated Total
Revenue from external customers	$	48,073	(3)	$	1,340		$	49,413	$	¾			$	49,413
Intercompany revenues		1,568			347			1,915		¾				¾
Gross profit		11,910			215			12,125		¾				12,125
Interest income		¾			¾			¾		37				37
Interest expense		90			1			91		333				424
Interest expense-financing fees		¾			¾			¾		205				205
Depreciation and amortization		2,195			15			2,210		10				2,220
Segment profit (loss)		6,443			(10	)		6,433		(3,742	)			2,691
Segment assets(1)		92,392			2,004			94,396		28,794		(4)		123,190
Expenditures for segment assets		1,063			2			1,065		20				1,085
Total long-term debt		1,092			21			1,113		9,408		(5)		10,521

(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 $17,171,000 or 59.4% and $30,833,000 or 58.7% for the three and six months ended June 30, 2011, respectively of our total consolidated revenue from continuing operations, as compared to $12,276,000 or 47.4% and $24,001,000 or 48.6% for the three and six months ended June 30, 2010, respectively, of our total consolidated revenue from continuing operations. Our M&EC facility was awarded a subcontract by CHPRC, a general contractor to the Department of Energy (“DOE”), in the second quarter of 2008. We also have three waste processing contracts with CHPRC.

(4)	Amount includes assets from discontinued operations of $7,590,000 and $6,580,000 as of June 30, 2011 and 2010, respectively.

(5)

Net of debt discount of ($32,000) and ($284,000) as of June 30, 2011 and June 30, 2010, respectively, in connection with Warrants and 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 on May 8, 2009. The promissory note and the Warrants were modified on April 18, 2011. See Note 6 - “Promissory Note and Installment Agreement” for additional information.