x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
||
For the quarterly period ended | March 31, 2009 |
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
||||
For the transition period from |
to
|
|
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
Common
Stock, $.001 Par Value
|
Outstanding
at May 8, 2009
54,019,324
shares
of registrant’s
Common
Stock
|
Page
No.
|
|||||
FINANCIAL
INFORMATION
|
|
||||
Item
1.
|
Condensed
Financial Statements
|
||||
Consolidated
Balance Sheets -
|
|||||
March
31, 2009 (unaudited) and December 31, 2008
|
1
|
||||
Consolidated
Statements of Operations -
|
|||||
Three
Months Ended March 31, 2009 and 2008 (unaudited)
|
3
|
||||
Consolidated
Statements of Cash Flows -
|
|||||
Three
Months Ended March 31, 2009 and 2008 (unaudited)
|
4
|
||||
Consolidated
Statement of Stockholders' Equity -
|
|||||
Three
Months Ended March 31, 2009 (unaudited)
|
5
|
||||
Notes
to Consolidated Financial Statements
|
6
|
||||
Item
2.
|
Management's
Discussion and Analysis of
|
||||
Financial
Condition and Results of Operations
|
26
|
||||
Item
3.
|
Quantitative
and Qualitative Disclosures
|
||||
About
Market Risk
|
48
|
||||
Item
4.
|
Controls
and Procedures
|
49
|
|||
PART
II
|
OTHER
INFORMATION
|
||||
Item
1.
|
Legal
Proceedings
|
50
|
|||
Item
1A.
|
Risk
Factors
|
50
|
|||
Item
5.
|
Other
Information
|
50
|
|||
Item
6.
|
Exhibits
|
52
|
March
31,
|
||||||||
2009
|
December
31,
|
|||||||
(Amount
in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2008
|
||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 70 | $ | 129 | ||||
Restricted
cash
|
55 | 55 | ||||||
Accounts
receivable, net of allowance for doubtful
|
||||||||
accounts
of $387 and $333, respectively
|
13,158 | 13,416 | ||||||
Unbilled
receivables - current
|
11,840 | 13,104 | ||||||
Inventories
|
284 | 344 | ||||||
Prepaid
and other assets
|
2,708 | 2,565 | ||||||
Current
assets related to discontinued operations
|
60 | 110 | ||||||
Total
current assets
|
28,175 | 29,723 | ||||||
Property
and equipment:
|
||||||||
Buildings
and land
|
26,706 | 24,726 | ||||||
Equipment
|
31,498 | 31,315 | ||||||
Vehicles
|
628 | 637 | ||||||
Leasehold
improvements
|
11,455 | 11,455 | ||||||
Office
furniture and equipment
|
1,913 | 1,904 | ||||||
Construction-in-progress
|
1,285 | 1,159 | ||||||
73,485 | 71,196 | |||||||
Less
accumulated depreciation and amortization
|
(24,940 | ) | (23,762 | ) | ||||
Net
property and equipment
|
48,545 | 47,434 | ||||||
Property
and equipment related to discontinued operations
|
651 | 651 | ||||||
Intangibles
and other long term assets:
|
||||||||
Permits
|
17,250 | 17,125 | ||||||
Goodwill
|
11,320 | 11,320 | ||||||
Unbilled
receivables – non-current
|
3,043 | 3,858 | ||||||
Finite
Risk Sinking Fund
|
14,042 | 11,345 | ||||||
Other
assets
|
2,415 | 2,256 | ||||||
Total
assets
|
$ | 125,441 | $ | 123,712 |
March
31,
|
||||||||
2009
|
December
31,
|
|||||||
(Amount
in Thousands, Except for Share Amounts)
|
(Unaudited)
|
2008
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 9,636 | $ | 11,076 | ||||
Current
environmental accrual
|
191 | 186 | ||||||
Accrued
expenses
|
8,617 | 8,896 | ||||||
Disposal/transportation
accrual
|
5,222 | 5,847 | ||||||
Unearned
revenue
|
3,579 | 4,371 | ||||||
Current
liabilities related to discontinued operations
|
1,211 | 1,211 | ||||||
Current
portion of long-term debt
|
2,020 | 2,022 | ||||||
Total
current liabilities
|
30,476 | 33,609 | ||||||
Environmental
accruals
|
543 | 620 | ||||||
Accrued
closure costs
|
12,126 | 10,141 | ||||||
Other
long-term liabilities
|
460 | 457 | ||||||
Long-term
liabilities related to discontinued operations
|
1,280 | 1,783 | ||||||
Long-term
debt, less current portion
|
16,887 | 14,181 | ||||||
Total
long-term liabilities
|
31,296 | 27,182 | ||||||
Total
liabilities
|
61,772 | 60,791 | ||||||
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,
|
||||||||
53,985,119
and 53,934,560 shares issued and outstanding, respectively
|
54 | 54 | ||||||
Additional
paid-in capital
|
97,581 | 97,381 | ||||||
Accumulated
deficit
|
(35,251 | ) | (35,799 | ) | ||||
Total
stockholders' equity
|
62,384 | 61,636 | ||||||
Total
liabilities and stockholders' equity
|
$ | 125,441 | $ | 123,712 |
Three
Months Ended
March
31,
|
||||||||
(Amounts
in Thousands, Except for Per Share Amounts)
|
2009
|
2008
|
||||||
Net
revenues
|
$ | 22,002 | $ | 17,470 | ||||
Cost
of goods sold
|
16,914 | 13,024 | ||||||
Gross
profit
|
5,088 | 4,446 | ||||||
Selling,
general and administrative expenses
|
4,339 | 4,460 | ||||||
Gain
on disposal of property and equipment
|
12 | ― | ||||||
Income
(loss) from operations
|
761 | (14 | ) | |||||
Other
income (expense):
|
||||||||
Interest
income
|
51 | 68 | ||||||
Interest
expense
|
(547 | ) | (371 | ) | ||||
Interest
expense-financing fees
|
(13 | ) | (52 | ) | ||||
Other
|
1 | 6 | ||||||
Income
(loss) from continuing operations before taxes
|
253 | (363 | ) | |||||
Income
tax expense
|
9 | ― | ||||||
Income
(loss) from continuing operations, net of taxes
|
244 | (363 | ) | |||||
Income
(loss) from discontinued operations, net of taxes
|
304 | (675 | ) | |||||
Gain
on disposal of discontinued operations, net of taxes
|
― | 2,107 | ||||||
Net
income
|
$ | 548 | $ | 1,069 | ||||
Net
income (loss) per common share – basic
|
||||||||
Continuing
operations
|
$ | ― | $ | (.01 | ) | |||
Discontinued
operations
|
.01 | (.01 | ) | |||||
Disposal
of discontinued operations
|
― | .04 | ||||||
Net
income per common share
|
$ | .01 | $ | .02 | ||||
Net
income (loss) per common share – diluted
|
||||||||
Continuing
operations
|
$ | ― | $ | (.01 | ) | |||
Discontinued
operations
|
.01 | (.01 | ) | |||||
Disposal
of discontinued operations
|
― | .04 | ||||||
Net
income per common share
|
$ | .01 | $ | .02 | ||||
Number
of common shares used in computing net income (loss) per
share:
|
||||||||
Basic
|
53,982 | 53,704 | ||||||
Diluted
|
54,005 | 53,704 |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
(Amounts
in Thousands)
|
2009
|
2008
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 548 | $ | 1,069 | ||||
Less:
Income on discontinued operations
|
304 | 1,432 | ||||||
Income
(loss) from continuing operations
|
244 | (363 | ) | |||||
Adjustments
to reconcile net income (loss) to cash provided by
operations:
|
||||||||
Depreciation
and amortization
|
1,180 | 1,121 | ||||||
Provision
(benefit) for bad debt and other reserves
|
59 | (20 | ) | |||||
Gain
on disposal of plant, property and equipment
|
(12 | ) | ― | |||||
Issuance
of common stock for services
|
64 | 14 | ||||||
Share
based compensation
|
136 | 126 | ||||||
Changes
in operating assets and liabilities of continuing operations, net
of
|
||||||||
effect
from business acquisitions:
|
||||||||
Accounts
receivable
|
200 | (51 | ) | |||||
Unbilled
receivables
|
2,079 | 1,892 | ||||||
Prepaid
expenses, inventories and other assets
|
(176 | ) | 333 | |||||
Accounts
payable, accrued expenses and unearned revenue
|
(3,400 | ) | 957 | |||||
Cash
provided by continuing operations
|
374 | 4,009 | ||||||
Cash
used in discontinued operations
|
(158 | ) | (2,625 | ) | ||||
Cash
provided by operating activities
|
216 | 1,384 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(304 | ) | (565 | ) | ||||
Proceeds
from sale of plant, property and equipment
|
12 | ― | ||||||
Payment
to finite risk sinking fund
|
(2,697 | ) | (2,158 | ) | ||||
Cash
used for acquisition considerations, net of cash acquired
|
― | (12 | ) | |||||
Cash
used in investing activities of continuing operations
|
(2,989 | ) | (2,735 | ) | ||||
Proceeds
from sale of discontinued operations
|
― | 5,950 | ||||||
Cash
provided by (used in) discontinued operations
|
11 | (28 | ) | |||||
Net
cash (used in) provided by investing activities
|
(2,978 | ) | 3,187 | |||||
Cash
flows from financing activities:
|
||||||||
Net
borrowing (repayments) of revolving credit
|
3,001 | (124 | ) | |||||
Principal
repayments of long term debt
|
(298 | ) | (4,473 | ) | ||||
Repayment
of stock subscription receivable
|
― | 15 | ||||||
Cash
provided by (used in) financing activities of continuing
operations
|
2,703 | (4,582 | ) | |||||
Principal
repayment of long-term debt for discontinued operations
|
― | (30 | ) | |||||
Cash
provided by (used in) financing activities
|
2,703 | (4,612 | ) | |||||
Decrease
in cash
|
(59 | ) | (41 | ) | ||||
Cash
at beginning of period
|
129 | 118 | ||||||
Cash
at end of period
|
$ | 70 | $ | 77 | ||||
Supplemental
disclosure:
|
||||||||
Interest
paid, net of amounts capitalized
|
$ | 475 | $ | 297 | ||||
Income
taxes paid
|
3 | ― | ||||||
Non-cash
investing and financing activities:
|
||||||||
Long-term
debt incurred for purchase of property and equipment
|
― | ― | ||||||
Sinking
fund financed
|
― | ― |
(Amounts
in thousands,
|
Common
Stock
|
Additional
Paid-In
|
|
Accumulated
|
Total
Stockholders'
|
|||||||||||||||
except
for share amounts)
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|||||||||||||||
Balance
at December 31, 2008
|
53,934,560 | $ | 54 | $ | 97,381 | $ | (35,799 | ) | $ | 61,636 | ||||||||||
Net
income
|
—
|
—
|
—
|
548 | 548 | |||||||||||||||
Issuance
of Common Stock for services
|
50,559 |
—
|
64 |
—
|
64 | |||||||||||||||
Share
Based Compensation
|
—
|
—
|
136 |
—
|
136 | |||||||||||||||
Balance
at March 31, 2009
|
53,985,119 | $ | 54 | $ | 97,581 | $ | (35,251 | ) | $ | 62,384 |
1.
|
Basis of
Presentation
|
2.
|
Summary of Significant Accounting
Policies
|
|
·
|
FSP
FAS 157-4, “Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability have Significantly Decreased and Identifying
Transactions That Are Not Orderly” (“ FSP FAS 157-4”), provides guidance
for making fair value measurements more consistent with the principles
presented in FASB Statement No, 157, “Fair Value
Measurement”. FSP FAS 157-4 must be applied prospectively and
retrospective application is not permitted. FSP FAS 157-4 is
effective for interim and annual periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15,
2009. An entity adopting FSP FAS 157-4 early must also adopt
FSP FAS 115-2 and FAS 124-2 early.
|
|
·
|
FSP
FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (“FSP FAS 115-2 and FSP 124-2”),
provides additional guidance designed to create greater clarity and
consistency in accounting for and presenting impairment losses on debt
securities. FSP FAS 115-2 and FAS 124-2 is effective for
interim and annual period ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. An entity
may adopt this FSP early only if it also elects to adopt FSP FAS 157-4
early.
|
|
·
|
FSP
FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments” (“FSP FAS 107-1 and APB 28-1”), enhances consistency in
financial reporting by increasing the frequency of fair value
disclosures. FSP FAS 107-1 and APB 28-1 is effective for
interim periods ending after June 15, 2009 with early adoption permitted
for periods ending after March 15, 2009. However, an entity may
adopt these interim fair value disclosure requirements early only if it
also elects to adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2
early.
|
3.
|
Stock Based
Compensation
|
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,
|
|||||||
2009
|
2008
|
|||||||
Employee
Stock Options
|
$ | 106,000 | $ | 83,000 | ||||
Director
Stock Options
|
30,000 | 43,000 | ||||||
Total
|
$ | 136,000 | $ | 126,000 |
4.
|
Capital Stock And Stock
Plans
|
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 (1)
|
3,558,347 | 2.01 | 4.2 | $ | 413,175 | |||||||||||
Options Exercisable
at March 31, 2009 (1)
|
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 |
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Options
outstanding Janury 1, 2008
|
2,590,026 | $ | 1.91 | |||||||||||||
Granted
|
─
|
─
|
||||||||||||||
Exercised
|
─
|
─
|
$
|
─
|
||||||||||||
Forfeited
|
(47,334 | ) | 1.82 | |||||||||||||
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 |
5.
|
Earnings (Loss) Per
Share
|
Three
Months Ended
March
31,
|
||||||||
(Amounts
in Thousands, Except for Per Share Amounts)
|
2009
|
2008
|
||||||
Income (loss) per share from continuing
operations
|
||||||||
Income
(loss) from continuing operations
|
$ | 244 | $ | (363 | ) | |||
Basic
loss per share
|
$ |
—
|
$ | (.01 | ) | |||
Diluted
loss per share
|
$ |
—
|
$ | (.01 | ) | |||
Income (loss) per share from discontinued
operations
|
||||||||
Income
(loss) from discontinued operations
|
$ | 304 | $ | (675 | ) | |||
Basic
income (loss) per share
|
$ | .01 | $ | (.01 | ) | |||
Diluted
income (loss) per share
|
$ | .01 | $ | (.01 | ) | |||
Income per share from disposal of discontinued
operations
|
||||||||
Gain
on disposal of discontinued operations
|
$ |
—
|
$ | 2,107 | ||||
Basic
income per share
|
$ |
—
|
$ | .04 | ||||
Diluted
income per share
|
$ |
—
|
$ | .04 | ||||
Weighted
average common shares outstanding – basic
|
53,982 | 53,704 | ||||||
Potential
shares exercisable under stock option plans
|
23 |
—
|
||||||
Weighted
average shares outstanding – diluted
|
54,005 | 53,704 | ||||||
Potential
shares excluded from above weighted average share calculations due to
their anti-dilutive effect include:
|
||||||||
Upon
exercise of options
|
3,361 | 845 |
6.
|
Long Term
Debt
|
(Amounts
in Thousands)
|
March
31,
2009
|
December
31,
2008
|
||||||
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 31,2009) plus 2.0 or minimum floor base London
|
||||||||
InterBank
Offer Rate ("LIBOR") of 2.5% plus 3.0%, balance due in
|
||||||||
July
2012. (1)
|
$ | 9,517 | $ | 6,516 | ||||
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 2.5% plus 3.5%. (1)
|
6,417 | 6,667 | ||||||
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
|
2,500 | 2,500 | ||||||
Various
capital lease and promissory note obligations, payable 2009
to
|
||||||||
2013,
interest at rates ranging from 5.0% to 12.6%.
|
473 | 520 | ||||||
18,907 | 16,203 | |||||||
Less
current portion of long-term debt
|
2,020 | 2,022 | ||||||
$ | 16,887 | $ | 14,181 | |||||
7.
|
Commitments and
Contingencies
|
8.
|
Discontinued Operations and
Divestitures
|
Three
Months Ended March 31,
|
||||||||
(Amounts
in Thousands)
|
2009
|
2008
|
||||||
Net
revenues
|
$ | — | $ | 2,387 | ||||
Interest
expense
|
(20 | ) | (40 | ) | ||||
Operating
income (loss) from discontinued operations (1)
|
304 | (675 | ) | |||||
Gain
on disposal of discontinued operations (2)
|
— | 2,107 | ||||||
Income
(loss) from discontinued operations
|
304 | 1,432 |
March
31,
|
December
31,
|
|||||||
(Amounts
in Thousands)
|
2009
|
2008
|
||||||
Account
receivable, net
|
$ | — | $ | — | ||||
Inventories
|
— | — | ||||||
Other
assets
|
— | 22 | ||||||
Property,
plant and equipment, net (1)
|
651 | 651 | ||||||
Total
assets held for sale
|
$ | 651 | $ | 673 | ||||
Account
payable
|
$ | — | $ | — | ||||
Deferred
revenue
|
— | — | ||||||
Accrued
expenses and other liabilities
|
22 | 5 | ||||||
Note
payable
|
— | — | ||||||
Environmental
liabilities
|
— | — | ||||||
Total
liabilities held for sale
|
$ | 22 | $ | 5 |
March
31,
|
December
31,
|
|||||||
(Amounts
in Thousands)
|
2009
|
2008
|
||||||
Other
assets
|
$ | 60 | $ | 88 | ||||
Total
assets of discontinued operations
|
$ | 60 | $ | 88 | ||||
Account
payable
|
$ | — | $ | 15 | ||||
Accrued
expenses and other liabilities
|
1,467 | 1,947 | ||||||
Deferred
revenue
|
— | — | ||||||
Environmental
liabilities
|
1,002 | 1,027 | ||||||
Total
liabilities of discontinued operations
|
$ | 2,469 | $ | 2,989 |
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.
|
Segment
Reporting for the Quarter Ended March 31, 2009
|
||||||||||||||||||||||||
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
|
4,292 | 226 | 570 | 5,088 | — | 5,088 | ||||||||||||||||||
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)
|
1,749 | 86 | 54 | 1,889 | (1,645 | ) | 244 | |||||||||||||||||
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 |
Segment
Reporting for the Quarter Ended March 31, 2008
|
||||||||||||||||||||||||
Nuclear
|
Engineering
|
Industrial
|
Segments
Total
|
Corporate (2)
|
Consolidated
Total
|
|||||||||||||||||||
Revenue
from external customers
|
$ | 13,981 |
(3)
|
$ | 902 | $ | 2,587 | $ | 17,470 | $ |
—
|
$ | 17,470 | |||||||||||
Intercompany
revenues
|
611 | 98 | 197 | 906 | — | 906 | ||||||||||||||||||
Gross
profit
|
3,554 | 255 | 637 | 4,446 | — | 4,446 | ||||||||||||||||||
Interest
income
|
2 | — | — | 2 | 66 | 68 | ||||||||||||||||||
Interest
expense
|
206 | 1 | 5 | 212 | 159 | 371 | ||||||||||||||||||
Interest
expense-financing fees
|
— | — | — | — | 52 | 52 | ||||||||||||||||||
Depreciation
and amortization
|
1,103 | 7 | — | 1,110 | 11 | 1,121 | ||||||||||||||||||
Segment
profit (loss)
|
976 | 128 | (35 | ) | 1,069 | (1,432 | ) | (363 | ) | |||||||||||||||
Segment
assets (1)
|
95,578 | 2,196 | 6,107 | 103,881 | 15,702 |
(4)
|
119,583 | |||||||||||||||||
Expenditures
for segment assets
|
512 | — | 46 | 558 | 7 | 565 | ||||||||||||||||||
Total
long-term debt
|
6,152 | 3 | 201 | 6,356 | 7,280 | 13,636 |
(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 $10,748,000 or 48.8% of our total
consolidated revenue for the quarter ended March 31, 2009. 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. The consolidated revenue within the Nuclear Segment also
include the Fluor Hanford revenue of $0 or 0% and $1,766,000 or 10.1% for
the quarter ended March 31, 2009 and 2008,
respectively. Effective October 1, 2008, CHPRC began management
of waste activities previously under Fluor Hanford, DOE’s general
contractor prior to CHPRC. See “Known Trends and Uncertainties
– Significant Customers” in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for the revenue transition
discussion.
|
(4)
|
Amount
includes assets from discontinued operations of $711,000 and $2,541,000 as
of March 31, 2009 and 2008,
respectively.
|
10.
|
Income
Taxes
|
11.
|
Closure
Costs
|
12.
|
Subsequent
Event
|
·
|
in
cash, or
|
|
·
|
subject
to certain limitations and pursuant to an exemption from registration
under Section 4(2) of the Act and/or Rule 506 of Regulation D, in shares
of Company Common Stock, with the number of shares to be issued determined
by dividing the unpaid principal balance as of the date of default, plus
accrued interest, by a dollar amount equal to the closing bid price of the
Company’s Common Stock on the date of default as reported on the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”)
(“Payoff Shares”). The Payoff Amount is to be paid as
follows: 90% to Mr. Lampson and 10% to Mr.
Rettig.
|
|
·
|
the
number of shares equal to 19.9% of the number of shares of the Company’s
Common Stock issued and outstanding as of the date of the Agreement,
or
|
|
·
|
19.9%
of the voting power of all of the Company’s voting securities issued and
outstanding as of the date of the
Agreement.
|
·
|
cash
flow from operations and our available liquidity from our line of credit
are sufficient to service our current obligations;
|
·
|
government
funding and economic stimulus package should positively impact our
existing government contracts;
|
·
|
demand
for our service will continue to be subject to
fluctuations;
|
·
|
effect
on us due to reductions in the level of government
funding;
|
·
|
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;
|
·
|
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;
|
·
|
ability
to generate funds internally to remediate sites;
|
·
|
ability
to fund budgeted capital expenditures of $1,300,000 during 2009 through
our operations or lease financing or a combination of
both;
|
·
|
growth
of our Nuclear Segment;
|
·
|
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;
|
·
|
settlement
of the Notice of Violation at PFTS is estimated to be during the second
quarter of 2009, subject to finalization and execution of a settlement
agreement;
|
·
|
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;
|
·
|
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 $267,000 in the remaining nine months of 2009 to
remediate the PFMI site, with the remainder over the next five
years;
|
·
|
based
on the current status of Corrective Action for PFMI, we believe that the
remaining reserve is adequate to cover the liability;
|
·
|
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;
|
·
|
we
anticipate remediation of these control weaknesses by the third quarter of
2009;
|
·
|
potential
for fines and remediation of our waste management
facilities;
|
·
|
In
the event of failure of AIG, this could significantly impact our
operations and our permits;
|
·
|
the
Company expects SFAS No. 141R and FSP No. 141R-1 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 and FSP 132(R)-1 to
materially impact our operations or financial position;
and
|
·
|
placing
the first $1,000,000 of the escrow amount we may be required to pay in
connection with the acquisition of PFNWR and PFNW in an escrow account
during the later part of 2009.
|
·
|
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; and
|
·
|
Risk
Factors contained in Item 1A of our 2008 Form
10-K.
|
Three Months Ended
March 31,
|
||||||||||||||||
Consolidated (amounts in
thousands)
|
2009
|
%
|
2008
|
%
|
||||||||||||
Net
revenues
|
$ | 22,002 | 100.0 | $ | 17,470 | 100.0 | ||||||||||
Cost
of good sold
|
16,914 | 76.9 | 13,024 | 74.6 | ||||||||||||
Gross
profit
|
5,088 | 23.1 | 4,446 | 25.4 | ||||||||||||
Selling,
general and administrative
|
4,339 | 19.7 | 4,460 | 25.5 | ||||||||||||
Gain
on disposal of property and equipment
|
12 | — | — | — | ||||||||||||
Income
(loss) from operations
|
$ | 761 | 3.4 | $ | (14 | ) | (.1 | ) | ||||||||
Interest
income
|
51 | .2 | 68 | .4 | ||||||||||||
Interest
expense
|
(547 | ) | (2.5 | ) | (371 | ) | (2.1 | ) | ||||||||
Interest
expense-financing fees
|
(13 | ) | — | (52 | ) | (.3 | ) | |||||||||
Other
|
1 | — | 6 | — | ||||||||||||
Income
(loss) from continuing operations before taxes
|
253 | 1.1 | (363 | ) | (2.1 | ) | ||||||||||
Income
tax expense
|
9 | — | — | — | ||||||||||||
Income
(loss) from continuing operations
|
244 | 1.1 | (363 | ) | (2.1 | ) | ||||||||||
Preferred
Stock dividends
|
— | — | — | — |
(In thousands)
|
2009
|
%
Revenue
|
2008
|
%
Revenue
|
Change
|
%
Change
|
||||||||||||||||||
Nuclear
|
||||||||||||||||||||||||
Government
waste
|
$ | 4,678 | 21.3 | $ | 6,335 | 36.3 | $ | (1,657 | ) | (26.2 | ) | |||||||||||||
Hazardous/Non-hazardous
|
958 | 4.4 | 855 | 4.9 | 103 | 12.0 | ||||||||||||||||||
Other
nuclear waste
|
2,730 | 12.4 | 5,025 | 28.7 | (2,295 | ) | (45.7 | ) | ||||||||||||||||
Fluor
Hanford
|
— | — | 1,766 | 10.1 | (1,766 | ) | (100.0 | ) | ||||||||||||||||
CHPRC
|
10,748 | 48.8 | — | — | 10,748 | 100.0 | ||||||||||||||||||
Total
|
19,114 | 86.9 | 13,981 | 80.0 | 5,133 | 36.7 | ||||||||||||||||||
Industrial
|
||||||||||||||||||||||||
Commercial
|
$ | 1,228 | 5.6 | $ | 1,398 | 8.0 | $ | (170 | ) | (12.2 | ) | |||||||||||||
Government
services
|
127 | 0.6 | 240 | 1.4 | (113 | ) | (47.1 | ) | ||||||||||||||||
Oil
Sales
|
754 | 3.4 | 949 | 5.4 | (195 | ) | (20.5 | ) | ||||||||||||||||
Total
|
2,109 | 9.6 | 2,587 | 14.8 | (478 | ) | (18.5 | ) | ||||||||||||||||
Engineering
|
779 | 3.5 | 902 | 5.2 | (123 | ) | (13.6 | ) | ||||||||||||||||
Total
|
$ | 22,002 | 100.0 | $ | 17,470 | 100.0 | $ | 4,532 | 25.9 |
(In thousands)
|
2009
|
%
Revenue
|
2008
|
%
Revenue
|
Change
|
|||||||||||||||
Nuclear
|
$ | 14,822 | 77.5 | $ | 10,427 | 74.6 | $ | 4,395 | ||||||||||||
Industrial
|
1,539 | 73.0 | 1,950 | 75.4 | (411 | ) | ||||||||||||||
Engineering
|
553 | 71.0 | 647 | 71.7 | (94 | ) | ||||||||||||||
Total
|
$ | 16,914 | 76.9 | $ | 13,024 | 74.6 | 3,890 |
(In thousands)
|
2009
|
%
Revenue
|
2008
|
%
Revenue
|
Change
|
|||||||||||||||
Nuclear
|
$ | 4,292 | 22.5 | $ | 3,554 | 25.4 | $ | 738 | ||||||||||||
Industrial
|
570 | 27.0 | 637 | 24.6 | (67 | ) | ||||||||||||||
Engineering
|
226 | 29.0 | 255 | 28.3 | (29 | ) | ||||||||||||||
Total
|
$ | 5,088 | 23.1 | $ | 4,446 | 25.4 | 642 |
(In thousands)
|
2009
|
%
Revenue
|
2008
|
%
Revenue
|
Change
|
|||||||||||||||
Administrative
|
$ | 1,503 | — | $ | 1,288 | — | $ | 215 | ||||||||||||
Nuclear
|
2,178 | 11.4 | 2,380 | 17.0 | (202 | ) | ||||||||||||||
Industrial
|
520 | 24.7 | 666 | 25.7 | (146 | ) | ||||||||||||||
Engineering
|
138 | 17.7 | 126 | 14.0 | 12 | |||||||||||||||
Total
|
$ | 4,339 | 19.7 | $ | 4,460 | 25.5 | $ | (121 | ) |
(In thousands)
|
2009
|
2008
|
Change
|
|||||||||
PNC
interest
|
$ | 162 | $ | 122 | $ | 40 | ||||||
Other
|
385 | 249 | 136 | |||||||||
Total
|
$ | 547 | $ | 371 | $ | 176 | ||||||
(In thousands)
|
2009
|
|||
Cash
provided by continuing operations
|
$ | 374 | ||
Cash
used in discontinued operations
|
(158 | ) | ||
Cash
used in investing activities of continuing operations
|
(2,989 | ) | ||
Cash
provided by investing activities of discontinued
operations
|
11 | |||
Cash
provided by financing activities of continuing operations
|
2,703 | |||
Decrease
in cash
|
$ | (59 | ) |
·
|
in
cash, or
|
|
·
|
subject
to certain limitations and pursuant to an exemption from registration
under Section 4(2) of the Act and/or Rule 506 of Regulation D, in shares
of Company Common Stock, with the number of shares to be issued determined
by dividing the unpaid principal balance as of the date of default, plus
accrued interest, by a dollar amount equal to the closing bid price of the
Company’s Common Stock on the date of default as reported on the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”)
(“Payoff Shares”). The Payoff Amount is to be paid as
follows: 90% to Mr. Lampson and 10% to Mr.
Rettig.
|
|
·
|
the
number of shares equal to 19.9% of the number of shares of the Company’s
Common Stock issued and outstanding as of the date of the Agreement,
or
|
|
·
|
19.9%
of the voting power of all of the Company’s voting securities issued and
outstanding as of the date of the
Agreement.
|
Payments due by period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
2009
|
2010-
2012
|
2013 -
2014
|
After
2014
|
|||||||||||||||
Long-term
debt
|
$ | 18,908 | $ | 1,723 | $ | 17,175 | $ | 10 | $ | — | ||||||||||
Interest
on long-term debt (1)
|
2,574 | 2,368 | 206 | — | — | |||||||||||||||
Interest
on variable rate debt (2)
|
2,360 | 652 | 1,708 | — | — | |||||||||||||||
Operating
leases
|
2,155 | 613 | 1,311 | 231 | — | |||||||||||||||
Finite
risk policy (3)
|
7,752 | 2,594 | 5,158 | — | — | |||||||||||||||
Pension
withdrawal liability (4)
|
1,067 | 109 | 635 | 323 | — | |||||||||||||||
Environmental
contingencies (5)
|
1,736 | 485 | 812 | 329 | 110 | |||||||||||||||
Earn
Out Amount - PFNWR (6)
|
— | — | — | — | — | |||||||||||||||
Purchase
obligations (7)
|
— | — | — | — | — | |||||||||||||||
Total
contractual obligations
|
$ | 36,552 | $ | 8,544 | $ | 27,005 | $ | 893 | $ | 110 |
(1)
|
Our
PDC Note agreements dated June 2001, as amended on December 29, 2008, call
for the remaining balance of approximately $2,309,000 which consists of
interest, to be paid by June 30, 2009. Two monthly remaining
payments of $100,000 are due April 27, 2009 and May 27, 2009, with the
final balance due June 30, 2009. Interest is to be accrued at
the applicable rate pursuant to the term of the original
note. In conjunction with our acquisition of PFNWR, which was
completed on June 13, 2007, we agreed to pay shareholders of Nuvotec that
qualified as accredited investors pursuant to Rule 501 of Regulation D
promulgated under the Securities Act of 1933, $2,500,000, with principal
payable in equal installment of $833,333 on June 30, 2009, June 30, 2010,
and June 30, 2011. Interest is accrued on outstanding principal
balance at 8.25% starting in June 2007 and is payable on June 30, 2008,
June 30, 2009, June 30, 2010, and June 30,
2011.
|
(2)
|
We
have variable interest rates on our Term Loan and Revolving Credit of 2.5%
and 2.0% over the prime rate of interest, as amended, respectively, or
variable interest rates on our Term Loan and Revolving Credit of 3.5% and
3.0% over the minimum floor base LIBOR of 2.5%, and as such we have made
certain assumptions in estimating future interest payments on this
variable interest rate debt. Our calculation of interests on our Term Loan
and Revolving Credit was estimated using the more current favorable prime
rate method and we assumed an increase in prime rate of 1/2% in each of
the years 2009 through July
2012.
|
(3)
|
Our
finite risk insurance policy provides financial assurance guarantees to
the states in the event of unforeseen closure of our permitted
facilities. See Liquidity and Capital Resources – Investing
activities earlier in this Management’s Discussion and Analysis for
further discussion on our finite risk
policy.
|
(4)
|
The
pension withdrawal liability is the estimated liability to us upon
termination of our union employees at our discontinued operation,
PFMI. See Discontinued Operations earlier in this section for
discussion on our discontinued
operation.
|
(5)
|
The
environmental contingencies and related assumptions are discussed further
in the Environmental Contingencies section of this Management’s Discussion
and Analysis, and are based on estimated cash flow spending for these
liabilities. The environmental contingencies noted are for
PFMI, PFM, PFSG, and PFD, which are the financial obligations of the
Company. The environmental liability, as it relates to the
remediation of the EPS site assumed by the Company as a result of the
original acquisition of the PFD facility, was retained by the Company upon
the sale of PFD in March 2008.
|
(6)
|
In
connection with the acquisition of PFNW and PFNWR in 2007, we could be
required to pay an earn-out amount not to exceed $4,552,000 over a four
year period from the date of the acquisition, pursuant to the Merger
Agreement, as amended, with the first $1,000,000 of the earn-out amount to
be placed into an escrow account to satisfy any indemnification
obligations to us of Nuvotec, PEcoS, and the former shareholders of
Nuvotec. The earn-out amounts will be earned if certain annual
revenue targets are met by the Company’s consolidated Nuclear
Segment. We anticipate that all or a portion of the first
$1,000,000 of the earn-out amount could be placed in an escrow account
during the later part of 2009 to satisfy any indemnification obligations
under the Agreement.
|
(7)
|
We
are not a party to any significant long-term service or supply contracts
with respect to our processes. We refrain from entering into
any long-term purchase commitments in the ordinary course of
business.
|
Current
|
Long-term
|
|||||||||||
Accrual
|
Accrual
|
Total
|
||||||||||
PFD
|
$ | 133 | $ | 337 | $ | 470 | ||||||
PFM
|
69 | 153 | 222 | |||||||||
PFSG
|
122 | 390 | 512 | |||||||||
PFMI
|
471 | 61 | 532 | |||||||||
Total
Liability
|
$ | 795 | $ | 941 | $ | 1,736 |
(a)
|
Evaluation of disclosure
controls, and procedures.
|
|
·
|
The
monitoring of pricing, invoicing, and the corresponding inventory for
transportation and disposal process controls at facilities within the
Company’s Industrial Segment were ineffective and were not being applied
consistently. This weakness could result in sales being priced
and invoiced at amounts, which were not approved by the customer or the
appropriate level of management, and inaccurate corresponding
transportation and disposal
expense.
|
|
·
|
The
design and operation of payroll, pricing and invoicing controls for our
subcontract awarded to our East Tennessee Materials & Energy
Corporation (“M&EC”) subsidiary by the Department of Energy’s (“DOE”)
general contractor, CH Plateau Remediation Company (“CHPRC”) were
ineffective and were not being applied consistently. This
weakness could result in invoices, expenses, and revenue recognized at
amounts that were not validated and approved by the customer and the
appropriate level of management.
|
|
·
|
The
control for the recognition of processed/disposed revenue at our Perma-Fix
Northwest Richland, Inc. (“PFNWR”) subsidiary was ineffective and not
being applied consistently. This weakness could result in a
material amount of revenue being recognized in an incorrect financial
reporting period.
|
(b)
|
Changes in internal control
over financial reporting.
|
Item
1.
|
Legal
Proceedings
|
Item
1A.
|
Risk
Factors
|
Item
5.
|
Other
Information
|
·
|
in
cash, or
|
|
·
|
subject
to certain limitations and pursuant to an exemption from registration
under Section 4(2) of the Act and/or Rule 506 of Regulation D, in shares
of Company Common Stock, with the number of shares to be issued determined
by dividing the unpaid principal balance as of the date of default, plus
accrued interest, by a dollar amount equal to the closing bid price of the
Company’s Common Stock on the date of default as reported on the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”)
(“Payoff Shares”). The Payoff Amount is to be paid as
follows: 90% to Mr. Lampson and 10% to Mr.
Rettig.
|
|
·
|
the
number of shares equal to 19.9% of the number of shares of the Company’s
Common Stock issued and outstanding as of the date of the Agreement,
or
|
|
·
|
19.9%
of the voting power of all of the Company’s voting securities issued and
outstanding as of the date of the
Agreement.
|
Item
6.
|
Exhibits
|
(a)
|
Exhibits
|
4.1
|
Loan
and Securities Purchase Agreement, dated May 8th, 2009 between William N.
Lampson, Diehl Rettig, and Perma-Fix Environmental Services,
Inc.
|
4.2
|
Promissory
Note dated May 8, 2009 between William Lampson, Diehl Rettig, and
Perma-Fix Environmental Services, Inc.
|
4.3
|
Common
Stock Purchase Warrant, dated May 8, 2009, for William N.
Lampson.
|
4.4
|
Common
Stock Purchase Warrant, dated May 8, 2009, for Diehl
Rettig.
|
31.1
|
Certification
by Dr. Louis F. Centofanti, Chief Executive Officer of the Company
pursuant to Rule 13a-14(a) or 15d-14(a).
|
31.2
|
Certification
by Ben Naccarato, Chief Financial Officer of the Company pursuant to Rule
13a-14(a) or 15d-14(a).
|
32.1
|
Certification
by Dr. Louis F. Centofanti, Chief Executive Officer of the Company
furnished pursuant to 18 U.S.C. Section 1350.
|
32.2
|
Certification
by Ben Naccarato, Chief Financial Officer of the Company furnished
pursuant to 18 U.S.C. Section
1350.
|
PERMA-FIX
ENVIRONMENTAL SERVICES
|
||
Date: May
8, 2009
|
By:
|
/s/ Dr. Louis F.
Centofanti
|
Dr.
Louis F. Centofanti
|
||
Chairman
of the Board
|
||
Chief
Executive Officer
|
||
Date: May
8, 2009
|
By:
|
/s/ Ben Naccarato
|
Ben
Naccarato
|
||
Chief
Financial Officer
|