UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

ý		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended September 28, 2003
OR
o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from                        to

 

Commission File Number 0-14292

 

DURATEK, INC.

(Exact name of Registrant as specified in its charter)

 

 

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 ý   No  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes ý   No  o

 

Number of shares outstanding of each of the issuer’s classes of common stock as of November 4, 2003:

 

Class of stock		Number of shares
Common stock, par value $0.01 per share		13,577,922

 

 

DURATEK, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

Part I	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 28, 2003 and December 31, 2002
	Consolidated Statements of Operations for the Three and Nine Months Ended September 28, 2003 and September 30, 2002
	Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2003 and September 30, 2002
	Notes to Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
Item 4.	Controls and Procedures
Part II	Other Information
Item 1.	Legal Proceedings
Item 3.	Defaults Upon Senior Securities
Item 6.	Exhibits and Reports on Form 8-K
	Signatures

 

Forward-Looking Information

 

In response to the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995, Duratek, Inc. (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 the 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 United States Department of Energy (“DOE”) for the cleanup of waste sites administered by the DOE.  The timing and awarding 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.  The loss of one or more technical support service contracts could adversely affect the Company’s future operating results.  Finally, a significant component of the Company’s direct costs include the cost of disposal of materials in licensed landfills.  The ability to reflect increased costs in pricing to customers, the availability of these licensed facilities, and any changes in the rate structures of such licensed facilities have the potential to affect the operating results of the Company.

 

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 acceptance and implementation of the Company’s waste treatment technologies in the government and commercial sectors; the evaluation by the DOE and commercial customers of the Company’s technologies versus other competing technologies as well as conventional storage and disposal alternatives; the timing of new government waste processing projects, including those pursued jointly with others; the duration of such projects; and the timing of commercial nuclear power plant outages and other large technical support services projects at its customers’ facilities.

 

An element of the Company’s growth strategy is to continue to pursue strategic acquisitions that expand and complement the Company’s business, technologies, and service offerings.  Under the Company’s amended credit facility, which was completed in February 2003, the Company is permitted to enter into certain acquisitions, as defined in the credit agreement, subject to certain conditions.  If the Company does complete an acquisition, the Company’s future operating results may be affected by the costs and timing of completion and integration of such an acquisition.

 

 

 

Part I  Financial Information

 

Item 1.  Financial Statements

DURATEK, INC. AND SUBSIDIARIES

 

Consolidated Balance Sheets

 

(in thousands of dollars, except per share amounts)

 

		September 28, 2003			December 31, 2002
		(unaudited)			*
Assets
Current assets:
Cash		$	2,589		$	2,323
Accounts receivable, net		48,809			48,420
Income taxes receivable		—			1,140
Cost and estimated earnings in excess of billings on uncompleted contracts		18,265			12,828
Prepaid expenses and other current assets		4,854			7,915
Deferred income taxes		2,168			2,168
Total current assets		76,685			74,794
Retainage		8,543			4,969
Property, plant and equipment, net		71,072			69,287
Goodwill		70,797			70,797
Other intangible assets		4,961			5,675
Decontamination and decommissioning trust fund		20,744			19,693
Other assets		13,235			8,917
Total assets		$	266,037		$	254,132
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt		$	10,400		$	10,400
Accounts payable		9,424			13,911
Accrued expenses and other current liabilities		36,721			41,147
Unearned revenues		26,430			16,476
Waste processing and disposal liabilities		7,833			9,936
Total current liabilities		90,808			91,870
Long-term debt, less current portion		45,549			50,749
Facility and equipment decontamination and decommissioning liabilities		40,008			28,778
Other noncurrent liabilities		1,086			4,472
Deferred income taxes		1,039			2,649
Total liabilities		178,490			178,518
Redeemable preferred stock (liquidation value $18,588)		15,752			15,752
Stockholders’ equity:
Preferred stock – $0.01 par value; authorized 4,840,000 shares; none issued		—			—
Common stock – $0.01 par value; authorized 35,000,000 shares; issued 15,188,381 shares in 2003 and 15,142,419 shares in 2002		152			151
Capital in excess of par value		77,960			77,715
Retained earning (deficit)		3,340			(8,108		)
Treasury stock at cost, 1,612,376 shares in 2003 and 2002		(9,577		)	(9,577		)
Deferred compensation		(80		)	(319		)
Total stockholders’ equity		71,795			59,862
Total liabilities and stockholders’ equity		$	266,037		$	254,132

 

 

*  The Consolidated Balance Sheet as of December 31, 2002 has been derived from the Company’s audited Consolidated Balance Sheet included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

 

See accompanying notes to consolidated financial statements.

 

2

 

DURATEK, INC. AND SUBSIDIARIES

 

Consolidated Statements of Operations

 

(Unaudited)

 

(in thousands, except for per share amounts)

 

		Three Months Ended						Nine Months Ended
		September 28, 2003			September 30, 2002			September 28, 2003			September 30, 2002
Revenues		$	72,517		$	72,837		$	213,137		$	214,361
Cost of revenues		53,577			57,002			161,673			169,669
Gross profit		18,940			15,835			51,464			44,692